FEDERAL CIRCUIT COURT OF AUSTRALIA
APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF BANKRUPT ESTATE OF DAVID AUSTIN KELLY (No.2)	[2015] FCCA 3036	

Catchwords: 
BANKRUPTCY – Application by trustee for order under s.146 of the Bankruptcy Act 1966 (Cth) – whether preconditions for the making of order satisfied – whether there is a reasonably arguable case that the only asset of the bankrupt’s estate is subject to a security held by a person who claims to have been the bankrupt’s de facto partner – reasonably arguable case established – the determination of that question on a final basis set down for hearing.	

Legislation:
Bankruptcy Act 1966, ss.77CA, 104, 146	

Application of Official Trustee in Bankruptcy in the Matter of the Bankrupt Estate of David Austin Kelly [2015] FCCA 1106 
Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Official Trustee in Bankruptcy; in the matter of Shaw [1999] FCA 968
Re Sturt; Ex parte Official Trustee in Bankruptcy [2001] FCA 1649; (2001) 117 FCR 1
West v Mead [2003] NSWSC 161	

Applicant:	Application Of Official Trustee In Bankruptcy In The Matter Of Bankrupt Estate Of David Austin Kelly	

File Number:	SYG 1925 of 2014	

Judgment of:	Judge Manousaridis	

Hearing date:	5 June 2015	

Delivered at:	Sydney	

Delivered on:	13 November 2015	
REPRESENTATION
Solicitors for the Applicant:	Ms K P Farmer of TressCox Lawyers	

Ms L Williams appeared by telephone for part of the hearing 

ORDERS
(1)	Lydia Williams have leave to reopen her case to the extent she claims she held a security interest over the land situated at 91 Ourimbah Road Mosman as a result of work she claims she undertook pursuant to an alleged agreement dated 31 July 2007 purportedly contained in the document that is annexure 1 to the affidavit of Lydia Williams made on 23 December 2014 filed with the Registry by facsimile at 4.11 pm (alleged 31 July 2007 Agreement).
(2)	There be set down for hearing at a date to be fixed the questions whether Lydia Williams and David Austin Kelly entered into an agreement to the effect of the alleged 31 July 2007 Agreement and, if so, whether Lydia Williams undertook work pursuant to the alleged 31 July 2007 Agreement and, if so, the amount of work she undertook pursuant to the alleged 31 July 2007 Agreement.
(3)	Whether an order under s.146 of the Bankruptcy Act 1966 (Cth) should be made be determined after the Court hears and determines the issues identified in order 2.
(4)	The application in a case filed by Lydia Williams on 23 December 2014 otherwise is dismissed.
(5)	The costs of the hearing of 5 June 2015 and of the application in a case filed on 23 December 2014 are reserved.

(1)	
FEDERAL CIRCUIT COURT 
OF AUSTRALIA 
AT Sydney	
SYG 1925 of 2014
Application Of Official Trustee In Bankruptcy In The Matter Of Bankrupt Estate Of David Austin Kelly	

REASONS FOR JUDGMENT
Introduction
1.	Before the Court are two applications. One is by the Official Trustee in Bankruptcy (Trustee), as trustee of the bankrupt estate of David Austin Kelly, for an order under s.146 of the Bankruptcy Act 1966 (Cth) (Act). The second is an application in a case filed by Ms Lydia Williams on 23 December 2014. 
2.	Ms Williams was the de facto partner of Mr Kelly at the time Mr Kelly died in 2012, and she was granted letters of administration of his estate. Ms Williams opposes the Court making an order under s.146 of the Act because she claims she has an interest in the sole remaining asset of Mr Kelly’s estate. The asset is the balance of the proceeds of sale of land at 91 Ourimbah Road Mosman (Mosman Property) of which Mr Kelly was the registered proprietor. The orders Ms Williams seeks in her application in a case relate to her claimed interest in the estate of Mr Kelly. 
3.	I will first consider the Trustee’s application for an order under s.146 of the Act without reference to the grounds on which Ms Williams opposes the Court making such order. It will be seen that I am satisfied that the Trustee is prima facie entitled to an order under s.146 of the Act. I will then identify and consider all of the grounds on which Ms Williams relies for claiming she held an interest in the Mosman Property and, hence, now holds an interest in the balance of the proceeds of sale of that property. 
Application under s.146 of the Act
4.	Section 146 of the Act provides:
	Where a bankrupt has failed to file a statement of his or her affairs as required by this Act, the Court may, on the application of the trustee, upon such terms as it thinks fit, order that distribution of dividends amongst the creditors who have proved their debts shall proceed in accordance with this Division as if the bankrupt had filed a statement of his or her affairs and those creditors had been stated to be creditors in it.
5.	Mr Kelly was made bankrupt on 13 July 2011. On 20 February 2012 the Official Receiver in Bankruptcy (Official Receiver) arranged to personally serve Mr Kelly with a notice under s.77CA of the Act requiring him to give to the Official Receiver a statement of affairs within 14 days of receipt of the notice. That notice was issued because Mr Kelly had not provided to the Official Receiver, or furnished to the Trustee a statement of affairs as he was required to do under s.54(1) of the Act. On 28 March 2012 Mr Kelly passed away without having provided to the Official Receiver a statement of affairs. The precondition for the exercise of the power conferred by s.146 of the Act, therefore, is satisfied.
6.	Section 146 of the Act “…is intended to facilitate the distribution of dividends among the creditors of the bankrupt in circumstances where the trustee has not had the benefit of a statement of affairs prepared by the bankrupt”. The purpose of s.146 of the Act is “…to give the Court the means of ensuring that the absence of a statement of affairs does not prejudice those with an interest in the bankrupt’s affairs”. Relevant factors to the exercise of the discretion conferred by s.146 of the Act include whether creditors have been notified of the application and have had an opportunity to be heard, and whether the trustee has taken steps to ascertain whether there are creditors other than those who have come to the trustee’s attention by filing a proof of debt.
7.	The evidence reveals the following. On 19 July 2011 the Trustee caused to be searched Mr Kelly’s individual consumer and commercial credit file held by a credit reporting agency known as Veda Advantage Information Services and Solutions Limited. That search revealed no creditors of Mr Kelly. The Trustee also made enquiries of the major banks, but none of the banks claimed to be creditors of Mr Kelly. 
8.	The Trustee caused various real property searches to be conducted. Those searches indicated that Mr Kelly was the registered proprietor of the Mosman Property, and that a mortgage and two caveats had been registered over the Mosman Property. The Mosman Property had been sold by the mortgagee, Perpetual Trustees Australia Limited, in the exercise of its power of sale, and the debt secured by the mortgage was discharged with money paid out of the proceeds of sale of the Mosman Property. There was a surplus from the sale which the Trustee currently holds in a bank account. This constitutes the only asset of Mr Kelly’s estate.
9.	One of the two caveats was lodged purportedly on behalf of “Original Sovereign Tribal Federation” (OSTF). The estate or interest claimed by OSTF was :
	Treaty interests pursuant to treaty between registered proprietor/owner who is David Kelly and the Original Tribal Federation.
10.	Annexure “A” to the caveat asserts the existence of a treaty between Mr Kelly and the “Daragule Sovereign Tribal Council” in relation to “[t]he concerned lands” which form part of the “Daragule Sovereign Tribal lands” that “are not bound by the Crown”. The annexure asserts that the treaty grants to Mr Kelly “[u]nfettered and unrestricted occupation and possession of the concerned lands”. The statutory declaration that forms part of the caveat form appears to have been made, and I find was made, by Ms Williams. 
11.	By letter dated 11 August 2011 addressed to the “Insolvency Division” of OSTF, Insolvency and Trustee Service Australia informed OSTF that Mr Kelly had become bankrupt, that the Trustee understood OSTF holds security over the Mosman Property, and requested a copy of the relevant security documents. Attached to that document was a form requesting information. One item of information the form requested was the “[p]ayout figure as at the date of this letter (include breakdown of amount)”. On 29 August 2011 an employee of the Trustee’s office had a conversation with a Mr Ganabati in which Mr Ganabati said Mr Kelly and Ms Williams had come “to the OSTF seeking assistance in relation to action taken against [Mr Kelly]by the Mosman Council”. Mr Ganabati further said that OSTF claimed ownership of the Mosman Property and that the OSTF “will eventually be seeking to commence action to claim the rest of the continent”.
12.	The second of the two caveats was lodged by Ms Williams. In that caveat, Ms Williams asserted the following estate or interest:
Lydia Williams holds a caveatable interest in the [Mosman Property] by virtue of
1.	Private lease agreement 15.2.2007 for use of land and property for period of not less than six years from date of agreement, for pre-paid consideration stipulated by the agreement with David Kelly
2.	Payment agreement 31.7.2007 consideration paid by David Kelly to Lydia Williams by way of equitable interest in land in lieu of cash , for services.
13.	By letter dated 11 August 2011 the Trustee informed Ms Williams that Mr Kelly had become bankrupt, that the Trustee understood Ms Williams held security over the Mosman Property, and requested a copy of the relevant security documents. There is no evidence Ms Williams provided any documents to the Trustee in relation to the interests she claimed in the caveat.
14.	On 18 December 2012 an employee of the Trustee’s office provided to the major debt collecting agencies a Notice of Intention to Declare a Dividend to Creditors that was advertised on 18 December 2012 together with a proof of debt form. None of the major debt collectors have claimed to be creditors of Mr Kelly. On 9 July 2013 the Trustee caused to be published in The Australian newspaper a Notice of Intention to Declare Dividend to Creditors. No additional creditors responded to that notice. 
15.	There is in evidence correspondence between the Trustee and Ms Williams in relation to the Trustee’s inviting Ms Williams to lodge a proof of debt. The earliest correspondence in evidence is a facsimile transmission dated 25 January 2013 from Ms Williams to the Trustee requesting “an extension of time to lodge proof of debt documents, ref caveat AF561232”. It is unnecessary to set out the correspondence in full. 
16.	On 20 October 2014 Ms Williams sent to the Trustee by email a proof of debt. In that part of the proof of debt headed “Details of Debt/s”, Ms Williams provided the following information:
7/11/2007	MONEYS HELD IN TRUST	105,000	
31/7/2007 2011	CONTRIBUTIONS TO MORTGAGE + PROPERTY	53,210	
31/7/2007 2011	PAYMENT AGREEMENT 31/7/07	5,369,900	
1/8/2009	REFUND ON PRE-PAID STORAGE RENT	10,800	
Less: Payments received in reduction of debts	8,000	
Less: Estimated value of security		
Amount  claimed	5,425,610 [sic]	

17.	By Notice of Rejection of Proof of Debt dated 12 May 2015, the Trustee rejected Ms Williams’ proof of debt because the Trustee was not satisfied that the documentation Ms Williams provided, being the affidavits Ms Williams filed in these proceedings (to which I will refer later in these reasons) addressed the claims Ms Williams made in her proof of debt. There is no evidence that Ms Williams made an application under s.104 of the Act to review the Trustee’s decision.
18.	There is in evidence a list of all of the creditors the Trustee has been able to identify and who have lodged a proof of debt which the Trustee accepted. On 11 August 2011 the Trustee caused to be sent by post a Report to Creditors to all actual or potential creditors known to the Trustee. The Trustee gave notice to each of these creditors, and also to Ms Williams and OSTF of its intention to apply to this Court for an order under s.146 of the Act.
19.	In these circumstances, I am satisfied the Trustee has undertaken all reasonable steps to ascertain the identity of creditors of Mr Kelly, and that the Trustee has given to those creditors whom the Trustee has identified reasonable notice of its intention to apply for the orders the Trustee seeks in this application. Subject to my considering the matters raised by Ms Williams, I am satisfied that I should make an order under s.146 of the Act, and an order that the Trustee’s costs of the application be paid from the estate of Mr Kelly. 
Ms Williams’ asserted interest in the Mosman Property 
20.	From the outset of the proceedings, Ms Williams indicated she opposed the Court making an order under s.146 of the Act. The basis of Ms Williams’ opposition was her claim that she held an interest in the Mosman Property. 
21.	Over objection by the Trustee, on 25 August 2014 I directed that Ms Williams file her evidence by 7 October 2014, and I appointed 24 October 2014 as the date for my hearing the Trustee’s application. Ms Williams did not comply with my directions. On 24 October 2014 Ms Williams applied for further time. I ordered that the Trustee’s application be adjourned for judgment to 9 December 2014. That order, however, was made subject to Ms Williams filing and serving by 2 December 2014 an application in a case seeking an order for leave to re-open her case, and all affidavits and other evidence on which she relied.
22.	Ms Williams did not file an application in a case by 2 December 2014, although she did file one affidavit. I therefore made orders extending the time for Ms Williams to comply with the orders of 24 October 2014 to 5.00 pm on 8 December 2014. Ms Williams filed additional affidavits on 3, 8 and 9 December 2014. On 9 December 2014 I made further orders. I allowed Ms Williams until 23 December 2014 to file and serve all further affidavits on which she intended to rely for her claim that she held an interest in the Mosman Property. I directed the Trustee to file submissions on whether, on the materials Ms Williams has filed, Ms Williams has an arguable case that she holds an interest in the Mosman Property. I also ordered that, unless by 19 February 2015 Ms Williams or the Trustee were to request that the Court hear oral argument on whether Ms Williams holds an interest in the Mosman Property, the judgment of the Court on whether Ms Williams does have such arguable case would be reserved.
23.	On 23 December 2014 Ms Williams filed an application in a case in which she sought the following orders:
1.	Leave be granted to re-open the case for Lydia William’ [sic] claim
2.	The application by the official trustee in bankruptcy to distribute dividends pursuant to s 149 of the Bankruptcy Act 1966 from David Kelly’s estate be postponed until the Lydia Williams case has been properly assessed or heard.
3.	Leave be granted for Lydia Williams to file documents out of time
4.	An adjournment be granted or alternatively orders for AFSA dealt [sic] with this matter by alternate [sic] dispute resolution on the grounds of disability (Disability Discrimination Act s6) and Legal Services Directions 2005 appendix B part 2 under s55ZF of the Judiciary Act 1903
5.	Orders that the matter return to court if alternate dispute resolution is unsuccessful
6.	Any other orders as the situation requires
7.	Costs reserved
24.	On 1 May 2015 I ordered that the Trustee’s application for final relief filed by the Trustee on 10 July 2014 and the application in a case filed by Ms Williams on 23 December 2014 be set down for hearing at 10.15 am on 5 June 2015. On 5 June 2015 Ms Williams applied for the matter to be adjourned, but, for reasons I have given in separate reasons for judgment, I refused that application.  As I noted in those reasons for judgment, Ms Williams did not participate further in the hearing. 
25.	During the hearing on 5 June 2015, I informed Ms Farmer, who appeared for the Trustee, that, even though Ms Williams decided not to participate in the hearing, I proposed to consider the affidavits she filed with a view to considering the application in a case filed by Ms Williams. I further informed Ms Farmer that if, as a result of my reading those affidavits, some issue would arise I would inform the Trustee of those issues and give the Trustee an opportunity to make submissions. The principal issue I consider in these reasons is whether the affidavit material Ms Williams has filed raises an arguable case that she held an interest in the Mosman Property and, thus, currently holds an interest in the money the Trustee holds.
26.	From the material Ms Williams has filed, it appears she claims an interest in the Mosman property on three grounds. The first is an agreement or series of agreements Ms Williams says she made with Mr Kelly in 2007 in relation to a house Ms Williams owned in Berowra Heights. The second is the agreement Ms Williams claimed in the caveat she lodged. The third ground is financial contributions she made in the course of her relationship with Mr Kelly.
Evidence in relation to Berowra Heights home
27.	In January 2007 Ms Williams owned a property at Berowra Heights (Berowra Heights home). The Berowra Heights home was subject to a mortgage. As at 18 January 2007, the mortgage debt stood at $509,651.41. The Berowra Heights home was valued for mortgage purposes at $610,000. Ms Williams, however, was in arrears with her mortgage payments, and she had listed the Berowra Heights home with a real estate agent for sale.
28.	On 18 January 2007 Mr Kelly, whom Ms Williams knew from April 2005, proposed a deal. He said words to the effect:
I’ll buy your house. The equity in your property can go towards purchase of land for you debt free, and I can build the house. You can move into my place at Mosman and work from there, it will be close to your city clients.
Ms Williams agreed.
29.	In February 2007 Ms Williams moved in with Mr Kelly at the Mosman Property and, on 28 February 2007, Ms Williams and Mr Kelly entered into a contract for sale of the Berowra Heights home for the price of $700,000. In relation to the purchase price, Mr Kelly said “this will help in getting the maximum line of credit we need for building”. Ms Williams understood that the purchase price may have needed to be reduced as “the mortgage broker worked on various funding options”, and the contract was subject to finance.  On 28 February 2007 Mr Kelly informed Ms Williams he would “in the mean time[sic]” pay the mortgage on the Berowra Heights home but, one week later, Mr Kelly said he would “just pay the mortgage out in full when the sale goes through”.
30.	The completion of the sale of the Berowra Heights home was subject to “lengthy delays”. Despite this, Mr Kelly repeatedly told Ms Williams he intended to proceed, and that the mortgage broker was “still shopping around for finance”. In July 2007, Mr Kelly told Ms Williams that he could not get a loan for the original price, they needed to drop the price to $525,000 and put in a tenant to make it easier to obtain a mortgage, and that the tenancy income “needs to go towards my income”. Ms Williams said that she needed her debts to be paid out, and she asked about her equity. Mr Kelly responded:
I promise that I will preserve the original value of your equity in the property at January 2007 as agreed which will go towards your new property, and I will payout [sic] all your debts in full. I have the money.
31.	After this conversation, Ms Williams agreed to reduce the sale price of the Berowra Heights home to $525,000, and let the Berowra Heights home for a rent of $495 per week, which was paid to Mr Kelly. Mr Kelly and Ms Williams exchanged contracts for sale on 21 September 2007. The sale price was $525,000, and the contract required the payment of a deposit of $105,000. The contract was expressed to be subject to finance.
32.	Mr Kelly paid the deposit, in part by electronically transferring $50,000 into Ms Williams’ bank account, and, in part, by placing $55,000 cash “in the safe”. Ms Williams has annexed a statement of account from a “DirectSaver” account she held with St. George Bank. That records the transfer into that account of $20,000, $20,000, and $10,000 on 24, 25, and 26 September 2007 respectively. Ms Williams has not annexed any document recording the receipt of $55,000 cash.
33.	In November 2007 Mr Kelly told Ms Williams that he wanted “to temporarily put the deposit moneys to reduce the Mosman house mortgage while waiting for the finance approval for Berowra property, it will save costs”. Ms Williams deposes that she withdrew the money from her account, and took out the money she kept in the safe, and gave it to Mr Kelly. Ms Williams deposes Mr Kelly said the money “was going temporarily on his mortgage on property at 91 Ourimbah Rd Mosman”. Ms Williams also deposes Mr Kelly “issued a receipt in the presence of Jason Strong”. 
34.	Ms Williams has not annexed to any of her affidavits any receipt in relation to the money she says she paid to Mr Kelly. There is in evidence, however, statements of account from Ms Williams’ “DirectSaver” account and from a “Freedom” account she held with St. George Bank. These record the following transactions:
DirectSaver Account

Date	Description	Amount	
02.11.07	Internet withdrawal 02 Nov 17:23 transfer	9,000 Dr	
03.11.07	Internet withdrawal 03 Nov 23:10 transfer	9,900 Dr	
03.11.07	Internet withdrawal 03 Nov 23:12 transfer	9,950 Dr	
03.11.07	Internet withdrawal 03 Nov 23:21 transfer	950 Dr	
06.11.07	Internet withdrawal 06 Nov 12:59 transfer	9,999 Dr	
06.11.07	Internet withdrawal 06 Nov 13:03 transfer	6,000 Dr	
06.11.07	Internet withdrawal 06 Nov 16:42 transfer	4,520 Dr	

Freedom Account

Date	Description	Amount	
02.11.07	Internet deposit 02 Nov 17:23 transfer	9,000 Cr	
03.11.07	ATM withdrawal 03 Nov 12:13	2,000 Dr	
03.11.07	ATM withdrawal 02 Nov 22:52	2,000 Dr	
03.11.07	Internet deposit 02 Nov 23:10 transfer	9,900 Cr	
03.11.07	Internet deposit 02 Nov 23:12 transfer	9,950 Cr	
03.11.07	Internet withdrawal 02 Nov 23:16 transfer	9,950 Dr	
03.11.07	Internet withdrawal 02 Nov 23:18 transfer	4,005 Dr	
03.11.07	Internet deposit 02 Nov 23:21 transfer	950 Cr	
05.11.07	Cash withdrawal 	9,950 Dr	
05.11.07	ATM withdrawal 04 Nov 22:31	2,000 Dr	
06.11.07	Internet deposit 06 Nov 12:59 transfer	9,999 Cr	
06.11.07	Internet withdrawal 06 Nov 13:01 transfer	6,000 Dr	
06.11.07	Internet deposit 06 Nov 13:03
transfer	6,000 Cr	
06.11.07	Cash withdrawal 	9,950 Dr	
06.11.07	Internet deposit 06 Nov 16:42	4,520 Cr	
06.11.07	Visa purchase	195.40 Dr	
06.11.07	John Pye Real Es	5,883.64 Cr	
07.11.07	Cash withdrawal	9,950 Dr	
09.11.07	Internet withdrawal 08 Nov 23:26 payment	500 Dr	

35.	On 3 January 2008 Mr Kelly was granted a loan approval for $423,000. On or about 20 January 2008, however, Mr Kelly terminated the contract for sale of the Berowra Heights home, giving as his reasons his concern that he would not have “enough reserves for my Court case with Mosman Council”. The mortgagee then possessed the Berowra Heights home and sold it. Ms Williams received nothing from the sale.
36.	In 2008 Mr Kelly intended to honour his promise to buy the Berowra Heights home by entering into a contract to buy land for $65,000, and to spend $40,000 to build a small kit home. Mr Kelly did not proceed with that plan “because the land was not suitable for building”. Ms Williams claims that in February 2011 Mr Kelly arranged to sell the Mosman Property “with the intent that we get the money from the sale towards other property in honour of his promise to me”. That did not occur, however, because Mosman Council had placed a caveat on the title to the Mosman Property.
37.	Ms Williams claims that Mr Kelly held the amount of $105,000 in trust for her, and that this amount is traceable into the Mosman Property and, hence, in the balance of proceeds of sale of the Mosman Property the Trustee currently holds in a bank account.  Ms Williams expresses her claims as follows:
I am claiming $105,000 is my money held in trust by David in the property at Mosman either from the promises of preserving the value held in equity in my Berowra home at January 2007, or from the non-refundable deposit on an exchanged contract of sale, which was the money temporarily loaned to David to temporarily use on his mortgage on 91 Ourimbah Rd Mosman.
. . . 
I claim the moneys held by the official trustee in bankruptcy as part of David Kelly’s estate, which was from the sale of 91 Ourimbah Rd Mosman, is the moneys held in trust for me, from my equity in my Berowra home, or alternatively, from the non-refundable deposit on the contract of sale which David entered into. Its [sic] my money, not David Kelly’s.
Agreement referred to in caveat.
38.	Ms Williams annexed to one of her affidavits a written agreement dated 31 July 2007 (31 July 2007 Agreement) apparently signed by Ms Williams and Mr Kelly. That agreement is as follows:
Lydia will provide professional and other services for David as directed by David for the consideration of $2,000 per day, or $8,000 per day if payment deferred or late by more than 6 months.
1.	The daily rate applies even if less than 8 hours or more than 8 hours work is done in a day
2.	The deferred rate of $8,000 per day shall be used in billing other parties
3.	Payment becomes due immediately on performance of work
4.	David to pay ongoing project and Lydia’s expenses
5.	Lydia may lower the charge rate for unskilled work to fair market value
6.	David gives equity in land as security for payment, and automatically assign ownership in land and property at 91 Ourimbah Rd Mosman NSW to Lydia, to value of work done, in place of payment, until such time the payment is made to Lydia.
7.	Any work done shall remain the intellectual property of Lydia until the account is fully paid
8.	Any error or invalidity of a part of this agreement does not invalidate the agreement of any other part.
39.	Ms Williams claims in one of her affidavits that she provided professional services under the 31 July 2007 Agreement in the amount of $1,200,000. She claims she undertook the following work:
Work to restore license, Work on Mosman Council court case under direction from David, 5 years work research legislation, case law, building codes and regulations, writing affidavits, correspondence, project management, seeking legal resources, agent in land and environment court, Mackenzie friend in other courts, work under power of attorney, media appearances, etc. meetings with council, communicating with MPs, ombudsman, ICAC, meetings with lawyers, trips interstate for meetings with lawyers and barristers, land and environment court matters, supreme court of appeal, bankruptcy matters federal magistrates court, local court, district court. Work on Creighton matter, Paleau (former tenant who sued), damages claims, dealing with car accidence and insurance claims, fixing credit records information, reading the constitution of the commonwealth of Australia to David, Mitigating risks by getting planning with David alternative strategies.
Average 3 days per week for 5 years, rates as per payment agreement 31/7/2007.
David paid part of amounts with equity in Mosman home. Affidavit of Lydia Williams 23/12/14 held in trust in Mosman home.
40.	In a different affidavit, Ms Williams says that “the costs associated with the work done were in excess of $948,000 in accordance to rates of payment agreement and . . . for which David had been presented with bills”. Ms Williams also says:
Apart from basic expenses and  $8,000 which he gave towards a car . . . David didn’t pay me for my work until he paid me with equity in the home at 91 Ourimbah Rd Mosman in 2010. I had a bill with current balance updated from time to time, in David’s view so he was aware of amounts owing. He chose to defer the payment until claimed back from Mosman Council.
41.	Ms Williams has not annexed to any of her affidavits the bill or bills she says she prepared and had presented to Mr Kelly.
Financial contributions
42.	Ms Williams says that, although they were not married, she and Mr Kelly were in a relationship,  and in February 2007 Ms Williams moved in with Mr Kelly at the Mosman Property. Ms Williams worked in Mr Kelly’s business. Mr Kelly depended on Ms Williams to drive him to and from work while he was disqualified from doing so and, because of Mr Kelly’s dyslexia, to read and write for him. Mr Kelly told Ms Williams he would look after her, that he was sharing everything he had with her, and that “it will be alright”. Ms Williams said she helped complete the building works on the Mosman Property garage and painted the house and garage. She landscaped the gardens for five years and did domestic work. Mr Kelly managed the finances and “was quite secretive about the money he had”. Ms Williams did not have access to Mr Kelly’s accounts and Mr Kelly “paid the bills and managed the money”. In 2009, however, Ms Williams and Mr Kelly established linked accounts so that Ms Williams could pay utilities by Internet after Mr Kelly had heart surgery. After the heart surgery, Ms Williams gave Mr Kelly “money from the safe for mortgage payments and credit card” and accompanied Mr Kelly to the bank. In around 2010, when Mr Kelly was in Queensland, Ms Williams “made direct deposits to the commonwealth bank credit card and the mortgage with a deposit card”. Ms Williams deposed:
We were in a relationship, we pooled the money, we didn’t keep receipts or records of transactions like one would in a commercial environment, just handed the money over to him, we had trust between us.
43.	In May 2010 Mr Kelly abandoned making mortgage and credit card payments. 
44.	In addition to the $105,000 and $1,200,000 Ms Williams claims are subject to trusts, Ms Williams claims a number of other amounts. 
a)	The first is $18,200 which represents the prepayment Ms Williams paid on account of storage of business records. That claim purports to be supported by a receipt dated 24 February 2007 apparently signed by Mr Kelly. The particulars of the receipt are “Rent at 91 Ourimbah Rd Mosman 24 02 2007 to 10/02/2013”.
b)	The second amount is $10,000 which, Ms Williams says, represents the value of personal effects and tools she owned which were used by Mr Kelly. 
c)	The third amount is $13,763.55 which, Ms Williams says, represents rent from the Berowra Heights home.
d)	The fourth and fifth amounts are $18,720 and $5,000   income Ms Williams says she contributed to the relationship.
e)	The sixth amount is $25,000 which represents the value of the work Ms Williams says she undertook in connection with Mr Kelly’s business.
f)	The seventh amount is $33,987 which represents a claim for work and money Ms Williams says she undertook and paid for the benefit of the Mosman Property.
g)	The eighth and ninth amounts are $45,000 and $4,000 respectively. Ms Williams says the $45,000 represents ten monthly mortgage payments for the Mosman Property of $4,500 made from August 2009 to May 2009, and the $4,000 represents nine payments made on account of Mr Kelly’s credit card for the same period. Ms Williams says that these amounts were paid “from my income and money reserved for my future land and house, was used for mortgage and credit card payments because we were in a crisis as David had heart surgery, was ill and debts needed to be paid” and that Ms Williams “expected to get it back when David recovered or when house was sold.
h)	The tenth amount is $10,000 which, Ms Williams says, represents cash for legal work “David recorded the payment in his diary” as “[p]ayment to Peter King, Barrister. Receipt missing”.
Is there an arguable case Ms Williams acquired interest in Mosman Property?
45.	I am not satisfied Ms Williams has a reasonably arguable case she acquired an equitable or other interest in the Mosman Property even if I were to assume that Mr Kelly paid to Ms Williams $105,000 on account of a deposit under the contract for sale of the Berowra Heights home; that, during the pendency of that contract, Ms Williams agreed to temporarily release the deposit to Mr Kelly; that Mr Kelly repudiated the contract; and that he thereby became liable to repay the $105,000 to Ms Williams. Apart from Ms Williams asserting that the $105,000 was used by Mr Kelly to reduce the interest costs of the mortgage over the Mosman Property, there is no evidence that the money Ms Williams says she paid to Mr Kelly was used by him to discharge any part of the mortgage debt.  To that extent, I agree with the Trustee’s submissions. The same may be said about the claims Ms Williams makes concerning the $45,000 and $4,000 she says she paid on account of the mortgage and credit card. There is no evidence that these amounts were used to discharge any part of the mortgage debt secured by the Mosman Property.
46.	The claim Ms Williams makes under the 31 July 2007 Agreement raises different considerations. On its face, the agreement purports to secure Mr Kelly’s obligations under the agreement. If, as Ms Williams claims, she undertook work pursuant to that agreement and if, as Ms Williams also claims, Mr Kelly made no payments under the agreement, Ms Williams became entitled to $8,000 (being the deferred rate provided for in the agreement) for every day she undertook work that fell within the terms of the agreement.
47.	The Trustee submits Ms Williams has provided no documents in support of this claim, such as time sheets or tax invoices. That is true. Ms Williams, however, does not claim she prepared no documents in relation to the work she claims she performed. As I have already noted, Ms Williams says she presented bills to Mr Kelly, and that she had a bill that showed a current balance that Ms Williams says she updated from time to time. Even in the absence of bills, however, it is reasonably arguable that Ms Williams’s assertions in her affidavit that she carried out the work she says she carried out pursuant to the 31 July 2007 Agreement is admissible evidence of the fact that she did carry out the work she asserts she did and that, therefore, Mr Kelly became obliged to make payments under the 31 July 2007 Agreement, and that Mr Kelly’s obligations were secured by the Mosman Property.
48.	There is no reasonably arguable case that Mr Kelly assumed a liability to Ms Williams in relation to the $18,200 Ms Williams says was paid for storage. The receipt on which Ms Williams relies states it is for rent. Even if I were to assume that amount represented a liability by Mr Kelly, there is no evidence that could reasonably support a finding that Mr Kelly’s obligation was secured by the Mosman Property.
49.	There is no reasonably arguable case that Mr Kelly became liable to pay to Ms Williams $10,000 or any other amount in relation to Mr Kelly’s use of personal effects and tools owned by Ms Williams. There is no evidence of the personal effects and tools Ms Williams claims Mr Kelly used or of the value of those effects and tools. Further, given Mr Kelly and Ms Williams lived as a de facto couple, if there were evidence that Mr Kelly used personal effects and tools owned by Ms Williams, the more probable inference that would be drawn is that Ms Williams intended Mr Kelly use the personal effects and tools without charge.
50.	Ms Williams does not have a reasonably arguable case that the $13,763.55 rent that was paid to Mr Kelly in relation to the Berowra Heights home, and the $5,000 and $18,720 income Ms Williams earned and contributed towards her relationship with Mr Kelly, were intended by Ms Williams and Mr Kelly to give rise to a debt by Mr Kelly to Ms Williams or was intended to give rise to any interest in the Mosman Property. The only conceivable way in which such amounts could arguably be treated as creating an equitable interest in the Mosman Property is by the application of the principles considered in Muschinski v Dodds and Baumgartner v Baumgartner. The relevant principles were usefully stated by Campbell J (as his Honour then was) in West v Mead:
	Before any particular asset can become subject to a constructive trust in accordance with the Baumgartner principle, one needs to have a joint relationship or endeavour, and an asset acquired in the course of, and for the purposes of, that joint relationship or endeavour. . . 
	In accordance with this approach, a plaintiff needs to establish that there is indeed a joint endeavour between the parties, in which expenditure is shared for the common benefit. It is also necessary to identify what the scope of that joint endeavour is. It is a question of fact, for any couple, what the scope of the joint endeavour they are engaging in is. Further, for any couple, the scope of the joint endeavour they are engaged in might change from time to time. If, within the scope of a joint endeavour which lasts for years, an asset is acquired, as a result of contributions both parties have made, and for a purpose of the ongoing joint endeavour of the parties, this gives rise to the presumption that the beneficial interest ought be shared equally. That presumption can be displaced if one party is able to show that the contributions, both financial and non-financial, to that asset should be regarded as unequal. In practical terms, this way of proceeding will place the onus of attributing a value to non-financial contributions on the person who asserts that the title should be held unequally.
51.	The evidence does not raise a reasonably arguable case that Ms Williams contributed the amounts of the $13,763.55 rent that was paid in relation to the Berowra Heights home, and the $5,000 and $18,720 she earned as part of any joint endeavour in relation to the Mosman Property. The more reasonable inference, assuming Ms Williams made the contributions, were that the contributions simply were contributions towards the common living expenses of Ms Williams and Mr Kelly. 
52.	Ms Williams’ claims for $33,987 she says represents work and expenditure in relation to the Mosman Property could possibly raise a different consideration if there was evidence of the amounts Ms Williams says she expended for the purposes of the Mosman Property, and of the actual work she did. There is no evidence in relation to these matters, other than broad assertions by Ms Williams that she undertook the work and made financial contributions. In my opinion, these assertions by themselves raise no reasonably arguable claim that Ms Williams acquired an interest in the Mosman Property as a result of her spending money on or doing work in relation to the Mosman Property.
53.	There is no reasonably arguable case that Ms Williams acquired any interest in the Mosman Property in relation to the work she claims she undertook for Mr Kelly’s business. If those claims were supported by evidence of the precise work she undertook, and the value of the work, it could arguably have given rise to a claim that Mr Kelly became obliged to pay Ms Williams for the work she did (assuming the business was in fact conducted by Mr Kelly, rather than by a company). It would not, however, give rise to a reasonably arguable case that Ms Williams acquired an interest in the Mosman Property. 
54.	Finally, there is the $10,000 cash payment Ms Williams says she made to lawyers for the benefit of Mr Kelly. If there were evidence that the $10,000 Ms Williams paid was her money, she would have a reasonably arguable case that Mr Kelly became liable to Ms Williams to pay to her $10,000 (as on an action for money paid). There is no evidence that the $10,000 was money that Ms Williams owned. Even if, however, there were such evidence, Ms Williams would not have a reasonably arguable case that that conferred on her an interest in the Mosman Property.
Conclusion and disposition
55.	Given my conclusion that Ms Williams has a reasonably arguable case that Mr Kelly became obliged to Ms Williams to make payments to her under the 31 July 2007 Agreement, and that such obligations are secured by the Mosman Property, it would be inappropriate to make an order under s.146 of the Act authorising the Trustee to distribute the funds the Trustee currently holds without there being a hearing about whether Ms Williams does hold a security interest in the Mosman Property under the 31 July 2007 Agreement. If, as a result of that hearing, the Court determines Ms William did not have any interest, I will make an order under s.146 of the Act. If, on the other hand, Ms Williams establishes she held a security interest in the Mosman Property in an amount equal to or greater than the balance of the proceeds of sale of the Mosman Property, it may well be that the money will have to be paid to Ms Williams.
56.	In my opinion, it would be in the interests of the administration of justice that I permit Ms Williams to reopen her case for the limited purpose of the Court determining whether she held a security interest over the Mosman property. As I have found, Ms Williams has a reasonably arguable case that she did acquire a security interest over the Mosman Property. Further, Ms Williams is an unrepresented litigant, and the issues she has raised are far from straightforward. 
57.	I propose to order, therefore, that a date be set down for the hearing of the question whether Ms Williams held a security interest in the Mosman Property as a result of the 31 July 2007 Agreement. I propose to allow Ms Williams one further opportunity to put on evidence of all documents which refer or relate to the work she claims she undertook pursuant to the 31 July 2007 Agreement, including the bills she says she provided to Mr Kelly. 
58.	I otherwise propose to dismiss the application in a case Ms Williams filed on 23 December 2014. I can see no utility in referring the matter to mediation. Ms Williams is adamant she is entitled to the money the Trustee holds; and the Trustee has formed the view that Ms Williams has not provided documents that support her claims. In my opinion, the issue of whether Ms Williams has an interest in the Mosman Property under the 31 July 2007 Agreement will be most efficiently determined by the Court conducting a hearing on that question, and making the appropriate findings after the hearing.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate:  

Date: 13 November 2015