Habony v Pal [2004] NSWSC 362

A businesswoman (Mrs Pal) acquired property in joint names with a new friend (Mr Harbony) after her father’s violent death.
The Court held – on the facts here, no ground for equitable intervention. By her cross-claim Mrs Pal contended that the transaction by which title to the Douglas Street property was placed in the joint names of herself and Mr Habony should be set aside, on grounds relating to undue influence, fraud, misrepresentation or unconscionable conduct. At the hearing emphasis was placed upon that species of undue influence sometimes called “actual undue influence”, and it was asserted that there had been unconscionable conduct because Mrs Pal’s capacity to make a decision as to her own best interests had become peculiarly susceptible to control or influence by Mr Habony: see Louth v Diprose (1992) 175 CLR 621, especially at 629.

The Court did not enter into any exposition of the legal principles and held that the factual basis for that case has not been made out, and for the same reason, there was no factual basis for a case of fraud or misrepresentation.

Both parties had submitted that their rights were regulated by the general principles applicable to co-owners. It had not been established that Mr Habony made any direct contribution from his own money, but the property was acquired in joint tenancy and mortgage interest installments were paid wholly or in substantial part out of the income of the jointly held property. Those facts did not warrant a finding that the joint tenants held the property on resulting trust absolutely for Mrs Pal, but they did indicate that by paying the deposit and other costs of acquisition, she made a disproportionately greater contribution to the acquisition than Mr Habony, which suggested a resulting trust to that extent. But the defence and cross-claim did not address those matters, and a further hearing was necessary to establish the ultimate monetary entitlements of the parties.

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