Behman v Behman

McCOLL JA: I agree with Meagher JA.

MEAGHER JA: The appellant and respondent are father and son. In the somewhat unusual circumstances of this case the respondent was held to be entitled to a charge over the appellant’s property at Bexley North to secure the repayment of an amount of $120,000. That charge was imposed to satisfy an equity arising in circumstances where the respondent had made significant payments to his father to assist him in meeting his ongoing obligations under a mortgage of that property: Daniel Behman v Tarek Behman [2015] NSWSC 1787

From 2002, when the respondent’s parents were divorced, the appellant and his four sons, each then at school, continued to live in the family home. The respondent and his twin brother remained there with their two younger brothers until June 2009, when Matthew (the respondent’s twin) moved out. The respondent stopped living in the property in January 2013. At that time he was almost 24 years old. From March 2007 when he commenced university, he had been working with an accounting firm, initially on a part time basis and then on a full time basis. Until December 2012 all of the income received from that employment was paid into a bank account operated and controlled by the appellant. The total of that income was $204,000 ([9], [25]). The primary judge (Rein J) held that the amount secured by the charge ($120,000) was in money terms equivalent to 1/5 of the net value of the property ([45]) and a “reasonable reflection” of what the respondent had contributed towards meeting the burden of the mortgage repayments “beyond what could be expected of a son living at home” ([47]).

His Honour held that the respondent was entitled to that relief on two bases. The first was an equity founded on his having made those contributions in reliance on a common understanding or intention shared by him and his father that he had an interest in the family home and accordingly was required to contribute to the financial burden of holding and maintaining it. After the respondent left the home following an incident in December 2012, the appellant denied that he had any ownership interest in the property. The primary judge held that to do so was “unconscionable” ([43]). Reference was made to the general equitable principle formulated in Baumgartner v Baumgartner (1987) 164 CLR 137 at 147-148. That principle was applied by this Court in Green v Green (1987) 17 NSWLR 343, esp at 353-355.

The appellant does not challenge the correctness of the primary judge’s formulation or application of these principles. The five grounds in the appellant’s notice of appeal are directed to establishing error on the part of the primary judge in finding that there was such a common intention or understanding between the father and his son.

The primary judge also held that the respondent was entitled to an equitable proprietary estoppel founded on the appellant’s representations as to his having an interest in the property which required and justified the making of the relevant contributions. In support of this claim the respondent relied on the statements of principle in Giumelli v Giumelli (1999) 196 CLR 101 at [10] and Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [2].

This second basis for upholding the respondent’s claim was not addressed by the original grounds of appeal. Recognising that to be so, at the commencement of the hearing the appellant sought and was granted leave to amend that notice of appeal to include a further ground challenging the primary judge’s finding as to the existence of an expectation in the respondent that he had or would receive a joint interest in the property.

The respondent gave evidence that from the time he was about 11 years of age he had numerous conversations in which his father maintained that the family home was owned by the five of them and that he had to “hurry up and start working so that [he could] help to pay for the mortgage”. Similar evidence was given by his twin brother: see [7], [20]. In his evidence, the appellant accepted that in the period from 2003 to 2012 he made statements to the respondent and his brothers including that: “This isn’t only my home, it’s yours and your brother’s so everyone needs to help” and “It is not just my money and your money. We all own the house so we all pay for it as a family” ([26]).

Notwithstanding that there was evidence of such conversations from 2003, the primary judge rejected the respondent’s claim that the relevant common understanding existed and was relied upon from the time he first commenced part time employment at McDonald’s, which was when wages earned by him were first paid into a bank account controlled by the appellant. His Honour concluded:

However, his Honour held that the position changed from about March 2007 and after the respondent had left school. It is those findings which the appellant challenges. At that time, the respondent ceased working at McDonald’s and commenced employment at the accounting firm. He attended university full time, working part time at that firm, usually two to three days a week. His wages from that employment were paid directly into the trustee controlled bank account until December 2012. In respect of that period the primary judge held:

His Honour made a similar finding with respect to the claim to relief on the basis of a proprietary estoppel, concluding:

The essence of the appellant’s challenge to these findings at [36] and [55] is captured in the following submission made by his counsel in the course of argument. Having referred to the various statements which the appellant accepted were made over the period from 2003 to 2012, counsel’s submission continued:

In my view that argument is to be rejected. The evidence on which the primary judge relied included specific conversations which squarely address the basis on which the respondent was being asked and pressed to make monetary contributions to enable the repayment of the mortgage.

At [27] the primary judge accepted the respondent’s evidence “that at times after he had commenced working for Lawler Partners” the appellant told him that he would use his earnings to pay the mortgage. The evidence to which the primary judge was referring included the following conversations with his father: (Affidavit 29 May 2014, para 82)

The primary judge found at [43] that:

The primary judge also accepted ([27], [55]), the respondent’s evidence as to the following exchange with his father which occurred in January 2013. He had asked his father to include his name on the title to the property. The appellant rejected that request. The conversation continued: (Affidavit 29 May 2014, paras 111, 112)

As the primary judge observed at [55], the appellant’s answer acknowledges the making of the statements giving rise to the common understanding on which the respondent relied.

This evidence justified the primary judge’s finding that by March 2007 the parties intended and understood that the contributions were made on the basis that the respondent had a joint ownership interest. At that time he commenced university and a new job and made clear that he wanted to be independent, to move out of the home and to manage his own affairs. The appellant persuaded him not to do so because the contribution of his wages was necessary to enable the repayment of the mortgage and retention of the family home in which he had a joint interest. Exchanges to that effect continued over the subsequent period and, as the primary judge found, were a “factor in [the respondent] continuing to provide most of his wages and permitting those wages to pay for the mortgage and related property expenses such as council rates” ([54]).

For these reasons the challenges to the findings at [36] and [55] should be rejected and the appeal dismissed with costs.

GLEESON JA: I agree with Meagher JA.