Daniel Terry Behman v Tarek Behman (also known as Terry Behman)

1. [1]

   The plaintiff, Daniel Terry Behman (“Daniel”) who is 26 years of age, sues his father Tarek Behman (“Terry”) in relation to a property at 46 Oliver Street, Bexley North (“the property”) in which Terry still resides together with two brothers of Daniel, Andrew Behman (“Andrew”) and Mark Behman (“Mark”). Daniel’s twin brother, Matthew Behman (“Matthew”) moved out of the property in June 2009 and went to live with his mother Hydi Ayad (“Hydi”) in Melbourne. Hydi and Terry were divorced in 2002 with Terry obtaining custody of all four sons. The property was, at the time of the divorce, registered in Terry’s name and he was permitted to retain ownership of the property as part of the divorce settlement. Mr J Darams of counsel appears for Daniel and Mr P Walsh of counsel appears for Terry.

2. [2]

   The property is, it is agreed, worth approximately $1.5 million and is subject to a mortgage to the National Australia Bank (“the Bank”) of approximately $900,000 producing a current net equity of $600,000. When Hydi left the property in 2002 the mortgage debt was approximately $250,000 and Terry has since then made numerous drawdowns against the property.

3. [3]

   Daniel asserts that Terry holds one fifth of the property for him on a constructive trust. He asserts that he and Terry agreed, or it is to be inferred that it was their common intention, that Daniel should have a one fifth interest in the property and that he has acted to his detriment on the basis of that agreement or intention, making it unconscionable for Terry to depart from the assumption that Terry induced.

4. [4]

   Alternatively, Daniel asserts that he has a one fifth share of the property on the basis of proprietary estoppel by encouragement.

5. [5]

   Daniel relies on:

6. [6]

   Daniel, Matthew, Andrew, Mark and Terry all gave evidence concerning conversations held in or about 2002 after Hydi had left the property and thereafter.

7. [7]

   Daniel’s version of the conversations is set out in paras 53, 54, 55, 56, 57, 58, 59 and 63 of his affidavit dated 29 May 2014:

8. [8]

   Daniel commenced university studies in 2007 with a view to becoming an accountant and obtained employment with Lawler Partners, a firm of accountants. He worked part time for Lawler Partners during the academic year but full time when he was on holiday from university. On graduation he commenced working for Lawler Partners full time.

9. [9]

   There was some dispute about the degree of access that Daniel had to the bank account opened in his name but there was little dispute about the fact that the amount that he received out of the wages earnt was quite modest- an amount in total, on his calculation, of $29,000 out of $204,000 net earnings and after tax refunds.

10. [10]

    There is no dispute that in December 2012 Daniel left the property and from that time Terry had no access to Daniel’s earnings. Daniel sought to take items which he claimed were his (see para 103 of his affidavit) which he says Terry refused to let him take but all disputes concerning any personal property of Daniel were resolved by the time of the hearing: T2.21- T3.1.

11. [11]

    Daniel gave evidence of a conversation he had with Terry in or around January 2013 after Daniel had left the property. Daniel asserts that he asked Terry to put his name on the title of the property which request Terry refused. Daniel says that he then had the following conversation:

12. [12]

    Daniel subsequently (18 July 2013) lodged a caveat on the property supported by a statutory declaration claiming that he had loaned money to Terry to enable Terry to make the monthly mortgage repayments. That caveat lapsed. Daniel did not assert in this Court that he had loaned his father money. On 12 March 2014 Daniel lodged another caveat also supported by a statutory declaration claiming that he had an equitable interest in the land because Terry “holds on trust…. a 1/5th interest in respect of the land pursuant to a common intention or agreement” between himself and Terry.

13. [13]

    There clearly has been acrimony between Daniel and Terry which acrimony has enveloped the family since Matthew has sided with Daniel and gave evidence in support of Daniel’s case and Andrew and Mark gave evidence in support of Terry’s case.

14. [14]

    Daniel claims that he worked on weekends in a business known as Nationwide Pest Control established by Terry. He claims he worked some thirty weekends and was never paid for that work. An estimate of what the hours worked by him would have yielded him he had been paid was given of $13,000. Terry, supported by Mark (and to a lesser extent Andrew), denied that Daniel ever worked in that business. Those denials were in my view shown to be false and the responses of Terry and Mark were damaging to their credit.

15. [15]

    Mr Darams outlined a number of matters relevant to Terry’s credit, namely:

16. [16]

    Mr Walsh did not seek to answer the attack on Terry’s credit, other than to say that there was not much factual dispute in the case and I accept Mr Darams’ submissions.

17. [17]

    Mr Darams outlined a number of aspects of Mark’s evidence:

18. [18]

    Mr Walsh did not seek to answer the attack on Mark’s credit other than again to say that there was not much factual dispute in the case. I accept Mr Daram’s submissions in relation to Mark’s credit and I formed the view that Mark was prepared to say whatever he thought would assist his father’s case.

19. [19]

    In relation to Terry, although he did make some admissions, for the reason identified by Mr Darams I have little confidence in his veracity as a witness.

20. [20]

    Both Daniel and Mark gave evidence concerning the conversations they were part of or heard from the time they were eleven years of age. There was (as with the evidence of their brothers Andrew and Mark) an air of unreality and artificiality about the details and their understanding of what was said a very long time ago. Daniel insisted that his father had never used the word ‘home’ (see T15.14- 37, T23.43- T24.2, T48.7- 21) and that there is a difference between “my place” and “my home” (see T21.49). This same theme was reflected in Andrew’s evidence: T51.30- 43. There were the following exchanges in cross examination:

    1. (1)

       At T20.5- 23 in the cross examination of Daniel:

    2. (2)

       At T58.9- 41 in the cross examination of Matthew:

    3. (3)

       At T65.40- 67.6

21. [21]

    I found the suggestion that Daniel and Matthew would, at eleven years of age and fourteen to fifteen years of age, hold any understanding of the matters of which they claimed to have knowledge and understanding as fanciful. I think that by the time of the proceedings they had come to believe that they were entitled to a one fifth share in the property and were projecting that belief back in time in a most artificial manner.

22. [22]

    There was evidence that Terry had provided the four boys with benefits that were available because they were contributing or had contributed to the household expenses:

    1. (1)

       private school education

    2. (2)

       extensive range of motor bikes

    3. (3)

       family use of a motor boat

    4. (4)

       family holidays

    5. (5)

       the ability to continue to live in a five bedroom home

    6. (6)

       other activities set out at para 21 of Terry’s affidavit pp 952- 955 Exh A2 and para 42 p 958

23. [23]

    Matthew gave evidence of his having contributed to school fees but that evidence was shown to be unreliable: see T71.37- T73.43 and see T104.15 of Terry’s evidence which explains why money was being paid by Matthew.

24. [24]

    The records of Terry’s loan account are incomplete notwithstanding efforts of Daniel’s solicitors to obtain all of Terry’s bank records (Terry accepted in cross examination that he had many bank accounts and credit cards: T89- T90) but what has been found (see Exh 2) coupled with copies of the account in Daniel’s name controlled by Terry does establish that on occasions all of Daniel’s earnings were used to make mortgage repayments (and see T97.20- T98.30). Terry was not willing to accept that Daniel’s income had made a direct contribution to the mortgage even when it was obvious it had: T98.1- 40 and he had all but admitted it at T98.6. I am satisfied on the balance of probabilities that Daniel’s earnings have either been used directly to pay the mortgage or have significantly assisted Terry in being able to make the mortgage repayments and associated costs of the property.

25. [25]

    The total income earnt by Daniel paid into the account operated by Terry was $184,913.86. The plaintiff endorsed over to the defendant tax refunds of $19,843.87. Daniel received, on his evidence, $29,101.72 of what had been paid by him. Excluding the earnings prior to his turning 18, the total net benefit to Terry (subject to what I say below) was $164,829.51 (see MFI 1) about which there was no dispute, and including the earlier period the net benefit to Terry was $175,656.01.

26. [26]

    Terry admitted that he said to the plaintiff and his brothers in the period of 2003- 2012:

    1. (1)

       “This is everyone's house and as long as we stick together we will be okay” (T137.35)

    2. (2)

       "This isn't only my home, it is yours and your brother's, so everyone needs to help” (T137.39)

    3. (3)

       “It is not just my money and your money. We all own the house so we all pay for it as a family” (T137.44)

    4. (4)

       “It's not my house it is yours and your brothers” (T137.50)

    5. (5)

       “As long as you all have this house, you'll always be okay financially” (T138.4)

    6. (6)

       “Whatever you do, always keep the house and you'll be okay” (T138.10)

27. [27]

    All of the above quotations were put to (and accepted by) Terry in cross examination. Terry did not accept that he had told Daniel that he would use the plaintiff’s earnings to pay the mortgage: see T95.22- 34 but my lack of confidence in Terry’s veracity leads me to accept Daniel’s evidence that at times after he had commenced working for Lawler Partners Terry did tell him that, and such of the bank documentation as has been obtained by Daniel tends to show that Terry did use it for that purpose.

28. [28]

    It was not put to Terry that his evidence (see para 32 of his main affidavit) that he did not have an understanding that by using the Daniel’s earnings to pay for expenses that related to family expenses and his own benefit he would owe money to Daniel or that Daniel “would have a vested interest in the property” was untrue. However it should be noted that there is no dispute that when Daniel demanded return of his money Terry said “the house is the family’s and since you’re no longer part of the family you don’t own it anymore”: see para 112 of Daniel’s affidavit and T35.8-10. That statement by Terry contains a recognition by Terry that Daniel did hold an interest, although on Terry’s view of matters Daniel had lost that interest.

29. [29]

    I think it is clear that Daniel was willing to provide his earnings for the common good of the family including to help ensure that the property was being kept as an asset of the family.

30. [30]

    This is not a case in which a plaintiff has provided some of the funds to purchase a property. Nor is it a case where of two persons liable for a mortgage debt only one has paid the debt and seeks contribution from the other. This is a case in which substantial amounts have been contributed by a family member directly to the benefit of his father and indirectly his brothers.

31. [31]

    Mr Walsh submitted that whilst there is no significant dispute that Terry did say to Daniel most of the words to the effect claimed by Daniel there are real reasons why the words should not be given the significance which Daniel contends should be ascribed to them. He also made reference to Watson v Foxman (1995) 49 NSWLR 315, contending that there was a need for caution of the type described in that case. McLelland CJ in Eq said in dealing with claims of misleading and deceptive conduct:

32. [32]

    Given that Daniel did not contribute to the purchase price (or ancillary costs) he does not assert a resulting trust but rather a constructive trust based on an asserted agreement or common intention. Reference was made to White J’s decision in Shepherd v Doolan & Ors; Shepherd v Doolan & Anor; Est. Doolan [2005] NSWSC 42 and I think that is a most helpful adumbration of the principles which need to be borne in mind in claims concerning constructive trusts. His Honour found in that case that the plaintiff, a de facto of the deceased, had paid £100 to help the deceased pay the costs associated with the acquisition and holding of the lease of the property (not the property itself) and or of the costs of building the house on the land and also the plaintiff assisted in building the house. His Honour found on the evidence that the common intention of the parties was that the plaintiff should have some proprietary interest but with no agreement or common intention as to the quantum. His Honour held that the deceased held the property on trust for the plaintiff to the extent of a 9% share (see [52]).

33. [33]

    I derive the following principles from Doolan:

    1. (1)

       the inquiry for the purposes of determining whether there was a common intention is inquiry as to the actual intention of the parties. The law does not impute a presumed intention to the parties based upon what the Court considers fair and reasonable persons would have intended: see [34]

    2. (2)

       the intention need not be that the parties have a specific share of the property

    3. (3)

       intention may be established by:

    4. (4)

       a common intention that a party have a beneficial interest in a property owned by another will not be inferred merely from their joint occupation of property, nor the carrying out of household duties, nor the bringing up of children on the property, nor the doing of repairs, renovations, maintenance, decoration or improvement, nor the provision of furniture (Pettitt v Pettitt [1970] AC 777 at 805-6, 811, 818, 826; Gissing v Gissing [1971] AC 886 at 900, 910; Burns v Burns [1984] Ch 317 at 326, 328, 342)

    5. (5)

       the intentions may be inferred from financial contributions, direct or indirect, to the acquisition of property, including the paying of mortgage or the payment of expenses which free up funds for that purpose (see [38]). In the case of ‘the common intention’ constructive trust there is no presumption that the beneficial interest is in proportion with the contribution of the purchase price

    6. (6)

       declarations about intentions before or at the time of the transaction or so close in time after the transaction as to constitute a part of it can be relied on (see [39])

    7. (7)

       a plaintiff must show that he or she acted to his or her detriment in a way referable to the agreement or intention that she have an interest in the property

    8. (8)

       conduct which is insufficient to establish a common intention as to ownership of the property may be sufficient to constitute relevant actions to the plaintiff’s detriment to establish a trust if the common intention is established otherwise

    9. (9)

       conduct may be both the evidence from which an intention that the plaintiff have a beneficial interest can be inferred and the act of detrimental reliance

    10. (10)

        equality is equity but that statement can be departed from when the parties make disproportionate contributions to the acquisition of the property

    11. (11)

        the constructive trust may arise after the acquisition of a property where the common intention is formed at a later time: Doolan at [45] and see Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044 at [55]

34. [34]

    I am not satisfied that Terry did tell Daniel that he would use Daniel’s earnings to pay the mortgage when Daniel commenced earning money as a teenager. I think it is unlikely that he would say any such thing to an eleven or fourteen year old boy or that if he did say such, it could be expected that Daniel (and Matthew) would understand that to mean that they would have a one fifth (or a one third) interest from the time that they commenced employment. The proposition that merely by commencing employment and the payment of wages into an account controlled by Terry, would confer such an interest is extraordinary, with no detail of how long it was to continue or what would occur if the sons stopped working and how Terry could possibly enforce the continuation of the arrangement after the sons had reached eighteen: see Ashton v Pratt [2015] NSWCA 281; (2014) 88 NSWLR 281 at [84] to [89].

35. [35]

    I am unable to accept that merely by telling his children that the house or home was theirs and that any earning they obtained would be used for the family’s benefit Terry is to be taken as having agreed that each of the sons would, when they commenced working and contributing to the household, have a one fifth share in the property. The plaintiff was no more than fourteen years of age when the conversation took place.

36. [36]

    The situation is, however, altered when Daniel is an adult and has commenced earning a substantial wage. By the time Daniel commenced working for Lawler Partners I think he was intended to and would have understood that by his contributions Terry would be able to pay the various liabilities in respect of the property that had been and were continuing including the mortgage repayments. There was in a sense a joint pooling of resources for the benefit of all family members much as a de facto might contribute their income to the needs of both themselves and their partner.

37. [37]

    In Doolan to which I have earlier made reference, White J said at [30]:

38. [38]

    The view of Deane J in Muschinski v Dodds (1985)1 60 CLR 583 with which Mason J (as his Honour than was) concurred was embraced in Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 in the principal judgment (Mason CJ, Wilson and Deane J) and with the concurrence of Toohey and Gaudron JJ in their separate judgments, described as an application of

39. [39]

    In Baumgartner the plurality said:

40. [40]

    Neither the language used by the Court in Baumgartner nor the cases identified by Deane J in Muschinski suggest any limitation of the principle to married persons or de facto partners.

41. [41]

    Although the foundational relationship here is of father and son and not de facto, the element of sharing or pooling is very much at the fore in this case, the common enterprise being the maintenance of a home within which all family members could reside and the needs of family members such as food, private school fees, trips and in the case of this family, motor bikes, and other leisure activities, could be met.

42. [42]

    The family relationship came to an end between Daniel and Terry because of mutual antipathy and I do not think it is necessary to ascribe blame to either or both of Daniel or Terry for that development.

43. [43]

    In my view the evidence supports Daniel’s contentions that his payment of wages from the accounting firm (and his not having sought wages from Nationwide Pest Control) enabled Terry to meet Terry’s obligations to the Bank in respect of the mortgage either directly or indirectly by enabling other debts to be paid: see Exh 2, CB 351- 399, CB 96, 99, 105, 115, 119 and 120. Whilst it is clear that Daniel obtained some of the funds back to himself (ie $29,000) and obtained other benefits such as continued accommodation, food and entertainment, the extent of the benefits so obtained by him are well exceeded by the benefits which Terry, as well as other members of the household for whom Terry was at all relevant times responsible, have obtained. The significant size of the salary contributions by Daniel (less the uncontested amount of $29,000 and a further $25,000 to which I refer below) as well as Terry’s statements concerning the family having an interest in the property (see T95- 96) leads me to view Terry’s refusal to accept that Daniel has any interest in the property that Daniel’s wages have helped Terry retain is unconscionable.

44. [44]

    A more difficult question is what should that interest be? Daniel claims that he should be declared to have a one fifth interest in the property (on the basis that there are four brothers and Terry). Alternatively he seeks a charge on the property that reflects his interest. Daniel is not a joint mortgagor and has no liability to repay the current mortgage debt to the Bank.

45. [45]

    Whilst I am inclined to regard the plaintiff’s claim to a one fifth interest having regard to the size of the total net payments made by him to the pooled account and the fact that he has received no wages from Nationwide Pest Control as not unrealistic, a declaration of a one fifth interest may create problems in the future including as to whether Daniel must become jointly liable for the repayment of the mortgage debt and I think it preferable that the property be burdened with a charge for the repayment of the equivalent amount of $120,000 with a specification of the period within which what amount is to be repaid to Daniel. I will give counsel an opportunity to address on the precise form of orders to be made.

46. [46]

    Terry did provide a sum of $80,000 by way of gift to Daniel and his brothers to enable them to buy an apartment at Wolli Creek. It seems likely that Daniel’s earnings assisted in the provision of that benefit to all of the sons to some degree. Daniel later had his interest in the apartment bought out for $25,000 (see para 41 of Terry’s affidavit) so that should be viewed as the return of a portion of the money he had contributed.

47. [47]

    Without a full accounting of how the earnings have been used which is not possible due to the incomplete banking records produced in respect of Terry’s many accounts, Daniel’s solicitor having subpoenaed Terry’s bank, it is difficult to arrive at any precise figure. Taking into account the net retention by Terry of the figure to which I have referred in [25] and even allowing for the return to Daniel of an additional amount through Wolli Creek, and for indirect benefit such as food and board, the claimed one fifth interest which equates to $120,000 of the net value of the property seems to me a reasonable reflection of what Daniel had contributed beyond what could be expected of a son living at home.

The estoppel claim

1. [48]

   In the light of my conclusion in relation to the constructive trust it is not strictly necessary to consider the alternative claim but I shall deal with it briefly.

2. [49]

   The plaintiff relies in the alternative on an equitable proprietary estoppel claim. Reference is made to Delaforce v Simpson-Cook [2010] NSWCA 84, Evans v Evans [2011] NSWCA 92, DHJPM Pty Ltd v Blackthorn Resources Ltd [2011] NSWCA 348; (2011) 285 ALR 311 and Sullivan v Sullivan [2006] NSWCA 312; (2006) 13 BPR 24,755.

3. [50]

   The requirements were summarised by Handley AJA in Delaforce:

4. [51]

   Daniel relies on:

5. [52]

   In the submissions of the plaintiff at para 30 there is found the following:

6. [53]

   The plaintiff relies on Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505 at [71] for the proposition that it is not necessary that the conduct was the sole inducement. The plaintiff relies on the decision in Giumelli at 125 and Delaforce [63]- [64] for the proposition that if the estoppel is made out the plaintiff’s expectation or assumption should be enforced.

7. [54]

   Once again I am not persuaded that at the age of fourteen or fifteen Daniel had any expectation of obtaining a proprietary interest by contributing his small earnings towards the household. By the time he had become an adult and was contributing a significant level of pay, however, I think that it was relevant that Terry was telling Daniel that he and his brothers ‘owned’ the property, and that this was a factor in him continuing to provide most of his wages and permitting those wages to pay for the mortgage and related property expenses such as council rates.

8. [55]

   Having regard to the undisputed fact that Terry told him at the time after Daniel had become an adult that “this is everyone’s house”, “I’m not keeping it for me”, “we all own everything” and “it’s yours and your brothers”, I accept that Daniel understood that he would, by continuing to make his extensive contributions, have an interest in the property which reflected those contributions although the extent of that interest was somewhat vague. In a context where significant contributions had commenced to be made it is not surprising that Daniel should have so understood the words used by Terry and Terry’s response when Daniel asked for return of his money was “the house is the family’s and since you’re no longer part of the family you don’t own it anymore” effectively recognising the existence of the interest that Terry denies Daniel ever had.

Conclusion

1. [56]

   It follows in my view that the property should stand charged with the repayment of an amount of $120,000 in favour of Daniel.

Costs

1. [57]

   I will hear the parties on the question of costs.