Barnard v Otten [2025] VSC 313, Irving AsJ (3 June 2025)
The facts were as follows –
- Rhianna Otten was the daughter of Sharon Otten and sister of Declan Otten. Rhianna was until her death on 1 April 2024 the partner and fiancée of the plaintiff (Carl) (the couple). Carl deposed –
- Before 2018 the four of them discussed purchasing a property, including initially in Rhianna’s name, then to be subdivided and part be transferred into Sharon’s name. But the couple did not pursue this because of difficulty finding land and cost.
- Rhianna and Declan opened a joint bank account (the joint account) into which Sharon made deposits. This account was not used to pool funds for a property purchase. Sharon and Rhianna did not agree to purchase a property.
- In around 2020 the couple purchased a house at Corio (the Property) for $416,000, negotiated by Rhianna, using a loan from a financier secured by first mortgage and an $85,000 gift from the sale of Sharon’s house at Melton described by Sharon as an ‘early inheritance’. Rhianna became its registered proprietor. The couple and children lived in the house.
- With the couple’s agreement Sharon purchased, he believed using her proceeds of sale, and placed, a moveable granny flat onto the Property, into which Sharon and Declan moved in mid-2021, living rent free and not contributing to mortgage repayments.
- Until 1 April 2024 the couple made all mortgage repayments, being about $80,000, from their joint finances and also paid all rates, insurance and utilities bills. Sharon paid for gas supply to the granny flat.
- On the other hand Sharon deposed –
- Following the sale of her property she had approximately $220,000. She agreed to Rhianna and Declan opening a bank account in their names so that she (Sharon) could make deposits to protect that money from her other daughter Taylah. She paid $100,000 into this joint account in October 2018.
- In 2018 Sharon and Rhianna began discussing property purchase. She (Sharon) suggested finding land with subdivision potential, to be purchased in Rhianna’s name and then subdivided so that sufficient for a granny flat could transferred into her (Sharon’s) name. They then involved Declan and Carl in their discussions.
- She paid $70,700 into the joint account in November 2019 and a further $25,907.50 between March 2018 and February 2020.
- The four persons created a Facebook group chat containing discussions about purchasing a property together.
- On 16 December 2020 the Property was purchased in Rhianna’s name using her (Sharon’s) contribution of $85,000 and the mortgage loan.
- She neither sought legal advice nor caveated because she was clear about her agreement with Rhianna. The couple and the children moved into the Property. The granny flat was subsequently constructed using Sharon’s funds from the joint account and she and Declan moved in. They did not contribute to loan repayments.
- The granny flat was not portable and its cost of relocation would exceed initial construction costs.
- At least fortnightly Rhianna borrowed money from Sharon and Declan for living expenses.
- Rhianna died intestate. Subsequently her aunt made one mortgage repayment. Carl became registered proprietor of the Property in his capacity as administrator of Rhianna’s estate. The mortgage was in default with interest accruing inducing a default notice. Carl engaged an agent to sell the Property, requiring vacant possession.
- Carl and Sharon were in dispute about possession of the Property. The mortgagee issued notices to vacate to her.
- Sharon caveated over the Property claiming an implied, resulting or constructive trust with an absolute prohibition on dealing with it.
- Carl applied under the Transfer of Land Act 903 for removal of the caveat. He also sought possession, which was dismissed because the Property had been vacated.
Irving AsJ ordered removal of the caveat, holding –
- A joint endeavour constructive trust arose where there was a joint relationship or endeavour; an asset was acquired in the course thereof; the joint relationship or endeavour was prematurely terminated; one party had made financial or non-financial contributions for the purpose thereof; and it would be unconscionable to permit the other party to retain the benefit of the relevant property where the contributions were made in circumstances where it was not specifically intended that the other party should so enjoy it. [49]
- A common intention constructive trust arose where there was a common intention or understanding that a person would acquire an interest in property and that person has acted to his or her detriment in reliance on that intention or understanding. [50]
- Equity would presume that a person held property on resulting trust, proportionate to the contribution, where another person contributed to its purchase and the property was held in the name of the first person. If the contributor was the parent of the person holding the property, a rebuttable presumption of advancement arose. [51]
- The caveator established a prima facie case of an interest in the Property by virtue of an implied, resulting or constructive trust, because –
-
- her evidence was of providing monies pursuant to an agreement with the couple to purchase a property together sufficient to subdivide and accommodate a granny flat for Sharon and Declan;
- her provision of $85,000 in purchase monies was undisputed, although the evidence of whether this was a gift to Rhianna conflicted;
- a granny flat was established which Sharon and Declan occupied;
- notwithstanding Carl disputing any agreement to jointly purchase the Property, and that the $85,000 was a contribution and not a gift, a prima facie case of Sharon’s asserted interest sufficed;
- conflicts in evidence were to be resolved at trial.
[7], [66], [73]
- However, the balance of convenience favoured removal of the caveat because: the mortgagee’s intention to sell the Property was undisputed and the caveat depressed the price; although the caveat claimed an absolute prohibition Sharon’s interests in the Property were at most not asserted to be to the whole Property; Sharon could claim on the funds remaining after the mortgagee was paid out. [7], [67]-[71], [73]
Philip H. Barton
Owen Dixon Chambers West
Tuesday, August 05, 2025