Catherine Margaret Thorn, as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd and Dawn Kathleen Boyd

These proceedings arise as a result of a dispute surrounding $260,000 which was transferred from the late Mrs McAuley to the First Defendant on 6 August 2009. By various judgments of this court, it has been held that this $260,000 was to be repaid by the First Defendant to the Plaintiff, as executor of Mrs McAuley’s estate. The Second Defendant has been joined in these proceedings as a tenant in common, holding an equal share of the property at Lot 10 in Deposited Plan 28150 at Sutherland (‘Property’) with the First Defendant (Exhibit P6).

The Property is subject to these proceedings because the Plaintiff alleges the First Defendant applied the money towards the repayment of loans over the Property. The evidence suggests the First Defendant’s only assets are his interest in the Property, approximately $11,000 in a bank account and approximately $16,000 available on a credit card (Affidavit of Ian Boyd – 28 July 2016 [3]). As such, the Property is the only asset by which the judgment debt may be fully or partially met by the First Defendant.

In these proceedings, the Plaintiff seeks declarations that:

Further, the Plaintiff seeks orders that:

In presenting its case in-chief, the Plaintiff indicated that she was not pressing order 9 (T 79) because the Second Defendant suggested that other members of her family occupied part of the Property and 28 days would be too short a time to vacate the premises.

Both Defendants, who are self-represented, oppose all of the declarations and orders sought by the Plaintiff.

Sometime in 2012, the Defendants complained to the Financial Ombudsman Service (‘FOS’) about their treatment at the hands of their banker, the National Australia Bank (‘NAB’).

By way of background to the FOS’ findings, in 2006, NAB provided to the Defendants a number of loans; a home loan for $320,000 which was refinanced from another financial services provider, a variable rate interest loan for $269,500 and an instalment loan for $190,000. In 2009, NAB consolidated the variable rate interest-only loan and the instalment loan into an interest-only facility and provided extra funding.

The FOS issued its final determination on 8 August 2013 (CB 11 and following). The FOS determined that there had been maladministration in lending. The maladministration arose principally because NAB, contrary to its own policy and standards of basic lending principles, had failed sufficiently to analyse the Defendants’ acquisition of a retail business. Part of the inadequate analysis was NAB’s failure to take into account the fact that the Defendants were totally inexperienced in retail business. However, crucially, the FOS determined that only two loans, namely the business loans for $269,500 and $190,000, were the subject of maladministration. The FOS specifically found that the $320,000 home loan was not the subject of any maladministration. The FOS also dismissed any suggestion that the bank owed fiduciary obligations to the Defendants.

Importantly, for the purposes of the current proceedings, the FOS found that the Defendants had offered the Property as security for the loans.

In addition, the FOS found that there was nothing to establish that the bank used illegitimate pressure in 2006, or by implication in 2009, upon the First and/or Second Defendant to provide the Property as security for the purposes of the various loans.

Whilst the FOS found that a principal sum was left owing by the Defendants, it nonetheless adjusted for interest, fees, stamp duty and other bank fees charged on the business loans which were the subject of its maladministration findings.

In early 2014 proceedings were conducted against the First Defendant by the Plaintiff, who sought to recover certain moneys transferred to the First Defendant from his elderly aunt.

On 25 August 2014, Robb J delivered judgment in Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159. Ultimately, although a number of allegations were made, Robb J determined that the First Defendant’s conduct regarding his aunt was unconscionable: Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 at [129]-[144]. In particular, his Honour determined that the First Defendant had no credible explanation for his conduct: Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 at [9]. His Honour also found that the First Defendant, prompted by his dire financial situation at the time, unconscionably influenced his aunt, procured the transfer of money to himself and persuaded her to terminate the retainer of her then lawyer: Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 at [79]-[82], [87], [89], [94], [134]-[136], [141]-[143].

Specifically, Robb J concluded that the First Defendant acted unconscionably in relation to the transfer $260,000 on 6 August 2009 and that he breached the fiduciary duty he owed to his aunt. As a result, his Honour ordered that the transfer of $260,000 be set aside and that the First Defendant repay the $260,000 with interest, to the Plaintiff as executor of Mrs McAuley's estate: Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 at [157]-[159]. Further, his Honour held that the Plaintiff was entitled to appropriate orders that would enable her to trace the money into any property owned by the First Defendant: Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 at [162].

In the context of the current application, it is important to set out in greater detail some pertinent paragraphs of his Honour’s judgment:

On 6 November 2014, Robb J made orders that the First Defendant held the $260,000 on trust for Mrs McAuley and that the transfer of $260,000 on 6 August 2009 be set aside. His Honour then gave judgment in favour of the Plaintiff for the sum of $260,000, with interest, and made a tracing order in relation to the $260,000.

On 13 March 2015, Robb J delivered another judgment in the matter: Thorn, as Executrix of the Estate of the Late Betty McAuley v Boyd (No 2) [2015] NSWSC 199. His Honour declared that the First Defendant held his interest in the Property upon constructive trust for the Plaintiff to the value of $200,000 and that the judgment debt constituted an equitable charge on the First Defendant's interest in the Property. His Honour granted liberty to apply in respect of the implementation of those orders, including for an order for sale to realise the charge, and an order in respect of the sale of the Property pursuant to section 66G of the Conveyancing Act 1919 (NSW).

In his judgment, Robb J made findings at [8]-[27] in relation to the First Defendant as follows:

After making these findings, his Honour came to the conclusion that:

In the current proceedings, no additional evidence, in fact no evidence at all, has been put before me to suggest that Robb J’s findings in this regard were incorrect. I have however carefully reviewed the evidence tendered before me and formed my own conclusions, to which I shall come in due course.

On 11 May 2016, on the application of the Second Defendant, White J set aside the two declarations and one order made by Robb J on 13 March 2015: Boyd v Catherine Margaret Thorn as executrix of the estate of the late Betty McAuley [2016] NSWSC 588 at [41]. White J held that these declarations were made irregularly because the Second Defendant was not a party to the proceedings when her rights and interests were directly affected by them: Boyd v Catherine Margaret Thorn as executrix of the estate of the late Betty McAuley [2016] NSWSC 588. White J further ordered that the Second Defendant be joined as a second defendant to these proceedings, for the purposes of a rehearing on those limited items described at [9], [11], [41] and [42] in Boyd v Catherine Margaret Thorn as executrix of the estate of the late Betty McAuley [2016] NSWSC 588.

On 6 April 2016, the First Defendant commenced proceedings against the Plaintiff, seeking to set aside, amongst other things, orders made by Robb J in his judgment of 25 August 2014.

On 14 June 2016, in Boyd v Thorn [2016] NSWSC 837, White J heard a notice of motion filed by the Plaintiff, which sought to have those proceedings brought against her by the First Defendant summarily dismissed. In those proceedings, the First Defendant had alleged orders made by Robb J on 6 November 2014 be set aside on the grounds that they were procured by fraud and also that the grant of probate made in favour of the Plaintiff in respect of Mrs McAuley's estate be set aside. During the hearing, the First Defendant alleged bias on the part of the Court in favour of the Plaintiff and pointed to many alleged procedural irregularities which he alleged placed the Plaintiff “in default”: Boyd v Thorn [2016] NSWSC 837 at [18]. White J found that there was “no substance to these submissions”: Boyd v Thorn [2016] NSWSC 837 at [20]. In particular before White J, the First Defendant agitated many issues including:

White J rejected all of these submissions and summarily dismissed the First Defendant’s case: Boyd v Thorn [2016] NSWSC 837 at [99], [106].

This is a rehearing. Its sole purpose is for the court to consider, this time with the Second Defendant as a party, whether the declarations and orders set aside by White J should now be made. The Plaintiff also seeks additional orders. Neither the First nor Second Defendant has served any affidavits nor documents upon which they wish to rely, in accordance with the order of White J on 11 May 2016. They both remain unrepresented, and have made oral submissions on a range of matters.

On 19 September 2016, prior to the commencement of the main proceedings, the Defendants sought to move on two notices of motion, both filed on 13 September 2016. The First Defendant sought three orders:

The Second Defendant sought seven orders:

For reasons set out in two ex-tempore judgments, I refused the orders set out in each notice of motion.

At the end of the Plaintiff’s case in-chief, the Defendants made an application which in effect, sought that the proceedings be adjourned. I again refused that application and gave my reasons in an ex-tempore judgment.

On the second day of the hearing, in the course of the First Defendant’s case in-chief, the First Defendant made another application for an adjournment to allow the Defendants to make a special leave application to the High Court of Australia. I rejected this application.

Tracing is a doctrine which, in certain circumstances, allows the owner of property converted into a different form to be treated as the owner of this property in its new form: J D Heydon and M J Leeming, Jacobs’ Law of Trusts (7th ed, 2006, Lexis Nexis Butterworths) at 666 [2701]. It must be noted that tracing rules are different at law and in equity. Only the equitable rules of tracing allow a plaintiff to trace into and out of a mixed fund, as in the present case: Brady v Stapleton (1952) 88 CLR 322 at 337; Robb Evans of Robb Evans and Associates v European Bank Ltd (2004) 61 NSWLR 75 at [143]-[145]; Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at 406-407 [96]; Russell Gould Pty Ltd v Ramangkura [2014] NSWCA 310 at [32].

Tracing is not a remedy, right or a claim, but an ‘evidentiary process’ of identifying assets and determining the rights of a plaintiff: Re Magarey Farlam Lawyers Trust Accounts (No 3) (2007) 96 SASR 337 at 371 [117]; Foskett v McKeown [2001] 1 AC 102 at 113, 128; Re Global Finance Group Pty Ltd (in liq) (2002) 26 WAR 385 at 406 [94]; Jones (as Trustee of the property of Heather MacNeil-Brown, A Bankrupt) v Southall & Bourke Pty Ltd [2004] FCA 539 at [59].

As Millett LJ explained in Foskett v McKeown [2001] 1 AC 102 at 128:

Given its nature, there is nothing “inherently legal or equitable about the tracing exercise”: Foskett v McKeown [2001] 1 AC 102 at 128 per Lord Millett affirmed in Re Magarey Farlam Lawyers Trust Accounts (No 3) (2007) 96 SASR 337 at 371 [117]. It is simply a process which may lead to the making of a personal or proprietary claim, or to the enforcement of a legal or equitable right: Foskett v McKeown [2001] 1 AC 102 at 128.

As Millet LJ again explained in Boscawen v Bajwa [1996] 1 WLR 328 at 334:

Applying the above principles of equitable tracing to the current proceedings, the relevant asset which may be traced is the amount of $260,000 transferred to the First Defendant. As above, the evidence presented before the Court only allows $200,000 of this amount to be traced. Therefore, the remedies sought by the Plaintiff can only be granted in respect of $200,000. I will consider this further at [72]-[83] below.

It is a feature of precedent that an equitable remedy must be ‘appropriate’ in the circumstances and achieve ‘practical justice’ for the parties: see Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6 at [503]-[512].

A constructive trust is an institution or remedy used to grant equitable relief which is to some degree equivalent or analogous to relief that would be available against an express trustee for breach of trust: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39 NSWLR 143 at [152].

A constructive trust is distinct and typically remedial in nature, usually imposed by operation of law when it would be inequitable, by reference to established equitable principles, for a defendant to unconscionably retain a benefit: Muschinski v Dodds (1985) 160 CLR 583; Baumgartner v Baumgartner (1987) 164 CLR 137.

Unconscionability has been accepted by the High Court as the benchmark criterion for determining the propriety of the award of a constructive trust. As Deane J said in Muschinski v Dodds (1985) 160 CLR 583 at 614:

Deane J added at 615 that constructive trusts are not “mediums for the indulgence of idiosyncratic notions of fairness and justice”. Further, constructive trusts go beyond unjust enrichment as a sole basis, unlike in jurisdictions such as Canada: Rathwell v Rathwell (1978) 83 DLR (3d) 289 at 305; Pettkus v Becker (1980) 117 DLR (3d) at 257; Sorochan v Sorochan (1986) 29 DLR (4th) at 1; Everson v Rich (1988) 53 DLR (4d) at 470.

The remedies available upon a finding of unconscionability are “broad and flexible”: Mainieri & Anor v Cirillo [2014] VSCA 227 at [29]. An equitable charge often accompanies, or is ordered in the alternative to the imposition of a constructive trust to remedy the unconscionable retention of a benefit. The appropriate equitable remedy is fashioned to the circumstances of each case.

As McLelland J explained in Morris v Morris (1982) 1 NSWLR 61 at 64 (referring to Chalmers v Pardoe [1963] 1 WLR 677 at 681-682):

Further, in Delaforce v Simpson-Cook [2010] NSWCA 84 at [3], Allsop P (with whom Giles JA agreed) said:

It has been well accepted then that an equitable charge may be granted over property to remedy unconscionability and “to satisfy the demands of justice and good conscience”: Morris v Morris (1982) 1 NSWLR 61 at 64; Jundi v Saco [2015] NSWSC 1835 at [16]; Cadorange Pty Ltd (in liq) v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 at 38; Tadrous v Tadrous [2012] NSWCA 16 at [46]-[53].

Section 66G of the Conveyancing Act 1919 (NSW) relevantly provides:

Section 66F contains definitions of co-ownership and co-owner as follows:

Section 66G only applies where a property is held in "co-ownership". An application for the appointment of trustees for sale may be brought by one or more of the co-owners.

"Incumbrancer" is not defined in the Conveyancing Act, and the only sections in which it appears are sections 66F and 66G. It has been held that the term means a person taking the benefit of an incumbrance, with a mortgagee being an incumbrancer for the purposes of the section, or in this case, if the Plaintiff is an equitable chargee: Australia and New Zealand Banking Group Ltd v Scott (1993) 6 BPR 13,217; Penny Nominees PL v Fountain (No 3) (1990) 5 BPR 97,348.

Counsel for the plaintiff drew my attention to a decision of Young J in Commonwealth Bank of Australia v Macdonald (2000) BPR 97,832. The purpose in her doing so was to put fairly what might at first blush be perceived as an expression of a contrary judicial view to those earlier expressed in cases referred to in [68] above. Counsel submitted that if those latter views were contrary to previous authorities they were obiter. There is no doubt the particular remarks of Young J were obiter.

However, upon my reading of what Young J said in Commonwealth Bank of Australia v Macdonald (2000) BPR 97,832, I see it as entirely consistent with the views expressed in the earlier authorities.

The particular case concerned a husband and wife who held shares in what the judge describes as a “home unit company”. The husband, a solicitor was a bankrupt and both he and his wife had given a series of equitable charges to the bank. It was alleged that both the husband and wife were in default, but more importantly, the bank sought the appointment of a statutory trustee for sale of the wife’s interest under section 66G.

At [34], the learned judge came to the view that although shares qualified as property for the purposes of section 66G, the section required that there be co-owners of that property who were either joint tenants or tenants in common. His Honour decided that the defendants were not obviously joint tenants. The question however was whether they held the shares as tenants in common: Commonwealth Bank of Australia v Macdonald (2000) BPR 97,832 [34].

Young J formed the view that they could not be tenants in common because there was no unity of possession. The first defendant held his shares and the second defendant, his wife, held her own. There was therefore no tenancy in common in the shares and no order could be made under section 66G: Commonwealth Bank of Australia v Macdonald (2000) BPR 97,832 [46], [47], [53].

His Honour then concluded, although it was unnecessary for him to do so, that the bank was not entitled to an order pursuant to section 66G. As an ‘incumbrancer’, it could not be a co-owner simply because of the existence of an equitable charge because there was neither a joint tenant nor a tenant in common and therefore there could be no “co-ownership” in the sense intended by the section. Read in that way, this authority is, as I have already said, entirely consistent with what Young J and Bryson J had earlier said. Indeed Young J, specifically approved: Penny Nominees at [18], [59] and Bryson J in ANZ v Scott at [59]. Here, of course, the problem encountered by Young J does not arise because there is a tenancy in common (Exhibit P6).

As such, there are clearly two pre-requisites for a person to be a ‘co-owner’ under section 66F of the Conveyancing Act. First, there must be property owned, at law or in equity, by joint tenants or tenants in common. Secondly, there must be a person who is the ‘incumbrancer’ of the interest of these joint tenants or tenants in common.

An applicant is entitled to a section 66G order almost as of right: Callahan v O'Neill [2002] NSWSC 877 at [8]; Tory v Tory [2007] NSWSC 1078 at [42]; Ross v Ross [2010] NSWCA 301 at [36]; Forrest v Nix [2012] NSWSC 493 at [44]. The Court's discretion is not to be exercised by reference to personal views about hardship or unfairness: Spathis v Nanas [2008] NSWSC 418 at [19]-[20]; Grizonic v Suttor [2004] 12 BPR 22,797 at [8]-[9]. The Court therefore has a very ‘limited’ discretion to refuse an application under section 66G: Ngatoa v Ford (1990) 19 NSWLR 72; Re Permanent Trustee Nominees (Canberra) Ltd [1989] 1 Qd R 314 at 317.

However, there are circumstances in which the court would refuse to make an order under section 66G for the appointment of trustees for sale. These circumstances, and the law generally on section 66G, are described by Hallen AsJ (as he then was) in NSW Trustee & Guardian as Executor of the Will of Michael Robert Walsh (Deceased) v Gregory [2012] NSWSC 681 at [33]-[47].

It should be observed that the parties opposing sale under a section 66G order bear the onus of dissuading the court from making such an order: NSW Trustee & Guardian (as executor of the will of Walsh (dec'd) v Gregory [2012] NSWSC 681 at [44]; Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14,685 at 14,701; Eathorne v Araya-Marvin [2011] NSWSC 782 at [19]. Situations where the court may decline to make an order for sale are identified in Peter Butt, Land Law (6th ed, 2009, Thomson Reuters) at 267 and include:

The court has a complete discretion as to who it will appoint to conduct a sale under section 66G: Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151 at [88]; NSW Trustee & Guardian as Executor of the Will of Michael Robert Walsh (Deceased) v Gregory [2012] NSWSC 681 at [46].

In the alternative to a section 66G order, the Plaintiff sought an order for judicial sale of the property.

The court’s power to order a judicial sale of land registered under the Real Property Act 1900 (NSW) arises from its inherent jurisdiction in Equity. In considering such an order the court exercises a discretion: New Beach Apartments Pty Ltd v Epic Hotels Pty Ltd [2007] NSWSC 474 at [16]-[25], [27]; Yarrangah v National Australia Bank Ltd [1999] NSWSC 97 at [22]-[23], [29]-[30]: Guardian Mortgages v Miller [2004] NSWSC 1236 [120]-[122]; King Investment Solutions v Hussain [2005] NSWSC 1076 at [78]-[81].

Judicial sale is not a remedy of last resort, but the standard remedy of an equitable chargee seeking to enforce their equitable interest: Sood v Christianos [2008] NSWSC 1018 at [16]; Mango Media Pty Ltd v Mertes [2006] NSWSC 1460 at [31]; Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 5] [2010] NSWSC 265 at [72]. An equitable chargee is entitled to an order for sale as of right upon default: Sood v Christianos [2008] NSWSC 1018 at [16]; Chateau Constructions (Aust) Ltd v Zepinic & Anor [No 5] [2010] NSWSC 265 at [72].

However, an order for judicial sale should only be made in special or exceptional circumstances, often where a mortgagor or equitable chargor is unfairly prejudiced: Koovousis v Tony, trustee in bankruptcy of the Estate of Vrkic [2014] NSWSC 218 at [20]-[21]; New Beach Apartments Pty Ltd v Epic Hotels Pty Ltd & 12 Ors [2007] NSWSC 474 at [25]; Palk v Mortgage Services Funding PLC [1993] Ch 330 at 344; Yarrangah v National Australia Bank Ltd [1999] NSWSC 97 at [37].

As I have earlier indicated the Defendants filed no evidence. Instead, they both took it in turns to make submissions and assertions from the bar table.

The recurring theme of these submissions, which involved frequent reference to the decision in Cameron v Cole (1944) 68 CLR 571, was that they were entitled to a rehearing of all matters which had been before Robb J and that White J’s judgment of 11 May 2016 was or should be construed as having that effect. As I understood it, they believed they were entitled to a rehearing, or as the Second Defendant submitted, a hearing de novo, according to general notions of procedural fairness. This submission has no basis in law and I reject it.

The Defendants pointed me to the comments of Rich J in Cameron v Cole (1944) 68 CLR 571 at 589 and submitted that that compelled me to set aside the remaining orders of Robb J as there had been “no valid trial at all”. However, the Defendants failed to appreciate the context in which these comments were made, as they simply quoted the last line of the relevant passage at 589. In full, Rich J said:

In the full context of 589, Rich J clearly stated that only the orders binding on the person affected, in the present case, the Second Defendant, could be set aside on the basis that she had not been afforded a ‘valid trial’. It is for these reasons that this central and repeated submission of both Defendants has no merit.

I was at pains on numerous occasions to emphasise it was only the items set out in [11] of White J’s judgment of 11 May 2016 which were the subject of the rehearing before me. However, both Defendants were simply unable or unwilling to accept that situation.

Other matters were raised by the Defendants from the bar table, for example, the alleged fraud on the part of NAB in the preparation of bank statements, which was previously raised before Robb J on 12 February 2015. There were also assertions made as to who may, or may not have, what the Second Defendant described as “equitable interests” in the relevant property. None of these allegations, or others of the kind, were the subject of evidence or currently have any foundation in fact.

In Thorn, as Executrix of the Estate of the Late Betty McAuley v Boyd (No 2) [2015] NSWSC 199, Robb J observed:

Indeed, in letters dated 8 March 2010 and 15 March 2010 sent to the Senior Legal Officer of the NSW Trustee and Guardian, the First Defendant admitted that the money was used to repay the mortgage over his home. These letters were tendered as evidence in proceedings before me as Exhibits P1 and P2. In the letter of 8 March, the First Defendant stated “…my Aunts gift was used to pay off my home which is what my Aunt wanted me to do” (CB 68; Exhibit P1). In the letter of 15 March, the First Defendant re-iterated his statement from the 8 March letter by explaining “my Aunt’s gift was used to pay off the mortgage on my family home which was in keeping with my Aunt’s wishes” (CB 70; Exhibit P2). He also stated “I informed you that my Aunts gift was used to pay off the mortgage on my family home. I advised you that I would have to sell my home to repay the gift. This matter should have ended there” (CB 76; Exhibit P2).

The NAB statement for the First Defendant’s NAB Base Variable Rate Home Loan shows a credit of $200,000 on 12 August 2009, listing the particulars "Internet Transfer Mortgage" (CB 78). This date was six days after the transfer of $260,000 of Mrs McAuley's funds to an account held by the First Defendant.

In the proceedings Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 before Robb J, during cross-examination, the First Defendant stated (T of 23/04/14 115-116):

The First Defendant also stated in the proceedings Catherine Margaret Thorn as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 that he credited the amount of $109,000 from his superannuation funds into the NAB account (T of 23/04/14 117; CB 83). He claimed that this money was used in another loan (T 117; CB 83), but in any event accepted that the business loan was secured against the Property (T 118; CB 84).

The FOS’ findings (CB 37-48) reveal that as at 12 August 2009, the Property secured three loans; the home loan in the amount of $320,000, an interest-only business loan in the amount of $269,500 and a principal and interest business loan in the amount of $190,000 (CB 12, 13, 19). The NAB bank statements (CB 77-79) indicate that each of the accounts was closed on 22 September 2009. The Defendants were granted, at their request, an interest only home loan of $560,000 secured by the Property which consolidated the above three facilities (CB 13-19). The First Defendant’s receipt of $200,000 reduced the total amount secured on the Property by that amount, which enabled the First Defendant to refinance the loans for a much lesser amount than the total sum of the three previous loans, increasing the equity in the Property. The Plaintiff submitted that the First Defendant's share of the Property was therefore charged with the amount of $200,000 as at 12 August 2009 (Plaintiff’s written submissions [18]).

On the basis of this evidence, which was only contested by way of oral submissions, I am satisfied that the $200,000 was transferred from Ms McAuley’s account and applied to pay down or reduce the debts which were mortgaged against the property. The admissions made by the First Defendant referred to at [73] and [75]-[76], and the bank statements referred at [74], more than corroborate that conclusion.

It is only appropriate to award a constructive trust in proportion to the detriment incurred by the Plaintiff. In the present case, this detriment is the unconscionably procured $200,000 which may, as established above, be traced into the Property.

As the Second Defendant rightly stated in oral submissions, a constructive trust may only be imposed after consideration of whether there is an appropriate remedy which falls short of the imposition of a constructive trust: Giumelli v Giumelli (1999) 196 CLR 101 at [10]; Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at [42]; John Alexander's Clubs Pty Limited v White City Tennis Club Limited; Walker Corporation Pty Limited v White City Tennis Club Limited (2010) 241 CLR 1 at [128]-[129].

Whilst this is true, a wealth of case law supports the proposition that a constructive trust is an appropriate remedy to impose upon a person’s legal entitlement to property, where it would prevent that person from exercising their legal right in respect of that property, in circumstances where it is unconscionable for them to do so, or where it was unconscionably procured: Muschinski v Dodds (1985) 160 CLR 583 at 614, 620; Baumgartner v Baumgartner (1987) 164 CLR 137 at 149; Bryson v Bryant (1992) 29 NSWLR 188. As is evident in the authorities identified above, a constructive trust may be appropriately ordered to preclude a defendant from retaining a benefit which is contrary to equitable principle. In the present case, it would be contrary to equitable principle to allow the First Defendant to retain the benefit of the $200,000 because it was unconscionably procured.

It is also relevant to consider whether the relief proposed would impact adversely on other persons: Giumelli v Giumelli (1999) 196 CLR 101 at [10], [50]; Tadrous v Tadrous [2012] NSWCA 16 at [49]. In the present case, I am satisfied that the imposition of the constructive trust will not adversely impact other persons, because a constructive trust is only to be imposed over the First Defendant’s interest in the Property to the value of the traceable $200,000, and not over the Property as a whole.

In the present case, because the traceable $200,000 was unconscionably procured and because it would be contrary to the principles of equity for the First Defendant to retain any benefit from this $200,000, I am satisfied that in light of the above authorities, a constructive trust is the appropriate remedy. In my view, the First Defendant’s interest in the property should also be charged to the value of that amount (together with interest) in favour of the Plaintiff.

I am also of the view that as a result of the imposition of the constructive trust and creation of the equitable charge, the Plaintiff is an ‘incumbrancer’ and ‘co-owner’ for the purposes of section 66G. As such, the Plaintiff has standing to pursue the section 66G application.

In the circumstances, there is limited discretion to refuse to make a section 66G order. On the evidence before me, I am of the view that it is the appropriate order. Neither Defendant has identified any legal basis upon which section 66G orders ought to be refused, in circumstances where they bear the onus of dissuading the court from doing so. They have not discharged that onus.

I am therefore of the view that trustees should be appointed under section 66G. No objection has, or in my view could rationally be taken to the persons nominated by the Plaintiff. Their appointment is therefore appropriate.

In the alternative, it would be equally appropriate to order a judicial sale on the same terms as requested by the Plaintiff for the same reasons and findings as above.

I would therefore make the orders proposed by the Plaintiff at [1]-[8] and [10]-[12] of the Short Minutes of Order. I would also make any further orders that may be necessary and consistent with my findings and reasons.