The Father and Daughter Disputed Over A Property that is Allegedly Held in Trust
Koprivnjak v Koprivnjak [2022] NSWSC 586 (16 May 2022)
The plaintiff, John is the father, and the respondent, Natalie, is the daughter. When their relationship had become in-amicable, John asked Natalie to transfer the property into the names of John and his then wife, Lena. Natalie did not do it so John lodged a caveat AN827263C to protect what he said was his interest in the property. The Court, in determining whether the caveat should be extended, assessed the parties' intention to hold the property in trust.
Facts:
From December 2011 until it was sold on 23 December 2020, Natalie was the registered proprietor of Lot 107, Deposited Plan 28772 being a property at Shoal Bay NSW.
Both parties claim the net proceeds of the sale, being a sum of $475,589.13, which are held in a solicitor’s controlled monies account. On 2 November 2018, when relations between the parties were not amicable, John asked Natalie to transfer the property into the names of John and his then-wife, Lena.
Natalie did not do so and John lodged caveat AN827263C to protect what he said was his interest in the property, which he described in the particulars of the estate or interest as “resulting trust ... by reason of direct financial and capital contributions” and “monetary contributions to the maintenance, conservation, and improvement of the property”.
In 2019 John, Lena and Natalie agreed (as part of Family Court proceedings brought by Lena against John for divorce and property settlement) that the property should be sold and the money held pending a determination as to the true owner. To enable the sale, Natalie issued a lapsing notice to remove the caveat. On 30 November 2020, John commenced proceedings in this Court to obtain an order extending his caveat and preventing the sale, despite the agreement to sell.
Those proceedings were subsequently dismissed by consent, however, Robb J found that John was required to pay Natalie’s costs on an indemnity basis because “...the institution and prosecution of these proceedings by the plaintiff constituted relevant misconduct." On 8 February 2021, John commenced proceedings, claiming Natalie held 25% of the property in trust for John because he says he contributed $75,000 towards the purchase price. He also claims a constructive trust in relation to the other 75% of the property, on the basis that was the common understanding of the parties and by reason of his contributions to the mortgage and property maintenance. It is said that the presumption of advancement, that John accepts would otherwise assist Natalie, has been rebutted with the evidence that demonstrates the existence of the resulting and constructive trust. Should no trust be found, John’s alternative case is that he is entitled to enforce the covenants in the mortgage and have $75,000 plus interest repaid, together with a sum of money for the improvements that he made to the property.
In about 2015, a gumtree fell on the property’s roof. Natalie and John submitted an insurance claim. The insurance policy was in Natalie and John’s name; Natalie’s because she was the owner, and John’s so that they could have the benefit of discounts available to John. Natalie refused to accept that John was an insured on the policy, adhering to her position that she was the only owner of the property. She considered this was a mistake by the insurance company.
Issues:
I. Whether or not there exist a resulting trust or constructive trust with the sums or interests in the property.
II. Whether or not the Court should grant the order extending John's caveat and preventing the sale of the property.
Applicable law:
Bassett v Cameron [2021] NSWSC 207 - Ward CJ in Eq (as her Honour then was) provided a concise summary of the common intention of constructive trust and the scope of the inquiry.
Black Uhlans Inc v New South Wales Crime Commission (2002) 12 BPR 22,421; [2002] NSWSC 1060 - provides that the presumption of resulting trust is the “starting point of a factual enquiry” about the intention of the party (or parties) who provided the funds for the purchase in question.
Commissioner of Taxation v Bosanac (No 7) [2021] FCAFC 158 - where the Full Federal Court considered presumptions that may arise in the context of two parties purchasing a property, which is placed in the name of one only.
DKL v LYK [2019] SASC 100 - provides that identifying and negotiating the purchase and renovating the property may be relevant to whether the presumption of a resulting trust or presumption of advancement has been rebutted.
Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 - provides that where both transferees have contributed to the purchase money, the intentions of both are material, but where only one has provided the money it is his or her intention alone that has to be ascertained.
Re Kayford Ltd (in liq) [1975] 1 WLR 279 - settled that a particular form of words is not necessary and the court is to draw an inference from all the circumstances.
Re Schebsman; Ex parte The Official Receiver, The Trustee v Cargo Superintendents (London) Limited and Schebsman [1944] Ch 83 - du Parcq noted that “unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the Court ought not to be astute to discover indications of such an intention.”
Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278; [2006] HCA 6 - where it is necessary to take a broader view and consider the intention of the relevant persons around the time of completion when all the purchase money had been provided.
Analysis:
Natalie resists John’s claim primarily on the bases that: a. there was no intention that the property be held on trust; b. Instead, the parties are bound by the mortgage and Natalie has offered to pay John in accordance with that mortgage; c. John is not entitled to any sum for improvements to the property; and, d. pursuant to her cross-claim, Natalie is entitled to a set-off against the money due under the mortgage by reason of John obtaining the benefit of an insurance payout in relation to the property.
Counsel for John submitted that the only relevant time for consideration of intention for the purposes of a resulting trust was the time of exchange. However, it is necessary to take a broader view and consider the intention of the relevant persons around the time of completion when all the purchase money had been provided. John asserts entitlement to a resulting trust for the $75,000 he contributed to the purchase price. However, he also claims that he contributed the whole of the purchase price and mortgage payments and expenses to the property for his argument based on a constructive trust. The only money that John paid directly to the vendor for the purchase (and/or mortgage) was $15,000, by way of two transfers from his company to the vendor’s real estate agent.
Natalie acknowledged that John carried out the necessary repair work, however, there is no evidence of the cost actually incurred for that work. Natalie considered all the insurance money was hers, and, in particular, the $38,000 for lost rental. The insurer’s record of payment for that sum had Natalie’s name as the relevant recipient, however, the money was paid to John’s bank account at John’s request. John's retention of the $38,000 insurance payout does not amount to admission against Natalie’s interest concerning the existence of a trust in John’s favour; it does not unequivocally demonstrate that she considered John was the true owner of the property. Natalie in effect gifted the $38,000 to John by giving a direction to the insurer to pay John and never attaching terms to that payment.
Conclusion:
Natalie is not entitled to a set-off. There was no intention to create a trust. Natalie has had substantial success and John has failed. The parties are to confer and provide short minutes of order reflecting this judgment and the appropriate costs order to my Associate within 7 days of the publication of this judgment. In the event of any dispute as to the form of the orders, each party is to provide their proposed short minutes of order and up to 2 pages of submissions in support of the proposed orders, including as to costs, together with any evidence relied upon as to costs, to my Associate within 7 days of the publication of this judgment.
