Calvo v Calvo

These proceedings are a family dispute about a large rural property near the Snowy Mountains (the "Property"). Without disrespect I shall refer to the family members by their given names. Daniel, for whom Ms R Golovina, Solicitor appeared is the plaintiff. He is one of the adult sons of the defendant, Athalie. Mr P Newton of Counsel appeared for Athalie on the instructions of her tutor.

In 1980 Athalie and her late husband, Peter, bought the Property as joint tenants. They made many improvements to it. On Peter's death, Athalie became registered proprietor of the Property by survivorship. In any event, Peter left Athalie his entire estate.

More recently, Athalie has put the Property up for sale. Daniel strongly objects to this. In his statement of claim filed on 8 August 2018, Daniel alleges that he has various legal and equitable interests in the Property entitling him to declarations of express, resulting or constructive trusts. At its most basic Daniel says he is entitled to that relief because Peter said from time to time that he (Peter) wanted the Property never to be sold and that it should stay in the family forever. Daniel also says that he contributed financially to the improvements to the Property.

By motion filed on 26 September 2018, Athalie seeks to have the proceedings dismissed under UCPR Part 13, Rule 13.4 and costs on the indemnity basis. After considering the pleadings and Daniel's evidence, the Court is satisfied to a high degree of certainty that this is a clear case where Athalie is entitled to that relief. Daniel's case does not appear to rise higher than that Peter wanted the Property to stay in the family.

On any view, that is not sufficient to make out a case for the relief sought in the statement of claim. If the proceedings went to trial on the basis of that statement of claim and the evidence that has been adduced, the Court is satisfied that the proceedings would fail.

UCPR Rule 13.4 provides:

I will apply the test for summary dismissal set out in the decision of the five member bench of the Court of Appeal in Shaw v State of New South Wales [2012] NSWCA 102 (per Barrett JA; Beazley, McColl and Macfarlan JJA and McClellan CJ at CL agreeing):

There is no question in this case of whether that test or the Court's approach requires further modification in the light of s 56 of the Civil Procedure Act 2005 (NSW).

The statement of claim seeks this relief:

The Court can immediately dispose of two aspects of that relief.

First, Ms Golovina accepted that nowhere does the statement of claim plead the requisite elements for the Court to find an express trust in Daniel's favour over any part of or interest in the Property.

Second, Ms Golovina was unable to demonstrate to the Court any basis known to the law, let alone one pleaded in the statement of claim, for relief in terms of paragraph 3 of the statement of claim.

Having eliminated those two aspects of the relief claimed, the focus of the argument was on Daniel's alleged entitlement to relief by way of resulting or constructive trust, whether or not arising from the improvements to the Property to which he allegedly contributed.

In addition to the statement of claim, Daniel adduced affidavit evidence from himself and his siblings in support of the claim. In response to a question from me, Ms Golovina informed the Court that the affidavit evidence upon which she relied in resisting Athalie's application was the evidence that Daniel would rely on in chief at any hearing. Without any disrespect, Ms Golovina accepted my somewhat colloquial characterisation that the Court could proceed on the basis that the evidence which Daniel had adduced was in effect "as good as her client's evidence was going to get". She did, however, also submit that at any trial her client would be able to cross-examine Athalie. That submission would be of little or no assistance on an application like this in any event. However, in this case it is a possibility to which I give even less weight because Athalie is no longer a capable person.

As the argument developed, it became apparent that the only parts of the evidence that were really of any significance were limited paragraphs of two affidavits sworn by Daniel. Those paragraphs were specified in answers to particulars that had been provided in response to requests made by Athalie's legal advisors in relation to the statement of claim. It is convenient to set out those parts of the evidence at this point in the Court's reasons.

In his affidavit of 18 June 2018, Daniel said:

In Daniel's affidavit of 7 August 2018, he said:

Mr Newton submitted there were four fundamental problems with the case that Daniel apparently wished to make. I accept that submission. In what follows I will generally be reproducing, by way of acceptance, Mr Newton's submissions. I will then consider Ms Golovina's arguments in response.

The four fundamental problems which I accept are, for all intents and purposes, insuperable obstacles to the relief sought in the statement of claim are:

The pleading may be considered in three parts:

The first section is paragraphs 1 to 22:

Some of the paragraphs of that pleading were amplified by answers to particulars. They are:

In relation to this first part of the pleading, the first point to note is that, as paragraph 6 alleges, the substantial construction and improvements to the Property were undertaken by Peter. There is no suggestion that at that stage anything was done by Daniel.

It is then necessary to consider paragraphs 11 to 13 of the pleadings which refer to Peter's "intention in relation to the Property was that it was to remain in the family for generations and never to be sold".

The particulars invite attention to paragraphs 29 to 33 of Daniel's affidavit of 7 August 2018 (see paragraph [17] above).

This part of the pleading demonstrates that the only intention that is pleaded in relation to the Property is Peter's. There is no suggestion that it was an intention held by Athalie. When one turns to the conversations particularised in support of the intention, with one exception none of those conversations, even read in the most generous way towards Daniel or for the purposes of Daniel's case, could be read as conferring or being intended to confer any rights in the Property on Daniel. The only possible but faint exception is what is said in paragraph 31 (which I set out again for convenience):

However, even that conversation is hardly a clear indication of a dispositive intention (as opposed to an expression of a general hope for the future). Even if it was, it is a statement made to Daniel's son, James, with an affirmation by Daniel of his belief that the Property could not be sold by anyone in the future.

The next point to note about this part of the pleading is that all of the work and improvements alleged in paragraphs 17 to 22 pre-date what are apparently relied on as representations for the purposes of creating a right in Daniel. This is clear from the particulars to paragraph 13 (see paragraph 22] above). All of those alleged representations were made in 2008, 2009, 2016 and 2017.

I should also observe that of the improvements pleaded, the purchase of white goods and household furnishings could not be considered an improvement to the Property that would have any relevance to the claim sought to be made by Daniel. I also note for completeness that the particulars subsequently provided in relation to that claim said that the household furnishings and white goods were only valued at $1,800 rather than $35,000.

To summarise the effect of the pleading and the evidence thus far, there is nothing capable of being a representation that would give rise to a right in Daniel to an interest in the Property and insofar as he alleges that he did anything by way of contribution or otherwise, it cannot be in reliance on any of the alleged representations because what he did pre-dates them.

I will not reproduce the second part of the pleading, being paragraphs 23 to 31. These relate to Daniel's involvement in litigation concerning the Australian Institute of Music, which was a not-for-profit company founded by and owned by Peter. There was a dispute in relation to the shareholdings in that company which was resolved by the decision of White J, as his Honour then was, in Calvo v Sweeney [2009] NSWSC 719. Daniel makes various allegations of his role as the "driving force" of the family's success in that litigation. Those parts of the pleading are completely irrelevant to any claim that Daniel might have to the Property.

The third part of the pleading is paragraphs 32 to 35:

Paragraph 32 undoubtedly sets out Daniel's state of mind. I accept that he has always considered the Property to be "family property". The difficulty is that nowhere is it alleged that Athalie contributed in any way to Daniel having that state of mind. Whatever he may or may not have done "as a result" (see paragraph 33 of the statement of claim) is in no way attributed to Athalie.

Finally, in relation to paragraph 34 of the pleading, I do not see how it is made out either in its own terms or by reference to any of the evidence. The particulars for these paragraphs are:

They bring the discussion back to the same conversations which I have set out in paragraph [17] above. I do not see how Peter's conduct in simply effecting improvements to the Property could give rise to the state of knowledge alleged in Athalie concerning Peter's intentions. Insofar as conversations are relied on, the evidence does not disclose any such conversations and Daniel's evidence does not go so far as to suggest that Athalie was present during any of the conversations that have been particularised. I will return to this last point in considering Ms Golovina's arguments, to which I now turn.

Ms Golovina began by drawing the Court's attention to the decision of the Court of Appeal in Allen v Snyder [1977] 2 NSWLR 685, in particular these parts of the headnote:

Ms Golovina accepted that the mere provision of services or expenditure for the benefit of a household is insufficient in and of itself to demonstrate a common intention as to the ownership of the asset. Nevertheless, she submitted that it was Daniel's case that it was the common intention of Peter and Athalie for the Property to be held on trust for their children and that Athalie was bound by that intention.

An immediate difficulty for Daniel is that no such case is pleaded in the statement of claim. Moreover, as I have already indicated, none of the conversations particularised as supporting it can, in my view, have that effect.

Ms Golovina then drew attention to the same conversations that I have set out in paragraphs [16] and [17] above and informed me that her instructions were that, whilst not stated in the affidavits, Athalie was in fact present at the time the statements which I have recorded above were made.

Even accepting that to be the case, notwithstanding there is no evidence to that effect, I do not think that assists Daniel for two reasons. My attention was again drawn to what was said in paragraphs 34 to 38 of Daniel's affidavit of 18 June 2018 (see paragraphs [16] above). The first reason why I do not think they assist is that, even taken in accordance with their terms, the various statements would not support the Court drawing an inference of a common intention of the kind alleged.

Second, even if the Court were to accept that Athalie was present at the time those things were said, her mere presence without more would not support an inference that she had somehow agreed to be bound by or shared that particular intention.

The same observations apply with equal force to the conversations alleged in paragraphs 30, 31 and 32 of Daniel's affidavit of 7 August 2018 upon which Ms Golovina relied (see paragraph [17] above).

Mindful of the exposition of the relevant test which I have set out in paragraph [7] above, I remind myself that a party in the position of Athalie bears a heavy burden in an application of this kind. The Court will not lightly prevent a party from bringing forward a case for final adjudication.

That being said, I have no doubt that this case would fail if it was permitted to go to trial on the statement of claim and the evidence which has been adduced as the highest and best evidence that Daniel is able to provide. It is one of the "clearest of cases" because of its failure to demonstrate a proper basis for any of the relief sought in the statement of claim in relation to a resulting or constructive trust.

For these reasons, the statement of claim will be dismissed.

Athalie applies for her costs on the indemnity basis.

Ms Golovina accepted that her client was obliged to pay Athalie's costs of these proceedings on the ordinary basis but disputed Athalie's entitlement to a special costs order.

It will be recalled that the notice of motion, prayed for costs on the indemnity basis (see paragraph [4] above). That prayer was clearly drafted against the background of some preceding correspondence to which I will now refer.

Daniel had earlier placed a caveat over the Property which Athalie sought to lapse. As part of that skirmish between the parties, Athalie's solicitor wrote to Ms Golovina on 21 June 2018 saying:

A summons was filed on 5 July 2018 supported by the affidavits of Daniel sworn on 18 June 2018, and his brother Benjamin sworn on 12 June 2018. Having reviewed that summons, Athalie's solicitor again wrote to Ms Golovina on 19 July 2018:

Daniel took up the invitation in that letter to file the statement of claim. After the statement of claim was filed, particulars were sought, some of which I have set out above. On 17 September 2018, Athalie's solicitors wrote to Ms Golovina saying:

On the same day, Ms Golovina responded on behalf of Daniel by refusing the offer made in the letter.

Mr Newton submits that the course of correspondence which I have set out above and, in particular, the offer made in the letter of 17 September 2018 warrant an order for costs on the indemnity basis from the period seven days after the date of the letter of 17 September 2018. I accept Mr Newton's submission for two reasons.

First, in accordance with the usual principles in relation to awarding indemnity costs, it seems to me that this is a case where Daniel's prosecution of the proceedings was unreasonable in the requisite sense: properly advised, he ought to have known from the outset that the proceedings would fail.

Second, in accordance with the Calderbank principles invoked in the letter of 17 September 2018, and where the letter clearly put Daniel on notice that an application for costs on the indemnity basis would be made, this is an appropriate case for the Court to exercise its discretion to order Athalie's costs to be paid on the indemnity basis on and from 24 September 2018.

The orders of the Court are: