This case arises out of a relationship between a boarding house operator and her young boarder spanning nearly 20 years and the property portfolio amassed between them, which they both lay claim to. Twelve units were purchased in the boarder’s name, initially with funds contributed solely by the boarding house operator and later with funds contributed by both. There were major disputes about the intention of the parties and the amounts contributed by each. The boarding house operator only dealt in cash and had no documentation. The common theme running through the purchases was that the boarding house operator negotiated the purchases and contributed funds but the boarder managed them and they were purchased in his name. The court did not believe either as to their relationship and said that each failed to acknowledge the realities of their relationship (business and personal).
The court found that the funds used to purchase all the properties, bar the first three, were by way of contribution from both parties. The court found that the funds provided by the boarding house operator for the first purchase were by way of loan, which had been substantially repaid. The funds for the second and third were provided by the boarding house operator and those units were held on trust for her.
The court found that their financial contributions for the balance of the units was similar, although it was difficult to determine precisely given the lack of records. The court imposed a constructive trust in relation to the balance of the units. The court was satisfied that there was a pooling of resources, capital, skill and management. It was a joint enterprise which depended upon injections of capital as well as the different skills of the two parties. As to indirect contributions, the contribution of the boarding house operator to the enterprise, particularly of capital and management, in its formative stages was significant just as the boarder’s management of the enterprise was important in the latter stages. However the court found that but for the boarding house operator’s capital injections and expertise the enterprise could not have flourished as it did. She provided the resources and skill which set up the business and permitted it to grow. The court found that there should be a slightly greater recognition of her contribution. A constructive trust was imposed in relation to the fourth to twelfth units with the beneficial interest of the boarding house operator, sixty per cent and the boarder, forty per cent. The judge also referred his findings to the Tax Office given the boarding house operator had not filed tax returns for many years.