Leaver v Leaver[2022] QDC 149

DISTRICT COURT OF QUEENSLAND

1. [1]
   This matter involving once close family members requires the determination of the extent to which the plaintiffs have, if any, beneficial ownership of certain land registered in the names of the defendants.  The plaintiffs, Neal and Ellen Leaver, seek a declaration that their son Cory Leaver and daughter-in-law Diana Leaver hold land located at 132 Station Road, Deagon (“Station Road”) on trust for them. 
2. [2]
   Station Road was purchased in March 1994 from a third party.  Cory and Diana Leaver are the registered proprietors.  Neal and Ellen Leaver have lived there since then. 
3. [3]
   Neal and Ellen claim that at the time of the Station Road purchase, it was the common intention of the parties that:

   1. (a)
      Station Road would be purchased in the name of Cory and Diana Leaver;
   2. (b)
      the purchase cost of Station Road would be paid $40,000 by the plaintiffs, and the balance to be funded by mortgage taken in the name of the defendants;
   3. (c)
      Station Road would become the residence of the plaintiffs;
   4. (d)
      the plaintiffs would make mortgage payments;
   5. (e)
      the plaintiffs would be responsible for the maintenance and upkeep of Station Road.
4. [4]
   There are three principal factual matters which require resolution, namely:

   1. (a)
      who paid the deposit for Station Road and what the agreement was for the payment of the deposit when it was purchased in 1994;
   2. (b)
      who paid the mortgage for Station Road and what the agreement was for the payment of the mortgage for Station Road when it was purchased in 1994; and,
   3. (c)
      the extent of renovations conducted at Station Road and the extent to which the plaintiffs were responsible for, and paid for, those renovations. 
5. [5]
   The defendants deny the establishment of any equitable interest on the part of the plaintiffs and have pleaded defences to the equitable relief based on the plaintiffs’ delay in asserting any interest in respect of Station Road, essentially based upon laches and acquiescence.  Given it is the plaintiffs who assert the equitable interest to impeach the defendants’ indefeasibility of title arising from the Torrens system of land registration, they carry the burden of proof in respect of the establishment of the equitable interest claimed.  Before resolving the three principal factual matters, it is convenient to outline some background matters.   

The Facts

6. [6]
   Neal Leaver is an elderly gentleman who is about 75 years of age.  He has been an electrician in excess of 50 years. 
7. [7]
   Armed with his electrical license, Neal started Leaver Electrical in 1970 after he bought out his work colleague “who got cancer of the lymph nodes and lymph glands in his neck”.  Neal’s wife, Ellen, worked in an administrative capacity doing the accounts and other office duties.  Neal and Ellen were paid by the business with a “living expense and all [their] other living expenses were paid through the business”.  In the early days of Leaver Electrical, Neal and Ellen made decisions jointly for the business. 
8. [8]
   In about 1978, Neal and Ellen purchased a house at 30 Wharf Street, Shorncliffe (“Wharf Street”) for $60,000.
9. [9]
   In 1986, Neal and Ellen’s son Cory, who was 16, commenced working for Leaver Electrical as an apprentice.  According to Neal, Cory received a wage of about $40 per week.  
10. [10]
    In about July 1992, approximately six years after Cory started working for Leaver Electrical, Cory and his wife Diana purchased 110 Hoskins Street, Sandgate (“Hoskins Street”) for $110,000.  Cory was 22 at the time.  To fund the purchase of Hoskins Street, a deposit of $10,000 was made together with a mortgage of $100,000.  Neal gave evidence that in order for Cory to fund the purchase of Hoskins Street, he and Ellen “rationed” Cory’s wages so that Cory saved $10,000 which was used as the deposit.  Cory’s wage was retained by the business to fund the mortgage.  According to Neal, the mortgage, like the mortgage he and Ellen had at Wharf Street, was paid “out of the business”.^[1] 
11. [11]
    Cory Leaver gave evidence that at the time of the purchase of his house at Hoskins Street, the bank overvalued the property such that he was able to obtain $150,000.  In cross-examination, he disagreed that the mortgage was $100,000 and acknowledged that by 1993, he could not draw down the Hoskins Street mortgage and that he did not have any other source of income apart from his wage from Leaver Electrical.  Cory’s evidence also included that Leaver Electrical made mortgage repayments for Hoskins Street and took it out of his wages.^[2]  He claimed that in 1992, he bought Leaver Electrical and “took the company debts over…and took an overdraft of $25,000”.^[3]         
12. [12]
    Due to a failed fishing trawler venture, Neal and Ellen were required to sell their house at Wharf Street in about September 1993 to Allan and Sue McArthur.  The inference by the defence was that Neal and Ellen were almost destitute because of the failed venture.  Neal and Ellen sold Wharf Street to Allan and Sue McArthur for $160,000.  They then moved in with Cory and Diana at Hoskins Street for approximately three months until Station Road was found and ultimately purchased.   It was common ground that Neal and Ellen’s move to Hoskins Street with Cory and Diana was only to be temporary.   
13. [13]
    Competing evidence was given about how Station Road was located.  Neal and Ellen gave evidence that they alone searched for the house and Cory and Diana were not involved in looking for the property.^[4]  Neal said that Cory and Diana never came and looked at the house.^[5]  Cory, on the other hand, gave evidence that he and Diana were expanding their family and real estate portfolio and they found and inspected Station Road.  If it is necessary to do so, the version given by Cory is not accepted because I prefer the evidence of Neal and Ellen that they found Station Road as, on my assessment, it would be extraordinary for middle-aged parents to expect to remain living with their son and daughter-in-law at Hoskins Street on an indefinite basis when their son and daughter-in-law had their own lives to live, including that of a growing family.  The better view is that Cory and Diana provided mere temporary accommodation whilst Neal and Ellen found a suitable dwelling in order to rebuild their financial security after the failed fishing trawler venture.  It is less plausible that the younger generation, who at that stage, were a couple in their mid-twenties, would on their own volition, locate a house and be willing to offer shelter and accommodation to the older generation, who were in their late forties, and still very much capable of earning a living and were otherwise independent.  It is far more plausible that an otherwise independent, older couple, would want to move out of their son and daughter-in-law’s house, so that the younger couple could share their own lives together, without the burden of parents/in-laws.
14. [14]
    In about March 1994, Station Road was purchased in the name of Cory and Diana for the sum of $165,000.  A mortgage in favour of Metway Bank was registered over the property.  As stated earlier, Neal and Ellen commenced living in Station Road and have resided there ever since.
15. [15]
    In January 1996, the registered mortgage over Station Road was released in favour of a new Metway Bank mortgage.   Neal and Ellen said they were not aware of this and subsequent mortgages until years later. 
16. [16]
    Towards the latter part of the 1990s, Leaver Electrical began to operate a four-way partnership between Neal, Ellen, Cory and Diana.  It is difficult for me to reconcile Cory’s evidence that he bought Leaver Electrical in about 1992 by taking over the business debt and using an overdraft as there was no explanation was to why the business would then operate, a few years later, in a four-way partnership.  I accept the evidence on behalf of the plaintiffs, and given it is more plausible, that Leaver Electrical was run by Neal until the four-way partnership was created.  It would seem extraordinary that a business which started in 1970 was then sold by a father in his mid-forties to his young son who had just completed his apprenticeship about two years prior and then for his son, a few years later, to create a four-way partnership involving his wife, father and mother. 
17. [17]
    In February 1999, Neal and Ellen’s daughter Nicole commenced working in the business.  Her role included, among other things, accounts receivable (being tasks related to receipt revenue by the business) and accounts payable (being tasks related to the payment of expenses by the business) and the recording of those payments in the business records.  Nicole’s evidence regarding the financial records and management of the business was the most reliable out of all of the witnesses because I formed the impression that Neal and Cory essentially supplied the labour and skill to the business and had little knowledge of the financial arrangements of the business.  Nicole explained that when she started, the business was a four-way partnership.  She detailed as follows:^[6]

And at that time who did you think owned the business?---It was a four-way partnership.

All right. Did you know how that four-way partnership came about?---I do not. I’m sorry.

All right. Now, were Cory and Neal being paid by the business in 1999?---They were being paid by their expenses being paid.

All right. Could you just explain how that all worked?---So any time a bill came in for anything, they were paid – that bill was paid through the business and they both took, I think from memory, $200 a week into their bank account.

All right. Okay. Now, when the business paid one of those expenses, how was that all recorded?---It would go down to whoever’s expenses it was, their beneficiary entitlement account.

Okay?---Oh, sorry. Back then it was drawings.

All right?---And when it was a partnership it went down to their drawings, the four-way partnership.

All right. So would there be a tally of each of the partners’ drawings?---Yes.

And would expenses be added to each of those piles depending whose expense it was?---Yes.

Now, what sort of personal expenses was the business paying at that time?---Loans, rates, gas, electricity, phones, car loans, everything.

What was the business paying in respect of Hoskins Street, if you can recall?---Everything. It – like, electricity – their electricity, their phones, their gas, the rates, everything that – yeah.

HIS HONOUR: Any loan repayments?---Yes.

MR MACINTOSH: And on whose account would those payments for Hoskins Street be put?---A lot of them were business expenses because they were working – we were working downstairs. So I think it – it was always a 70/30 split. So 70 per cent was a business expense and 30 per cent went to Cory and Di.

All right. And so would that have included 70/30 split for the mortgage repayments?---No. I – I actually don’t recall there being a mortgage on that house when I came into the business.

All right?---I – I can’t remember that.

And when you came into the business what sort of things was the business paying for Station Road?---The same things: electricity, rates, loan, everything. 

All right. And whose account were all of those expenses recorded towards?---Cory and Di.

Do you recall why that those expenses were recorded to Cory and Di?---I think anything – because when I came into the business I was told that they were on paper running Station Road as an investment property, but no rent changed hands. So any of the electricity or any of that was again – it was a 70/30 split but the other way. So electricity and gas and all that went down to mum and dad for 70 per cent and 30 per cent was claimed as a business expense because dad was working in the business.

18. [18]
    In August 1999, the mortgage registered over Station Road in favour of Metway Bank was released and a new mortgage, granted by Cory and Diana, was registered in favour of Citibank.  There were subsequent releases and new mortgages in February 2004, October 2006 and March 2018, which according to Neal and Ellen were done without their knowledge or consent.  At trial, the current value of the mortgage over Station Road was approximately $590,000.^[7] 
19. [19]
    In early 2008, Leaver Electrical ceased operating under the partnership and began operating under Leaver Industries Pty Ltd as trustee for the Leaver Family Trust.  According to Nicole, the structure changed following discussions with an accountant such that the tax implications would be better served as a company and trust, as opposed to a four-way partnership.^[8] 
20. [20]
    In about 2014, the entity known as LEAIND Pty Ltd was established.  Cory said the purpose of establishing LEAIND Pty Ltd “was to protect the assets, like cars and tools and things, if we ever had an employee incident” and “to protect … the cars, the tools, equipment, business equipment”.^[9]  Leaver Industries Pty Ltd as trustee for the Leaver Family Trust continued.  Cory said, “one was the trust that holds all the car assets that there was, and then LEAIND was the actual trading company that leased the cars off Leaver” Industries.^[10]  LEAIND Pty Ltd operated the electrical licence.  The following exchange occurred in cross-examination between Cory and Mr Macintosh of counsel who appeared for the plaintiffs:

And is Leaind the one that operates the electrical licence?---Yes.

So if a claim was made in respect of work that the business had done, that claim would be against Leaind?---Yes.

It would not be against Leaver Industries?---Yes. Propriety Limited, yes.

Yes.  And so the purpose of having the split between Leaind and Leaver Industries is so that if someone makes a claim against Leaind, they can’t get to the assets of Leaver Industries; is that right?---Propriety Limited, yeah.

Yes.  And that’s exactly the same setup as Station Road, isn’t it?  It was put in yours and Di’s name so that if anybody made a claim against the business for which Neal was responsible, then they wouldn’t be able to get the house; that’s right, isn’t it?---No.

21. [21]
    By 2016, the relationship between Neal and Cory soured.  It was the last time Neal received any money from the business.^[11]  Neal’s exit from the business was followed by that of Ellen and Nicole in 2017.^[12]   
22. [22]
    It is with these matters in mind that I will consider the three principal factual issues requiring determination.

Who paid the deposit for Station Road?

23. [23]
    For the reasons to follow, I find Neal and Ellen paid the deposit for Station Road.  
24. [24]
    Neal and Ellen gave evidence that a deposit for Station Road was paid from the proceeds of the sale of their property at Wharf Street the previous year.  Contrarily Cory gave evidence that the $40,000 deposit was funded from an existing mortgage that Cory held over Hoskins Street.  The parties’ evidence followed their pleaded cases and there is no documentary evidence to support either party’s assertions about this issue.  
25. [25]
    Neal and Ellen’s evidence, which I accept, was that Leaver Electrical was operating since the 1970s and, in the lead up to the purchase of Station Road in 1994, was performing financially well.  It was because of Neal’s failed fishing trawler venture in the early 1990s, that Neal and Ellen resolved to sell Wharf Street to pay for the debts associated with that venture.  I am satisfied that after payment of the debts associated with the failed venture, Neal and Ellen had money remaining, sufficient to fund the deposit for Station Road because they sold Wharf Street in late 1993 for $160,000 and, after the venture debts were paid, whilst Neal could not recall the exact amount, he said that it was “in the vicinity of $40,000”.  To an extent Ellen corroborated Neal’s evidence about selling Wharf Street, paying out the venture debts and having some funds left over.^[13]  In responding to the proposition put to him in cross-examination that they moved in with Cory and Diana because they needed a place to live because of financial difficulties, Neal bluntly said “we needed a place to live because we didn’t have a house”.  Cory said that he did not “delve in why” his parents had financial difficulties.^[14]  I am prepared to infer that Neal and Ellen needed temporary shelter and they accumulated enough liquidity from the sale of Wharf Street to avoid bankruptcy and essentially start afresh with limited funds after the failed fishing trawler venture.  Contrary to Cory’s evidence, Neal and Ellen needed temporary assistance from their son and daughter-in-law for a period of time until they themselves found a house, that house being Station Road.  In accepting the evidence of Neal and Ellen, I reject Cory’s evidence that he paid the deposit for Station Road.    
26. [26]
    At around the time of the purchase of Station Road, Neal said that he discussed with Cory that if the property was to be bought in Cory’s name, Nicole would get her share in the property after Neal and Ellen died.  He said the Station Road loan would be financed through the business from Neal’s wages and that rates would be paid out of the business.  Neal’s evidence was that there were no discussions with Diana about these matters.  Cory’s evidence was silent about this.  Ellen was not involved in any discussions and left it all to Neal.  According to Neal, he wanted to “asset protect”.  In other words, for asset protection purposes so that no person could make a claim against him associated with an electrical contracting business, then known as Leaver Electrical.   
27. [27]
    I do not accept the contention advanced on behalf of the defendants that it was improbable that there was enough money from Neal and Ellen’s sale of Wharf Street in circumstances where it was a forced sale, and Neal and Ellen were in such financial difficulty that they had to live with the defendants for a period of time with the prospect of bankruptcy.  Following the sale of Wharf Street, Neal and Ellen’s financial troubles lightened such that they ended with up a deposit for a new house, which was Station Road, albeit that they needed to temporarily live with Cory and Diana for a period of time (until Station Road was found).      
28. [28]
    Cory’s evidence was that he bought Leaver Electrical from Neal in 1992 and funded the deposit for Station Road.  Having seen his evidence given in the witness box, I was not impressed with the adequacy of some of his responses.  He was not as credible and reliable as Neal and Ellen.  At times, I thought Cory was evasive with respect to his responses.  On the other hand, I was impressed with the forthright nature of the responses given by Neal and Ellen because:

    1. (a)
       Neal’s account of the payment of the deposit for Station Road, the circumstances in which Station Road came to be purchased, and the manner in which the renovations were conducted and paid^[15] was more logical and probable than the account proffered by Cory.
    2. (b)
       While Neal candidly accepted that his memory was not infallible, unlike Cory he did not seek to evade answering questions by stating that he could not recall.  Cory seemed to have been able to give an explanation to almost everything and his responses sought to position himself favourably.    
29. [29]
    Neal struck me as a person who had been in the electrical industry for half a century and his skills lie in his trade. He did not seek to demonstrate that he was a sophisticated investor.  He simply took his financial advisor’s advice over the years and wanted to ensure that his family were looked after by creating the business of Leaver Electrical (and subsequently employing his family members in the business).
30. [30]
    On the other hand, my impression of Cory was that he attempted to construct a defence intended to impress upon the court a version of events of his financial dealings between 1992 and approximately 1996 which does not seem as likely because he was a young, married man who did not have the financial means to buy Leaver Electrical nor to pay the deposit for Station Road at the time.  For example, despite documentary evidence, under cross-examination, Cory refused to accept that everyone in the business received things out of the business.  As was highlighted on behalf of the plaintiffs, Cory has demonstrated by his preparedness to file tax returns claiming rental deductions that had already been accounted for, sign a rental agreement that even on his own evidence significantly overstated the rent he was receiving for Station Road, and obtain insurance by claiming rent was received when none was being received.  His preparedness in those instances to represent facts that were not true caused me to doubt the veracity of some of his evidence. 
31. [31]
    I do not accept that Cory and Diana had the financial means to contribute to the Station Road deposit.  Cory only entered the workforce in 1986 as his father’s apprentice at Leaver Electrical.  He was only earning a modest wage.  In 1992, he and Diana purchased Hoskins Street for $110,000.  In order to fund that purchase, Cory applied $10,000 of his own money which was said that he saved in the time that he had been working at Leaver Electrical.  He accepted in cross-examination that the mortgage was significant and that payments took up a “significant chunk” of his pay.  He was only 22 years of age at the time and had a $100,000 mortgage and a large amount of his income was directed towards servicing that mortgage.  He had no other significant assets on which to draw to find money to buy Leaver Electrical.  It is therefore less plausible that he had the financial means to purchase Leaver Electrical.  Further, a fundamental problem as was highlighted on behalf of the plaintiffs, with the defendants’ evidence, regarding the Hoskins Street deposit was the explanation he gave as to the purchase of Hoskins Street defies both logic and common sense.  Cory’s evidence was that he obtained a mortgage for $150,000 over Hoskins Street at that time he purchased it, and that Metway Bank valued Hoskins Street at $175,000 but that fails to take into account:

    1. (a)
       His own evidence that he could not draw down on the Hoskins Street mortgage in 1992 and 1993 which runs counter to the proposition that on the bank’s valuation and accounting for the deposit he would have to draw approximately $75,000 equity in Hoskins Street from which to draw down.
    2. (b)
       That the transfer, which recorded the purchase price for Hoskins Street at $110,000 was lodged by Metway Bank, such that Metway Bank must have known the purchase price was indeed $110,000.
    3. (c)
       It is unlikely, in a commercial sense, that a bank would have given a loan for any amount other than what was required to complete the purchase (in this case the purchase price of $110,000 and associated purchase costs less the deposit of approximately $10,000).
    4. (d)
       That it is extraordinary, and in any event highly commercially unlikely that any bank would have valued a property for mortgage purposes at almost 60 per cent higher than the purchase price agreed in an arm’s length transaction.
    5. (e)
       That the mortgage was stamped to the effect that duty was paid on an amount of $100,300, which in all likelihood records the true amount of the Hoskins Street mortgage.
32. [32]
    On the other hand, Neal’s evidence was convincing.  He was adamant and I accept that the sale of Wharf Street resolved their financial predicament and there was sufficient money left over to fund a deposit for a new house.  Leaver Electrical was profitable and it was the source of income for Neal and Ellen to enable them to meet their financial obligations at Wharf Street.  Neal’s evidence was that he was the owner of the business.  This was independently corroborated by his wife’s evidence that she understood him to be the owner of the business, as well as his daughter’s evidence that, when she commenced working in the business in 1999, it was her understanding that Leaver Electrical was owned by the four-way partnership.

Who paid the mortgage of Station Road?

33. [33]
    The plaintiffs in their pleadings have asserted that neither Cory nor Diana made payments to Metway Bank to discharge any principal or interest on the Metway Bank mortgage under which the land was given as security.  The defendants deny this assertion and have pleaded that they made payments from their own funds or that the partnership of Leaver Electrical or the company Leaver Industries Pty Ltd made payments from its own funds and from time to time recorded those payments as a loan to the defendants and from time to time directed a proportion of the wages of Cory to those payments.
34. [34]
    There is a significant absence of documents for the large part of the period 1994 through to 1999 at a time when the mortgage was refinanced.
35. [35]
    Evidence was given by Nicole who ran the bookkeeping for the business from February 1999 that both rates and mortgage repayments concerning Station Road were “booked back” to the defendant’s beneficiary entitlement account or drawings account.  Cory’s evidence was in a similar vein but covered the whole period from the purchase of the Station Road property.
36. [36]
    Nicole gave evidence that when she commenced working in the business, the mortgage and rates for Station Road were paid by the business and attributed 70 per cent to Cory and Diana and 30 per cent as a general business expense.  Other outgoings were paid by the business and attributed 70 per cent to Neal and Ellen and 30 per cent as a business expense. 
37. [37]
    It was highlighted on behalf of the defendant that while Nicole’s evidence and the documentary evidence only give direct evidence as to the period from February 1999 to 2017, it may be inferred that the mortgage payments were made the same way pre-February 1999 because:

    1. (a)
       Nicole’s evidence on the question related to a period before the first refinance in July 1999;
    2. (b)
       The fact that there was a practice from 1999 of paying the mortgage through business funds and booking that back to the defendants is suggestive of the existence of that practice during the 1990s – it is highly improbable that the business practice (which by 2000 was a partnership and Nicole entirely controlled the finances and accounts) was a new practice at the time;
    3. (c)
       Station Road was treated as an investment property in the tax returns of Cory and Diana;
    4. (d)
       Even Neal’s evidence was that the manner of dealing with the home loan during the 1990s did not change over time.
38. [38]
    Overall, I am not satisfied, as contended by the plaintiffs, that neither Cory nor Diana made payments to Metway Bank to discharge any principal or interest on the Metway Bank mortgage under which the land was given as security.  I am also not sufficiently satisfied that at the time Station Road was purchased, the intention of the parties was that the Station Road mortgage would be paid by the business and accounted to Neal.  Whilst it is apparent that the Station Road mortgage was paid by the business, it is not apparent that the intention of the parties at the time of purchase was that the Station Road mortgage would be accounted to Neal.  Neal’s evidence was not sufficiently clear about this nor did the evidence of Ellen assist.  Neal’s belief was that he, through the business, discharged the mortgage over Station Road but it was unclear when he claimed the mortgage was discharged.  There was no evidence about the extent of the mortgage repayments.^[16]   It seems money was deducted from Cory’s wages and certainly by February 1999, the mortgage and rates were largely attributed to Cory and Diana.  Consistent with this is that Station Road was treated as an investment property in the taxation returns.  Further, Neal gave evidence that he intended that Station Road would be negatively geared for the defendants.^[17]  There is no evidence of a direct contribution to the rates or home loans by the plaintiffs directly other than recognition for their labour in the business.  Equity should not intervene in this instance.  These expenses were paid by the business and offset against distributions to the defendants.  The business ultimately paid the personal expenses for all concerned, being Neal, Ellen, Cory and Diana.  It is also clear from Nicole’s evidence that Station Road was consistently treated as an investment property for Cory and Diana.
39. [39]
    I do find however that it was intended that when Station Road was purchased in 1994, Neal and Ellen would live in the house indefinitely and that it was never intended that they would pay rent.  I accept Neal and Ellen’s evidence about these matters.  For example, Ellen said she “used to joke and say ‘I’m going to die in this place.  You could take me out in a box’ ”.^[18]  Neal recalled at the time of the purchase discussing with Cory that when Neal and Ellen died, Nicole would get their share.  It does not seem credible given the plaintiffs’ present ages that there was not an expectation that they would not live there forever.  Also, it is to be noted that Cory and Diana never received any cash rent at all and after the relationship between Cory and Neal soured, Neal and Ellen have continued to occupy Station Road rent free without complaint by the defendants.  Nor has any attempt been made to remove them from Station Road or otherwise recover unpaid rent from them, despite Cory asserting in cross examination that a purported rental agreement issued in 2017, which is denied by Neal, was in fact enforceable.^[19] The arrangement by which Neal and Ellen were notionally paid contractor fees of $5,200 each and notionally paid annual rent of $10,400 was put in place to enable a tax deduction to be claimed and arose sometime after the purchase of Station Road, most likely in or around 2000.  Neal and Ellen said they never paid any rent.  Further, Nicole gave evidence that the arrangement whereby Neal and Ellen were notionally paid “contractor’s fees” and rent for Station Road did not commence in or around 1999 to 2000 when the business commenced using an accountant whom she recommended.^[20]  Nicole’s evidence is also consistent with some of the documentary evidence adduced at trial, namely what appears in Diana’s tax returns.  For instance, the amounts claimed by Diana in her tax returns for rent are inconsistent until 2001 onwards because it appears that she claimed $1,200 in the 1993-94 financial year, $0 in the following financial year, $5,200 in the 1995-96 financial year and 1996-97 financial year, $6,000 in the 1997-98 financial year and $4,500 in the 1998-99 financial year.^[21] 

Renovations

40. [40]
    It was pleaded on behalf of the plaintiffs that, on the understanding that they were the true beneficial owners of the land, they have made substantial improvements and renovations since the purchase in March 1994, including but not limited to:

    1. (a)
       raising the residence;
    2. (b)
       constructing a flat under the residence including ensuite, kitchen, lounge, bedroom, carpet and tiles;
    3. (c)
       installing a concrete ground floor;
    4. (d)
       constructing a new driveway and carport;
    5. (e)
       constructing a new laundry and storage cupboard;
    6. (f)
       removing the wall between the back bedroom and dining room to create an open living area;
    7. (g)
       installing a hanging beam to support the ceiling and installing an arc for a feature and for support;
    8. (h)
       installing a wall at the end of the loungeroom to create a walk-in wardrobe and ensuite for the main bedroom;
    9. (i)
       altering the outside walls to facilitate replacement of windows with aluminium;
    10. (j)
        installing new patio/deck at the rear of the home and extension of deck and conversion of small bedroom into ironing room;
    11. (k)
        painting the home inside and out;
    12. (l)
        altering the kitchen;
    13. (m)
        installing solar panels on the roof of the home;
    14. (n)
        renovating the bathroom and toilet with a separate toilet and new bathroom;
    15. (o)
        building a small patio, front door, landing and stairs;
    16. (p)
        installing shade cloth blinds;
    17. (q)
        rebuilding the old jetty and installing Phase 3 power and security lights;
    18. (r)
        filling an old slipway to improve the grounds of the home including construction of a concrete wall;
    19. (s)
        replacing shed floor concrete;
    20. (t)
        installing a concrete slab for a water tank and garden shed;
    21. (u)
        installing air-conditioning, ceiling fans and new lighting;
    22. (v)
        installing a roller garage to the garage and new gas hot water system and gas supply.
41. [41]
    The plaintiffs gave evidence about some of these matters.  Relevantly Neal, Ellen and Nicole gave evidence that the land was always considered and treated as Neal and Ellen’s property.  Cory and Diana did not physically contribute to the renovations and whilst they accepted that some work had been done renovating the property, which they readily accepted that Neal had done some of that work himself, the only documentary evidence available demonstrated that at least some renovation costs were paid indirectly by the defendants through the expense being booked to their beneficiary entitlement account.  It was submitted on their behalf that the plaintiffs have neither pleaded nor proven that the work resulted in an increase in value in Station Road.  It was also highlighted on behalf of the defendants that at least some of the renovation work was done to accommodate the defendant’s now deceased mother (Dulcie) who occupied Station Road (which was at her expense, not the plaintiffs) and that other renovations ought to be considered to have been for the benefit of the plaintiffs who have occupied the land for many years.  The submission was advanced that for example, if the kitchen was improved in the 1990s or 2000s, that improvement would plainly have decreased in value over time such that the present value may be equal to or less than the state of the kitchen in 1994. 
42. [42]
    Neal gave evidence that he estimated the cost of the materials was approximately $130,000.  Again, there is a lack of documentary evidence available to support this evidence.  However, it is clear that renovations were undertaken, yet it is impossible to accurately identify what renovation expense was paid by the business and what (if any) portion was paid for by the plaintiffs.
43. [43]
    The plaintiffs relied upon a report of architect and town planner, Marcus Pye.  Prior to receiving Mr Pye’s evidence at trial, it was noted by the parties that the evidence was to be received subject to any submission by the defendants as to its admissibility.  The defendants have subsequently objected to its admission into evidence due to the principles in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, relevantly that:

    1. (a)
       the report was prepared for the express purpose of assessing the value of the renovations, but reliance on that aspect had been (respectfully, quite properly) withdrawn;
    2. (b)
       no other purpose is stated on the face of the report;
    3. (c)
       the plaintiffs now rely on the report as an opinion that certain works were conducted since a particular time which relates to a field of knowledge in which Mr Pye does not have apparent expertise;
    4. (d)
       no conclusion or opinion as to that matter is expressly stated in the report;
    5. (e)
       the expert relied on photographs which were not included in the report and had not been disclosed by the plaintiffs;
    6. (f)
       the expert’s process of reasoning is not exposed on the report and it is unclear whether the matters stated in his report are matters told to him by the plaintiffs, matters arising from his own lay observation or speculation or observations made by reason of his specialist knowledge and training; and,
    7. (g)
       the expert did not give the rule 428 certification.
44. [44]
    In light of the objections pressed by the defendants, despite it not being made clear to me prior to Mr Pye’s oral evidence of which I would have preferred to rule on prior to Mr Pye’s evidence, I exclude the report. 
45. [45]
    The exclusion of the report is not fatal to the case advanced by the plaintiffs given the collective evidence of Neal and Ellen, as well as that from Cory and Nicole about the extent of the renovations which had been conducted by the plaintiffs.  For instance, Nicole’s evidence was that the house was “terrible” when Neal and Ellen moved in and as the renovations had been conducted, “everything changed”.  She also gave evidence that Cory and Diana had visited the property on several occasions up until the 2010s and made no adverse or contrary opinion suggestive of a need to obtain permission on part of the registered proprietors.  Further, at one point in cross-examination, Cory did not acknowledge that the renovations provided significant improvement, but they were “better than what it was”.  Such a response was typical of his demeanour.  He struck me as particularly evasive with this response.  Had he simply accepted the proposition, then I would have found him more credible.  Again, on the other hand, I am prepared to act on the evidence of Neal, who I found to be credible.  I accept there is no documentary evidence as to the costs involved with the renovations over the years.  However, Neal’s estimate of the monetary value of the renovations into Station Road, both in chief and cross-examination, was that the cost of the materials was approximately $130,000.^[22]  On balance, I am prepared to act upon this evidence, although I do accept that it is difficult from the evidence to ascertain whether the renovation expenses came from the business or personal funds from Neal and Ellen.  In any event, it was a contribution made by Neal’s efforts for which he ought to be equitably recompensed.  I am also prepared to act upon Nicole’s evidence that the house significantly changed after Neal and Ellen moved in.  The renovations were not conducted, as was suggested on behalf of the defendants, merely to suit Neal and Ellen’s occupancy.  I am therefore prepared to find that Neal and Ellen undertook a raft of renovations to Station Road since they commenced occupation in 1994 and that the renovations, on balance, have had a significant improvement upon the value of the property.

Equitable Principles and Defences

46. [46]
    Having determined that Neal and Ellen paid for the deposit for Station Road as well as contributed to renovations of Station Road, the plaintiffs are, subject to Cory and Diana’s pleaded defences of laches and acquiescence, entitled to a beneficial interest.  It is convenient at this juncture to note that an alternative claim was pressed at trial on behalf of the plaintiffs that, as it was always intended that Neal and Ellen would live at Station Road for the entirety of their lives, and in reliance on that intention, they paid the deposit and were responsible for (and paid for) at least the vast majority of renovations to Station Road, Neal and Ellen have an equity in Station Road commensurate with their contributions, or alternatively they live there for the rest of their lives.^[23] 
47. [47]
    Regarding the deposit for Station Road, the defendants, subject to the pleaded defences and the presumption of advancement, hold part of the legal title of Station Road on trust for the plaintiffs.  Part of the legal title is commensurate with the contribution as a proportion of the purchase price.^[24]  Station Road was funded through the deposit and the funds secured by way of mortgage from Metway Bank.  The $40,000 deposit was a direct contribution by Neal and Ellen to the purchase price of Station Road ($165,000), which they received from the sale of Wharf Street after the debt associated with the failed fishing trawler venture was cleared. 
48. [48]
    It was submitted on behalf of the defendants that given Cory is the biological son of the plaintiffs, the presumption of advancement arises whereby equity infers that any benefit was provided by way of advancement.^[25]  It was conceded on behalf of the defendants that the presumption of advancement is rebuttable, however:

    1. (a)
       the person alleging the existence of the resulting trust bears the onus of rebuttal;^[26]
    2. (b)
       the rebuttal is made out by admissible evidence that no gift was intended by the transfer or of the benefit and such evidence includes:^[27]

       1. the instrument pursuant to which the title is transferred;
       2. the acts and declarations of the parties before or at the time of the transaction or so immediately after the transaction that they constitute part of the transaction;
    3. (c)
       the acts and declarations of a party subsequent to the transaction are only admissible as evidence against the party who made them;^[28]
    4. (d)
       as a general principle, a party may not rely on his or her own fraud or illegality to rebut the presumption.^[29]
49. [49]
    In this respect it was highlighted on behalf of the defendants that even if the plaintiffs paid the deposit, there were two insurmountable hurdles to the plaintiffs’ case.  The first is that there is no evidence from the time of the purchase of Station Road which may be relied on to rebut the presumption of advancement.  Relevantly no witness for the plaintiffs gave evidence that either of them had a discussion with Cory or Diana to the effect that Station Road would be beneficially owned by the plaintiffs and Cory gave evidence that there was no such discussion.  A bare assertion as to the intention 28 years later is neither admissible on the question nor probative to its resolution.  As to what was submitted to be the second insurmountable hurdle, the only evidence from the plaintiffs as to the purpose of the transaction is evidence of fraud or illegality.  Relevantly, taking the plaintiffs’ evidence at its highest, the purpose of the transaction was to seemingly perpetuate a fraud on creditors, a fraud on Metway Bank and a tax fraud on the Commonwealth government.  Aside from the inability of the plaintiffs to use this evidence to rebut the presumption, the evidence establishes, it was submitted, that equity would not intervene so as to grant the plaintiffs relief.^[30]        
50. [50]
    However, Neal and Ellen gave evidence that they never intended the $40,000 was to be a gift to Cory.^[31]  Neal trusted Cory to pay Nicole her share of it when the plaintiffs died.^[32]  The purpose of the transaction was not to perpetuate fraud or illegality.  The reason why the land was registered in the defendants’ names was to obtain legitimate tax benefits and for financial planning purposes, which could not be said to perpetuate fraud or illegality.  Nicole would receive her share after the plaintiffs died.  Further as was highlighted on behalf of the plaintiffs in Bloch v Bloch^[33], Wilson J (with whom Gibbs CJ, Murphy and Aickin JJ agreed) said:

“… the facts present a classic illustration of the creation of a resulting trust.  The property was conveyed into the name of the son, with the father having contributed part of the purchase price in circumstances which rebutted the presumption that the contribution was intended to advance or benefit the son.  The contribution was not a gift.  It was not a loan.  The inference then arises that the father intended the son to hold the property in trust for him in a proportion corresponding to the proportion of the purchase price which was contributed by him …”

51. [51]
    Overall therefore and in the absence of any contrary evidence by the defendants upon which I am prepared to accept, I find that a resulting trust operates in the circumstances of this case and the presumption of advancement has been sufficiently rebutted because the plaintiffs’ contribution of the Station Road purchase was never intended to advance Cory.  The plaintiffs accept that the defendants have contributed the part of the purchase price of Station Road comprised by funds that were provided by mortgage because they were ultimately bound by the Metway mortgage.  I am not prepared to find however, as the plaintiffs submitted, that the intention of the parties at the time Station Road was purchased was that Cory and Diana would be on the mortgage in name only and it was Neal and Ellen who were to pay the mortgage out of what the business was to otherwise pay to them.  There is insufficient evidence for me to act upon and the evidence that Leaver Electrical treated Station Road as an investment property for the defendants, militates against the finding agitated by the plaintiffs.  In any event the justices of the case warrant a declaration that the defendants hold 24.24 per cent of their interest in Station Road on resulting trust for the plaintiffs, calculated by their contribution being the deposit ($40,000) against the purchase price ($165,000).  Unless otherwise agreed by the parties, therefore, it is ordered that the defendants transfer that part of Station Road that is held on trust for the plaintiffs to the plaintiffs as tenants in common. 
52. [52]
    The difficulty arising in the present situation of course is that there have been subsequent mortgages obtained over Station Road.  The current mortgagee over the property is Perpetual.  Neal and Ellen gave evidence that they did not have knowledge of, or consent to, the subsequent registrations, nor did they receive any benefit of any of the loan advances secured by those mortgages.  However as highlighted on behalf of the defendants, it would be impossible for the plaintiffs not to have been aware of subsequent mortgages given the need for valuers to obtain access to Station Road when valuing the property.  In any event, given the mortgagee is not a party to the proceeding and has not been heard, it is not appropriate for me to make declarations or orders which affect the mortgagee’s rights.  Accordingly, the mortgagee’s legal security interest in Station Road should not be disturbed.  Therefore, to do justice between the parties in the present proceedings, the parties’ beneficial interests ought to be adjusted as between themselves such that the adjustment have the effect that the mortgagee charges only the defendants’ interest in Station Road, and, upon any sale of Station Road, Cory and Diana account to Neal and Ellen in respect of the proceeds of such sale to ensure that Neal and Ellen receive an amount equal to the amount they would have received if the subsequent mortgagee charged only the defendants’ interest in Station Road.
53. [53]
    Having found that the plaintiffs contributed to the renovations of Station Road, the plaintiffs have an equity in the property to the extent of the money expanded consistent with the approach taken by McLelland J (as his Honour then was) in Morris v Morris.^[34]  His Honour stated:

“I do not think that on the facts as I have found them there is room for inferring the existence at any material time of an actual intention on the part of the plaintiff or the defendants that a trust of the property or any share therein was to be created in favour of the plaintiff.  There is thus no legitimate basis for a conclusion that the arrangements gave rise to an express or implied trust …

However, in my view wider equitable principles operate in the present case.  The plaintiff spent money on the defendants’ property in the expectation, induced or encouraged by the defendants that he would be able to live there indefinitely as a member of their family. This expectation has been defeated by the occurrence of events which were not in contemplation when the money was spent and as a result of which any subsisting right of residence by the plaintiff in the property is now of no practical consequence.  In my opinion, on the facts of this case, it would be unconscionable and inequitable that the defendants should now retain the benefit of the expenditure by the plaintiff of his money on their property free of any obligation of recoupment to him.  Consequently, an equity arises in favour of the plaintiff and the court must determine how in all of the circumstances justice requires that that equity be satisfied.  What a plaintiff in such a case as this should in justice receive will not necessarily correspond with what, when the relevant expenditure was made, he expected to receive.”^[35]

(emphasis added)

54. [54]
    It was highlighted on behalf of the plaintiffs that McLelland J applied the principle stated by the Privy Council in Chalmers v Pardoe^[36] which was:

“There can be no doubt upon the authorities that where an owner of land has invited or expressly encouraged another to expend money upon part of his land upon the faith of an assurance or promise that that part of the land will be made over to the person so expending his money, a court of equity will prima facie require the owner by appropriate conveyance to fulfil his obligation; and when, for example for reasons of title, no such conveyance can effectively be made, a court of equity may declare that the person who has expended the money is entitled to an equitable charge or lien for the amount so expended.”^[37]

55. [55]
    The principle espoused by McLelland J has been both repeatedly and recently accepted by intermediate appellate courts^[38] and has been described as a species of estoppel.^[39]  I accept that the principle is not limited to the factual circumstances in Morris, being an expectation of permanent residence, but it is also applicable in circumstances where the expectation is that the land in respect of which money is expended is to be beneficially owned by the payer.^[40]
56. [56]
    The court is permitted “to do what is required in order to avoid detriment to the party who has relied on the assumption induced by the party estopped, but no more”^[41] or, to put it another way, any remedy is to the effect “the minimum equity to do justice.”^[42]  The minimum equity required to do justice between the parties depends on the facts of each case and “the court must look to the circumstances of each case to decide in what way the equity can be satisfied.”^[43]
57. [57]
    Further, it is not necessary that a precise dollar value be placed on the improvements for the equity to rise.  As Nettle JA in Donis v Donis^[44] stated:

“The object of the exercise is to do equity and for that purpose “detriment” is no narrow or technical concept.  It need not consist of expenditure of money or other quantifiable financial disadvantage so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether departure from a promise would be unconscionable in all the circumstances.”^[45]

(emphasis added)

58. [58]
    Over the time Neal and Ellen occupied Station Road, they did not consult or seek permission from Cory and Diana as to the renovations undertaken.  Not unsurprisingly they felt as though they did not have to because of their belief that Station Road was theirs.    Indeed, on the occasions Cory and Diana visited Neal and Ellen at Station Road and saw the renovations, neither of them objected to the works.  The plaintiffs’ efforts in the renovations were encouraged by the defendants.  Their efforts are consistent too with the evidence that the plaintiffs expected to live there indefinitely.^[46]  It is my assessment of the circumstances that it would be unconscionable and inequitable that the defendants should now retain the benefit of the plaintiffs’ efforts.  It is impossible to discern a precise value placed on the improvements expended by the plaintiffs towards the renovations.  That is because there is no independent evidence or any documentary evidence to assist with respect to this issue.  However, I am satisfied that the plaintiffs were induced by the defendants that they had a beneficial interest in Station Road which, among other factors, prompted the plaintiffs to renovate on the expectation that it was their property and that they could live there indefinitely.   True ownership was never asserted by the defendants until 2018.  As has been highlighted on behalf of the plaintiffs, the detriment to the plaintiffs if the inducement was resiled from is that they would lose the benefit of any increase in value to Station Road occasioned by the renovations conducted by them.  That is so because if the inducement was made good:

    1. (a)
       Neal and Ellen would continue to enjoy the benefit of the money they had expended on the renovations;
    2. (b)
       if there was no inducement that they were or would become the true owners of Station Road, then they would never have had the expectation that they would enjoy any increase in value of Station Road occasioned by the renovations; and,
    3. (c)
       if the inducement was resiled from, what they would lose is the benefit of the renovations themselves, being things they caused to be constructed from their own money.
59. [59]
    It was submitted, and I accept, that departure from the inducement would be unconscionable for four key reasons, namely:

    1. (a)
       The starting point to the enquiry in respect of unconscionability is that it cannot be seriously challenged that the parties conducted themselves over the course of nearly 30 years as if Station Road was always to be the home of Neal and Ellen. 
    2. (b)
       Not only was that Neal and Ellen’s understanding, but it is admitted on the pleadings that Station Road was known as the home of Neal and Ellen.
    3. (c)
       There is no question that Cory and Diana knew of the extent of the renovations.  It was the consistent evidence of Neal, Ellen and Nicole, and it was accepted by Cory, that Cory and Diana visited Station Road many times between 1994 and approximately 2010.  There is no suggestion that at any time the renovations were being conducted, Cory or Diana expressed any objection to the renovations occurring.
    4. (d)
       At the time the renovations were undertaken, the familial relationship between the parties were such that on any view it was reasonable for Neal and Ellen to rely on an expectation that they either were the beneficial owners of, or otherwise had an indefinite right of the residence of Station Road.  There is also no question that Neal and Ellen conducted the renovations for themselves (where there is beneficial owners or indefinite occupancy of Station Road), and not for Cory and Diana because Ellen gave evidence that she and Neal “did it for us because we thought this is how we want to live”^[47]  and Neal gave evidence that “if it was their [Cory and Diana’s] house, I wouldn’t have done the renovations”.^[48]
    5. (e)
       At all times until 2016, the parties conducted themselves within a familial relationship that was characterised by the trust that Neal placed in his children.  In particular, Neal stated on several occasions in his evidence that Neal trusted Cory.^[49]
60. [60]
    One submission advanced on behalf of the plaintiffs was that given there is no evidence of the value of the improvements before the court, the court could, upon the making of certain findings, hear further evidence as to the value of the improvements.  I am not prepared to receive further evidence about this.  The plaintiffs had every opportunity prior to trial to ensure an expert report, in compliance with the expert rules, was adduced at trial.   It would be unfair for the defendants if I acceded to this submission. 
61. [61]
    I am prepared however in circumstances where the inducement was that Neal and Ellen would have an indefinite right of residence in Station Road to find that they have an equitable charge in Station Road to the extent of the funds they have expended on their renovations.  It is to be acknowledged that there is no documentary evidence.  Nevertheless, accepting Neal’s best estimate of the total funds expended on the renovations in the sum or $130,000 of which I am prepared to act upon, but recognising that at least some of the renovations were financed through the business and recorded to Cory and Diana’s expense account, I will allow no more than 50 per cent by way of contributions paid for by Neal and Ellen (including the funds Neal and Ellen received from Neal’s mother, Dulcie) on the amount of $130,000.  As such, Neal and Ellen have an equitable charge over Station Road in the amount of $65,000 (being 50 per cent of $130,000). 
62. [62]
    A third alternative basis was advanced on behalf of the plaintiffs at trial, namely that the plaintiffs’ claim included that Cory and Diana hold all or part of the legal title to Station Road on a constructive trust for Neal and Ellen on the basis of the common intention of Neal, Ellen, Cory and Diana at the time Station Road was purchased.  I am not satisfied, on the evidence, that it was the common intention of Cory, Diana, Neal and Ellen that Cory and Diana would purchase Station Road in the name of Neal and Ellen but never take beneficial ownership, such that Cory and Diana hold the entirety of Station Road on constructive trust for Neal and Ellen.  There is insufficient evidence for me to act upon to find that the common intention was that Station Road would be beneficially owned by Neal and Ellen.  This is principally so because Neal trusted Cory to pay Nicole her share of Station Road when the plaintiffs died so there was at least some recognition or intent that Cory would have an interest in Station Road and the legal interest at the time of purchase of Station Road was fully vested with Cory and Diana.  In any event, having found that:

    1. (a)
       Cory and Diana hold part of the legal title to Station Road on a resulting trust for Neal and Ellen on the basis of contribution to the purchase money by Neal and Ellen;
    2. (b)
       Neal and Ellen have an equity in Station Road on the basis of their contributions made to the property by way of:

       1. the deposit to fund the initial purchase; and
       2. the renovations to Station Road; and,
    3. (c)
       Cory and Diana do not hold all of the legal title to Station Road on a constructive trust for Neal and Ellen on the basis of the common intention of Neal, Ellen, Cory and Diana at the time Station Road was purchased,

it is unnecessary for me to embark upon the enquiry of the third alternative basis advanced by the plaintiffs that Cory and Diana hold part of the legal title to Station Road on a constructive trust for Neal and Ellen.  Moreover, I am not satisfied the common intention of the parties, at the time of the purchase of Station Road, was that Neal and Ellen would take full beneficial interest in Station Road.  The defendants are therefore not constructive trustees.  Fiduciary obligations do not arise therefore in the circumstances.

63. [63]
    Turning now to the defendants’ pleaded defence of laches or acquiescence.  It was submitted on behalf of the defendants that equitable relief should be refused on the basis that Neal and Ellen delayed bringing proceedings to the prejudice of Cory and Diana.  Relevantly:

    1. (a)
       The plaintiffs did not assert any interest in the land as against the defendants until lodging their caveat on 17 October 2018. 
    2. (b)
       Since the purchase of the land, the parties have acted in all respects as though the land was beneficially owned by the defendants and not the plaintiffs. 
    3. (c)
       The plaintiffs have, at all times since the purchase, known of the matters and circumstances giving rise to any interest on their part and have chosen not to assert such interest prior to the lodgement of a caveat. 
    4. (d)
       The delay has led to detriment to the defendants in that they have bound themselves to and paid loans in respect of the land and are prejudiced in that historical bank evidence has now been lost.
64. [64]
    It has been highlighted on behalf of the defendants that there is a considerable degree of overlap between the concepts of acquiescence and laches, but in essence laches is concerned with the delay and its effect, whereas acquiescence focuses on the conduct of the plaintiffs in encouraging the defendant to adopt a particular position.  Equity will exercise a discretion to refuse relief where the plaintiff has stood by and placed the defendant in a situation of prejudice or secured and unjust advantage for themself.^[50]  The focus of the enquiry is the length of the delay and the nature of the acts done during the interval.^[51]  It was highlighted on behalf of the defendants that the plaintiffs were aware from 1994 of the facts underlying the claims they now assert (the alleged common intention, the payment of the deposit and, over time, the renovations (assuming they commenced upon purchase or immediately thereafter)).  It was submitted that this position misapprehends both the evidence and the law because:

    1. (a)
       It is not for the defendants to assert ownership when they are registered on title with the knowledge of the plaintiffs and have the benefit of indefeasibility.
    2. (b)
       Such a suggestion impermissibly turns the focus of enquiry to the conduct of the defendants seeking to assert a negative rather than the plaintiffs asserting their case to rectify the land title register.
    3. (c)
       While evidence was led on the part of the plaintiffs that there was no knowledge on their part about subsequent mortgages or treatment of the land as an investment property of the defendants, that evidence should be rejected in circumstances where:

       1. Nicole gave evidence that subsequent mortgages were discussed with Neal and Ellen as partners in the business in family discussions;
       2. It is highly probable that valuers attended Station Road at various times from 1999 and organised inspections through Neal and Ellen, as refinance applications were granted on multiple occasions;
       3. It is highly improbable that the plaintiffs, who each professed to have known about and participated in the workings of the business, were not aware for more than 20 years of the established practice in the books of the business of treating Station Road as the defendants’ investment property;
       4. Neal gave evidence that Ellen would prepare information for the accountants to prepare tax returns.
    4. (d)
       On Neal’s evidence alone, what happened to be the reason for putting the property in the defendants’ names (asset protection) had ceased to have any relevance in 1996^[52] and Neal took no step thereafter to rectify the legal title until lodging the caveat.
65. [65]
    It was also highlighted that the business always accounted for Station Road as the defendants’ investment property.  While no business records exist from the 1990s, the available evidence is consistent with later practices for which there are business records.  It was common ground between the witnesses that each of Neal, Ellen, Cory and Diana’s tax returns were prepared based on the business records.  It follows that Cory and Diana have claimed rental income and deductions based on their ownership of Station Road for many tax years.  It was submitted that Neal’s own evidence is suggestive of acquiescence.  His evidence of lack of knowledge of Station Road’s treatment as the defendants’ investment property should be rejected, at its highest his evidence is that he was happy for Station Road to be dealt with by his children in the manner they saw fit, and he was happy to disregard what he considered to be his beneficial interest in the property.  Furthermore, even leaving aside those matters, it was submitted that the prejudice suffered by the delay in depriving the defendants the means to defend the claim with documentary evidence is sufficient to make out the defence.^[53]
66. [66]
    As is evident, regarding the issue of delay the court must have regard to all of the circumstances, including the nature of the claim and the conduct of the parties.^[54]  Matters of particular relevance are:

    1. (a)
       The length of delay, including whether it was reasonable for a plaintiff with knowledge of the underlying facts to be ignorant of their legal rights; and,
    2. (b)
       what occurred during the period of delay.
67. [67]
    In disputes involving family members, the circumstances of the family relationship are relevant.^[55]
68. [68]
    The plaintiffs submitted that the court would not exercise its discretion to refuse the relief for seven reasons.  The seven reasons were:

    1. (a)
       Neal and Ellen are uncomplicated and straightforward people.  Neal is a veteran and electrician, who started at age 16, and Ellen an office worker, who finished school after grade 7.  They are not lawyers.  They are not accountants.  They are not sophisticated commercial people.  They are not well-versed in financial matters.  They both gave evidence that they rely heavily on professional advice.  Accordingly, it is unreasonable to expect Neal and Ellen to have understood the intricacies of the differences between legal and beneficial ownership until a drastic step, such as Cory and Diana’s attempt to sell Station Road in 2018, was taken.
    2. (b)
       There is a demonstrated history of the Leaver Electrical and Leaver Industries business being operated since the 1970s as a family business for the benefit for the whole family, together with the history of the business making payments of family members’ mortgages.  As Neal emphasised in re-examination, “like I’ve being saying all afternoon, family business”.^[56]  The complex family dynamic of the Leaver family was such that it was perfectly reasonable for Neal and Ellen to assume that where family members were all benefiting from the business, and no one had taken any action to remove Neal and Ellen from Station Road, that there was no need to take any action on their part to assert their beneficial interest in Station Road. 
    3. (c)
       At all relevant times, Neal and Ellen have acted as though they were the beneficial owners of Station Road even though they were not the registered owners.  In addition, there is no evidence that any member of the family acted contrary to an intention that Neal and Ellen would live at Station Road permanently (if not an intention that they owned it beneficially) until about 2018 when Cory and Diana engaged a real estate agent to sell Station Road. 
    4. (d)
       Critically with these matters in mind, Neal gave repeated and unchallenged evidence that he trusted Cory and did so all the way until he was forced out of the business in 2016.^[57]  That, in itself, is a powerful explanation as to why Neal and Ellen did not assert their interest against Cory and Diana until it was tolerably clear (by the attendance of the real estate agent) that Cory and Diana asserted Station Road was theirs.
    5. (e)
       In all of those circumstances and as a result of the first two matters, there was no reason for Neal and Ellen to assert the interest in Station Road until 2018 when Cory and Diana made their ultimate assertion of ownership by dispatching a real estate to commence the process to sell the property.
    6. (f)
       Upon learning that Cory and Diana wished to assert ownership of Station Road and sell the property, Neal and Ellen acted promptly to register a caveat and therefore commence the proceeding.
    7. (g)
       It is accepted that there has been delay in asserting the beneficial interest and it is accepted that Cory and Diana have suffered detriment by the delay to the assertion of the beneficial interest being precluded from obtaining documents or other evidence.  But that, without more, does not lead to a conclusion that Neal and Ellen’s delay was unconscionable.
    8. (h)
       In the circumstances, the delay between the beneficial interest arising (that is, 1994) and the assertion of the beneficial interest, is entirely explained.  Accordingly, Cory and Diana’s defence is not made out.
69. [69]
    It is my assessment of the evidence that there has been delay and the defendants have been deprived of the means to defend the claim without documentary evidence.  That however is not enough for defence to be proved particularly in circumstances where as here, there was a family business in operation since the 1970s of which all relevant family members contributed at one point in time.  The family were once close.  Station Road was known as Neal and Ellen’s house.  They conducted renovations under the watchful eye of the defendants.  There was never any hint or suggestion to Neal and Ellen that they did not have an interest such that they would not live at Station Road permanently until about 2018 when Cory and Diana engaged a real estate agent to sell Station Road.  Upon learning of the assertion of the legal interest of Station Road, Neal and Ellen acted promptly and reasonably to register a caveat and thereafter commence proceedings.  Their conduct could not be said to have been unconscionable such that they ought not be entitled to their claim.  The delay between 1993 and 2018 is entirely explained.   

Conclusion

70. [70]
    Accordingly, there should be judgment for the plaintiffs.  Within 21 days of these reasons, the parties are to provide written submissions regarding orders and/or declarations consistent with the findings that:

    1. (a)
       When Station Road was purchased in 1994:

       1. the plaintiffs paid the deposit;
       2. the parties agreed that the plaintiffs would live in the house indefinitely and it was never intended that they pay rent.    
    2. (b)
       The defendants hold 24.24 per cent of their interest in Station Road on resulting trust for the plaintiffs, calculated by their contribution being the deposit ($40,000) against the purchase price ($165,000). 
    3. (c)
       Reflective of the renovations, the plaintiffs have an equitable charge over Station Road in the amount of $65,000 (being 50 per cent of $130,000). 
71. [71]
    Within 21 days of these reasons, the parties should provide submissions as to costs.