McGrath v McGrath

• Jurisdiction: Australian Capital Territory
• Judge: McWilliam AsJ
• Judgment Date: 29 May 2018
• Docket Number: File Number: SC 275 of 2017
• Court: Supreme Court of ACT
• Date: 29 May 2018

[2018] ACTSC 148

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Before:

McWilliam AsJ

File Number: SC 275 of 2017

Robyn Joy McGrath

(Plaintiff)

and

Ross William McGrath

(Defendant)

Representation:

Counsel

Mr C Ryan (Plaintiff)

No appearance (Defendant)

Cases Cited:

Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495

Anderson v McPherson (No 2) [2012] WASC 19

Baumgartner v Baumgartner (1987) 164 CLR 137

Beatty v Guggenheim Exploration Co (1919) 225 NY 380

Calverley v Green (1984) 155 CLR 242

Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353

Brown v Brown (1993) 31 NSWLR 582

Corin v Patton (1989) 169 CLR 540

Cowcher v Cowcher [1972] 1 All ER 943

Currie v Hamilton [1984] 1 NSWLR 687

Dinsdale bht the Protective Commissioner v Arthur [2006] NSWSC 809

DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431

Drever v Drever [1936] ALR 446

Dunphy v Russell [2018] NSWSC 721

Hillman v Box as Executors of the Estate of Graeme William Box (No 4) [2014] ACTSC 107

Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41

Ingram v Ingram [1941] VLR 95

Martin v Martin (1959) 110 CLR 297

Muschinski v Dodds (1985) 160 CLR 583

Napier v Public Trustee (Western Australia) (1980) 32 ALR 153

Ong v Lottwo Pty Ltd (in liq) (2013) 116 SASR 280

Parsons v McBain [2001] FCA 376 ; 109 FCR 120

Ryan v Dries [2002] NSWCA 3

Ryan v Ryan [2012] NSWSC 636

Shepherd v Cartwright [1955] AC 431

Shepherd v Doolan [2005] NSWSC 42

Tamer v Official Trustee in Bankruptcy [2016] NSWSC 680

Tjen v Bilic [2017] NSWSC 364

Weige v Cupton Pty Ltd [2012] NSWCA 414 ; 8 ASTLR 229

Legislation Cited:

Supreme Court Act 1933 (ACT) s 26

Court Procedures Rules 2006 (ACT) rr 1732 and 1700

Texts Cited:

J D Heydon and M J Leeming, Jacob's Law of Trusts (LexisNexis Butterworths Australia, 8 ^th ed, 2016)

TRUSTS — resulting or constructive trust — where title to family home held between father and son as joint tenants — whether father and son jointly contributed to purchase price — whether family home treated as beneficially owned by parents — constructive trust found

EQUITY — equitable remedies — where title to family home held between father and son as joint tenants — whether joint tenancy severed — whether common intention that title held by son on trust for his parents — where legal title passed to son upon father's death — whether it would be unconscionable for son to retain proprietary interest — declaratory relief of a remedial constructive trust appropriate

Decision:

See [75], [78], [80] and [81]

1 On 15 October 2012, Frederick William McGrath died, leaving no will. His only two children, Robyn and Ross McGrath, are the plaintiff and the defendant in these proceedings respectively. They are the only beneficiaries of the estate following the grant of letters of administration on 1 March 2016. Given their shared surname, I will refer to the parties and the deceased by their first names for convenience, and without intending any disrespect.

2 Robyn is the administrator of the estate of her late father. It is uncontroversial that she has an obligation to get in the estate, but her difficulty has been whether, and to what extent, a property located in Latham in the Australian Capital Territory, is included as one of the assets of the estate.

3 Prior to his death, Frederick held the legal title (by way of Crown lease) to the Latham property as a joint tenant with his son, Ross. Upon Frederick's death, title has passed to Ross. This change in title was registered on 2 April 2013 and it appears the previously unencumbered property was then mortgaged by the defendant in June 2013.

Application before the Court

4 The substantive relief sought by Robyn in these proceedings is a declaration that the joint tenancy was severed on 16 April 1999 (when the defendant bought a house in Higgins) and a further declaration that the Latham property is held on trust for her as administrator of her father's estate, either in its entirety or in such less equitable interest as is found by the Court.

5 If a declaration of trust is made in favour of the estate, in whatever equitable interest, Robyn then seeks to sell the asset so as to properly administer the estate along with consequential orders to give effect to the sale, including an order that the defendant provide vacant possession of the Latham property within 28 days of any orders being made.

6 The plaintiff brings her claim in equity, pursuant to s 26 of the Supreme Court Act 1933 (ACT).

Notice to the defendant

7 Ross did not appear at the hearing and has taken no role in the proceedings. An order for substituted service was made by the Registrar on 9 October 2017. There is an affidavit before the Court proving that service has been carried out by the means provided in the orders. The documents have all been sent to the address of the property that is the subject of dispute in these proceedings. Ross was known to be living at the property with his father when his father passed away.

8 In addition, the solicitors for the plaintiff have taken steps to notify the defendant of the hearing date and time. The solicitor for the plaintiff gave evidence in the witness box testifying to the fact that he had been in discussions with the defendant prior to proceedings commencing, but it appears that once litigation in the Court became likely, the defendant ceased communicating. I am satisfied that the defendant is on notice of these proceedings and could have participated had he chosen to do so.

Issues

9 The following issues arise for consideration:

• (a) Whether the joint tenancy was severed, and if so, on what date;

• (b) Whether the property is held on trust for the estate, and if so in what proportion; and

• (c) What is the appropriate discretionary relief.

10 These issues will be considered in turn below.

Evidence

11 The plaintiff's affidavit evidence was that growing up, the family lived simply. The family started renting the Latham property in about 1980, when she was about ten years old.

12 Her father worked as a plant operator and her mother (referred to as Delma McGrath, although according to the plaintiff's aunt, they never married), undertook home duties and later became a cleaner.

13 Her older brother, the defendant, left school when he was about fifteen and a half to work in the same business in which his father worked. The business was owned by the deceased's brother-in-law. The plaintiff moved out of the Latham property when she was 17.

14 In 1986, she remembers her father saying to her words to the effect of, “We've bought the house”. She remembers her parents being delighted. She came to know later that the landlord had sold the Latham property to her father and the defendant.

15 The evidence of the plaintiff's aunt, Ms Janice McCabe, who is currently 64 years old, was to the effect that she was in regular contact with her brother (the deceased) and in about 1985, remembers a number of conversations with her brother, during which he said words to the effect of, “Delma and I can buy the house, the landlord wants to sell,” and “Ross is helping me to pay for the house.” I accept the evidence although I find that such statements probably occurred in 1986. Notwithstanding such knowledge, Ms McCabe viewed the house as owned by her brother and Delma, as that was how they talked about the house.

16 The Memorandum of Transfer of Crown Lease was in evidence, dated 8 September 1986. It records the purchase price of $73,000. According to the affidavit evidence of the plaintiff's solicitor, it is now worth approximately $500,000.

17 The Memorandum of Transfer also records the deceased and the defendant holding title to the Latham property as joint tenants. Ms Mary Cahill, who was the conveyancing solicitor engaged by the defendant and his father on the purchase of the Latham property, gave evidence that it was her usual practice to advise purchasers of the difference between holding a title to a property as either joint tenants or tenants in common, but she cannot remember the purchase by the deceased and the defendant at all, and the file has long since been destroyed. She could only speculate as to why the father and son chose the joint tenancy arrangement.

18 At the time of the purchase of the Latham property, the defendant was 19 and working, although only recently. Robyn does not know whether Ross put any money towards the deposit for the purchase of the Latham property or if he paid any money towards the mortgage to Civic Advance Bank Limited that funded the purchase.

19 There were no documents as to the details of that mortgage in evidence. I have assumed that in all likelihood Ross would have been listed as a joint mortgagor, given that the title to the property was also in his name.

20 The circumstantial evidence as to what happened between 1986 and 1998 is relevant to the outcome of this case. The evidence of Ms McCabe is that Delma became employed within a few months of the purchase of the Latham property, and it was Delma and Ross who were “working very hard to pay off the house as soon as they could.”

21 I accept that uncontested evidence, as it is plausible that two parents who had rented and then purchased the family home would take on the responsibility of meeting the mortgage commitments, regardless of whose name was on the title or the mortgage.

22 Had Ross paid any money towards the mortgage, it was open to him through these proceedings to seek to establish that fact. He may well have paid the equivalent of board over 1986 to 1989, given that Robyn was required to pay some board while she was living in the Latham property in 1986 and was employed at Coles....