State of Queensland v Barac[2004] QSC 40

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

BYRNE J

No 2263 of 2003

BRISBANE

..DATE 26/02/2004

ORDER

HIS HONOUR:  This application pursuant to sections 37(1) and 38(1)(a) of the Criminal Proceeds Confiscation Act 2002 to vary an order of Justice Holmes made restraining dealings in the property of the first respondent concerns the proceeds of sale of a house property at the Gold Coast.

The respondents are in a de facto relationship that has subsisted since the early 1990s.  The Gold Coast house was their fourth home.  Their acquisition of it, which was registered in their names as joint tenants, was financed by borrowings and a payment made by the first respondent.

Of the $620,000 purchase price, $478,000 was borrowed from a financier pursuant to a mortgage, under which both the first and second respondents assumed a liability to the financier to repay the sum advanced and interest.

Consistently with the equitable principles discussed in Calverley v. Green (1984) 155 CLR 242, the unequal contributions to the purchase price gives rise to a presumption that the respondents hold their legal estates in trust for themselves as tenants in common in proportion to their contributions.  For this purpose, the few payments of instalments made by the second respondent in reduction of the mortgage debt may be ignored, for they are not to be treated as acquisition costs.

The result is that, in the absence of some other sufficient contrary intention (see Calverley v. Green at 258), the contributions to the purchase price were: 61.45 per cent by the first respondent; and 38.55 per cent by the second.

There is no satisfactory basis for a conclusion that the evidence displaces the equitable presumption mentioned.  Although the second respondent does depose to the close nature of the relationship between the respondents, all that has been said concerning their intentions when the property was acquired is this (see subparagraphs (j) and (k) of paragraph 2 of her affidavit filed on 3rd December, 2003):  "The first respondent and I have always considered ourselves to be a joint financial entity and it has always been understood that we owned each of our properties in equal shares.  I have always had and continue to have authorisation to draw upon all bank accounts held in the name of the first respondent."

This mere conclusory assertion concerning intentions with respect to ownership is not a sufficient foundation for a conclusion that the first respondent intended, in effect, to deprive himself of the benefit of the presumed trust.  No facts are deposed to by the second respondent - such as things the first respondent said or did - to evince a state of mind on his part inconsistent with the presumed trust arising from the unequal contributions.  And there is no evidence from the first respondent at all on the topic.  (It may also be noted that there is no evidence of any attempt on his part to have disposed of the benefit of the presumed trust since its creation at the time of the acquisition of the house).

The presumption not being displaced, 11.45 per cent of the second respondent's beneficial interest in the proceeds of sale is "property" susceptible of a section 37 restraining order.

This view involves rejection of several submissions made on behalf of the respondents to which I turn. 

First, it was said that section 38(1)(a) cannot be invoked to vary an existing restraint to add property "about which the State has always known and which was previously unrestrained".  Such a restrictive interpretation of sections 37(1) and 38(1)(a) is said to be required for the reason that the "public interest" may not be taken into account on an application under section 37, though it falls to be considered in an application for an original restraining order under section 31.

But the power under 37 is conferred in wide terms.  The section stipulates:  "(1) the Supreme Court may make the other orders in relation to a restraining order the Court considers appropriate, including, but not limited to, orders mentioned in section 38."  In view of this ample conferral of discretionary power, there is no justification for construing section 37 in such a way as would require the Court to ignore the public interest.

Next it was said that developments since Calverley v. Green mean that it is no longer appropriate to evaluate beneficial interests in the property of de facto couples by reference to the principles discussed in that case.

Authorities such as Baumgartner v. Baumgartner (1987) 164 CLR 137 and the analysis they contain of remedies in disputes between disaffected de facto couples and the provisions of part 19 of the Property Law Act 1974 were said to have overtaken Calverley v. Green.

True it is that judicial and legislative interventions since 1984 have introduced different regimes for the adjustment of rights in property disputes between feuding de facto partners.   And these regimes entail the prospect that rights arising under the general law may be significantly altered by remedies granted in judicial proceedings between former de factos. But that says nothing as to the way in which the rights which the law otherwise establishes are to be regarding pending any such judicial adjustment.  Here the interest of the respondent in the proceeds of sale is as ascertainable in accordance with the principles stated in Calverley v. Green.

Not content with a restraint that extends to 11.45 per cent of the sale proceeds, the applicant contends that the whole of the second respondent's legal interest in the proceeds ought to be the subject of a restraint.  This attempt to establish that her 38.55 per cent proportionate share is also the property of the first respondent is founded on a contention that the first respondent may, in all the circumstances, be taken to have surrendered any rights (for example, to contribution) which he otherwise had against the second respondent arising from her execution of the mortgage.  As it was put by Mr Hinson, "It should be concluded that Ms Cosma's beneficial interest in the property and the proceeds of its sale was a gift to her from Mr Barac."

The evidence does suggest that it is unlikely that the first respondent ever expected to call upon the second to repay any of the mortgage debt, either directly to the financier or, to the extent to which the first respondent paid more than half the mortgage debt, by way of contribution.  She was financially dependent upon him.  But that is a far cry from concluding that, by his conduct, the first respondent evinced (or had) an intention to surrender any claim he might afterwards acquire against the second respondent upon payment of more than his share of the mortgage debt.  It is one thing for the first respondent to have expected that he would pay the whole debt: quite another to conclude that he intended to abandon such a claim for contribution against the second respondent should it arise.  The evidence does not sustain such an inference.

Finally, it was submitted for the applicant that the house property was, and therefore the whole of the proceeds of sale now are, under the "effective control" of the first respondent (compare section 20(4) of the Act).  This bold contention depends upon the notion that, put tersely (as it was during argument), the second respondent would do whatever the first respondent told her to do, at least concerning the house and the financial arrangements pertaining to it.  The evidence falls well short of establishing this.

In the result, the applicant has established an entitlement to a restraining order in respect of the 11.45 per cent mentioned.

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