DISTRICT COURT OF QUEENSLAND

1. [1]
   The parties in this case were in a relationship over something approximating a five year period. They commenced to live together in Perth in 1992 in the plaintiff’s home. They finally ceased living together in July 1997. They had earlier separated in February 1995 but remained in contact with each other, commencing to live together again in early 1996. The claim and counter claim the subject of this trial arises out of their association.

2. [2]
   The plaintiff owned his home in Perth. It was unencumbered. When the parties moved to Queensland in early 1993, he sold the home realising a net amount of $201,131.04. Of this, he put $196,131.04 into a term deposit with the Commonwealth Bank.

3. [3]
   The defendant’s asset position when she lived with the plaintiff was much more modest. With her daughter she owned a rental unit which was encumbered. She owned her own furniture and she had a Daihatsu motor vehicle which she was paying off. She did some part-time work and at some stage or stages was receiving a supporting parent benefit. On an occasion when the rental unit was unoccupied, the plaintiff assisted her with about $3,000 to meet payments due to the mortgagee. It appears that before the parties came to Queensland they spoke of marriage and the plaintiff bought the defendant a ring. Before they left Perth, a party was held at which their engagement was celebrated. The plaintiff said and I accept that at that stage he did not have an intention to marry the defendant. He was described in evidence as a cautious man. That accords with my assessment of him as a careful, cautious man. I think it likely that at that stage he wished to consider the matter as time passed. I accept that the plaintiff suggested the defendant sell her unit and her furniture prior to them coming over to Queensland. He told her that they would buy a place in Queensland in joint names. He had adequate, good quality furniture of his own.

4. [4]
   In the light of the defendant’s and her daughter’s apparent inability to meet repayments on the unit when it was untenanted, the suggestion of the plaintiff regarding the defendant’s unit probably had merit. The unit sold for $69,200. The net equity in the property amounted to $10,150. Of this the defendant paid $1,000 each to her daughter and her son. The plaintiff suggested she pay off her car and she paid $4,000 off the amount owing on the car. The other $4,000 or thereabouts she chose to spend in the move to Queensland. I accept that at that stage she thought she and the plaintiff would make a life together.

5. [5]
   Upon arrival in Queensland, it was decided to purchase a house at Noosa (the Noosa house). The house was to be bought in joint names. The plaintiff had a prior experience with a relationship where the woman had left him and claimed a share of property. The parties went to see a lawyer and an agreement was drawn up and entered into on 27 May 1993 (the agreement). Settlement of the purchase of the house was due on 28 May 1993.

6. [6]
   It appears the plaintiff paid a total of $187,287.67 in the purchase of the house. It appears that included legal costs and stamp duty. The sale was completed and the plaintiff and the defendant were registered on the title as joint tenants.

7. [7]
   The agreement, to which I have referred, recited that the parties wished to purchase the land and dwelling at Noosa and wished to contribute to the purchase price in equal shares and hold the property as joint tenants, that the defendant at the date for completion did not have her share of the purchase funds, that the defendant was a beneficiary of a will pursuant to which she expected to receive a bequest of funds and wished to pay her share of the purchase price upon receipt of the bequest and that the plaintiff had agreed to pay the defendant’s half share contribution on terms and conditions. It then set out that the defendant agreed to pay $90,000 which the parties agreed was the defendant’s contribution for her half share of the land upon receipt of the bequest or on demand by the plaintiff, that the plaintiff agreed to make demand for the defendant’s contribution on or before five years from the date of the agreement, that in the event the defendant was unable to pay the $90,000 on demand she agreed to transfer her half share of the land to the plaintiff, that if that occurred the plaintiff agreed to pay to the defendant an amount which represented a one half share of the gain in capital value, if any, of the land between the date of the contract and the date of the transfer, that neither party was then to have any further claim against the other pursuant to the agreement, that in the event the property was sold prior to the defendant paying $90,000 to the plaintiff and a capital gain was obtained the plaintiff agreed to pay the defendant the difference between one half of the net proceeds of sale after expenses and capital gains tax and the amount of $90,000.

8. [8]
   The plaintiff’s claim was based upon the agreement. He sought payment of $90,000 and interest from 3 September 1997. The plaintiff made demand of the defendant for payment on 3 September 1997.

9. [9]
   The defendant’s amended defence admitted the agreement and that the plaintiff made demand for payment of $90,000 on 3 September 1997. It pleaded the agreement was unenforceable, that the parties had agreed expressly or impliedly the agreement was not binding upon them, alternatively that it had been mutually abandoned or that it was impossible to perform. It pleaded that the parties had agreed and it was their common understanding that they would combine their financial resources and hold their respective interests in property equally and that accordingly they made contributions of money and labour. It claimed a beneficial interest in various property. It included a counter-claim for various relief including the appointment of statutory trustees for sale and consequential orders (there remained jointly owned real property at Flaxton), a declaration that the plaintiff held his interest in a stairway and joinery business on trust for the plaintiff and defendant in equal or such shares as the court determined, a declaration that a partnership in that business was dissolved, an order that the affairs of the partnership be wound up and consequential orders.

10. [10]
    It is necessary to examine what happened after the Noosa house was purchased.

11. [11]
    On 17 June 1993, the plaintiff and defendant entered into an agreement to jointly purchase a business, Montville Chalet Café (the café business) for $70,000. The plaintiff paid the $2,000 deposit. Seventy-five thousand dollars was borrowed in joint names for the purchase price, some working capital and legal expenses.

12. [12]
    On 24 July 1993, the plaintiff and defendant entered into two agreements with the owners of the freehold upon which the café was located. One agreement related to the joint purchase from those persons of the freehold for $170,000. The other agreement related to the sale to those persons of the Noosa house for $190,000.

13. [13]
    The defendant said that she had urged the plaintiff to agree to make these purchases having recognised them as good business. The plaintiff was reluctant or at least cautious. I accept that.

14. [14]
    The plaintiff said that at the time the Noosa house was sold and the freehold of the café purchased he had discussed with the defendant the agreement regarding the $90,000 he advanced for the defendant’s contribution in the context of what was to happen if they broke off the relationship. The defendant said she would sign over her share of the property to the plaintiff. The defendant denied any conversation in those or similar terms.

15. [15]
    I accept the plaintiff’s evidence about this. As I have already noted, he is a careful, cautious man. He had provided all the money to purchase the Noosa house in joint names. He was concerned about this if the relationship broke down. Hence the agreement. Two months or so later the Noosa property was sold and the café freehold purchased in joint names. It is probable that he discussed with the defendant his concern about what was to occur in the event the relationship broke down with the defendant.

16. [16]
    The agreement provided that in the event of the sale of the Noosa house the plaintiff was to pay to the defendant the difference between one half of the net proceeds of sale after deducting stamp duty, agent’s commission, solicitor’s costs, capital gains tax (etc) and the amount of $90,000. What occurred was that money received from the sale of the Noosa property was used to purchase the café freehold.

17. [17]
    On 1 August 1994, the parties entered into an agreement to sell the café business and café freehold for $105,000 and $180,000 respectively, a total of $285,000. The defendant’s share of the capital gain from the sale of the café business was $17,275.

18. [18]
    In the mean time on 13 January 1994, the parties had purchased a dwelling at Flaxton in joint names for $142,500. The purchase money was jointly borrowed. I accept the plaintiff’s evidence that there was similar discussion between them regarding the $90,000 he had provided for the defendant’s share of the purchase price for the Noosa house.

19. [19]
    When the café business and the café freehold were sold a portion of the money received was used to discharge the mortgage securing the money borrowed to purchase the Flaxton property. The balance of $141,537.72 was put on term deposit. The loan to purchase the café business was not discharged. About $65,624.60 was still owing. That loan was secured over the Flaxton property. Since that time the plaintiff has been paying off that loan. At 1 February 2000, the outstanding balance was $16,404.17.

20. [20]
    On 17 October 1994, the parties jointly entered into an agreement a purchase a retail lingerie shop (the lingerie business) in Nambour for $36,500 including stock. In about the same month, the plaintiff who is a cabinetmaker by trade entered into an agreement by himself to purchase a half interest in a stairways and joinery business for $37,500. The purchase money for these businesses came from the retained funds from the sale of the café business and the freehold.

21. [21]
    The lingerie business was a financial failure. Despite it being purchased in joint names, I think it was the defendant’s desire to purchase it, not as the defendant said the plaintiff’s. I accept the plaintiff’s evidence that within three months he wanted the defendant to close it to halt the financial drain. She refused. It was a source of tension between them. He had no input into its running but he was aware it was losing money. It was probably a significant contributing factor in their separation early in 1995. The defendant maintained a separate banking account for the lingerie business. From time to time additional money had to be injected to pay the business debts. The only source of funds apart from the retained money from the sale of the café business and freehold was the plaintiff’s earnings.

22. [22]
    I accept that at about the time the café and freehold were being sold the defendant received notification that the property in her father’s estate, the bequest referred to in the agreement would be available for distribution. Under her father’s will she was entitled to 90 per cent of the property and her brother to 10 per cent. She regarded her father’s distribution as wrong and wished her brother to have 50 per cent. She discussed this with the plaintiff. I accept that during the discussion he agreed that she could do as she wished. I accept the plaintiff’s evidence that he spoke of his position regarding the agreement and money he had provided to purchase the defendant’s share of the Noosa house which she had not paid and that she reassured him that if they were to break up she would sign over to him her share of property they jointly owned.

23. [23]
    On about 3 April 1996 the defendant received $45,630.93 for a 50/50 distribution from her father’s estate. There was an overpayment and she repaid $3,000 odd dollars in early May. The defendant wanted to buy a unit. I accept that the plaintiff was opposed to that. He was concerned about the debt in the lingerie business. These moneys were banked into the lingerie business bank account. On 20 May 1996, she withdrew $11,000 which she put into a term deposit. She said that over time she used these moneys including the term deposit moneys to keep the lingerie business afloat. Eventually all the money that had been put into the lingerie business was lost.

24. [24]
    The lingerie business ceased to operate in August 1996. At some stage the parties went to a counsellor. The defendant took the remaining stock to Montville where she opened again in her own name but this also was not successful and ceased in about January or February 1997. The plaintiff did not agree to the defendant opening again in Montville. I accept the defendant told the plaintiff it was her money and she could do with it as she wished.

25. [25]
    The parties went overseas together during the latter part of 1995. The only source of funds for the trip was retained moneys from the sale of the café business and freehold and the plaintiff’s earnings. Two thousand dollars was also paid for the defendant’s daughter’s wedding. This was in May 1995.

26. [26]
    Shortly before the final separation of the parties, the plaintiff paid money from the stairways and joinery business into a superannuation fund, the beneficiary of which was the defendant. That was altered after the final break up in the relationship.

27. [27]
    I find that both the plaintiff and the defendant worked hard in the businesses they were jointly engaged in to make them successful. In the café business they each took only a small amount of spending money for themselves from the business earnings. Although they jointly owned the lingerie business it did not make money. To the contrary it was a drain on money. I also find that when they were living together in the Flaxton house each contributed time and labour to household and landscaping work.

28. [28]
    The agreement was about money provided by the plaintiff to the defendant for the purchase of the Noosa house. It provided for the eventuality that the plaintiff made demand for payment of $90,000 and the Noosa house was still jointly owned by the parties. It also provided for the eventuality that the Noosa house was sold prior to $90,000 being paid by the defendant to the plaintiff. When the Noosa house was sold the agreement operated to require the plaintiff to pay to the defendant one half of any capital gain realised on sale, nett of costs and capital gains tax. Otherwise the money realised from the sale was his to deal with as he wished. Once either the plaintiff made demand for payment of $90,000 and it was paid accordingly, or the Noosa house was sold the respective clause of the agreement operated and resulted in the plaintiff having the whole estate in the house or its value. Its operative effect was then at an end.

29. [29]
    After the Noosa house was sold, the plaintiff provided the money to purchase the freehold of the café in joint names. I find that he did not intend to provide to the defendant a beneficial interest in that property, rather he intended all of the beneficial interest to be his unless in the meantime she paid for her interest. Consequently the defendant’s beneficial interest in the café property was held on trust for the plaintiff: Charles Marshall Pty Ltd v. Grimsley (1956) 95 CLR 353 at 364-5; Napier v. Public Trustee (Western Australia) (1980) 32 ALR 153; Calverley v. Green (1984) 155 CLR 246. 

30. [30]
    When the café property was sold and the lingerie business was purchased in joint names, I think the plaintiff still had a similar intention. At this time however, the pool of money included the defendant’s share of the capital gain from the sale of the café business. This probably contributed to the defendant regarding the lingerie business as hers, despite that it was in joint names.

31. [31]
    It seems to me the consequences of what has occurred can be summed up as follows:

The plaintiff chose to use the money to which he was entitled from the sale of the Noosa house to purchase the café freehold in the joint names of he and the defendant.  He did not intend a gift to her.  There was a resulting trust in favour of the plaintiff.  When the café business and freehold was sold the plaintiff was entitled to the nett proceeds of sale of the freehold and the plaintiff and the defendant were entitled to an equal share of the nett capital gain from the sale of the business, at best $17,275 each. 

32. [32]
    If the relationship had ended at this point, the entitlements just described would have reflected the parties’ respective positions together with the joint interest in the Flaxton property. There may have been a small nett capital gain from the sale of the Noosa house to which the defendant was entitled under the agreement but in the light of subsequent events with the lingerie business it is not necessary to deal with it further.

33. [33]
    As to subsequent events, the lingerie business cost $36,500. The defendant’s share of the capital gain from the sale of the café business at best, is not quite half of the purchase price. The plaintiff provided the balance. He injected further money into the business to pay debts. The defendant said she put the bequest she received into the lingerie shop business to pay the business debts and to keep it operating. All money put into the business was lost.

34. [34]
    The plaintiff bought a half interest in his name in the stairways and joinery business for $37,500. It was purchased with his money. It was successful. He has recently sold his interest. The defendant has no claim, legal or equitable to any part of the profits or any capital gain on the sale of the plaintiff’s interest.

35. [35]
    Money provided for an overseas trip the parties took together was intended by the plaintiff as a gift as was money provided for the defendant’s daughter’s wedding.

36. [36]
    The defendant has no claim to money paid into a superannuation fund by the plaintiff from his earnings from the stairways and joinery business to which the defendant was, but no longer is nominated as a beneficiary. I find the payment was made by the plaintiff with the intention of providing for the defendant as his partner in a relationship. The relationship broke down, apparently irretrievably very shortly after the payment was made.

37. [37]
    The parties are joint tenants in the Flaxton property. It was purchased in joint names with money borrowed jointly. Consequently both the legal and the beneficial title are jointly held. Later after the sale of the café business and freehold, the plaintiff chose to pay off the jointly incurred debt. That does not effect the position of the legal or beneficial title although he did not intend to make a gift of money to the defendant. The remainder of the joint debt incurred to purchase the café business, $65,624.60 was then secured by the jointly owned Flaxton property. The pool of funds used to repay the money borrowed to purchase the Flaxton property was in gross terms $180,000 which was the plaintiff’s and $105,000 which was the plaintiff’s and the defendant’s jointly received from the sale of the café freehold and business. Since August 1994, the amount of debt has been reduced by the plaintiff until by 1 February 2000 it was $16,404.51.

38. [38]
    The parties were jointly liable for the debt incurred in purchasing the café business. Since the business was sold the plaintiff alone has been paying out this debt. The defendant must account for her share of this debt.

39. [39]
    Apparently the plaintiff has been living in the Flaxton property since the final break up of the relationship. The defendant has not. He has made payments to reduce the joint debt which is secured over it. I was informed the parties were agreed the value of the Flaxton house is $142,000. If it be assumed that the outstanding debt at the time the plaintiff commenced solely to reduce it was $65,624.60, the defendant’s share of the debt is $32,812.30 which she must account for to the plaintiff. There has been no claim for an occupation rent. The parties ceased living together in July 1997 and the plaintiff brought his claim in October 1997. Claim for occupation rent was recently discussed in the Court of Appeal Queensland in Stone v. Owen [2000] QCA 56.

40. [40]
    Subject to hearing further from the parties I will order the appointment of statutory trustees for sale of the Flaxton house.