DISTRICT COURT OF QUEENSLAND

CITATION:	De Whalley Farrall v Money [2017] QDC 84	
PARTIES:	MICHAEL DE WHALLEY FARRALL 
(plaintiff)
v
DEBORAH MONEY 
(defendant) 	
FILE NO/S:	92/2012	
DIVISION:	Civil	
PROCEEDING:	Trial	
ORIGINATING COURT:	District Court at Southport 	
DELIVERED ON:	13 April 2017	
DELIVERED AT:	Southport	
HEARING DATE:	5-6 October 2016; 21 December 2016	
JUDGE:	Kent QC DCJ 	
ORDER:	1.	It is declared that the defendant holds her interest in the property at 45 Skyline Terrace, Burleigh Heads in the State of Queensland, described as Lot 2 on Registered Plan 120975, County of Ward, Parish of Mudgeeraba, Title Reference 14413015 on trust for herself and the plaintiff as tenants in common in equal shares;
2.	The plaintiff’s interest therein is subject to a charge in favour of the defendant to the extent of the imbalance in the parties’ contributions to the property, in an amount to be agreed or determined.	
CATCHWORDS:	EQUITY – TRUSTS AND TRUSTEES – EXPRESS TRUSTS CONSTITUTED INTER VIVOS – DECLARATION OF TRUST – GENERALLY – where the subject matter of the alleged trust was a residential property, acquired by the defendant during her de facto relationship with the plaintiff – where the trust is alleged to be created by a deed signed by the parties – where the deed stated the defendant held the property on trust for the plaintiff – where it was alleged the plaintiff failed to perform certain obligations required by the deed – whether the agreement was repudiated – whether a repudiation was accepted – whether the deed is enforceable – whether the property is held on trust by the defendant for the parties – whether the defendant holds the property on trust for the parties as tenants in common in equal shares – whether an account should be taken of the contributions made by the plaintiff
EQUITY – TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – UNCONSCIONABLE CONDUCT – where the defendant acquired a residential property during her de facto relationship with the plaintiff – where it was alleged the plaintiff contributed to the acquisition, conservation and improvement of the property – where the defendant denied the plaintiff an interest in the property – whether the plaintiff contributed to the property – whether it would be unconscionable to deny the plaintiff a beneficial interest in the property – whether a constructive trust should be imposed over the property, reflecting the respective contributions by the parties to that property 
Property Law Act 1974 (Qld), s 11, s 45
Uniform Civil Procedure Rules 1999 (Qld), r 389
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59, considered
Davis v Richards and Wallington Industries Ltd [1991] 2 All ER 563; [1990] 1 WLR 1511, cited
Foran v Wight (1989) 168 CLR 385; [1989] HCA 51, cited
Marshall Futures Ltd v Marshall [1992] 1 NZLR 316, cited
Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78, applied
Ogilvie v Ryan (1976) 2 NSWLR 504, cited
Nolan & Ors v Nolan [2015] QCA 199, cited	
COUNSEL:	S Kissick for the plaintiff
A Collins for the defendant	
SOLICITORS:	Browns Lawyers for the plaintiff
Craig Ray & Associates for the defendant	
[1]	In this action, the plaintiff claims an interest in a residential property at 45 Skyline Terrace, Burleigh Heads (“Skyline Terrace”) on the basis that it was acquired by the defendant during a de facto relationship between the parties; the plaintiff contributed to the acquisition, conservation and improvement of the property; further, during a legal dispute about the parties’ rights concerning Skyline Terrace and another property (222 Cooper’s Camp Road, Ashgrove, jointly held by the defendant with her two sons, the “Ashgrove property”), a Deed of Release was signed (the “Deed”), expressly creating a trust; and, in the circumstances, either the defendant holds Skyline Terrace on trust for the parties as tenants in common in equal shares, or otherwise an account should be taken of the contributions made by the plaintiff. 
[2]	The defendant rejects these claims saying the Deed is of no effect as the plaintiff has not performed his obligations thereunder, particularly by failing to discontinue the action and also by not contributing his share to the shortfall of the mortgage payments; thus he has repudiated it, which was accepted; she does not admit the plaintiff’s work increased the value of Skyline Terrace; and says it is not unconscionable for her to deny any interest of the plaintiff in the property, which she does. Further, as to reliance on the Deed, she refers to delay and relies on the doctrine of laches.
[3]	The trial took place over two days in October 2016, with final submissions in December 2016 and further written submissions in January 2017.
Background
The relationship
[4]	The parties have known each other for many years. The plaintiff is a former solicitor who has practised at times, and also worked as a company director and a mediator. The defendant is a social worker. They seem to have first commenced a relationship in about 1998 and lived together from August 1999.  They lived together initially in the defendant’s Ashgrove Property, where she lived with her sons.  They travelled to Europe together in August 1999, however thereafter the defendant remained living and working in the United Kingdom.  In July 2000, she returned to Australia and lived with the plaintiff at 12 West Street, Burleigh Heads. The parties accept there was a de facto relationship from March 1999 to December 2001.
[5]	In April 2001, the defendant became the registered owner of Skyline Terrace, during the relationship.
[6]	In December 2001, the defendant left Australia to live in the United Kingdom and the plaintiff left to live in Canada.  The parties spent time together in Ireland and other places at various times around this period.  They later lived overseas separately. 
[7]	In or about January 2005, after each had returned from overseas, the couple were living, at times, at Skyline Terrace – there is a dispute as to whether this was as a de facto couple or housemates. The plaintiff’s case is that the de facto relationship continued until March 2005.  The defendant says the relationship did not persist after December 2001 and refers to a binding determination of the Federal Circuit Court of Australia in that regard.
The Deed
[8]	In March 2005, the plaintiff lodged caveats over both properties, as he said to protect his interests as the defendant was trying to “cut me out”. This was, of course, in the context that the parties had previously been in a de facto relationship that persisted according to the plaintiff, but not the defendant (the plaintiff later failed, in the Federal Circuit Court, to establish it persisted past December 2001), and there was at least an acknowledged contribution by the plaintiff to the Ashgrove Property of $23,000. Pursuant to the caveats three months later, he issued proceedings in the Supreme Court of Queensland claiming a property distribution pursuant to the de facto property provisions of the Property Law Act 1974 (Qld). The proceedings necessarily named the defendant’s sons, as they were co-owners of the Ashgrove Property, but it seems the proceedings were not served on them.
[9]	The parties settled that dispute with a deed of release (not properly witnessed, and thus not taking effect as a deed, but effectively a signed agreement), signed 10 February 2006. The Deed was the third version. The first one was torn up by the defendant, and the second one was destroyed by her putting her pen through the paper. Thus, it is not surprising the final version contains several provisions which favour her position and upon which she insisted. It provided for the defendant holding half of the real property at Skyline Terrace on trust for the plaintiff. Consent orders to that effect were intended to be filed, discontinuing the action, but this did not happen.  This is one of the features relied on by the defendant as to non-performance by the plaintiff of the terms of the Deed. The Deed also contemplated the execution of a separate declaration of trust which was prepared, but not signed. The caveats, which had preceded the action were withdrawn at some stage, as the Deed required.
Occupation of the property
[10]	The evidence shows that the defendant occupied Skyline Terrace and the plaintiff came and went on a weekly basis until late 2008, as he was conducting his solicitor’s practice in Brisbane.  Again, at this stage the plaintiff took the view that the relationship was as a de facto couple, but the defendant took the view this was merely as housemates. The plaintiff’s amended statement of claim alleges the resumption of the relationship; the defendant denies this.  
[11]	In about late 2008, the plaintiff took up full-time residence at Skyline Terrace.  In August 2009, the defendant left the address, returning in mid-2010 and the plaintiff left not long thereafter.  He has lived in Victoria for some years now.
Litigation history
[12]	The lengthy litigation in this matter involved, apart from the Supreme Court proceedings and this action, proceedings in the Federal Magistrates Court of Australia (later the Federal Circuit Court) at Brisbane, where the plaintiff sought a declaration of the existence of a de facto relationship in order to invoke the jurisdiction of the Family Law Act.  These were commenced in 2010. There was a hearing that proceeded to judgement; an appeal and a re-trial. The second judgment was delivered in 2015.
[13]	As noted above, the eventual conclusion of those lengthy proceedings was that the parties agreed there had been a de facto relationship between March 1999 and December 2001, a period of two years, nine months.  However, the final ruling of Judge Baumann was the plaintiff failed to establish any de facto relationship, as defined in the legislation, had existed between the parties since 2001 (the relevant cut-off date for the applicability of the legislation sought to be relied on by the plaintiff was 1 March 2009).
[14]	Proceedings had been commenced in this court, but this action was stayed in 2012 pending the outcome of the second Federal Circuit Court proceedings in 2015. It then recommenced and proceeded to conclusion.

Summary of the plaintiff’s case
[15]	The defendant became the registered owner of Skyline Terrace during the currency of the de facto relationship. The plaintiff’s Supreme Court action concerned both it and the Ashgrove Property, to which the plaintiff had contributed. The plaintiff thus contends the original Supreme Court proceedings were a serious endeavour, i.e. asserting substantial rights, which it was in the interests of the defendant to compromise.  Thus, the Deed, although not formally perfected, was supported by consideration and constitutes evidence of the parties’ intentions, namely that the defendant ought hold in trust for the benefit of the plaintiff one half of her interest in Skyline Terrace. 
[16]	It is further contended this is appropriate and fair, given the contributions by the plaintiff to both Skyline Terrace and the defendant’s Ashgrove Property.  Thus, it is said there was an intention to create a legal half interest in Skyline Terrace, held on trust by the defendant for the plaintiff, and it is unconscionable for the defendant to retain the benefit of the whole of the property to the exclusion of the plaintiff. 
Pleadings
Amended Statement of Claim
[17]	The plaintiff’s amended statement of claim was filed on 8 January 2016.  It pleads in paragraph 9 that the defendant held the legal title to Skyline Terrace upon trust for the parties in equal shares, by reason of the operation of the Deed as and from 9 February 2006.  As noted above, it is common ground that the “deed” does not operate as such because the relevant formalities for creation of a deed have not been observed.  Although the parties to this action signed the document, it was not witnessed and, further, the action to which it related included the defendant’s sons as parties because of their interest in the Ashgrove Property, and yet they are not parties to the Deed. Thus, whatever the status of the document, it did not concern all parties to the relevant action it sought to compromise.
[18]	It is pleaded that, in breach of the agreement set out in the deed, the defendant wrongly refinanced the property in about November 2011; secured a larger mortgage and retained the extra part of the advance ($127, 000) for herself.  It is pleaded that half of this sum ought to be paid to the plaintiff pursuant to clause 5 of the Deed, which explicitly required any further borrowings to be consented to and equally shared.
[19]	The plaintiff pleads a number of contributions which he says he made to Skyline Terrace; mortgage payments and repairs/improvements.  These are referred to both in furtherance of his allegation of unconscionability and also as acts of part performance, presumably establishing a perfection of the written agreement.  Thus, the plaintiff pursues specific performance of the Deed.  He also relies on a constructive trust. 
[20]	The pleaded facts include the defendant’s sole retention of the rentals and income from the property (I note that the mortgage is in her name and therefore her responsibility) and the defendant’s residence in the property to the exclusion of the plaintiff.  
[21]	The plaintiff claims, apart from the interest in the property, an account of half of the further advance obtained by the defendant, and accounting for half of the rental income, alternatively occupation rent.
Amended Defence 
[22]	The defendant pleads that the purported Deed did not take effect as a deed.  Further, the plaintiff did not comply with its terms, because there was no notice of discontinuance filed, and the plaintiff breached the terms of the purported Deed by not paying one half of the shortfall between rental income and the expenses associated with the property, including mortgage payments, insurance, rates, taxes, upkeep and maintenance.  Thus, it is said, the plaintiff has evinced an intention to no longer be bound by the purported Deed and has repudiated it.  This repudiation is said to have been accepted (by conduct) and thus the agreement, such as it is, is of no effect. 
[23]	The defendant also pleads that the term (clause 5) of the Deed entitling the plaintiff to half of any further borrowings only applies to money borrowed by agreement where the parties are severally liable; this is not such a case.
[24]	There is a clear factual issue between the parties as to whether the plaintiff contributed to the mortgage payments for Skyline Terrace between 2001 and 2010. The defendant pleads that the plaintiff made some payments after 2006, but none earlier. It is denied there is part performance or any unconscionability, or that a constructive trust arises.
[25]	The defendant pleads that she has not wrongly retained rental payments. They went towards the mortgage. She denies any obligation to the plaintiff and says, that in relation to relief upon the Deed, specific performance may be refused because of laches.
Amended Reply
[26]	The plaintiff pleads that whether or not the document took effect as a deed is irrelevant. It was supported by consideration. The defendant eschewed her obligations, so that the correct view is not that the plaintiff repudiated. He joins issue on a number of matters.
The Issues

The effect and status of the Deed
[27]	The Deed was signed by the parties at a time when they had known each other for a number of years and had previously been in a de facto relationship. They had been involved in both of the properties and the plaintiff had made at least some contributions of substance thereto. Its purpose was to compromise serious litigation. Thus, the issue of the legal effect of the Deed is of central importance; whether it is, as the plaintiff argues, clear evidence of an express trust and a binding agreement; or conversely as the defendant argues, a non-binding agreement because of its features, including omission of the defendant’s sons; the non-execution of the separate declaration of trust; the contrary evidential matrix; its terms were not complied with; the parties did not intend an interest to be created forthwith and it was contingent on unmet obligations.
The evidence on this issue
[28]	The plaintiff says that at the time of the Deed’s execution the parties were in a court dispute of real significance such that compromising it represented real value to the defendant; it was not repudiated and remains in effect and is able to be enforced. 
[29]	The defendant properly concedes that for an extended time after February 2006, the parties considered there was an agreement in place. On this point, there are instructive emails in exhibit “MDWF 23” to Mr Farrall’s affidavit. The defendant’s email to the plaintiff of 12 October 2009 says, inter alia, “Nothing has changed your interest in Skyline is protected” (p208); it was treated as a joint venture (p214); the plaintiff wanted his interest formalised but the defendant resisted saying there is a signed agreement (p219); the defendant regarded them as joint owners but wanted the property and mortgage to be held as tenants in common (p222); the parties have equal shares in Skyline Terrace (p228); it is a “joint financial partnership” as at 22 February 2010 (p232).
[30]	By April 2010, relations soured when the plaintiff again lodged a caveat claiming an interest over both the Ashgrove Property and Skyline Terrace (he was concerned about the insecurity of his position when made aware of the defendant’s impending sale of the Ashgrove Property). However, the defendant’s solicitor again confirmed on 8 April that the agreement gave Mr Farrall “½ of Skyline Terrace” with proceeds to be equally divided after a sale. This was without any demur as to the nature of the Deed or any non-compliance, either lack of a notice of discontinuance or insufficient contributions. He was a “half owner”. The house was “in common”. Further, evidence given in 2011 by the defendant in the Federal Circuit Court indicates she considered the agreement to be binding and she had legal advice at or around the time of signing it.
[31]	The plaintiff also points to the joint account opened for the property, from which the mortgage was paid from 2007. This ceased in July 2010, after the defendant opened a new account in her sole name and arranged for the rent to be deposited into it. She later refinanced through the Commonwealth Bank, indicating (falsely, on the plaintiff’s case) that she owned Skyline Terrace. The refinancing is said to have been in breach of an undertaking to the Federal Circuit Court on 11 June 2010. As to the relevance of the non-discontinuance, the plaintiff refers to “MDWF 26” where the defendant gave evidence that she would never allow consent orders that said there was a relationship. Clause 8 of the Deed requires consent orders as well as a notice of discontinuance and this was problematic. The plaintiff gave evidence that he could not organise it with the defendant, because she would not give him the name of her lawyer. He deposed to these efforts in his affidavit at paragraph 76. He also said he thought the effluxion of time would extinguish the action. This of course has some substance, particularly after a two year delay.
[32]	The defendant’s concession being properly made, it must be considered whether the agreement continued to be binding, or as the defendant argues, did its effect cease at some point.
[33]	Her evidence is that she was placed under pressure at the time of signing the Deed, however this is not said to amount to duress in a legal sense. She refers to the failure to discontinue the Supreme Court proceedings and this being used by the plaintiff to verbally threaten her; however, as outlined above, this did not feature in her, or her solicitor’s, correspondence, or in her 2011 evidence. It is raised in her pleadings.
[34]	I shall return to the question of repudiation after mentioning some other relevant issues.
Other evidentiary issues
Financial contributions
[35]	There is a schedule of financial contributions helpfully provided by the defendant’s counsel which summarises the position and is not strongly contentious. This summarises the parties’ financial contributions as being $65,166.01 for the plaintiff and $73,730 for the defendant.
[36]	However, there are also withdrawals, and these are summarised as $80,819.03 for the plaintiff and none for the defendant. This includes money transferred by the defendant to the plaintiff out of her further borrowings, $29,697.42 in March 2006 and $12,629.77 in February 2008, for which the plaintiff is also said to be responsible for interest. There is no reference to the defendant accounting for her equivalent receipts; this may be because she acknowledges she remains responsible to the bank for the whole borrowings. The plaintiff asserted in evidence that the defendant also made many withdrawals, but could not point to evidence of this.
[37]	The non-financial contributions by the plaintiff are referred to, particularly in the statement of claim. However, no quantification of the value of this work has been proven, for example, as an identifiable increase in value. Rather, it is relied on as a circumstance relating to his part performance of the Deed and the unconscionability of the defendant withdrawing from it.
Occupation of the Property
[38]	The defendant’s material also includes a helpful schedule of residences, so that occupation of the property may be assessed. This indicates broadly that during the period 2007 – 2010 the defendant resided there for 29 months and the plaintiff for 22 months. Since August 2010, the defendant has apparently resided at the property, or at least been in sole receipt of the rent and responsible for paying the mortgage. It seems clear the plaintiff moved to Victoria after he was, as he says, excluded from the property by the defendant changing the locks.
Discussion
Express trust?
[39]	The pleadings refer to various acts amounting to part performance by the plaintiff of his obligations under the Deed; thus, it is unconscionable for the defendant to withdraw therefrom, and the plaintiff is entitled to specific performance of the obligations thereunder, presumably recognising the plaintiff’s interest. If there was an express trust created by the words of the deed, however, unconscionability may have a lesser role; there would have been a trust created which presumably persists.
[40]	When the concept of an express trust was raised as opposed to the constructive trust previously referred to, further submissions were made on the issue. There would need to be certainty of intention to create a trust, certainty of the subject matter, and certainty of the objects, that is, the beneficiary must be ascertainable and identified. These features are all present. However the defendant submits that the signed deed does not satisfy the requirements of s11(1)(b) of the Property Law Act 1974 (Qld); this despite it being in writing and signed by her, as the section requires. She submits that the relevant part of the deed appears in the recital rather than the operative; also it refers to the agreement having been previously made, rather than the trust being declared by that document. She also submits a separate declaration of trust was prepared but not signed, thus eroding the conclusion that the trust was created by the deed. Further the deed does not in terms provide for immediate vesting of the interest. 
[41]	Rather than an effective express trust, these features are argued to be more consistent with an executory trust, where there is an enforceable agreement to create a trust but the parties contemplate a separate specific trust instrument; here, the unsigned Declaration of Trust. See Davis v Richards and Wallington Industries Ltd [1990] 1 W.L.R. 1151 at 1537 per Scott J.
[42]	Importantly, the defendant also points out that the balance of the deed contains elements which are executory in nature. Clauses 6 and 7 contemplate the agreement (and thus the interest created thereby) coming to an end if the condition therein (withdrawal of the caveats) is not met. Thus the deed did not create an express trust but rather an executory trust; there was an enforceable agreement to create a trust. Such an agreement may, of course, be ordered to be specifically performed, which the plaintiff seeks.
[43]	As to this remedy, the defendant submits the plaintiff has not complied with his contractual obligations under the deed, particularly the failure to discontinue the Supreme Court action and failure to meet one half of the shortfall between the rent and the mortgage payments. These matters amount to repudiation which was accepted and the contract thus at an end.
[44]	The plaintiff conversely submits that he did perform his obligations, the defendant repudiated but he did not accept this, the agreement remains in force and able to be specifically enforced and the relevant interest declared.  
[45]	If either an executory or a constructive trust were the basis for the plaintiff to succeed, the defendant argues that relief should be refused in the court’s discretion as the plaintiff has unclean hands. She refers to the matters outlined above as amounting to a repudiation.
[46]	In my view an executory trust is the proper conception of the parties’ arrangements. Thus the status of this agreement, particularly repudiation, must be considered.
Repudiation
Plaintiff
[47]	There is a repudiation if a party to a contract manifests an intention not to perform the substance of his or her side of the exchange; see e.g. Foran v Wight (1989) 168 CLR 385 per Brennan J at 416.  
[48]	Thus in this case, the first question is whether the plaintiff repudiated the agreement.  The plaintiff never in terms indicated any intention that he was unwilling to perform the substance of his side of the exchange.  Rather, of course, he has been at pains to maintain that the arrangement remained on foot. 
Plaintiff’s Failure to Discontinue  
[49]	The defendant points to, firstly, the plaintiff’s failure to discontinue the Supreme Court action thus, as she submits, intentionally reserving for himself a lever to place some pressure on her during the ensuing period.  In this context it is important to note that the requirement in the deed for a discontinuance is part of cl 8, which also refers to a consent order being prepared.  The plaintiff’s explanation for the failure to follow through with these procedures is that he was unable to reach a consensus with the defendant in order to do so.  That is, he was unable to reach any terms capable of being reduced to a consent order.  Part of what he said in this regard was that the defendant refused to inform him as to the name of her solicitors, to continue the formalisation of the consent order. 
[50]	The defendant also said expressly in evidence given to the Federal Circuit Court of Australia (exhibit “MDWF 26”) that she would never allow consent orders which indicated that there was a relationship.  
[51]	The plaintiff’s attitude to the discontinuance was the subject of vigorous cross examination and to the extent that this issue turns on findings of credit I do not, in all the circumstances, accept that the non-resolution of a consent order with the accompanying notice of discontinuance represented a deliberate tactic by the plaintiff.  Rather, I accept that as time passed it became more difficult to resolve these matters and in the end the parties did not do so.  It was, of course, raised at the trial as I had a concern that the present action should not remain on foot if there were a Supreme Court action still on foot between the same parties concerning the same issues.  A notice of discontinuance was then filed. 
[52]	I also note that in terms of the deed itself, the condition as to the consent orders and discontinuance did not have as fundamental a character as the condition concerning the caveats; thus they are a less likely subject of repudiation. The relevant clause did not provide for the agreement to be “at an end” (as it did for the caveats) and the obligation as to consent orders had a greater element of mutuality.
Shortfall in Payments
[53]	The next issue upon which the defendant relies to point to the plaintiff’s alleged repudiation is the failure to meet one half of the shortfall between the rental payments and the mortgage payments. No doubt this is an important term of the contract.  In this context, the evidence indicates that the plaintiff did meet, if not half, then close thereto, of the shortfall, although it is true to say that on the evidence he also withdrew money from the mortgage account which obviously reduced his net contribution.  In my view this does not necessarily represent an unwillingness to perform the agreement and thus does not amount to a repudiation, particularly where the context was that he continued to do work on the house at Skyline Terrace up to the point of his leaving apparently to live in Victoria after 2010.  I note that the alleged failure to meet half of the shortfall was not complained about by the defendant’s lawyer at the time of this turning point in the arrangements in 2010. 
Repudiation - Defendant 
[54]	The next issue is whether or not the defendant may have repudiated the agreement.  In this context it is clear that in 2010 the defendant changed the banking arrangements so that the plaintiff did not have any ability to deposit money to the mortgage as the agreement had required.  She also changed the locks, denying the plaintiff access to the property. 
[55]	In my view, these actions do amount to a clear manifestation of the defendant’s intention not to permit the plaintiff the ability to contribute to the shortfall.  This amounted to the contravention of a fundamental part of the defendant’s obligations under the agreement.  The contribution to the shortfall was not possible where the defendant prevented it. 
[56]	Similarly, in my view changing the locks to deny the plaintiff access to the property was also fundamental.  For example, it made it impossible for the plaintiff to continue to contribute to maintenance or repairs of the property, which he had previously been doing. 
[57]	Therefore in my view there was an agreement to create an express trust which was supported by consideration.  This continued in effect until the defendant’s acts of repudiation in 2010.  I do not find that it was repudiated by the actions of the plaintiff.  In the circumstances, the plaintiff is in the position to be able to seek specific performance of the executory trust, entitling him to the express trust contained in the terms of the deed. However this is subject to the plaintiff doing equity in associated matters set out below.
Constructive trust
[58]	Because the concept of a constructive trust is relied upon in the pleadings, and the parties dealt with the matter initially on that basis, the applicability thereof should be discussed.  A constructive trust will apply where the court is satisfied that property is held by a person in circumstances where it would be inequitable to allow her to assert full beneficial ownership in the property.  Thus, such a trust may arise where the property is acquired on the basis of a common intention as to beneficial ownership and also where such an intention has subsequently arisen.  See generally Ogilvie v Ryan (1976) 2 NSWLR 504.  Equity will prevent unconscionable assertion of legal title by imposing a constructive trust in such circumstances. 
[59]	In Muschinski v Dodds (1985) 160 CLR 583, Deane J rejects the idea that a constructive trust may be imposed whenever justice and good conscience require it.  He disregards the “formless void of individual moral opinion.”  The other judges in the case did not really form a majority of reasoning as to this analysis, but the majority reached the same result as Deane J.  As his Honour said at p 619:
“Like most of the traditional doctrines of equity, it operates upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct.”
[60]	In Baumgartner v Baumgartner (1987) 164 CLR 137 the High Court followed Muschinski v Dodds and said that a constructive trust would be imposed where there was an unconscionable assertion of the legal title to the exclusion of a de facto partner who had contributed to the property.  This was despite there being no commercial purpose but rather pooled resources for their joint relationship and mutual security and benefit.  
[61]	The particular circumstances of Baumgartner were more to do with the relationship of the parties and the pooling of resources on a non-commercial basis, and, as the parties submit, therefore, they have less application to the present case where, as the evidentiary features outlined above demonstrate the purpose seemed to at least devolve into a more commercial one. 
[62]	Nevertheless, on the general basis of Muschinski v Dodds, that is, an unconscionable assertion of the legal title to the exclusion of the other party, the analysis as to the arising of a constructive trust is applicable to the present circumstances.  
[63]	In the circumstances of this case, my conclusion is that the assertion of the defendant’s legal title to the exclusion of the plaintiff would be unconscionable, for the same reasons discussed above in relation to the conclusion concerning an executory trust and repudiation. The defendant expressly agreed to hold the property on trust, for valuable consideration; the plaintiff’s misbehaviour did not amount to repudiation but the defendant did wrongly repudiate and thus wrongly assert her legal title. Although in my view the proper conception of the case is as an executory trust with specific performance being available, the same result is reached in the application of the principles concerning a constructive trust. 
Defences
[64]	The matters relied upon as pointing to a repudiation by the plaintiff, while falling short of establishing a repudiation, are also relevant to equitable defences to the relief sought, both pursuant to the executory trust or a constructive trust.  As submitted by the defendant, the plaintiff, in seeking equitable relief, is required to do equity.  Relevant to those considerations are the following matters:
(a)	the shortfall of equal contributions for the period from February 2006 until July 2010;
(b)	the indebtedness for the joint account of the loans against the property including the loan of $60,000 of which one half was for the plaintiff’s benefit;
(c)	the interest paid by the defendant on that portion of the debt which then existed as at the time of refinancing; and
(d)	an accounting generally of the contributions of the parties. 
[65]	The failure to earlier file a notice of discontinuance and also the failure to make equal contributions to the shortfall amount to misconduct by the plaintiff, falling short of repudiation of the agreement but nevertheless misconduct in an equitable sense, are relevant to the nature of the equitable relief.  A plaintiff who comes to equity with unclean hands may not necessarily be denied relief even if his misconduct does relate to the subject matter of the relief.  As an equitable defence, it remains discretionary and impacted upon by the circumstances of each individual case (Marshall Futures Ltd v Marshall [1992] 1 NZLR 316 at 331 per Tipping J).  Where denial of the plaintiff’s relief would, despite the plaintiff’s misconduct, unjustly enrich the defendant, the relief may be moulded to the misconduct; compare Nolan & Ors v Nolan [2015] QCA 199 at [68] – [79]. This is achieved by, for example, a declaration that the defendant holds the Skyline Terrace property on trust for the parties as tenants in common in equal shares, however the plaintiff’s interest to be encumbered by an equitable charge in favour of the defendant to the extent of the inequality of the contributions.
Laches 
[66]	The defendant also pleads laches in the amended defence on the basis that the claim for specific performance was raised seven years after the deed was signed. This defence was not the subject of any further evidence or submissions. It arises in those circumstances, and requires consideration of the length of the delay; the nature of the acts done during this period which might be of prejudice to the defendant and the justice of the matter; see The Duke Group (in liq) v Alamain Investments Ltd [2003] SASC 415 at [151]-[159]. Here there does not seem to have been any real basis or need to take any action until the defendant’s repudiation took place in mid 2010; the parties were engaged in active litigation about this matter thereafter almost continuously, in this action, the proceedings in the Federal Circuit Court, the related stay of this action and the appeal in relation to the stay order. Thus there is no suggestion of lost evidence, memory lapse or other prejudicial circumstances in the interim, and the plaintiff has continued to actively pursue the matter. Thus the length of the delay, the lack of identifiable prejudice to the defendant and the justice of the matter do not found a basis for a defence of laches and I find the principle to be inapplicable.
Conclusion
[67]	Thus in my view the appropriate disposition of the matter is a finding of an executory trust of which specific performance should be granted, allowing the plaintiff an interest in Skyline Terrace in equal shares as outlined in the deed; however that interest should be encumbered by an equitable charge in favour of the defendant to reflect the imbalance in the contributions.  If the summary of the parties contributions is as outlined in attachment 1 to the defendant’s outline of submissions, this would result in a charge, after registered mortgages, in favour of the defendant to the extent of $89,383.02.   However the matter is further complicated, for example by the defendant’s further advance on the mortgage which is relevant to the calculation, e.g. if the property is held as tenants in common should the mortgage only encumber the defendant’s interest, and does this unfairly prejudice the mortgagee? As the parties have not finally concluded their position on these details I will hear submissions as to the final form of the orders and costs. 
[68]	The proposed orders are: 
1.	It is declared that the defendant holds her interest in the property at 45 Skyline Terrace, Burleigh Heads in the State of Queensland, described as Lot 2 on Registered Plan 120975, County of Ward, Parish of Mudgeeraba, Title Reference 14413015 on trust for herself and the plaintiff as tenants in common in equal shares;
2.	The plaintiff’s interest therein is subject to a charge in favour of the defendant to the extent of the imbalance in the parties’ contributions to the property, in an amount to be agreed or determined.