Parkas v Shankar [2025] NSWSC 1140 provides a recent and clear summary of the principles governing co-ownership accounting and equitable allowances between co-owners, particularly regarding claims for improvements or repairs that enhance a property’s value. The decision explores differing judicial views on whether a co-owner may receive an allowance for time personally spent carrying out work that has reduced expenses. In this case, Richmond J concluded that, notwithstanding earlier comments from White J in Maio v Sacco [2002] NSWSC 646 suggesting otherwise, allowances based solely on time spent are not available. The reasoning in Parkas v Shankar illustrates the complexities that can arise when assessing competing claims by co-owners or beneficiaries for improvements or substantial repairs to shared property.
Background
The case involved a complex hybrid ownership structure. The property was held as tenants in common. Mrs Parkas owned a 50 percent share. Her sister, Mrs Shankar, and brother-in-law, Mr Shankar, jointly owned the remaining 50 percent as joint tenants. The purchase was funded by equal personal payments and a loan from the Bank of Queensland. All three co-owners were jointly liable for the loan.
The parties jointly developed the vacant land into a duplex. Mr Shankar managed the design, finances, and contractors. Mr Parkas contributed his construction expertise. The duplex was completed in 2013 and rented through several agents. Management later shifted to Mr Shankar’s company, ETP Projects Pty Ltd. Disputes then arose regarding his handling of funds.
In 2023, following the breakdown of the parties’ relationship, the Court made orders under section 66G of the Conveyancing Act 1919 (NSW), appointing trustees for the sale of the property, and directing the parties to account for their respective interests.
However, further issues arose on how to divide the proceeds. Specifically, Mr Shankar contended that he should receive an amount reflective of his time spent constructing improvements to the property.
How the Law Resolved the Co-Ownership Accounting Dispute
Mr Shankar advanced four claims seeking adjustments to reflect his contributions to the property, including construction costs, payments from joint accounts, rental income management, and unreimbursed personal expenditures.
The Court approached each claim methodically. It scrutinised the accounts and payment records to distinguish between amounts already reimbursed and those still outstanding. It then assessed whether expenditures genuinely enhanced the property’s value, rather than representing routine costs.
In doing so, the Court enhanced key principles of co-ownership law. At common law, co-owners cannot claim reimbursement for improvements, repairs, or maintenance unless expressly or impliedly agreed. Equity, however, permits co-owners to recover contributions for repairs or improvements that enhance the property’s value after co-ownership ends. Allowances are confined to actual expenditures, not personal labour, and extend beyond physical improvements to cover payments, such as mortgage instalments, made on behalf of all co-owners.
The Court also considered statutory limitations under the Limitations Act 1969 (NSW). It concluded that Mr Shankar’s claims for construction payments were not statute-barred, as the right to equitable adjustment arises only at the time of the s 66G application terminating co-ownership, not when the original payments were made.
Ultimately, the Court allowed Mr Shankar’s claims for certain adjustments, underscoring that equitable accounting focuses on actual financial contributions that enhanced the property or satisfied joint obligations, rather than on time or effort alone.
Parkas v Shankar Shows Us…
The recent Parkas v Shankar decision has made it clear that in co-ownership, not all contributions are created equal. Only actual financial contributions that enhance the property or discharge joint liabilities, like mortgage payments, will be recognised. Personal labour, time, or management effort alone won’t entitle a co-owner to reimbursement.
Key Legal Lessons for Co-Owners and Developers:
- Claims for adjustment only arise when co-ownership ends, not at the time of the original expenditure.
- Common law does not provide automatic reimbursement, while equity allows recovery only for expenditures that increase the property’s value.
- Maintaining clear records of payments, receipts, and contributions is essential to support any claim.
Practical Takeaways for Smooth Co-Ownership
- Track reimbursable expenses separately from personal effort to avoid disputes.
- Formalise agreements upfront regarding contributions, repayments, and improvements.
- Plan in advance how contributions will be accounted for if the property is sold or co-ownership ends.
- Keep evidence of joint liabilities paid on behalf of all owners, including mortgage and tax payments.
Conclusion
Parkas v Shankar underscores the importance of clarity and documentation in co-ownership accounting arrangements. The Court confirmed that only contributions enhancing value or meeting joint obligations are recoverable. Claims arise when co-ownership ends. Co-owners and developers should agree on financial responsibilities early. They should also keep detailed records to reduce disputes and ensure fair division of property proceeds.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
