Stack v Marshall[2022] QDC 274

DISTRICT COURT OF QUEENSLAND

1. [1]
   This case is a simple one.  It involves the plaintiff who provided funds, which is not disputed by the defendant, to acquire real estate registered in the defendant’s name.  Because of this, the plaintiff primarily seeks a declaration of a resulting trust.  The defendant’s case is that the plaintiff gifted him the relevant funds.  For reasons to follow, I am satisfied the plaintiff should be entitled to the relief that she seeks, and I am not satisfied the defendant has rebutted the presumption of a resulting trust, in that the plaintiff gifted him the funds to acquire the real estate.

The Facts

2. [2]
   The plaintiff is a widow who met the defendant after her husband’s passing.  In about mid-2019, an intimate relationship between the two commenced.  The relationship lasted for approximately 13 months and ceased in around August 2020.  During the relationship, the parties discussed purchasing a house because the plaintiff had sufficient capital for this to occur. 
3. [3]
   The plaintiff asserts that in early 2020 an oral agreement was made between them to purchase, renovate and sell a property located at 17 Best Street Brighton (the ‘Brighton Property’).  It is alleged that:

   1. (a)
      The Brighton Property would be purchased in the defendant’s name.
   2. (b)
      The plaintiff would provide the defendant with the funds to purchase the Brighton Property.
   3. (c)
      The defendant would reside at the Brighton Property rent-free.
   4. (d)
      The defendant would pay all the outgoings and expenses associated with his use and ownership of the Brighton Property.
   5. (e)
      The defendant would renovate the kitchen located at the Brighton Property (the ‘Kitchen Renovations’).
   6. (f)
      The plaintiff would provide the defendant with the funds to purchase the materials required for the Kitchen Renovations.
4. [4]
   The defendant denies the existence of the oral agreement. 
5. [5]
   On 21 January 2020, the plaintiff transferred to the defendant the amount of $470,000 to purchase the Brighton Property.^[1]  The purchase price for the Brighton Property was $440,000.  At the same time, the plaintiff transferred an additional $30,000 for the plaintiff’s share of the Kitchen Renovation. 
6. [6]
   Upon purchase of the Brighton Property in January 2020, the defendant became the registered proprietor. 
7. [7]
   As indicated, the relationship between the two ceased in around August 2020. 
8. [8]
   Shortly after the cessation of their relationship, the plaintiff advanced an extra $50,000 in anticipation of what she thought would assist the defendant following their failed relationship.  This was done via two instalments being $40,000 on 10 September 2020 and $10,000 on 11 September 2020.^[2] 
9. [9]
   Following this, the Brighton Property was sold on 27 October 2020.^[3]   The defendant retained the net proceeds of the sale.
10. [10]
    So therefore, in total, during the course of their 13-month relationship, the plaintiff transferred $520,000 to the defendant, being:

    1. (a)
       $440,000 for the purchase of the Brighton Property;
    2. (b)
       $30,000 for the Kitchen Renovation; and
    3. (c)
       $50,000 payment (over two days on 10 and 11 September 2020).
11. [11]
    The plaintiff asserts that the defendant has retained the above amount of $520,000 for his own use and benefit.  The defendant claims the plaintiff gifted him the money, and by counterclaim, asserts that prior to and during their relationship, he performed construction and renovation works at the plaintiff’s request, to her properties which were then located at Sandgate and Woody Point.  He has placed a figure of around $110,000 on that labour, based largely upon a text message the plaintiff sent him on 3 September 2020 where she valued the labour component of the work he performed.^[4]  The defendant says that if he is found to be liable on the plaintiff’s claim (which he denies), this amount should be, at least, set off on any judgment amount owed. 
12. [12]
    It seems that when the relationship broke down, the plaintiff and the defendant discussed the sale of the Brighton Property.  Such negotiations took place largely at the Full Moon Hotel,^[5] as well as during various telephone conversations (some of which were recorded by the defendant).^[6]  Relevantly in late August 2020, the parties agreed that the defendant would sell the Brighton Property and retain the net proceeds of the sale in the sum of $180,000, with the plaintiff to receive the balance, because the defendant engaged solicitors, who on 28 August 2020, wrote to the plaintiff as follows:

“Dear Ms Stack,

Re: 17 Best Street, Brighton

I wish to advise I act for John William Marshall.

I am instructed that the above property will be listed for sale in the very near future. I am further instructed that an agreement has been reached in that from the net sale proceeds of such sale, my client will retain the sum of $180,000 and the balance will be paid by you.

Once a sale has been achieved and a settlement date is confirmed our office will be in contact with you again.

Yours Faithfully,

…..

Solicitor”^[7]

(Emphasis added)

13. [13]
    On 30 August 2020, the plaintiff responded to the letter by writing the following and returning it to the defendant:

“I Wendy Ann Stack hereby acknowledge that this agreement is to my satisfaction”.^[8]

14. [14]
    The defendant has pleaded that such arrangement was not binding because there was a lack of consideration.  
15. [15]
    On 7 September 2020, the plaintiff and the defendant wrote and signed two handwritten documents that were marked as ‘draft only’.  One document provided: 

“I Wendy Ann Stack hereby gift John William Marshall $100,000”.^[9]

16. [16]
    The other document provided as follows: 

“This is the final draft agreement between Wendy Ann Stack & John William Marshall on the settlement of 17 Best Street & the gift to John William Marshall.

I John William Marshall hereby direct all monies to Wendy Ann Stack from the sale of 17 Best St Brighton in return for a gift of $100,000 – as final settlement by Friday 11 September 2020”.^[10]

(Emphasis added)

17. [17]
    On 10 September 2020, the defendant provided the plaintiff with a letter drafted from his solicitors confirming the Brighton Property was listed for sale and an agreement had been reached for the defendant to retain the sum of $100,000 from the net proceeds.  The letter stated:

“Dear Ms Stack,

I wish to advise I act for John William Marshall.

I am instructed that the above property has been listed for sale.  I am further instructed that an agreement has been reached in that from the net sale proceeds, my client will retain the sum of $100,000 and the sum of $50,000 will be paid by you to my client tomorrow 11 September 2020.

Once a sale has been achieved and a settlement date is confirmed our office will be in contact with you again.

Yours faithfully,

….

Solicitor” ^[11]

(Emphasis added)

18. [18]
    The plaintiff contends that following this proposal she then transferred the $50,000 as referred to in [7] above.  She transferred $40,000 to the defendant on 10 September 2020 with the reference ‘PropStlm 17BestSt’.  The following day on 11 September 2020, she transferred the $10,000 to the defendant with the reference ‘Sment17BestSt’.^[12]
19. [19]
    On or about 14 September 2020, a contract of sale was entered into for the Brighton Property in the sum of $456,000.^[13]  The Brighton Property settled on 27 October 2020.  The defendant retained the net proceeds of sale.

Evidence of the Plaintiff and the Defendant

20. [20]
    Both the plaintiff and the defendant gave evidence.  Neither party called any witnesses in support of their competing claims.  It is trite that I had the opportunity to observe the evidence from each of them.  My overall impression is that the plaintiff’s evidence was more compelling and credible than the defendant.  The plaintiff provided evidence which seemed more consistent with the contemporaneous documents than that of the defendant’s pleaded case.  She provided reliable and genuine responses.  Not unsurprisingly, at times she appeared to respond with sarcasm to some of the questions posed by the self-represented defendant.  In fact, both parties at times were sarcastic in their evidence and became agitated and frustrated, but that is understandable given their once intimate relationship.  However overall, I found the plaintiff’s evidence more compelling than that of the defendant, because at times it seemed to me, the defendant was more inclined to offer self-serving and manufactured responses.  I accept, as was highlighted to me on behalf of the plaintiff, that the defendant tended to exaggerate matters, was argumentative under cross-examination and instead of answering the questions, he sought to advocate his own case and make submissions from the witness box.  He should have simply answered the questions directly as opposed to proffering non-responsive answers.  In my assessment, the contemporaneous records advanced the plaintiff’s case more so than that of the defendant’s because in all of the letters exchanged between them, there is not one reference to the plaintiff gifting the entirety of the funds, as claimed by the defendant.    It is perplexing to me that the defendant has claimed the entire amount was a gift, yet the contemporaneous records demonstrate on at least two separate occasions, different amounts said to be “gifts”.  For example, the first letter given by the defendant to the plaintiff on 28 August 2020, suggested a retainment of $180,000 from the net sale of the Brighton Property.  Less than two weeks later that amount was reduced to $100,000.  It also seems extraordinary to me that someone would gift such a large amount of money during the course of a relatively short, intimate relationship.  It is more consistent and more plausible that the parties orally agreed to do certain things on the case advanced by the plaintiff.  That is why, in my assessment, I have preferred the plaintiff’s evidence. 
21. [21]
    In evidence-in-chief, the plaintiff was questioned about how the Brighton Property was funded and she gave the following evidence:^[14]

“I sold my property at Woody Point for $980,000, and that money was in my              account.  I had already paid for the Sandgate house by selling shares.  So, there was no bridging loan, there was no pressure to buy a property”.

22. [22]
    At one point during her cross-examination, the defendant sought to rely upon four edited audio recordings of telephone discussions between the plaintiff and the defendant.  Those recordings were not disclosed in accordance with rule 211 of the Uniform Civil Procedure Rules 1999, despite Judge Porter KC providing the defendant with a trial document at an earlier mention outlining the rules of disclosure and the general structure of a trial.  The legal representatives for the plaintiff did not object to the receipt of that evidence, but made submissions regarding its weight.  The defendant sought to rely upon the audio recordings to advance his claim that the presumption of a resulting trust was rebutted because the plaintiff gifted him the funds.  Despite the defendant’s valiant efforts to utilise the recordings to advance his case, I am unable to act upon them because the recordings were edited, not clear and not a complete reflection of the entire negotiations between the two parties.  In other words, they were a select representation of some of the ongoing discussions after the relationship ceased.  Even on the defendant’s testimony, the original recordings were lost upon being edited.^[15]  Further despite multiple previous requests by the plaintiff’s legal representatives prior to trial, the recordings were only produced at trial.  Also, the recordings do not advance the defendant’s case and that is because the law looks to the intention at the time of the advancement.  I will return to this issue later in these reasons.  For present purposes however it is important to note that the recordings occurred after the parties separated, so they do not assist the defendant to prove the issue of intention at the time of the advancement.    
23. [23]
    The principal evidence from the plaintiff was she and the defendant were to flip properties.  The defendant would obtain the profits made from the sale of those properties and she would retain the balance of her funds.  Her evidence was consistent with the text messages exchanged between the parties around the time of the Brighton Property purchase.^[16]  She was clear in her evidence that she did not intend to gift the money for the Brighton Property to the defendant at the time of the advancement.  The plaintiff’s evidence, consistent with the documentary evidence, demonstrated to me that:

    1. (a)
       she and the defendant agreed to flip houses;
    2. (b)
       the defendant had the appropriate skills to renovate, but limited financial capacity;
    3. (c)
       she had the funds to purchase the property;
    4. (d)
       the payment of the extra $30,000 was made to the defendant to represent her half share for the Kitchen Renovations;
    5. (e)
       the Kitchen Renovations were never undertaken by the defendant.
24. [24]
    As to the last matter, it was unclear to me from the defendant whether he undertook any of the renovations to the kitchen.  There was no documentary evidence or other independent evidence furnished on his behalf to assist with respect to this issue.  This is another feature which, in my assessment of the case, causes me to prefer the plaintiff’s evidence.  Importantly, and in any event, as was highlighted to me on the plaintiff’s behalf which I accept, the defendant made the following admissions during cross-examination:

    1. (a)
       he admitted that the plaintiff never described the payments to him as a gift;
    2. (b)
       he accepted that he did not have the money to buy the Brighton Property;
    3. (c)
       he was adamant that he paid for the stamp duty from his own funds, but the documentary evidence was that the money was paid from money provided by the plaintiff the day before, and no evidence was led to show that the stamp duty was paid from his own funds.
    4. (d)
       his only reasons for saying the funds paid to him by the plaintiff were a gift were:

       1. (i)
          there was no contract;

       1. (ii)
          there was no agreement in writing;

       1. (iii)
          he had spoken to solicitors;

       1. (iv)
          the plaintiff said it was a gift in the recordings;

       1. (v)
          the plaintiff did not use the words “loan” as a reference in the NAB payment transfer at the time of making the payment.^[17]
25. [25]
    Accordingly I am satisfied on the evidence presented at the trial, and consistent with the case advanced by the plaintiff, that the transfers the plaintiff made to the defendant were not gifts; instead they were made to purchase the Brighton Property and ultimately sell it following the breakdown of the relationship between the parties.     
26. [26]
    Regarding the counterclaim, there was insufficient evidence to support the claim that it would be unjust for the plaintiff to retain the benefit of the construction and renovation works the defendant did without making any payment for it.  Whilst the defendant produced photographs, I am unable use them, on their own, without any evidence as to the value of the work done or materials supplied on which a quantum meruit claim could be properly proven.  The text message the defendant relied upon by the plaintiff^[18]does not assist in my task of accurately assessing the value of the work performed because the text message is from someone who holds no qualifications or experience in valuing the relevant work.  Moreover, there was no evidence produced at trial as to the fair market value of the work the defendant said he performed.^[19] 
27. [27]
    Additionally, as was highlighted to me on behalf of the plaintiff which I accept, there is no evidence led as to:

    1. (a)
       the amount claimed to be the hours spent on undertaking the works;
    2. (b)
       the proposed hourly rates to be charged for the works;
    3. (c)
       what market or commercial rates were at the time;
    4. (d)
       any quotations being issued for the works (other than the limited quote discussed by the defendant during his evidence-in-chief which he accepted he paid for); and
    5. (e)
       any invoices being issued specifying the works completed and the amounts charged for the work.
28. [28]
    The result is the counterclaim is dismissed.

Resulting Trust

29. [29]
    Having preferred the plaintiff’s evidence, at law the defendant is presumed to hold the Brighton Property on a resulting trust for the plaintiff by virtue of receiving funds to purchase the house.^[20]  Accordingly, equity presumes that the defendant, within whom legal title is vested, holds such property on a resulting trust for the plaintiff who paid the purchase price.  This presumption is premised on the intention to create an equitable interest in the property other than, or in addition to the person who holds legal title.  Once the presumption of a resulting trust is established, which in this case I am satisfied, the evidentiary onus rests upon the party disputing the existence of the resulting trust. ^[21] 
30. [30]
    One way the presumption of a resulting trust can be rebutted is a presumption that a gift was intended by virtue of the relationship between the parties.  Equity infers that a gift was intended where the nature of the relationship is such, as for example with a parent and child, and the parent is under an obligation to make provision for the child.^[22]
31. [31]
    The circumstances of this case are such that I am not satisfied a gift arises.  It is highly fanciful, in my assessment on the facts of this case, that the plaintiff would voluntarily gift the funds to the defendant.  The duration of their relationship was short.  I resolved earlier in these reasons that I accept it is more plausible, and on balance, that the parties orally agreed to do certain things (consistent on the plaintiff’s pleaded case).  The contemporaneous correspondence exchanged by the parties after the relationship ceased is inconsistent with the defendant’s pleaded case.  Further, by virtue of s 11 of the Property Law Act 1974, the full amount to be gifted was required to be in writing and signed by the plaintiff.  Also, the time of the assessment for the intention of the gift is at the time of purchase, not as the defendant would like me to find, at a later date.  I am not permitted to reason that the evidence after the advancement is referable to the aspect of intention at the time of the advancement.  Furthermore, if there was an agreement to resolve the dispute (which it is not denied that the plaintiff acted on and transferred a further $50,000 to the defendant), that is a complete bar to the defence of the defendant that the parties compromised the dispute on the terms between them.  Finally, when transferring property by way of gift, there must either be a deed or an instrument of gift and an actual or constructive delivery of the thing to the donee.^[23]  The defendant here was never delivered the gift.  There was no delivery from the plaintiff to the defendant.^[24]
32. [32]
    Therefore, I am persuaded that the defendant has retained for his own use and benefit the following:

    1. (a)
       the net sale proceeds on the Brighton Property;
    2. (b)
       $30,000 for the Kitchen Renovation; and
    3. (c)
       the $50,000 advance.
33. [33]
    In the end, I am not persuaded that the defendant has rebutted the presumption of a resulting trust.  Accordingly it is only appropriate that the plaintiff, having demonstrated her case, is entitled to the following relief:

    1. (a)
       A declaration that the defendant holds, on a resulting trust for the plaintiff, the sale proceeds of the property located at 17 Best Street, Brighton in the State of Queensland, more particularly described as Lot 13 on RP 75530 with Title Reference 12721094.
    2. (b)
       The defendant is to pay the plaintiff $456,000 in equitable compensation.
    3. (c)
       Judgment for the plaintiff in the sum of $80,000.
34. [34]
    I will hear from the parties as to interest and costs.  In that regard the parties are directed, within seven days, to file any material and written submissions (limited to two pages) as to appropriate orders.