Leaver v Leaver[2023] QDC 179

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 28 June 2022, I delivered reasons in this matter (“the Reasons”) and directed the parties to confer in respect of the consequential orders and/or declarations.^[1]  The parties were to provide submissions regarding orders and/or declarations consistent with the Reasons.  Among other findings, I found that:

   1. When Station Road^[2] was purchased in 1994:
      1. the plaintiffs paid the deposit; and
      2. the parties agreed that the plaintiffs would live in the house indefinitely and it was never intended that they pay rent.
   2. The defendants hold 24.24 percent 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. Reflective of the renovations, the plaintiffs have an equitable charge over Station Road in the amount of $65,000.
2. [2]
   The time for the filing of submissions was extended a number of times because the parties were willing to work towards an amicable resolution of the orders and/or declarations.  However, they have not been able to do so, and, hence written submissions were eventually received from each of them.  What therefore follows are the consequential orders and declarations arising from the Reasons.     

Non-Contentious Declarations

3. [3]
   The defendants concede, and the plaintiffs agree, that declarations as to the existence of the resulting trust and equitable charge should be essentially made in the terms set out in the Reasons.^[3]  It has been submitted that the following wording is appropriate:

“It is declared that:

(a) the defendants hold 24.24 percent of their interest in [the Land] on a resulting trust for the plaintiffs;

(b) the plaintiffs have an equitable charge over [the Land] in the amount of $65,000.”

Contentious Declarations/Orders

4. [4]
   The parties do not agree about three matters.  The first, as has been sought by the plaintiffs, concerns a declaration about a life interest over the land situated at Lots 225 and 226 on Registered Plan 29244, Title Reference 11514085 (“Station Road”).  The second, as has been sought by the defendants, concerns a declaration as to an equitable charge in their favour, commensurate to an account with rates and insurance.  The third matter concerns costs. 

Life Interest

5. [5]
   The plaintiffs seek a declaration (and a further consequential order determining the trust in requiring the transfer of Station Road to the plaintiffs).  The defendants oppose this.   
6. [6]
   The plaintiffs have submitted that, given the irretrievable breakdown in relations between the defendants and the plaintiffs, it is not tenable that the defendants remain trustees in the plaintiffs’ interest in Station Road.  Accordingly, two orders are necessary, namely:

   1. First, there is no reason why the resulting trust in respect of Station Road should not immediately vest such that the plaintiffs’ beneficial interest in Station Road (held on trust for them by the defendants) immediately vests in the plaintiffs.^[4]
   2. Second, it follows that the defendants should be ordered to provide an instrument of transfer in registerable form to give effect to the vesting of the plaintiffs’ beneficial interest in Station Road.
7. [7]
   The plaintiffs submit that on the basis of the pleaded case and the factual findings made by the court, a declaration should be made that a constructive trust arises in their favour.  In doing so, it anticipates a defeat to any inequity that would arise if a life interest in favour of the plaintiffs was not recognised.^[5]  It was submitted that relief in the form of a life interest was not inconsistent with the plaintiffs’ case.  Reliance has been made to the plaintiffs’ amended claim which included that “the whole of the land” (being Station Road) was held on trust for the plaintiffs.  It was contended that the “whole of the land” as expressed in the amended claim must necessarily encompass all interests in that land, including both the estate in fee simple and a life interest.  Reliance was placed on the amended statement of claim, where relevantly, it was pleaded:

   1. It was the common intention of both the plaintiffs and the defendants that Station Road would become the residence of the plaintiffs.^[6]
   2. The reason why Station Road was registered in the name of the defendants was to ensure that the plaintiffs had a place to live.^[7]
   3. In the premises, among other matters:
      1. the existence of any power or discretion by the defendants in relation to Station Road would affect the interest of the plaintiffs in a practical sense; and,
      2. the defendants hold Station Road on constructive trust for the plaintiffs.^[8]
   4. It was common knowledge between the plaintiffs, the defendants and Ms Nicole Leaver that Station Road was known as the home of the plaintiffs.^[9]
8. [8]
   It has been identified that in the Reasons, factual findings in support of a declaration that a constructive trust for a life interest in favour of the plaintiffs arise, more particularly:

   1. That it was intended by the parties at the time of the purchase of Station Road that the plaintiffs would live in the house at Station Road indefinitely.^[10]
   2. That it does not seem credible that the plaintiffs would not live at Station Road “forever”.^[11]
   3. That the plaintiffs conducted renovations to the house at Station Road on the basis that they could live there indefinitely.^[12]
   4. That the parties conducted themselves over the course of nearly 30 years as if Station Road was the plaintiffs’ home.^[13]
   5. That Station Road was known as the home of the plaintiffs (on the basis that it was admitted on the pleadings).^[14]
   6. That, at the time the plaintiffs undertook the renovations to the house at Station Road, the familial relationship between the plaintiffs and defendants meant that it was reasonable for the plaintiffs to rely on an expectation that they had “an indefinite right of residence of Station Road”.^[15]
   7. That at all times until 2016, the familial relationship between the parties was one of trust, whereby Neal Leaver trusted his children, including Cory Leaver.^[16]
9. [9]
   Findings were also made that when Station Road was purchased in 1994, the plaintiffs paid the deposit and the parties agreed that the plaintiffs would live in the house indefinitely.  Further it was never intended that the parties agreed that the plaintiffs pay rent. 

10. [10]
    It was submitted that in the context of those findings, especially that the plaintiffs had a right to reside at Station Road the term “indefinitely” must, objectively, be taken to mean “forever”.  That is particularly so in light of the findings that it does not seem credible that the plaintiffs would not live at Station Road, and it was incongruous with the weight of the factual findings for “indefinitely” to mean anything other than “forever”.  It was in the premises of those features (just as it was unconscionable for the defendants to deny the plaintiffs the benefit of the cost of renovations to Station Road at trial), that it would be unconscionable for the defendants to deny the plaintiffs the benefit of a life interest in Station Road.  Put simply, it was said that if that intention were to be departed from, it would cause serious detriment to the plaintiffs.^[17] Therefore, it was submitted, a constructive trust arises in respect of the plaintiffs’ life interest in Station Road. 
11. [11]
    It was also highlighted that as a matter of practicality and legality, there was no impediment to an ultimate finding (in consequential declarations and orders) that the plaintiffs are entitled to a life estate in Station Road.  The following four grounds were advanced to support this proposition:

    1. First, a life estate is a freehold estate in possession in land that exists for the life of the tenant.  The fee simple estate remains in the ownership of the remainderman and becomes an estate in reversion upon the granting of a life estate.  That is entirely consistent with:
       1. the plaintiffs and the defendants being registered owners of the fee simple estate in Station Road but the plaintiffs taking a life estate in the same; and
       2. the factual finding that it was the intention of the plaintiffs and the defendants at the time of the purchase of Station Road that the plaintiffs would live at Station Road indefinitely without paying rent.
    2. Second, the life estate may be registered in the Land Titles Register without requiring alteration of the interest of the plaintiffs, the defendants, or the mortgagee’s interest in the fee simple estate in Station Road.  It was highlighted that s 55 of the Land Title Act 1994 permits the Registrar of Titles to record an interest in a lot for life in the way the Registrar considers appropriate.  Further, s 9A(1) of the Land Title Act 1994 permits the Registrar to publish a manual of land title practice, which may include practices developed in the Land Registry for the depositing and lodging of instruments.  The Land Title Practice Manual, kept pursuant to s 9A of the Land Title Act 1994, relevantly provides that (at [1-2240]):

“Under the Trust Act 1973, a life tenancy is regarded as ‘trust property’.  The creation of a separate indefeasible title for an interest for life is not permitted. 

The life estate is recorded by way of a transfer to the life tenant stated in Item 5 without reference to the trust.

The land remains in the name of the registered owner and reference to the creation of the life estate by the transfer will appear in the Easements, Encumbrances and Interests section of the title.” 

3. Third, the plaintiffs’ life estate does not affect the mortgagee’s rights because it remains the mortgagee of the estate in fee simple of Station Road (although the recognition of the plaintiffs’ life estate results in the fee simple estate being one in reversion rather than possession).  As a result, the mortgagee is not prevented by the plaintiffs’ life estate in Station Road from exercising any rights or powers in respect of the fee simple estate.  It is important to note the finding in the Reasons that:

“… to do justice between the parties in the present proceedings, the parties’ beneficial interest sought ought to be adjusted as between themselves such that the adjustment have the effect that the mortgagee (sic) charges only the defendants’ interest in Station Road…”^[18]

4. Fourth, the recognition of the plaintiffs’ life tenancy would cause no prejudice to the defendants because:
   1. the plaintiffs, as life tenants, would have no ability to unilaterally deal with the fee simple estate in Station Road by way of sale, mortgage, or lease; and
   2. as life tenants, the plaintiffs would be liable for acts of voluntary waste (being positive acts that damage, or result in the despoliation of, the land) pursuant to sections 24 and 25 of the Property Law Act 1974 and the defendants would, therefore, be protected from any acts by the plaintiffs that damage, or reduce the value of, Station Road. 

12. [12]
    In those circumstances, it was submitted that a declaration in the following terms would be made:

“It is declared that the defendants hold a life interest in [the land] on constructive trust for the plaintiffs.”

13. [13]
    Further, consequential orders should be made to the effect that:

    1. the constructive trust vests such that plaintiffs’ life interest (held on trust by the defendants) immediately vests in them; and
    2. the defendants should deliver an instrument in registrable form capable of registering the plaintiffs’ life interest on the title for Station Road. 
14. [14]
    I have come to the view, albeit not without hesitation, that it would not be appropriate to make the declaration and consequential order principally because the relief, which has now been sought, was not contended by the plaintiffs at trial or in their pleadings. More tellingly, as has been highlighted by the defendants, the defendants would have run the case differently had the plaintiffs done so.  Also, the evidence did not go so far as to support the relief now contended for.   
15. [15]
    It has been acknowledged by the plaintiffs that the precise relief of the kind now sought was not pleaded in the amended claim.  It is accepted that rules 156 and 658 of the Uniform Civil Procedure Rules 1999 contemplate that the Court has a discretion to grant relief not sought or pleaded by a party provided that to do so does not prejudice the other party and the relief sought is consistent with the matter in which the trial was conducted.  However, it is the issue of procedural fairness to the defendants which causes me some consternation.  It has been submitted by the defendants that their case would have certainly been conducted differently at trial.  For instance, they could have pleaded, led evidence or cross-examined concerning any conduct subsequent to the purchase of Station Road which might have affected that relief, as well as the circumstances surrounding the supposed grant of a life interest which may have demonstrated, among other things, that the circumstances did not give rise to any real intention to create legal or binding relations.  The defendants have identified that they also could have taken steps to test the evidence which is relied upon to support the relief now sought by the plaintiffs.  Also, the defendants’ approach to settlement, it has been raised by them, could have been different.^[19]
16. [16]
    Further, there is no evidence of the creation of any life interest in writing, in contravention of s 11 of the Property Law Act 1974. 
17. [17]
    Therefore, I am not inclined to make the declaration sought by the plaintiffs.  As intimated, I have not come to this view lightly.  It is unfortunate the parties have been unable to resolve the issue, especially given the plaintiffs are elderly and the situation between a once cohesive family is now acrimonious.     

Equitable Charge in favour of the Defendants

18. [18]
    I am also not inclined to make the declaration, as sought on behalf of the defendants, that the defendants have an equitable charge over the plaintiffs’ interest in Station Road for 24.24 percent of the rates and insurance paid by the defendants in respect of Station Road. 
19. [19]
    At trial, this position was not specifically pressed by either party, especially the defendants.  Moreover, the evidence established that the plaintiffs made their contribution to the payment of expenses in respect of Station Road through a deduction to their entitlement to distributions from the business.  Also, Nicole Leaver’s evidence was:

    1. the business paid all expenses in respect of Station Road which included “electricity, loans, rates, everything”; and
    2. 70 percent of those expenses were recorded against the plaintiffs’ entitlement to payment from the business (be it drawings when the business was operated as a partnership, or entitlement as beneficiaries when the business was operated as a trust).
20. [20]
    Further, the evidence which I accepted, established that the plaintiffs made an indirect contribution to the payment of expenses of Station Road through the recording of expenses by the business and the deduction of those expenses from the plaintiffs’ entitlements from the business. 
21. [21]
    It was unclear on the evidence, if evidence was led at all, as to what efforts were taken by the parties post-2016.  It would not do justice between the parties to permit such an order to make the declaration sought by the defendant. 
22. [22]
    I therefore decline to make any declarations or other orders in respect of the equitable charge claimed by the defendants.

Costs

23. [23]
    Each party seeks that their costs of the proceeding be borne by the other side.  They do so on the basis that they claim they have been successful in the litigation.  An alternative order has been advanced by the plaintiffs (in the event the Court was not minded to award the plaintiffs’ entire costs) and that is that the appropriate order is one for the defendants to pay a proportion of the plaintiffs’ costs.  In this respect it has been submitted that it would not do justice between the parties having regard to the plaintiffs’ substantial success, for there to be no order as to costs or for the plaintiffs to pay any part of the defendants’ costs.  Neither party seeks costs on the indemnity basis. 
24. [24]
    The plaintiffs have principally submitted that the crux of their claim was that it challenged the defendants’ title to Station Road, in respect of which the defendants enjoyed indefeasibility.  The plaintiffs carried the burden of proof to establish their equitable claim and impeach the defendants’ indefeasible title.  While the plaintiffs’ claim was for the whole of Station Road, the plaintiffs nevertheless successfully impeached the defendants’ indefeasible title to Station Road to the extent of the resulting trust.  It was also highlighted that the plaintiffs have successfully established the existence of an equitable charge in the sum of $65,000 and, further, the plaintiffs have the benefit of the Court’s finding that when Station Road was purchased in 1994, the parties intended that the plaintiffs would live in Station Road indefinitely.  By contrast, the defendants’ consistent position was to deny the plaintiffs any interest in Station Road at all (in particular the defendants deny that it was the plaintiffs who paid the deposit for Station Road or made any contribution at all to the cost of its purchase).  The logical conclusion is, therefore, that the plaintiffs have been the substantially successful party.
25. [25]
    Conversely, the defendants have highlighted that since the inception of the proceedings, the plaintiffs have sought relief on the basis that the whole of the land was held by the defendants on trust for them.  In the result, the Court found that less than a quarter of the land is so held, with a small equitable charge for renovation work.  It should also be borne in mind that by their claim, the plaintiffs sought not only a declaration that the defendants hold the whole of the land on trust, but also:

    1. orders requiring the defendants to pay out the mortgage and transfer the land to them;
    2. damages claims that appear to be no longer pressed; and
    3. injunctive relief premised on the footing that the plaintiffs own the whole of the land.
26. [26]
    It was submitted by the defendants that the ‘disastrous’ consequences for them of that relief being granted plainly justified their defence in the proceeding.  As a result of the Reasons, none of that relief is now open.  It was also submitted that the plaintiffs’ conduct in pursuing relief justifies an order for costs in the defendants’ favour because:

    1. that case was hopeless in light of the documentary evidence and the evidence of Nicole Leaver;
    2. Nicole Leaver was the plaintiffs’ witness and gave evidence voluntarily in their favour early in the proceeding on an injunction application; and
    3. the documentary evidence was available by way of disclosure well before the trial was heard.
27. [27]
    Therefore, evidence was available relatively early in the proceedings which the plaintiffs should have known that the case for an interest in the whole of the land was hopeless and yet they persisted with it right through to trial.  The plaintiffs therefore put the defendants in the position of having to defend the consequences of that case.  That part of the case consumed, it was said, the vast majority of the documentary evidence obtained during the proceeding and the majority of hearing time at the trial. 
28. [28]
    Rule 681 provides that costs of a proceeding are in the discretion of the court but follow the event, unless the court orders otherwise.
29. [29]
    It seems to me that on a quantitative analysis, the success in respect to Station Road, on a simple mathematical spilt, falls in favour of the defendants’ defence.  Having noted that, a substantial component of the trial was devoted to the defendants’ resistance to any interest of the plaintiffs to an entitlement with respect to Station Road.  Because of this, I am of the view that it is the plaintiffs who have been substantially successful in the litigation because of the meritorious challenge they made to the defendants’ indefeasibility of title.  Costs should be awarded in their favour.  It is because of the challenge to the indefeasibility of Station Road, albeit not 100 percent, as well as the equitable charge of $65,000, in addition to the findings that when Station Road was purchased in 1994, the parties agreed that the plaintiffs would live in the house indefinitely and it was never intended that they pay rent, that I consider the plaintiffs to be substantially successful.  To deny the plaintiffs of their entire costs, and indeed only some, would not do justice to the proceedings.  I therefore order that the defendants pay the plaintiffs costs of and incidental to the proceedings, including any reserved costs.

Conclusion

30. [30]
    The declarations and orders are as follows:

    1. It is declared that:
       1. The defendants hold 24.24 percent of their interest in the land situated at Lots 225 and 226 on Registered Plan 29244, Title Reference 11514085 (132 Station Road, Deagon) (“the land”) on resulting trust for the plaintiffs.
       2. The plaintiffs have an equitable charge over the land in the amount of $65,000.
    2. The defendants pay the plaintiffs’ costs of and incidental to the proceedings, including any reserved costs.