Background
Ronnie met his partner Marie in or around 1987 while residing with his family at a farmhouse in Kemps Creek. Shortly afterwards, Marie began living at Kemps Creek with Ronnie and his family.
The Plaintiff, Ravina alleged that in or around November or December 2011, she entered into an oral agreement with the defendant, Marie concerning a lease of the property situated at 25 Robey Avenue, Middleton Grange in New South Wales (Property) for $600 per week in arrears.
On the basis of the lease, Ravina claims that Marie owes her $181,800 in unpaid rent for the six years prior to the commencement of the proceedings, while acknowledging that a claim for earlier rent was statute-barred.
Marie and Ronnie (the Defendants), in a counterclaim argued that an agreement was reached between the parties whereby Ravina would build a house for Marie and her family to live in for life and that Marie and Ronnie would help complete construction of the house, pay a part of the mortgage, pay utilities and maintain the Property. Marie and Ronnie also sought a declaration that since the Property had been sold, the plaintiffs held the proceeds on constructive trust for them. Marie and Ronnie contended that the proceeds should be distributed based on their contributions towards the Property, and any surplus should be split equally. Alternatively, Ronnie and Marie sought equitable compensation.
Issues
The Defendants argued that the agreement gave rise to a joint endeavour constructive trust claim. In order to establish a joint endeavour constructive trust claim, the following three elements needed to be satisfied:
- that a joint endeavour was formed between the parties;
- the parties acquired the property pursuant to their joint endeavour; and
- that there was a premature termination of the joint endeavour, leaving one party with a legal interest that it was not intended to enjoy beneficially in all the circumstances.
Furthermore, the Defendants sought a declaration that since the Property had been sold, the plaintiffs held the proceeds on constructive trust for them. The Defendants contended that the proceeds of the sale should be distributed based on their contributions towards the Property, and any surplus should be split equally. Alternatively, Ronnie and Marie sought equitable compensation.
Court Ruling
In deciding for the defendants and their constructive trust claim, the judge:
- emphasized that in cases where both parties rely on an oral agreement from many years ago, there must be “actual persuasion” that the alleged conversations occurred, with reliable contemporaneous records being the most dependable evidence to assess the credibility of witness testimony.
- dismissed Ravina’s claim and accepted Ronnie and Marie’s assertion that there was a joint endeavour.
- considered the contributions to the mortgage, driveway construction, soil removal, landscaping, and other property improvements to assess the value of each party’s contributions.
Take-away
This case illustrates how the court addresses disputes over oral agreements and trusts. It demonstrates that the court thoroughly examines the credibility of relevant witnesses and only accepts oral evidence if it is supported by reliable contemporaneous records. This serves as a reminder that it is always best to put agreements in writing to avoid complicated disputes over their terms.
This case illustrates how the court addresses disputes over oral agreements and trusts. It demonstrates that the court will thoroughly examine the credibility of relevant witnesses and only accept oral evidence if supported by reliable contemporaneous records.
This serves as a reminder that it is always best to put agreements in writing to avoid complicated disputes over their terms.
