Amit Laundry Pty Ltd v Jain

[2017] NSWSC 1495

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495

Hearing dates:

19, 20, 21 and 22 June 2017

Date of orders:

03 November 2017

Decision date:

03 November 2017

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

(1)   Declare that the defendant holds the property identified in schedule A (and referred to in these orders as Property A) on a resulting trust as to 9.08% for the plaintiff and as to one-third of the balance for the defendant’s brother, Amit Jain.
(2)   Order that title to Property A be rectified on the register of land titles maintained by the Registrar-General to record that Property A is held by Rajil Jain, Amit Jain and Amit Laundry Pty Limited, as tenants in common in the following shares: Rajil Jain as to 60.61%, Amit Jain as to 30.31% and Amit Laundry Pty Limited as to 9.08%.
(3)   Direct that a copy of these orders, once entered, be lodged with the Office of the Registrar-General at Land and Property Information for the purpose of rectification of the register in accordance with order 2 above.
(4)   Reserve the question of costs.
(5)   Direct the parties to serve brief written submissions (no more than 3 pages) in relation to costs within 14 days with the intent that the issue of costs be dealt with on the papers.

Catchwords:

EQUITY – Trusts and trustees – Resulting trusts – Presumption of resulting trust – Unequal contributions to purchase price

 

EQUITY – Trusts and trustees – Resulting trusts – Presumption of advancement

  EQUITY — Trusts and trustees — Express trusts — Intention to create

Legislation Cited:

Corporations Act 2001 (Cth)

Cases Cited:

Allen v Synder [1977] 2 NSWLR 685
Amit Laundry Pty Ltd v Jain [2016] NSWSC 1871
Anderson v McPherson [No 2] [2012] WASC 19
Bahr v Nicolay [No 2] (1988) 164 CLR 604
Bennet v Bennet (1879) 10 Ch D 474
Bilson v Rogers [2008] NSWSC 469
Black Uhlans Inc v New South Wales Crime Commission Cautionary (2002) 12 BPR 22,421; [2002] NSWSC 1060
Bloch v Bloch (1981) 180 CLR 390; [1981] HCA 56
Brown v Brown (1993) 31 NSWLR 582
Buffrey v Buffrey (2006) 12 BPR 23,619; [2006] NSWSC 1349
Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26
Calverley v Green (1984) 155 CLR 242; [1984] HCA 81
Carter v Brine [2015] SASC 204
Chau Ting Yung v Chau Ming Yung [2013] NSWSC 1089
Cook v Fountain (1672) 3 Swan 585; 36 ER 984
Cowcher v Cowcher [1972] 1 WLR 425; [1972] 1 All ER 943
Currie v Hamilton [1984] 1 NSWLR 687
Damberg v Damberg [2001] NSWCA 87
Drever v Drever [1936] ALR 446
Dullow v Dullow (1985) 3 NSWLR 531
Dyer v Dyer (1788) 2 Cox Eq Cas 92; (1788) 30 ER 42
Elddin v Hamed (No 2) [2015] NSWSC 654
Fowkes v Pascoe (1875) LR 10 Ch App 343
Hamed v Elddin [2016] NSWCA 9
Jobson v Beckingham (1983) 9 Fam LR 169
Kauter v Hilton (1953) 90 CLR 86
Kerr v Baranow [2011] 1 SCR 269; [2011] SCC 10
Knight v Knight (1840) 3 Beav 148
Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6
Mackowik v Kansas City St J & C B R Co 94 SW 256 (1906)
Martech Energy Systems Pty Ltd (in liq) v Bell [2005] VSC 198
Martin v Martin (1959) 110 CLR 297; [1959] HCA 62
McGregor v Nicol [2003] NSWSC 332
Mordecai v Mordecai (1988) 12 NSWLR 58
Murtagh v Murtagh [2013] NSWSC 926
Muschinski v Dodds (1985) 160 CLR 58; [1985] HCA 78
Napier v Public Trustee (WA) (1980) 332 ALR 153
Neilson v Letch (No 2) [2006] NSWCA 254
Nelson v Nelson (1995) 184 CLR 538 at 547; [1995] HCA 25
Nguyen v Phan (No 2) [2015] VSC 634
Noack v Noack [1959] VR 137
Ong v Lottwo Pty Ltd (in Liq) [2013] SASCFC 57
Re Kerrigan; Ex parte Jones (1946) 47 SR (NSW) 76 Ryan v Dries (2002) 10 BPR 19,497; [2002] NSWCA 3
Ryan v Ryan [2012] NSWSC 636
Shepherd v Doolan [2005] NSWSC 42
Singh v Singh [2004] NSWSC 109
Thornton v Hyde [2004] NSWSC 125
Wallington v Kokotovich Constructions Pty Ltd (1993) 11 ACSR 759
Weige v Cupton Pty Ltd (2012) 8 ASTLR 229; [2012] NSWCA 414

Texts Cited:

W Ashburner, Principles of Equity (Butterworths, 1902)
J Glister, “Is There a Presumption of Advancement?” (2011) 33 Sydney Law Review 39
MJ Leeming and JD Heydon, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis)
W Swadling, “Explaining Resulting Trusts” (2008) 124 Law Quarterly Review 72
L Tucker et al, Lewin on Trusts (19th ed, 2015, Sweet & Maxwell)
PW Young, C Croft and ML Smith, On Equity (Lawbook Co, 2009)

Category:

Principal judgment

Parties:

Amit Laundry Pty Ltd (Plaintiff)
Rajil Jain (Defendant)

Representation:

Counsel:
JE Thomson with M Hall (Plaintiff)
ATS Dawson SC with C Mitchell (Defendant)

  Solicitors:
Western Sydney Legal (Plaintiff)
Mills Oakley (Defendant)

File Number(s):

2016/00361471

Publication restriction:

Nil

Judgment

1. HER HONOUR: This matter involves a dispute as to the ownership of a property in Guildford (Property A), the sole registered proprietor of which is the defendant, Mr Rajil Jain. Without intending any disrespect, I will refer to the defendant and the various family members involved in the present dispute by their first names.

2. Property A was acquired in June 1999. Since its acquisition, the ground floor of Property A has been occupied by the plaintiff, Amit Laundry Pty Ltd (Amit Laundry), which (as its name suggests) conducts a laundry business from that part of the premises. From 2003, the upper floor of Property A has been occupied by Rajil and his immediate family as their home. From around 2008, Amit Laundry has paid rent to Rajil for the occupation of the ground floor premises (since February 2017 this has been expressly on a without admissions basis).

3. By statement of claim filed 12 January 2017, Amit Laundry seeks, among other relief, a declaration that Rajil holds the title to Property A as trustee upon trust for it under a resulting trust. The presumption of resulting trust is said to arise from the payment by Amit Laundry of the purchase price for the property (by way of payment of the initial deposit and then by the making of the mortgage repayments in respect of the funds borrowed by Rajil and his two brothers, Amit and Vinay, for the acquisition of the property).

4. In the alternative, Amit Laundry claims a declaration that the property is held on trust for it under an express or implied trust in accordance with the terms of an agreement said to have been reached between the directors of Amit Laundry (at the time, those being each of Amit, Rajil and Vinay and the wives of Amit and Rajil – Abha and Sharmilla, respectively) in relation to the acquisition of Property A in the joint names of Amit, Rajil and Vinay (the Acquisition Agreement, as pleaded at [7] of the statement of claim – see [143] below).

5. By way of further alternative relief, Amit Laundry claims a declaration that Rajil holds his title to Property A upon trust to permit it to use the laundry premises for the conduct of its business for so long as it continues to operate its business from those premises upon condition that it is responsible for the payment of water rates in respect of the property.

6. Rajil denies that he holds Property A on trust for Amit Laundry (be it resulting, express or implied). He asserts that he holds both the legal and beneficial interest in Property A. In answer to any presumption of resulting trust that may (contrary to the position for which he contends) be found to have arisen, he invokes the presumption of advancement in his favour. A cross-claim by Rajil in relation to a “re-characterisation of the mortgage repayments” (presumably as to the loan in respect of Property A) was foreshadowed at the outset of the hearing (T 1) but not pursued.

7. The present dispute, though involving a corporate plaintiff, is an unfortunate example of a falling-out between members of what appears to have been a close family in which the father (Ramesh) was concerned to ensure that each of his sons and their families were established in life (with property held in each son’s name) and the three sons (Amit, Rajil and Vinay) paid at least outward deference to the wishes of their father in relation to family matters, including the distribution of moneys derived from the laundry business that Ramesh and others in the family saw as the “family business”.

8. The genesis of the dispute was the entry by Rajil, in late 2016, into a contract for the sale of Property A with vacant possession to a third party and the consequent service, on about 4 November 2016, of a notice of termination and to quit in respect of Amit Laundry’s lease of the laundry premises, requiring Amit Laundry to vacate the premises within one month. Amit Laundry did not vacate the premises and instead commenced the present proceedings, seeking in the first instance (and obtaining) interlocutory relief to preserve the status quo.

9. For the reasons that follow, I have concluded that: there was no express or implied trust as alleged; a presumption of resulting trust arose from the contribution by Amit Laundry as to the deposit (but that the mortgage repayments by it do not count as contributions to the purchase price for the purpose of such a presumption) and by Amit as borrower under the loan facility entered into with his brothers; there was not a sufficient relationship to give rise to a presumption of advancement (and, if there had been, it would have been rebutted); and that the presumption of resulting trust has not been rebutted. Hence, relief will be granted on the basis that, at the time of acquisition of the property, Rajil and Vinay held Property A in favour of the contributors to the purchase price in proportion to their unequal contributions, namely as to 9.08% in favour of Amit Laundry and as to the balance (90.92%) apportioned as to one-third each as between Amit, Rajil and Vinay. Given that Vinay has since transferred his share in Property A to Rajil, this means that Rajil now holds the property on a resulting trust as to 9.08% in favour of Amit Laundry and as to one-third of the balance in favour of Amit. Rajil’s beneficial interest in Property A is thus two-thirds of 90.92% (60.61%).

Background

Family’s arrival in Australia

10. Ramesh Chandra (Ramesh) immigrated to Australia with his wife and their three sons in June 1984. Their entry to Australia was sponsored by Ramesh’s sister (Sarita). At the time of their arrival in Australia, Amit was 18 years old; both Rajil (who is about two years younger than Amit) and Vinay, the youngest of the three sons, were then still of school age. Rajil and Vinay both completed their schooling in Australia and went on to undertake further study (Rajil, a two year associate diploma course in chemical technology at a local TAFE; Vinay, a pharmacy degree at university). Amit commenced, but did not complete, a TAFE pathology course. He says that he discontinued his studies when the laundry business was purchased ([9] of Amit’s affidavit of 18 June 2017).

11. At some time not long after the family arrived in Australia, Ramesh was involved in a car accident, sustaining physical injuries that rendered him unable to work in the construction industry, as it seems he had done for a short period after his arrival in Australia (see the statutory declaration dated 17 December 1985 signed by Ramesh after his accident – Exhibit G). In that statutory declaration, which must have been prepared by someone else as Ramesh has difficulty reading and writing English, reference is made to Ramesh’s cultural background and it is stated that he felt his position “as head” of the family had been “compromised” as a “result of not been able to forfil [sic] my tasks as a bread-winner for my family” (p 3). The statutory declaration also includes a statement that Ramesh was finding it extremely difficult at times to relate to members of his family; and to him suffering anxiety and depression. In his oral evidence in these proceedings Ramesh did not recall the statutory declaration or its contents (T 197.49). In any event, what is relevant (in terms of what income Ramesh had available to him at around the time of the acquisition of the laundry business and later) is that Ramesh has been in receipt of a disability pension since the car accident.

Acquisition of laundry business

12. In March 1985, some months before the date of Ramesh’s accident (assuming the date of accident is accurately recorded in Exhibit G as 10 November 1985), Amit signed a contract to purchase a laundry business (Exhibit A).

13. The laundry business was known, according to the contract for sale of business, as A&D Laundry but, according to Ramesh (and Rajil), was called “Westinghouse Coin Operated Laundry” at the time of the purchase (see, for example, the affidavit sworn by Ramesh on 24 March 2017 at [5]). The laundry business operated out of leased premises in Guildford (Property B). Property B is adjacent to the later-to-be-acquired Property A, the subject of the present dispute.

14. There is a dispute amongst various of the family members as to who purchased the business (or perhaps, more accurately, as to whose business it was regarded within the family as being). Ramesh (see, for example, at [5]; [6]) has deposed that it was he who bought the laundry business, with a loan from his sister and her husband. Rajil, who was still at school at the time, has similarly deposed that the laundry business was bought by his father using money loaned by his aunt to him (see [13] of Rajil’s affidavit sworn 24 March 2017), although in an earlier affidavit (sworn 12 December 2016 at [5]) Rajil had deposed that both his mother and father had started the family laundry business and that it was conducted “solely at the direction and control of the family patriarch and family matriarch” (i.e., Ramesh and his wife). Rajil’s recollection is said by him to have been derived from what he heard (as a teenager) in discussions within the family at the time (see T 156.43).

15. As will be seen, there is a common theme in the evidence of Ramesh and Rajil to the effect that Ramesh made all the relevant decisions (as the primary decision-maker); whereas Amit is adamant that the laundry business was his and that he made the relevant decisions in relation to that business (including as to the acquisition of Property A), though he does not dispute that there was discussion (or perhaps consultation) with his father as to those matters. Exhibit A, however, makes quite clear that from a legal perspective the purchaser was Amit.

16. Both Ramesh and Rajil explain Amit’s name on the contract for purchase of the laundry business as being, in essence, for convenience due to Ramesh’s language difficulties. While the language issue might well explain why Amit, not Ramesh, was named as the purchaser, it does not alter the fact that Amit was the person who in fact acquired the laundry business. Whether he might be said to have done so as agent for his father was not explored in argument (and not disclosed in the contract for sale). That said, Amit accepted in cross-examination that the operation of the business was to support the family and its financial needs (T 36.46) and it is clear from the evidence that the revenue from the laundry was used to support the acquisition of property and business opportunities for various family members over the period up to and after the incorporation of Amit Laundry.

17. Insofar as Ramesh’s affidavit might be read as suggesting that the purchase of the laundry business was a decision made as a consequence of “a turn of events” that included the motor vehicle accident (see [4]), this is inconsistent with the time at which the accident is recorded in his statutory declaration as having occurred; as is Rajil’s March 2017 affidavit (at [11] – if, which is not clear, the change in circumstance to which he there refers includes a reference to the motor vehicle accident).

18. It is not disputed that the purchase price of $19,000 for the laundry business was funded by way of a loan from Sarita (though Ramesh and Amit differ as to who was the recipient of the loan). Amit has deposed that he paid back the money lent by Sarita from moneys earned from operating the laundry business (affidavit affirmed 15 December 2016 at [4]-[5]). Whether the loan from Sarita was made by her to Ramesh or to Amit, it is clear that any repayment of that loan must have come from the revenue of the laundry business, since the only other “family” income of which there is evidence at around that time was Ramesh’s disability pension (and even then this would only have been after the motor vehicle accident) or other government benefits (see Exhibit G).

19. At some stage (Rajil puts this as occurring at some time in 1988 – see [15] of his March 2017 affidavit) the name of the laundry business was changed to that of “Amit Laundry”. Rajil deposes that his father made the decision to change the name of the laundry business ([15]). Ramesh’s evidence is to the same effect. He says that he called the business “Amit Laundry” because of “our culture and tradition”, Amit being the eldest son (see at [6]). I will return in due course to the significance of the family/Indian culture in the present case. For the moment I simply note that Amit himself accepted in cross-examination that, as a matter of family culture or tradition, as the eldest son he was in a position of greater responsibility and authority in the family than his brothers (see T 35.49).

Assistance of family members in laundry business

20. There is also some dispute between the parties as to who was responsible for the management of the laundry business and the level of assistance provided by the family members in that business from time to time (including, from 1993, Amit’s wife, Abha, and Rajil’s wife, Sharmilla).

21. Ramesh says in his affidavit that he managed the cash flow, including income and expenditure for the business; that he was the sole operator who managed the deposits and withdrawals from the single bank account for the family business and that (though Amit’s name was also recorded on the account and Amit “possessed authority to make withdrawals or deposits into the account”) as a matter of practice “and by reason of our family dynamics” Amit “did not do so and certainly not without my prior agreement” (my emphasis) (see Ramesh’s affidavit at [7]). (The last part of that sentence, of course, implicitly accepts that Amit did do what in the first part of the sentence it is said he did not.) Ramesh’s evidence in the witness box suggests that he did not himself go to the bank to make deposits or withdrawals (see below) and Rajil did not suggest otherwise).

Q.   … I’m suggesting your son Amit brought the cash home each day in the cash box.

A. INTERPRETER: No, I used to bring it.

Q.   Each day you would write the cash takings for that day in your exercise book, wouldn’t you?

A. INTERPRETER: Please say it again.

Q.   Each day you would write the cash takings in your exercise book, wouldn’t you?

A. INTERPRETER: Whatever I used to earn in the shop, I used to enter that.

Q.   From time to time when you held cash surplus to what was needed for household expenditure, you asked Amit to bank that spare cash, didn't you?

A. INTERPRETER: Please say it again.

Q.   From time to time when you had spare cash, you asked Amit to deposit that cash at the bank, didn’t you?

A. INTERPRETER: I do not remember.

Q.   The deposits of cash that you asked Amit to make, you wrote up in your exercise book also, didn’t you?

A. INTERPRETER: I do not remember anything like that.

…

Q.   You were not a signatory to the bank account that your son Amit used for the purposes of running the laundry business, were you?

A. INTERPRETER: I do not know.

Q.   In paragraph 7 you said that, “Amit possessed authority to make withdrawals and deposits into the account.” Do you recall that?

A. INTERPRETER: No.

Q.   I suggest Amit was the only person with authority to make withdrawals to that account. Do you agree with that?

A. INTERPRETER: I do not remember this.

…

Q.   Does that mean that every deposit and every withdrawal from the account you authorised in advance of Amit making any of those payments or withdrawals, is that what you say?

A. INTERPRETER: Agreement in the sense whenever there will be need, he would be withdrawing.

Q.   You didn’t exercise any control over business expenses of operating the Amit Laundry business, did you?

A. INTERPRETER: What sort of control?

Q.   Control over the income deposits and the withdrawals from the account.

A. INTERPRETER: I do not remember about those days.

Q.   Very well. At no stage did you exercise control over Amit’s ability to make deposits and withdrawals from the bank account either before or after incorporation, did you?

INTERPRETER: Could you please paraphrase that?

Q.   At no time did you control Amit's ability to make withdrawals and deposits into the account either before or after incorporation of the laundry business.

A. INTERPRETER: He is to ask me and do it.

(which was followed by Ramesh’s inability to recall any occasion when Amit had requested funds and he had refused them).

22. Rajil deposes (at [16] of his March affidavit) that his father “was always the primary decision maker of the family” and that this extended to the family business. He says that his father managed and controlled income and expenditure for the family and for the family business (the laundry business) and that his parents worked full time in the laundry business while he and his brothers pursued their studies (including in this the time during which Amit was undertaking the TAFE pathology course in which Amit had enrolled) ([14]). Rajil identified his mother as doing the physical labour in the laundry business and his father taking on an administrative/managerial role. He described Ramesh’s role (in addition to that of primary decision maker for the family and in relation to the management of the money from the laundry business) as being a “mental health” role (at T 159):

Q.   That was the only role that he had in the area of administrative or managerial functions for the laundry, wasn’t it?

A.   Plus making decision for the family. Plus he used to go to laundry, just sit there and just watch. So it was mental health for us that okay, somebody elderly is there who can guide you.

Q.   He would just sit there, wouldn’t he?

A.   Sorry?

Q.   He would just sit there?

A.   Of course.

23. While Amit accepts that his mother worked full time in the laundry business until about 1988 (“mainly drying and folding laundered articles”), in his affidavit he deposed that his father “was not involved in the business” (Amit’s 15 December 2016 affidavit at [7]). That evidence must be qualified by his acceptance in cross-examination that his father managed the money from the laundry business (T 38.5 and see T 37.4). Amit’s evidence must thus be understood as being that his father did not have a physical role in the laundry work (and that seems not to be disputed).

24. I accept that Ramesh’s role in relation to the management of the money from the laundry business involved keeping exercise books in which he (and in some instances his wife) recorded the daily takings from the laundry business and expenditure for the family’s day to day needs (such as for groceries and the like) and for at least some business items referable to the laundry. How extensive those records are (and their actual content) cannot here be determined – first, because only a few exercise books were produced (during the course of the hearing) by Amit Laundry in answer to a call for the production of such books (and hence they were only able to be interrogated on the run, so to speak), and, second, because the exercise books (the tender of which was ultimately not pressed) are written in Hindi and the evidence given orally in the witness box on this issue (with no disrespect to Counsel for both parties) left me little the wiser. In essence what seemed to be generally agreed by Counsel in that respect (see T 276ff) was, as I understand it, that there were mixed entries in the books; that some were in Ramesh’s handwriting and some in his wife’s handwriting; that not much could be drawn from the description on the book covers as to the contents of the books; and that the books included both records of household income and expenditure as well as some business items.

25. As to the sons’ involvement in the laundry business, Rajil’s evidence was that while he and his brothers pursued their studies they helped out in the business on a part time basis ([14]) – he said that he was doing “pressing and washing” and in oral evidence he said that he continued to do this after his TAFE studies:

Q.   After TAFE, what work did you do?

A.   After TAFE, same, helping, helping at the laundry.

26. It is fair to say that Amit downplays the assistance given by Rajil and Vinay while each was at school, saying that Rajil (as did Vinay) would come to the business after school (to do homework and because the laundry was close to the train station) and would sometimes assist in the business with the ironing ([7] of his 15 December 2016 affidavit). Nevertheless he accepts that from about 1993 both he and Rajil were working in the business (Amit at [7] of his 15 December affidavit; Rajil at [14] of his March 2017 affidavit). Amit qualifies this by saying that at the same time Rajil was conducting his own part time business making and selling computers ([7]), whereas Rajil’s evidence in that regard is that his interest in computers was only a hobby. From 1993, Amit’s wife, Abha, and Rajil’s wife, Sharmilla, also provided some assistance in the laundry business (although the extent of this is disputed and ultimately nothing turns on it). What is not disputed is that, at least from the time Amit ceased his studies at the local technical college, Amit worked full-time in the laundry business.

27. I should note that Rajil’s evidence that he was working full time in the business from 1993 until about 2004 is on its face inconsistent with his acceptance that he was in receipt of unemployment benefits for a considerable number of years from 1990 to 1996 (i.e., for at least part of the period in which, in these proceedings, he has deposed he was working full-time in the laundry business). Rajil sought to explain this by saying that he was looking for work at the time and that he did not receive any money for his work in the laundry business (see T 154):

Q.   You told Centrelink you didn’t have any work.

A.   Yes, because I was looking for work, but I was helping at the laundry, and I was looking for work.

Q.   When did you first go on unemployment benefits?

A.   I cannot remember.

Q.   Was it after you finished TAFE?

A.   Maybe. I cannot remember.

Q.   Were you on unemployment benefits until the company was incorporated in 1996?

A.   I cannot remember.

Q.   That’s certainly a possibility, isn’t it?

A.   Sorry, I cannot remember.

Q.   In all events, you were on unemployment benefits for a considerable number of years between 1990 and 1996, correct?

A.   Yeah.

Q   In order to obtain the unemployment benefits, you told Centrelink you didn’t have any work, you didn’t have any job.

A.   That’s right, that’s right, but I worked at the laundry but I did not get any money from the laundry.

28. Leaving aside the question as to whether Rajil’s claim for unemployment benefits could properly have been made consistent with his evidence as to his full-time employment at the laundry at that time (as to which no finding need be made for the purposes of the present proceedings), both Amit and Rajil agree that Rajil was working in the laundry on a full time basis after he finished his TAFE course for a period up to about 2004 (when Rajil set up his own laundry business).

29. None of the family members drew a salary or wages for his or her labour in the laundry business. Ramesh’s evidence is that all the family’s expenses and income were paid into and out of the business account at his discretion both before and after the business was incorporated ([9]). Although that is accepted as being the position for the period prior to the incorporation of Amit Laundry, the period after incorporation (as reflected in the company’s accounts) is somewhat different. For that period, while it is still the case that no wages were paid in cash to family members for their work in the laundry, Rajil accepts that group certificates were issued by Amit Laundry in relation to family members then working in the laundry (T 231). The evidence also shows that in the company’s accounts there were amounts credited in the shareholders’ loan accounts, which it is suggested represented the wages in respect of which those group certificates were issued. (Presumably, if so, Rajil could take steps to require the repayment of the amounts recorded to his credit in the company’s accounts as shareholder loans.) In any event, it is the common position of all relevant parties that no actual wages were received by the family members for their work in the laundry at any relevant time.

30. The relevance of Rajil’s (or, for that matter, Vinay’s) role in the laundry business and in particular the non-receipt by family members of actual wages or income in return for their labour (see Rajil’s March 2017 affidavit at [17]) is the proposition put for Rajil that the payments made by Amit Laundry in relation to the purchase of Property A were in lieu of such wages (which I consider in due course).

Acquisition of residential properties from around 1986 to 1991

31. For a time after the purchase of the laundry business, the family (Ramesh, his wife and the three sons) resided in the upper storey of Property B, which they leased from the owner. Then, in around 1986 or 1987, a property in Adam Street, Guildford was purchased (the Adam Street Property). The Adam Street Property was described both by Ramesh (at [10]) and Rajil (at [11] of his December affidavit) as the “first family home” in Australia. Amit was registered as sole proprietor on the title to the Adam Street Property.

32. Again there is a dispute as to the circumstances of its acquisition. Ramesh says that he bought the house at auction; that he secured a loan for the purchase of the house and used the laundry business as security for that loan; and that it was bought with the intention of it being a family home (at [10]). He says it was “purchased in Amit’s name” but that it was not bought for Amit’s sole benefit (at [10]). Ramesh says in his affidavit that it was “for convenience” that the property was in Amit’s name “so that he [Amit] could converse in English, attend to loan arrangements, signing contracts and so on” on Ramesh’s behalf. Rajil again echoes his father’s evidence and deposes that it was his father who bought the Adam Street Property and that his father did so using money from the “family business” (see [28] of Rajil’s March 2017 affidavit).

33. Amit says, to the contrary, that he was the purchaser of that property; that he borrowed the money for the purchase from St George Building Society; and that it was his decision subsequently to sell that property and purchase the next property to which I am about to refer (see [11] Amit’s 15 December 2016 affidavit). I interpose to note that there is no suggestion that Ramesh himself entered into any finance arrangements at any time and that the bank records in relation to the later loan facility used to acquire Property A (see [70] below) support Amit’s contention that it was he who borrowed the funds to acquire the Adam Street Property.

34. In 1988, the Adam Street Property was sold and at the same time a property was purchased in Granville (the Granville Property). Again, title to that property was in Amit’s name. Amit says he borrowed from Westpac the remaining funds necessary to settle the purchase of the Granville Property (Amit’s 15 December 2016 affidavit at [11]) and that in respect of both mortgages (i.e., the St George Bank mortgage over the Adam Street Property and the Westpac mortgage over the Granville Property) all repayments were paid from moneys earned by him operating the laundry business ([11]). The Granville Property again became the family home.

35. Ramesh, as was the case in relation to the Adam Street Property, deposes that it was he (Ramesh) who purchased the Granville Property at auction and says that it was “purchased in Amit’s name for the same reasons as with the Adam Street Property” ([11]). He maintains that it was “absolutely and unequivocally a family home” (something not necessarily inconsistent with Amit being both the legal and beneficial owner of that property). However, at [12], Ramesh deposes that:

At the time of purchasing [the Granville Property], it never occurred to me that in registering the property in Amit’s name he would become the legal or beneficial owner of [the Property]. The assets of the business were the assets of the family collectively. It was a matter of convenience because of Amit’s hold of the English language … [my emphasis]

36. Rajil’s evidence again largely echoes that of his father on this issue, including Rajil’s assertion that it was a matter of convenience that the Granville Property be in Amit’s name “because of the language barrier”; although Rajil also states his belief that his father caused the property to be registered in Amit’s name “because Amit was the eldest child and he [Ramesh] wanted to give effect to his wish that each of his children be provided with a property, starting with Amit as the eldest” (at [28] of his March 2017 affidavit). I note, however, that Ramesh’s evidence (somewhat to the contrary of Rajil’s evidence) is that it “later” (my emphasis) occurred to him that he should start buying assets “for each of my sons” (see [14]).

37. Rajil also refers to his parents briefly having purchased and then sold another property in Guildford in the same block as Property B in 1991 (Property C) ([16] of his December 2016 affidavit; [30] of his March 2017 affidavit). Amit denies this and says that Property C was purchased by himself and his partner (a Mr Siddique); and that all decisions concerning it were made by the two of them (see [14] of his 15 December 2016 affidavit). There is nothing that establishes what the position was as to the acquisition and sale of Property C and nothing turns on this (though it may well be the explanation for an error in the description of the property the subject of the later business development loan (see [68] below, since that refers to the address for Property C). Ramesh makes no reference in his affidavit to any acquisition of Property C.

Marriages of Amit and Rajil in 1993

38. Amit and Rajil married their respective wives (Abha and Sharmilla) in India in 1993. After their respective marriages, the daughters-in-law immigrated to Australia and came to live with the family in the Granville Property. Extensions were carried out to the Granville Property so that each of the sons could have his own bedroom. Amit says that those extensions were paid for partly by re-draws on the St George Bank facility (by which it appears he is referring to the facility initially taken out by him to fund the purchase of the Adam Street Property and which he also refers to as “my Westpac loan”) and partly from earnings from the laundry business (at [12] of Amit’s December affidavit).

39. In passing I note that annexed to Rajil’s 12 December 2016 affidavit (admitted for a limited purpose and not for the truth of its contents) is a statutory declaration purportedly signed by Amit but (as Rajil accepts) in Rajil’s handwriting. It is said by Rajil to have been written when the Immigration Department required an assurance of support at the time he was trying to bring his wife Sharmilla from India to Australia. The statutory declaration includes the statement that “as per Indian tradition, and as being the elder brother I [i.e., Amit] should give my young brother a house to live in and some assets to help him start his new life” and the statement that he (Amit) had presented Rajil as his wedding present with a $100,000 portion of the (Granville) house (the house itself being said to be worth in total $400,000).

40. Amit denies being involved in assisting his brother to obtain a visa and denies having signed the statutory declaration a copy of which is annexed to Rajil’s affidavit (see [18] of Amit’s 1 December 2016 affidavit and [13] of his 15 December 2016 affidavit). In the circumstances I can put no weight on the statements contained in the statutory declaration, there being nothing to establish that it was in fact signed by Amit. Moreover, Rajil has not, as far as I am aware, asserted (and does not now assert) any interest in the Granville Property.

Incorporation of Amit Laundry

41. On 26 March 1996, Amit Laundry was incorporated. There is (unsurprisingly, given that most such matters are disputed in the present case) a dispute as to whose decision it was for its incorporation.

42. Amit’s evidence (at [9] of his 15 December 2016 affidavit) is that it was his decision to incorporate what he refers to as “my laundry business” (my emphasis). In contrast, both Ramesh and Rajil refer to the laundry business as the “family business”. I treat the use by Amit of the possessive pronoun and the use by Ramesh and Rajil of the descriptor “family” as reflecting their different perceptions as to whose business it was.

43. Amit says that he obtained advice from accountants in Granville about incorporation ([9] of his affidavit of 15 December 2016).

44. Ramesh, on the other hand, deposes that in about 1996 he decided that the family business “should be incorporated to protect our assets and for tax purposes”; that he decided that his sons and their wives (Vinay not then being married) would be the directors of the company “and that they should have equal shareholdings in the family”; and that he saw no reason to differentiate between their shareholdings or positions of office – “[t]hey were all equal” ([17]).

45. Ramesh says that at the time the decision to incorporate was made he had a meeting with his family in which he, in effect, announced that “We are going to incorporate, You will all be the directors and you will all have equal shares” ([18]). He says that the response from his sons and their wives was to the effect “Yes, OK” and he says that he instructed Amit to engage an accountant to prepare the paperwork to incorporate the business into Amit Laundry ([18]; [20]). He further deposes to his awareness that, after incorporation, the business “was paying wages to the directors on paper” but that the money never physically changed hands nor did the directors actually receive that money ([21]). He also deposes (but accepted in cross-examination that this was not in fact the case) that he met with the accountant for the purpose of preparing the company tax returns (see [21] cf. T 214).

46. Rajil’s affidavit evidence as to the incorporation of Amit Laundry was, first, that it was his parents’ decision to change the family business structure into a corporate one ([9] of his December 2016 affidavit) and, then, that it was his father’s (presumably meaning his sole) decision to do so ([21] of his March 2017 affidavit). He has deposed to an announcement made by his father around the dinner table on one occasion in about 1996 to the effect that “I want to form a company from the Family Business, I want equal shares for everyone. I want all five of you to be in the company” and says that Ramesh then gave instructions to Amit to “go and form the company, do the paperwork, bring it and everyone will sign it” ([21] of his March 2017 affidavit). He also deposes to an occasion on which Amit “presented the paperwork” to him, which he understood to be indicating his consent to being appointed a director and shareholder of “the Family Business” and which he says he did not read (he says this was because he understood that it was paperwork prepared in accordance with his father’s instruction that all were to be equal shareholders, deposing to a statement from Amit to that effect) ([22] of his March 2017 affidavit).

47. On incorporation, the initial directors of the company were Amit, Abha, Rajil, Sharmilla and Vinay. 200 ordinary shares were issued to Amit; Amit held 400 E class shares and he and his wife held 200 F class shares each. The other directors were issued E or F class shares respectively (Rajil and Vinay – 200 E class shares each, Sharmilla - 200 F class shares) (see Annexure A to Amit’s 1 December 2016 affidavit).

41. The E and F class shares conferred only limited rights. They did not confer a right to vote at any general meeting of the company (though the holders were entitled to notice of and attend any such meeting) and they did not confer any right on a winding up of the company to participate in any distribution of surplus assets or profits of the company. In all other respects those shares had the same rights and privileges and were to rank equally with the ordinary shares (see article 7 of the articles of association). Thus there was a right to participate in any dividends declared and payable by the company on the class of share held (see article 4 of the articles of association). (There have been no dividends declared on any of the E and F class shares at any relevant time.)

42. Thus it is clear that, from its incorporation, Amit has had the ability to control Amit Laundry; and that the shareholdings of the respective sons were never equal. Pausing here, I have concluded that Amit was at all times the controlling mind of Amit Laundry (albeit that he no doubt consulted with his father from time to time as to the operation of the laundry business or family matters, if for no other reason than paying deference to his father). Not only did Amit hold the relevant voting shares but, of the other directors, both Rajil and Vinay seem to have accepted that decisions as to the laundry business were not made by them and the only involvement of Abha and Sharmilla in family discussions as to the laundry business to which reference was made in the evidence was their assent (in general terms) to what was discussed at family dinners (Amit’s description of the relevant family discussion in relation to Property A is quite telling – “our wives were there because they were serving us the food” – T 30.30). Vinay’s evidence, for example, was that he was not involved in the family business because “elders” were looking after that (T 165; T 167.31); hence his explanation as to how he came to be a borrower for the loan for Property A was (at T 168) to the effect that if he were told to sign paper or “do whatever” by his elders he would do so (in the expectation that he would not be responsible for repayment of the loan).

Purchase of the Vacant Land next to Property B

50. In May 1996, Amit Laundry purchased a vacant block of land adjoining Property B (the Vacant Land) for the sum of $95,000. Again there is a dispute as to whose decision it was to purchase the Vacant Land (see Amit’s 15 December 2016 affidavit at [14]; Ramesh at [22]; Rajil at [17] of his December 2016 affidavit). However, there is no dispute that the Vacant Land was purchased with a view to developing that property and then relocating the laundry business to that property and expanding the laundry business (see [17] of Rajil’s December 2016 affidavit; [15] of Amit’s 15 December 2016 affidavit; [31] of Rajil’s March 2017 affidavit; [22]; [24] of Ramesh’s affidavit). Nor is it disputed that problems were subsequently encountered with obtaining development consent for the proposed development of the Vacant Land (which has not even now been obtained from the local council; see for example, Exhibit H) (see [52]ff below) and that the property remains in an undeveloped state.

51. Not insignificantly in my view, unlike the various other property purchases that occurred over the period after the incorporation of the company, the Vacant Land was purchased in the name of Amit Laundry. In that regard, Ramesh has deposed (at [23]) that:

The purchase of [the Vacant Land] took place and it was registered in the name of the plaintiff because it was intended to be used by the business. It was not intended to be owned by any one of my sons and no one was going to live in it.

Proposals for development of the Vacant Land

52. Amit’s evidence was that within a year of the purchase of the Vacant Land he was involved in engaging people to prepare a development application of which he was the applicant (T 57.26-50, T 58.0-11). He says that the process took about 6 months to a year. That places the application as being made somewhere between mid 1996 and mid 1997. In fact, it must have been lodged by March 1997 because there was in evidence a letter sent in March 1997 from the Council of the City of Holroyd to Amit at the Property B address (Exhibit H), in which Council advised that the development proposal was not acceptable on the grounds of parking and manoeuvring; and Amit was urged to negotiate with the adjoining owners to seek a right of way (in exchange for a reasonable sum of money).

53. Subsequently, another development application was lodged with the Council, this one having been prepared by an architect. Amit says that that proposal involved the building of four or six apartments and a business space downstairs (T 16.37-50; T 138.22-25) but that this was also rejected (apparently due to the need for a stormwater easement) (see T 59). Amit’s evidence was vague as to the timing of the making of this second development application (a year to a year and a half ago, or possibly 2015 (T 59.10-26). Amit accepted that he was not dealing with an architect in relation to plans for the development of the Vacant Land at the time that consideration was being given to the sale of the Vacant Land in one line with Property A and Property B (as occurred in around 2012/2013) (T 120.5-10; T 126) (see [92]ff below) but then said that the development application process with the architect had been going before that (T 120.43-47).

54. Pressed as to the timing of the proposals for the development of the Vacant Land, Amit said that the attempts, communications and rejections from the Council with respect to the development application occurred over a period of time (T 119) and were an ongoing process but he could not remember the timing of the process (T 121.4). Relevantly, for present purposes Amit says that he started the process to buy Property A (see below) after learning from the Council that the Vacant Land could not be built upon (T 58.34-35) and Ramesh’s evidence supports the link between the problems that had been encountered with the development of the Vacant Land and the acquisition on Property A (see [57] below). Amit Laundry submits this sequence of events supports the conclusion that the motivation to purchase Property A was due to the realisation that it was not possible to conduct Amit Laundry’s business from the Vacant Land.

55. Amit’s evidence is that he has formed the view that, at least in terms of any proposal for development, the Vacant Land is “basically … just useless” (T 59) but he does not accept that it would be impossible to sell the land.

Purchase of Property A

56. In June 1999, Property A (the subject of the present dispute) was purchased. Again, there is dispute as to how the opportunity to purchase the property arose, who it was within the family that carried out the negotiations for the purchase, and whose decision it was to purchase the property. (More relevant, for present purposes, is the evidence as to the intended purpose of the purchase, to which I will come shortly.)

57. Ramesh’s evidence is that Property A appealed to him because it had a large shop area on the lower level and a residential area upstairs. He says he decided that because they were not having any progress with developing the Vacant Land “this would be a good temporary solution”. He says that he said words to the family to that effect, including (see [26]; see also T 220.10-27):

… If we buy [Property A], we can move the laundry into the lower level temporarily until we can develop [the Vacant Land]. If we are successful in purchasing [Property A] we will register Rajil and Vinay as the owners. It is just a temporary solution but regardless of what happens with [the Vacant Land], we will keep [Property A] as an investment for Rajil and Vinay.

58. Ramesh says in his affidavit (at [28]) that he instructed Amit to deal with the seller and the bank to effect the purchase of [Property A] and that those instructions included that Amit was to assist Rajil and Vinay to secure a loan from the bank in their names for the purchase. He says that his understanding was that, consistent with his instruction, Amit would be recorded as a guarantor on the loan because neither Rajil nor Vinay had any assets or other security in their names; and that he did not intend or understand that Amit would be recorded as a borrower on the loan (see [28]). (His evidence in cross-examination is markedly different, in that Ramesh was there adamant that he gave the relevant instructions to Rajil, not Amit – see for example T 214.)

59. Amit’s evidence (consistent to this extent with that of his father) is that Property A was purchased with a view to relocating and expanding Amit Laundry’s business to those premises (see [4] of his 1 December 2016 affidavit; [16] of his 15 December 2016 affidavit). That is consistent with the fact that, by then, problems had been encountered with the proposed development of the Vacant Land which had been acquired for that very purpose. However, Amit disputes that occupation of the property for the laundry business was only to be “temporary”. He says that it was to be for as long as Amit Laundry wished (see [60] below) and he says it was his decision to buy the property.

60. Amit says that he proposed the purchase of Property A at a family gathering and that what he said was that the business was doing well and needed bigger premises; that there was an opportunity with respect to the property; and that he had spoken to the owner and that the owner would agree to sell the property (T 30.28 – T 31.32). Amit says that in that meeting he said that the company should move into Property A and remain there “for as long as it wanted or as long as it could be run” (T 31.24; T 76.41-50; T 128.27-29). (Ramesh agreed in cross examination that he could not remember if Amit told the family that an advantage of buying Property A would be that the laundry could operate from that property for as long as it wanted – T 221.27-33).

61. Amit recalls telling his family the purchase price on the above occasion and that the bank would be willing to lend the money with the company paying back the loan and recalls that both his brothers agreed with his proposal (T 31.23-31) (though see Vinay’s evidence at [65] below that he was not present at the family discussions in relation to the Property). (Amit Laundry says that Amit was not cross-examined in relation to his evidence about this conversation. That said, and to anticipate some of the argument discussed later in these reasons, whether or not his brothers agreed with Amit’s suggestion as to the mechanics of repayment of the loan, this does not go so far as establishing that there was a clear agreement at the time of purchase of the property that the repayments by the company were to be taken into account when determining the respective contributions to the purchase price.)

62. Amit also gave evidence describing another occasion, after he had met with his bank manager, when he says he sat and spoke to his brothers and explained how the loan was going to be structured (T 31.48-50 – T 32.16). He stated that at that time he told his brothers the company would make the repayments of the loan and that his brothers agreed to what he stated in that discussion. (I make the same comment as made above in that regard.)

63. Amit says that it was his decision to put the title into the name of his younger brothers and explains the reason for this as being “in part” because his father had on a number of occasions expressed the wish to have property put into their names ([17]). He said in the witness box that Ramesh “wanted to have something in their name” (T 65) and accepted that he understood that his father wanted to make sure that all his sons were set up in life. He agreed that his father wanted each of his sons to end up with property in their names which they owned. He said that their names were there (on the title of Property A) just to please his father or fulfil his father’s wish (T 73) and that the “main thing” was to have something in their name, though also referring in this context to his father’s wish to save rent (T 73.38; T 75.3).

64. Rajil’s evidence in some respects is broadly consistent with Amit’s evidence, other than as to who made the decision to buy the property (see [32]-[35] of the March 2017 affidavit) and that Rajil says it was he who spoke with the neighbour about the acquisition of the properties. Rajil says that his father suggested that the property be bought; that the upstairs would be kept for rent; that the property be bought in his and Vinay’s name; and that the business could be run “downstairs temporarily until we build the shop [on the Vacant Land]” ([32] of the March 2017 affidavit). Rajil says that Amit agreed with the proposal and said “this is the best way to rise. We can have a bigger laundry and earn more money”. He also says that Amit said “I have [the Granville Property] in my name anyway. They can have [Property A] in their name” ([34] of his March 2017 affidavit). (Amit’s position, as I understand it from the submissions for Amit Laundry, is that insofar as there was an allocation of properties amongst the sons with any intention that the properties be held beneficially by the sons, Amit was to have the Granville Property and Rajil was to have the benefit of the Redhead property that was later acquired – see further from [78] below. For present purposes, it should simply be noted that at the time Property A was acquired neither Rajil nor Vinay held any property in his own name and hence if by then Ramesh was looking to put properties into his sons’ names it would not be inconsistent for him to have wished Property A to be in the two younger brothers’ names – the acquisition of the Redhead property then not being on the horizon, so to speak.)

65. Vinay does not recall being present for the discussions surrounding the purchase of Property A ([4] of his March 2017 affidavit). He says that when the property was purchased he understood he would be named on the loan as one of the borrowers and that he would be liable to the bank with Rajil ([5]). His evidence (admitted as to his understanding but obviously limited in its weight given that he does not recall being present at the discussions) is that “it would have been” his father who made the decision to register his name on the title deeds of the property (saying that these types of decisions were always made by his father) ([4]). In cross-examination there was the following exchange (at T 172):

Q.   Did you understand at that stage that the purpose of you participating in this borrowing was to enable the Amit Laundry business to be relocated to [Property A]?

A.   Yes sir, yes, yeah.

Q.   How did you know that?

A.   I think there might have been a conversation sitting down sir that look, you know, I think we need to buy our own building so that we can move the laundromat in there and also to - I guess, to buy property, to have a property for the family.

Q.   Do you recall it being mentioned that one of the advantages of buying the premises at [Property A] was that the premises that the laundry was then operating from were charging rent, were costing rent?

A.   Sorry, I didn’t understand the question?

Q.   I’m sorry, I’ve mangled it. Did you also hear in the context of discussion about the laundry moving to the adjoining premises?

A.   Yes.

Q.   That one reason for moving was that they could avoid having to pay rent for their existing premises [Property B] by buying the premises at [the Vacant Land]

A.   Yes sir, yes, I can, I can say yes.

66. This was hardly a firm recollection but, as far as it goes, it supports aspects of both parties’ cases – namely, that the property was to be acquired “for the family” (consistent with it being put into two of the sons’ names, not that of the company) and that it was to enable the laundry business to relocate there and stop paying rent.

67. Abha gave evidence (in an affidavit affirmed 9 March 2017) as to her recollection of a family discussion at which the move to Property A was discussed. Her recollection was not specific. She said that what Amit had said to her about the proposed move (see [13]) may or may not have been repeated on that occasion ([14]). No probative weight can be accorded to that recollection, which goes simply to the possibility that Amit made a statement of the kind there set out. Abha also says that nothing to the contrary of what she recalled Amit having been said was then said. Slightly more, but still little, probative weight can be given to that recollection given the overall vagueness of Abha’s recollection of discussions at the family meeting(s). Furthermore, what Abha recalls Amit having said (namely that “by moving into the bigger shop next door we will save on rent because we will own the new shop” and a reference to renting upstairs and paying off the loan quickly) is not specific as to the identity of the purchaser. Sharmilla, who was also a director of Amit Laundry at the time, gave no evidence.

68. The purchase price on the contract for sale for Property A was $185,000. The initial deposit was paid by Amit Laundry. The balance ($168,204.57) was provided by way of a finance facility from Westpac (described as a Business Development Loan – see Exhibit 1, which the parties accept incorrectly refers to Property C). The security for the loan was an existing mortgage by Amit over the Granville Property and Amit Laundry guaranteed the loan.

69. The borrowers who signed the Westpac loan facility agreement dated 17 February 1999 were Amit, Rajil and Vinay, each of whom by so doing expressly declared that the credit provided was to be applied wholly or predominantly for business or investment purposes (or both) and expressly confirmed that he did not hold “any assets as the trustee of a trust unless the Agreement states that it is a trustee”. The bank’s customer account opening form (Exhibit B), signed by each of the three sons, similarly did not disclose that the borrowing was as trustee for any trust.

70. In passing, I note that the bank’s internal credit approval summary form identified the “Customer group” as “Amit Laundry Connection” and the borrower as each of the three sons; and it included, against the item “Customer Years”, the figure “14”. The last entry is consistent with Amit having been a customer of St George/Westpac since the purchase of the Adam Street Property (see [33] above). Neither of the two younger borrowers had previously held a loan facility with St George/Westpac. That said, I place no weight on the bank’s description of the events as noted on its internal records, since at best this would represent what a bank officer understood (or assumed) from what he or she had been told at the relevant time (presumably by Amit, since Amit’s evidence that he was the principal point of contact with the bank – T 67.48-50 – does not appear to have been disputed (see Rajil’s evidence at T 249.7-12, 22-33).

Events after acquisition of Property A

71. After the acquisition of Property A, the laundry business was relocated from the ground floor of Property B to the ground floor of Property A. No rent (as such) was paid by Amit Laundry in relation to its occupation of Property A until much later (in 2008). Rajil explains this by saying that there was nothing to be gained from charging rent “to the Family Company” at that time (at [47] of Rajil’s March 2017 affidavit). However, it should be noted here that there is an entry in the company’s accounts for the 2000/2001 financial year as “rent” (not shown in the accounts for the following 2001/2002 financial year). As there is no suggestion that Amit Laundry was paying rent for any other premises at the time, it may be inferred that the amounts paid by Amit Laundry and recorded as “rent” were the amounts paid by way of repayment of the Westpac loan facility – in which case, Amit Laundry did in effect pay an amount referable to its occupation of the premises earlier than 2008.

71. The upper floor of Property A was initially tenanted (rent-free) by the previous owner of the property and then by a third party who did pay rent (see Rajil at [45]). The rent paid by that tenant (according to Rajil) was either kept as cash or deposited into the “Family Company’s bank account” in accordance with his father’s decision ([45]). Rajil says that he never received the benefit of that rent, although some of the rent income was recorded on his personal tax return each year ([45]-[46]) – again this being consistent with the way in which there was a notional treatment of income/expenses in the company’s accounts.

72. The loan in respect of Property A was repaid by 8 May 2001 (see annexure D to Rajil’s March 2017 affidavit). Then, on 14 June 2002, the Westpac loan facility was re-drawn in the amount of $130,000. That further amount was repaid on 22 August 2002.

73. The significance of the above is that both Rajil and Vinay gave evidence that Vinay had made some repayments in respect of the loan for Property A (see Rajil at [41]-[44], reference there being made to conversations in which Rajil says he and his father asked Vinay to make contributions to the loan repayments and at [48], where Rajil deposes that the final instalment to discharge the loan was made by Vinay “by about 2002”; see also Vinay at [6]-[8]).

74. However, the payments recorded as having been made in Newcastle (in about August 2002) that were attributed to Vinay (those Newcastle payments being the only payments identified by either Rajil or Vinay as having been made referable to the Westpac loan) were, according to the bank statements, made at a time after the initial loan had been repaid. Therefore, while the statement by Rajil that the final instalment to discharge the loan was made by Vinay (Rajil at [48]) may well be correct that is the case only insofar as it relates to the discharge of the amount that had been re-drawn in June 2002, not the loan for Property A.

Purchase of Pharmacy business for Vinay

76. The amount of $130,000 that was re-drawn under the loan facility in June 2002 was re-drawn at about that time that Vinay (who had married his first wife in 2000) acquired a pharmacy business in Newcastle. It was submitted for Amit Laundry that the re-drawn amount related to the purchase of Vinay’s pharmacy business. Vinay did not accept that the funds related to his pharmacy business acquisition. His evidence was that the acquisition of the pharmacy business settled on 15 June 2012 (and that payment of the purchase price was required at the time of settlement), which would not be inconsistent with the re-drawn funds being applied to the acquisition of the pharmacy business. However, Vinay’s (admittedly vague) recollection is that he contributed $50,000 (that he had earned from his work at a Quakers Hill Pharmacy) towards the $412,000 purchase price for the pharmacy business and that Amit organised a loan for him of $312,000 (though he could not be sure exactly and this leaves some $50,000 unaccounted for). Vinay did not recall any other source of funds and said that he would not have had money (from the pharmacy business) by August 2012 to repay a loan of $130,000 (see T 174).

77. Whatever may be the position as to how the re-drawn amount was applied, it is clear that the re-payments Vinay made in relation to the Westpac loan facility in August 2002 cannot have been referrable to the borrowing for Property A, since that had by then been repaid.

Redhead property

78. In October 2002, Rajil purchased a property at Redhead, NSW for $321,500 (as to this and the following, see Exhibit C). The deposit and loan repayments were paid by Amit Laundry. The loan was in Amit and Rajil’s joint names. (In January 2006, at which time the money outstanding on the loan was $252,041, the Redhead property was sold for the sum of $485,000.)

79. Insofar as it was suggested by Amit Laundry that the Redhead property was in effect to be “Rajil’s” property, Rajil says the property was instead regarded as “Vinay’s” property. Rajil gave evidence (unable to be tested by reference to any contemporaneous documents) that the net proceeds of sale from the Redhead property went to Vinay. The most relevant conclusion to be drawn from the account given by Rajil in this regard is that he seems to have paid little attention to the legal consequence of registration of legal title in respect of properties acquired over the whole of the relevant period – and in a loose sense may be said to have treated various of the properties acquired, with funds obtained or repaid by Amit Laundry, simply as “family” property.

Rajil moves into Property A

80. At some stage in about late 2003, at which time all the family (other than Vinay, who was by then living in Newcastle) were still living at the Granville Property, there was an altercation involving Amit and various family members. It is unnecessary to go into the details of what the various family members say occurred. Suffice it to note that Rajil says that Amit told him (and his wife and children, as well as his parents) to move out of the Granville Property; and that not long thereafter they did so (see [27]-[31]).

81. After renovations to the upper storey of Property A (over the following couple of weeks), Rajil and his family moved into the two bedroom residential flat above the laundry at Property A (the tenants in the meantime presumably having been required to vacate those premises). Ramesh and his wife went to live with Vinay in Newcastle ([55]-[56]).

Rajil’s dry cleaning business

82. In late 2004, Rajil and Sharmilla started their own dry cleaning business, renting a property at a different location in Guildford for that purpose (see [59] of Rajil’s March 2017 affidavit). Ramesh says that Vinay assisted Rajil financially to acquire his own dry cleaning business because by then he (Ramesh) no longer had access to or involvement in Amit Laundry’s bank account (see [37]). (Rajil ceased to carry on that business from about 2006.)

Removal of Rajil/Sharmilla and Vinay as directors of Amit Laundry

83. According to the ASIC register (see Annexure A to Amit’s 1 December 2016 affidavit) each of Rajil, Sharmilla and Vinay ceased to be directors of Amit Laundry on 1 April 2006. Rajil says that his consent was not sought for this and nor was that of Sharmilla ([60]). Vinay did not recall any such request. Amit’s evidence, to the contrary, was that the directors were removed at their request. Whatever be the case in that regard (and it seems to be accepted within the family that Amit for all practical purposes has – as he effectively has had since its incorporation – control of the company and hence the laundry business), there was no formal resolution in relation to the resignation of the directors – as required under the company’s articles of association.

Transfer of Vinay’s interest in Property A

84. On 21 January 2007, Vinay’s 50% interest in Property A was transferred to Rajil for a nominal consideration of $1. Ramesh says that he told Vinay to transfer his interest in the property to Rajil because Rajil did not have anything to himself (Ramesh at [40]). Vinay says that he and Ramesh agreed for Vinay to give his interest in the property to Rajil as Vinay was at that stage undergoing a divorce from his first wife (Vinay at [9]). Rajil says that his father told him that he had spoken to Vinay and had told Vinay that he (Vinay) was doing well financially and that he should give Property A to Rajil ([63]). (Again, this evidence suggests that the family members, or at least Ramesh, Rajil and Vinay, paid little regard to the legal concept of ownership. It also is reflective of the family tradition/culture of the sons – or at least Rajil and Vinay, acceding to whatever their father’s wishes were.) I have no doubt that Ramesh’s wishes were that his sons should own property in a real (not simply notional sense), starting first with the eldest, Amit:

Q.   Can you explain how Amit's name ended up on the title?

A. INTERPRETER: Yes, because he is my eldest son, that's why.

85. Amit says he was not aware at the time of the transfer of Vinay’s interest to Rajil (although in part of an earlier affidavit which was not read at either the interlocutory hearing or the present hearing – [12], which he now says was a typographical error – he had stated that Vinay was removed from the title at Vinay’s request). His evidence in the witness box as to his reaction when he learnt of the transfer (see T 93) was quite heated:

Q.   When Vinay transferred his share to Raj, you didn’t say anything at the time when you found out about that, that Vinay shouldn’t have done that without consulting you as the person in charge of the company, did you?

A.   As soon as I found out I called Vinay and I also called my father, how did this happen and why did this happen, and you shouldn’t have done it without my knowledge, and I'm upset. So they said oh we didn’t, you know, know, you know, what to do so we just thought we won't tell you. And later on I found out because my brother was going through the divorce settlement. So I don’t know, for to obtain some advantage they've done this. That’s, that’s what I found out.

86. By then, of course, there had been the falling out with Rajil which might well explain Amit’s concern at finding that Rajil held 100% of the property and that the laundry business was exposed to the risk of Rajil deciding whether to allow it to remain being conducted from the premises, although that was not how it was put in the evidence. Amit Laundry’s position was, in effect, that it was appropriate for the property to be transferred for nil consideration because Vinay held the property on trust for it and therefore did not have any beneficial interest in the property. Suffice it at this stage to note that I accept that Amit was genuine in his reaction to the news that Vinay’s interest in the property had been transferred to Rajil.

Commencement of the payment of rent by Amit Laundry in respect of the laundry premises

87. At some time in 2008, Amit Laundry began making payments (of $2,465 per month) to Rajil. These payments were recorded in the company’s financial records as “rent”. The payments were made by direct debit from April 2008 through to 17 February 2017 (and thereafter have been made on a “without admissions” basis to Rajil’s lawyers).

88. Ramesh says that a “short while” after Rajil commenced running that business he had a conversation with Rajil in which, in effect, Rajil complained that he was having to pay rent for his own business and would not have to do so if he had the downstairs part of Property A. Ramesh says he then spoke to Amit and told Amit that he had to pay Rajil rent for using the downstairs premises, and that Amit agreed and said “whatever Rajil is asking for, I will pay” (see [37]-[38]).

89. Rajil deposes to a conversation with his father along the same lines as that to which Ramesh has deposed ([67]) and to a subsequent conversation with Amit in which Rajil says he requested rent for the downstairs space and Amit agreed (see [68]). Rajil puts those conversations as occurring in or about 2007 or 2008 (i.e., not a “short while” after Rajil commenced running his own business). Rajil says that he calculated the rent by reference to the amount he was paying at the other leased premises and made allowance for the fact that Property A was a significantly larger space. He says it was agreed that Amit pay the water rates; and that he (Rajil) pay the Council rates, insurance and electricity for the upstairs area ([69]). Consistently with that, Rajil’s evidence is that from about 2008 he has paid all of the Council rates and other outgoings, including insurance, for the whole building at Property A (which would be consistent with him being the owner of the premises) and that Amit only paid for the water “because his laundry business used so much water” ([32]).

90. Amit’s evidence is that the “rent” payments were made to assist Rajil, who was in need of financial assistance at the time (see [32] of Amit’s 15 December 2016 affidavit). Rajil, however, denies that he was in need for financial assistance at the time.

Proposed sale of Property A in 2012/2013

91. Rajil’s evidence is that he spoke to Amit in late 2012 about selling Property A ([74]) and that Amit did not raise any objection to the sale or as to Rajil’s entitlement to sell the property ([75]).

92. Property A was listed for sale by auction in one line with Property B (still owned by a third party) and the Vacant Land (owned by Amit Laundry) in December 2013. The advertisement for the properties contained statements that there was no lease for Property A and that the tenant (for Property A) was happy to sign a one year lease (Exhibit 2). Amit did not provide an explanation for this (T 116). There was the following exchange:

Q.   Let me get this straight. You saw this ad at the time.

A.   Right.

Q   It’s correct, isn't it, you took no step to correct anything in this advertisement?

A.   No, because I did not appoint him [the real estate agent, Mr Tannous], my brother appointed him, and I don’t know what they had planned, but they did not approach me, they just approach me that, “We’re going to get the market value and see if it works out, and if you would, we can include [the Vacant Land] as well”.

Q.   Are you telling her Honour that despite seeing this as being what was being proposed to the public, that is, any potential purchaser, you never took any step to correct anything in the details here?

A.   No, no, I did not, because, you know, it just didn’t make any sense to me at that time.

93. The properties did not sell at auction. Rajil gives evidence that a buyer was found at this time for Property A; that he wanted to accept that offer and told Amit this; that Amit said words to the effect “OK good”; and that Abha, Amit’s wife, then rang him and said she and Amit had decided to buy Property A from him at the price offered by the buyer (see [78]-[80] of Rajil’s March 2017 affidavit), but that this did not proceed (by which time the buyer was gone and the property was taken off the market). Abha denies the conversation to which Rajil has deposed ([1] of her 18 June 2017 affidavit) and says that she never knew that Property A had been listed prior to learning about the property being sold shortly prior to the commencement of these proceedings (at [2]).

94. Amit’s evidence is that he had no intention of selling or permitting the sale of Property A at that time, unless the sale was sufficient to justify moving the laundry business and buying other suitable premises; and that the combined listing was to test the market to see whether it might be of interest to a developer willing to pay above market prices to secure a large block suitable for redevelopment (at [34] of Amit’s 15 December 2016 affidavit). There was the following (rather extraordinary) exchange in cross-examination as to the unsuccessful auction:

Q.   You did nothing to stop that auction from taking place, did you?

A.   No, because we wanted to find out the market value, how the property - how much the property is worth.

Q.   You knew that if the property was sold, then the laundry business would have to relocate at some time, subject to whatever lease could be obtained from the new owner?

A.   No, if we made a good amount by selling the property and if I had considered that yes if it was worth moving, we would move it.

Q.   But once the property had gone to auction and had been bid on, by those at the auction, had that happened, so your developer had materialised and bid on it at auction and bid above reserve and the property was knocked down to the developer, you’re stuck with the sale, aren’t you?

A.   No, then we would have been in the same predicament as we are today. Because how - how can they sell it?

95. In re-examination Amit said there was no reserve price set for the auction. Pausing here, the suggestion that the property could have been the subject of a successful bid, at auction, but that Amit Laundry (through Amit as its controlling mind) would have been in a position to decide whether the sale should then go ahead, if it were to be accepted, reveals complete ignorance on Amit’s part of the auction process. I cannot accept Amit’s explanation on this issue as plausible.

Events in 2016

96. Rajil gives evidence that in about 2016 he discussed with Ramesh and Amit that he proposed to sell Property A (after a couple of “break and enters” downstairs); that his father agreed and that Amit replied with words “Sell it. Don’t worry about anything else” (at [86] of Rajil’s March 2017 affidavit). He says that about two weeks later he approached Mr Grgic (a real estate agent) to list the property ([86]). In October 2016 (acting on Rajil’s instructions – see [83]), Mr Grgic listed Property A for sale.

97. Amit denies being aware that the property had been listed for sale and says that the first he knew that an agent had been retained by Rajil was when Mr Grgic spoke to him on the afternoon of 2 November 2016 (Amit at [12], 18 June 2017 affidavit). This was at a conversation in the laundry premises. Mr Grgic confirmed that there was such a meeting. Rajil says that when Mr Grgic told him he had a buyer for the property, he contacted Amit and told Amit that Mr Grgic would be coming with a one year lease and “just sign it”, and that Amit said “no problem” ([87]). Amit disputes this.

98. Amit says that Mr Grgic told him that he had a purchaser and (which Mr Grgic denies) that if he (Amit) did not agree to enter into a 12 month lease then Rajil would sell with vacant possession and require Amit Laundry to leave the premises within one month ([12]). (Matters that tend towards acceptance of Amit’s account of that last part of the conversation, as opposed to Mr Grgic’s account, are the evidence that Mr Grgic gave in the witness box as to “buyer’s remorse” (see T 149 – that being the reason he gave for one of the options he said he had presented Amit with and a reason that would be consistent with him adopting a hard stance in discussions with Amit) and Rajil’s evidence that Mr Grgic had told him that they could “kick [Amit] out” and that his lawyers confirmed this. Amit says that he told Mr Grgic to leave and that he would be telephoning his lawyers the following day. (Rajil denies that this was reported back to him.)

99. Mr Grgic’s evidence as to the conversation with Amit on 2 November 2016 is that Amit said he would not take a 12 month lease and that he wanted a 5 year lease plus a 5 year option at a much lower rate ([6], 23 March 2017 affidavit). Mr Grgic said the following:

Q.   The effect of your statement to him, I suggest, was that if he didn’t take the one year lease, he would be required to vacate the property within a month. What do you say to that?

A.   No. What I told him, if he does not sign the lease, I will go back to the purchaser, because I had an offer on a table subject to 12 month lease which were the same terms that the property was offering 2014.

100. Mr Grgic confirms that Amit told him “I will talk to my lawyer tomorrow” ([10]) and says that Amit (complete with expletives) said he would obstruct the sale ([12]; [14]; [15]). Amit denies Mr Grgic’s version of the conversation (and denies that he uses expletives).

101. As adverted to above, Rajil deposes to a conversation with Mr Grgic after Mr Grgic had been to see Amit ([90]). He says that Mr Grgic told him, in effect, that “[w]e can kick him out, you can then sign the contract to sell with vacant possession” ([90]).

102. What next happened was that contracts for sale of Property A with vacant possession were signed by Rajil later in the afternoon of 2 November 2016 (at a time when at least Mr Grgic knew that Amit was foreshadowing that he would be talking to lawyers) for a purchase price of $1.32 million and with a completion date of 15 December 2016. A notice of termination and to quit was then served on Amit Laundry on 4 November 2016 requiring vacant possession of the laundry premises within a month (on the basis that there was no fixed term tenancy but rather a tenancy at will terminable on one month’s notice).

260. It is submitted that Amit Laundry’s position is consistent with Rajil’s evidence of his father’s role (at T 159.23-33 and T 234.24-29) and his evidence of Amit’s considerable role in the family (referring by way of example to the evidence given at T 233.46-50; T 244.33, T 246.17-18; T 249.42-49; T 250.44-45; T 256.24-27); as well as Vinay’s evidence concerning the periods of time Ramesh was not present in Sydney (T 164.16-19) and Amit’s involvement in assisting him with the finances for acquiring the pharmacy (T 177.26-50 – T 178.0-17). Amit Laundry also refers to passages of Ramesh’s own evidence in this regard (such as his evidence at T 190.45-48, T 206.41-49; T 207.40-42; T 214.16-17; T 222.33-39).

261. Amit Laundry points to the fact that Ramesh was never a signatory on the bank account for the business at any time (whether prior to or after incorporation) and that Ramesh accepted that, whenever there was a need Amit, as a signatory on the bank account, could withdraw funds for that need (T 202.27-28). It notes that Ramesh could not recall any occasion when he declined or refused to pay for something for which Amit had asked (T 203.5).

262. Rajil, however, argues that Amit Laundry’s conduct over the entire period was fundamentally inconsistent with it having ownership of Property A (treating that conduct as in effect an admission against interest and as rebutting any presumption of resulting trust that is found to have arisen) (see T 335.31-38). Rajil points to the fact that he has lived at Property A rent-free since about 2003; that Amit Laundry has paid rent to Rajil from about 2007/2008 (written submissions at [27]); and that the signed loan application documents, deny the existence of any trust (Exhibit 1 and Exhibit B) and do not disclose that the loan account is held on trust (in respect of which declarations as to the accuracy of those documents were signed by each of the brothers). It is submitted that the actual intention of two of the relevant directing minds (Rajil and Vinay) was plain, namely, that they owned both the legal and beneficial title upon the acquisition of Property A.

263. In that regard, it is noted that Rajil was adamant in cross-examination as to his expectation that Property A was for him and for Vinay; and that Vinay's intention was to the effect that he trusted in his elders to look after his interests and went along with his father’s wishes (those wishes being for his children to have properties in their own name, as his way of providing for his children – see T 210.27).

264. Rajil emphasises that what is clear from Ramesh’s evidence is that he intended to provide for his family by the purchase of the respective properties (for Amit with the Granville Property and for Rajil and Vinay with Property A). He submits that the inconsistency between Ramesh’s evidence and his affidavit evidence (to which I have referred earlier) is attributable to the fact that Ramesh was plainly frail, aging, and in some difficulty with the language without the benefit of the ability to discuss concepts in an exchange in Hindi.

265. While Vinay’s understanding was that the laundry business was going to be able to operate from that premises and that it would save the laundry business paying rent to somebody else, Rajil emphasises that Vinay was very clear about the fact that it was a property for him (T 178-179). It is submitted that Vinay gave cogent uncontradicted evidence of his intention (that intention according with his father’s intention). Rajil also points to Vinay’s understanding (and acceptance) that Amit as eldest was to get the first property and to the effect that he, Vinay, had to wait his turn.

266. In response, Amit Laundry notes that, to the extent that Vinay gave evidence contrary to Amit concerning who had a beneficial interest in Property A, this was based on Vinay’s understanding of his father's intention (T 178.45-50-T 179), and argues that evidence based on an assumption as to his father’s intention (without actually witnessing any conversations where his intention was stated) is of limited probative value.

267. Amit Laundry says that, similarly, Rajil’s evidence is of limited probative value, his understanding being predicated at various points of time not on having actually witnessed events but his understanding (or assumption) of his father’s role within a family setting (referring by way of example to T 236.42-50; and T 256.34-35, where Rajil accepted that not claiming rent was because of “whatever” the arrangement was between Amit and his father).

268. Amit Laundry further says that both Rajil and Vinay's conduct subsequent to the purchase of Property A is inconsistent with the proposition that they had, and understood themselves to have, a beneficial interest in Property A equal to their prima facie legal interest. Specifically, Amit Laundry points to the following: that Vinay was willing to transfer his interest in Property A for $1; that Vinay did not know how he came to be a director of the company (T 165.16), had just signed the loan documentation and was not aware that he was borrowing a substantial sum of money (T 166.45-50); that Rajil allowed Amit to “handle” the account the subject of the loan (T 249.7-33; T 253.12); that Rajil failed to assert an entitlement to rent after the Property A loan was repaid (being 8 May 2001) and before he moved into the property in late 2003; and that Rajil accepted that the arrangement was “whatever the discussions with Amit and my father” were (T 256.29-35).

269. Amit Laundry argues that the payment of rent by it should not be seen as an admission of Rajil’s ownership (pointing to the fact that the “rent” paid to Rajil by the company was calculated with reference to the rent Rajil was paying for his own business – T 259.50-260.9) but, rather, as Amit’s willingness as a “loving” elder brother to assist Rajil during his financial difficulties (invoking Rajil’s description of Amit at T 248.26-29).

270. As to the other matters to which Rajil points (such as the fact that Amit did not assert the company’s ownership over Property A prior to going to his lawyers following his meeting with Mr Grgic; that the repayments for the Property A Loan were claimed as “rent” in the company’s tax returns; that payments of “rent” were made to Rajil from 2006 and subsequently recorded as rent in the company’s tax returns; and that Property A was never recorded as an asset of the company in the company’s tax returns) Amit Laundry makes the following submissions.

271. First, Amit Laundry argues that there was no cause for it (through Amit) to assert ownership prior to the point in time that it did (when Amit caused the company to commence these proceedings). It is said that the multiple listing of Property A with Property B and the Vacant Land in 2013 was undertaken with Amit’s knowledge and consent and points to his evidence was that this was carried out to test whether a price could be achieved by selling three properties in one line beyond the sum total of individual sales. It is submitted that the fact that Amit never told Rajil he did not have authority to sell Property A is consistent with Amit’s understanding that Rajil also knew the company was entitled to Property A.

272. As to the contents of the tax returns and financial documents, it is submitted that these should be given limited weight because there is no evidence of the basis on which such (mis)descriptions were included in the accounts. Reference is made to Amit’s evidence that he informed his accountant as to the arrangements about Property A (T 138.0-10). It is further said that the descriptions of “rent” do not appear “necessarily” to tally up with the amounts debited to the loan or match the description of payments as recorded in cheque butts by Amit (T 84.28-31).

273. Further, Amit Laundry submits that the direct evidence of the relevant parties’ intentions and understandings is inherently of more probative value than indirect evidence of how things were characterised for accounting purposes.

Determination

275. As to the Westpac loan, I accept that it was the shared intention of the three borrowers: Amit, Rajil and Vinay (to the extent that Vinay gave it any independent consideration at all) that when Property A was acquired in the names of Rajil and Vinay the legal title would reside in them. Amit’s intention, as the controlling mind of Amit Laundry for all practical purposes, was the same insofar as the provision of the deposit cheque was concerned. Such a conclusion is supported by the documentary evidence as to how the property was treated in the company records (as referred to earlier).

276. However, that is not enough to rebut the presumption of resulting trust. Rajil must establish, on the balance of probabilities, that there was an intention on the part of the respective contributors that he (Rajil) and Vinay were to take the beneficial interest in the property. That leads to the question as to what inference is to be drawn from the shared intention of the contributors that Rajil and Vinay were to become registered proprietors of Property A.

277. In Muschinski v Dodds (1985) 160 CLR 58; [1985] HCA 78 it was found as a fact that the shared intention of the parties was that registration would have a specific effect (namely, that it would render Mrs Muschinski and Mr Dodds beneficial co-owners), which intention rebutted any presumption of resulting trust. In Muschinski v Dodds, the findings of the primary judge and the Court of Appeal were set out by Gibbs CJ relevantly as follows (at 589):

… it was the intention of [Mrs Muschinski] that [Mr Dodds] should have a beneficial one-half interest in the land in return for his assurances that he would assist the appellant to set up a craft business in the old cottage and that he would have a house built on the land and pay for it out of any moneys which might come to him from his divorce settlement and his earnings. A further reason for the appellant's intention to give [Mr Dodds] a beneficial interest in the land was that she hoped that if she did so it would improve the quality of their relationship. The learned primary judge further held that there was no evidence that [Mrs Muschinski’s] intention was to confer on [Mr Dodds] an interest conditional on the fulfilment of the purposes which the parties had in mind. … The Court of Appeal agreed that the appellant intended to give the respondent a one-half beneficial interest in the land and, to use the words of Hope J.A., that "this intention was based on the assurances which [the respondent] gave to her and not upon the fulfilment of those assurances". Their Honours held that the evidence pointed to an intention on the part of [Mrs Muschinski] to give [Mr Dodds] a beneficial interest which was immediate and unconditional. They accordingly agreed that the presumption of a resulting trust was rebutted and further held that the events that occurred after the property had been acquired did not give rise to a constructive trust in favour of [Mrs Muschinski]. [my emphasis]

278. Gibbs CJ said the following in relation to these concurrent findings (at 591):

… the findings in the Supreme Court, so far as they go, are correct. It was, in my opinion, right to conclude that [Mrs Muschinski] intended that [Mr Dodds] should have a beneficial one-half share in the property. The conversations to which I am about to refer must be viewed against the background provided by the relationship between the parties, and in the light of the fact that the parties were co-contractors for the property, each undertaking the obligation to pay the purchase price. Both intended to borrow jointly from the bank, if that became necessary, to finance the purchase. When [Mrs Muschinski] first saw the Picton property, she wanted to put it in her own name because she expected to supply all the money. [Mr Dodds], however, told her that he would assist her financially and by his own physical work on the property, but only if his name was "on the title". [Mrs Muschinksi] in her evidence frequently spoke about "putting [the respondent's] name on the title". Mr. Bennett, who appeared for [Mrs Muschinski], contended that this revealed an intention to give [Mr Dodds] only a legal, and not an equitable, interest in the land. That argument attaches altogether too much significance to language used by lay persons who were unlikely to have appreciated the distinction between legal and beneficial interests, and the tenor of the discussions shows that the parties were concerned with the substance of the matter - with the beneficial interest and not the form of the legal title. The parties had frequent discussions about the matter; [Mrs Muschinski] had doubts about putting the land in both names, but [Mr Dodds] regarded it as unfair that he should have no interest in the property when he intended to contribute, roughly equally, to the total cost of obtaining the asset in its final form. [my emphasis]

279. A similar view was taken by other members of the Court. Mason J noted (at 598-599) that the common intention of the parties was that Mr Dodds would acquire an “immediate and unconditional legal and beneficial one-half interest in the property” and that there was therefore “no scope” for a resulting trust (my emphasis). Brennan J stated (at 603) that there was “no reason” in the circumstances to infer that the taking of title in both names was understood by Mrs Muschinski “as relating merely to legal title” (as distinct from a legal title with which the beneficial interest would be at home). Deane J considered (at 611-612) that the evidence “leads inexorably to the conclusion” that it was Mrs Muschinski and Mr Dodds’ shared intention that “from the time of purchase, each should have a full one-half beneficial, as well as legal interest”; it was not the intention of either party that Mr Dodds’ beneficial interest “should be acquired by stages” – it was intended by both to be “immediate and unconditional” (my emphasis).

280. In Muschinski v Dodds, therefore, it was found as a matter of fact that the relevant contributor (namely, Mrs Muschinski) intended, by the act of registration, to confer upon another (namely, Mr Dodds) an immediate and unconditional beneficial interest in the acquired property.

281. The present case is different. None of the contributors to the purchase price appears to have understood the significance of incorporation, still less of registration on the title to property. In a sense, that is also true of Muschinski v Dodds: the parties there were concerned “with the substance of the matter – with the beneficial interest and not the form of title” (at 591). However, it was found as a fact that the parties intended by registration to confer an immediate, unconditional interest upon Mr Dodds; or, as Deane J put it (at 611):

… Mrs. Muschinski’s intention was that her own and Mr. Dodds’ interest or, to use her words, “status” in the whole venture should be equal; it should be a “joint venture”, a “partnership”

282. That is not so in the present case. I accept that all contributors to the acquisition intended that Rajil and Vinay would become the registered proprietors of Property A. However, I am not satisfied that all contributors intended that Rajil and Vinay would then be free to do what they wanted with the property. That is not to say that, in order to rebut the presumption, it is necessary for Rajil to establish that the contributors intended to confer on Rajil and Vinay indefeasible title as such; it is merely to say that I do not accept, on the balance of probabilities, that registration was intended by the contributors, in their own way, to confer on Rajil and Vinay an immediate or unconditional beneficial interest.

283. To test that proposition one need only pose the following counterfactual: what would have been Amit’s reaction, had it been put to Amit (in his own right or as the controlling mind of Amit Laundry) that as from the date of completion of the purchase of Property A, Rajil and Vinay were to be free to assert ownership of the property to the exclusion of any right of occupation on Amit Laundry’s part? I have no doubt that this would have been unacceptable to Amit and that it was not the intention of Amit (or Ramesh, whose intention is only of relevance insofar as both Rajil and Vinay have made very clear that he was the primary decision maker and that they acceded, as a matter of culture and tradition, to his wishes in family and business matters). Had such a proposition been articulated at the time, it is not plausible that Amit (and Amit Laundry) would have proceeded with the arrangement to buy the property in the younger sons’ names at least without protection for the laundry business operation.

284. It is true that Amit Laundry could have acquired the property in its own name, had it wished to do so. However, at the centre of the reasoning behind the acquisition, in the minds of all the contributors (as can be inferred by their words and conduct at the time of acquisition), were the business interests of Amit Laundry. A plausible inference is that registration in the name of Rajil and Vinay was incidental to this main purpose, in the sense that it was (at the time of acquisition at least) symbolic of equality between the sons (even if there was in the minds of the sons, to various degrees, an expectation that Property A would remain in Rajil and Vinay’s name once Amit Laundry had ceased to use it for its own business purposes). To describe registration as symbolic is not to gainsay its significance to the contributors at the time. But in the circumstances, I cannot accept that any of the contributors had the intention that upon registration it would have been open to Rajil and Vinay to exclude all others from Property A (which is to say, none contemplated that the beneficial interest would reside wholly and unconditionally in Rajil and Vinay).

285. In relation to Amit, his evidence was that it was his suggestion that the property be put into Rajil and Vinay’s names. He also intended that Amit Laundry would be able to remain in occupation of the property until such time as it was able to develop Vacant Land for purpose of relocating the laundry business there. The intention of Rajil at the relevant time was that the property be acquired in his and Vinay’s names but for the purpose of enabling the laundry operations to relocate to those premises. The intention of Vinay was simply to do whatever accorded with his father’s (and possibly Amit’s, as the eldest brother) wishes.

286. As to the intention of Amit Laundry in providing the deposit, the relevant intention must be of its controlling mind. That was at all times Amit. His intention, as I have found, was that the property be acquired in his brothers’ names but the purpose of the acquisition was for the property to be available for the laundry business (to expand the business and save on rent).

287. There is a divergence in the evidence as to whether the intended period of use of the Property A as the laundry was to be a temporary solution or an indefinite solution (in light of the problems that had been encountered with the development of the Vacant Land).

288. Amit Laundry submits that Rajil’s evidence (that the company moving into Property A was only a temporary solution pending development of the Vacant Land – T 247.18-20 – is improbable given what Amit (and it may be inferred other members of the family) knew in light of Exhibit H. However, it is not clear that Rajil knew of the import of Exhibit H at the relevant time. Amit Laundry also submits that the costs involved in moving the business render it unlikely that it was ever intended that the move into Property A would only be for a short temporary period (before moving costs were incurred again to move into Property A). However, the steps taken in relation to the proposal to re-develop the Vacant Land for the purposes of use as a laundry (which continued after Property A was acquired) are not consistent with there being a concern as to the cost of moving the laundry to that property in due course.

282. I have concluded that it is likely that the family members, so far as they turned their minds to the question, were expecting that the Vacant Land would be developed in due course and hence that the occupation by the laundry business of Property A would not be a permanent one. However, the intent was that until the Vacant Land was developed (so that the laundry business could be relocated there) the laundry business was to be occupied from the ground floor of Property A.

283. I find that the intention of the contributors was that Amit Laundry was to be able to operate the laundry business out of the premises at least until such time as the Vacant Land was developed and it could relocate to those premises. Whether or not the expectation was that this would take place within a relatively short period of time, such that the occupation of Property A would only be a “temporary solution”, it can be said with confidence that its occupation was to be for an undefined (and hence in that sense indefinite) period.

284. I am not satisfied on the evidence that Amit Laundry (through its controlling mind, Amit) or Amit himself intended to disclaim any beneficial interest in respect of the property towards the acquisition of which Amit Laundry and Amit (through the borrowing liability he assumed) had advanced funds.

285. Accepting that none of the relevant persons properly understood the legal significance of their actions, I have concluded that at the time of acquisition the interest intended to be conferred on Rajil and Vinay (by registration on the title) was one that was conditional on Amit Laundry having certain beneficial entitlements vis-à-vis Property A. Those entitlements were not precisely defined (and, in the circumstances, that is hardly surprising for the reasons already given). I doubt that the contributors, at the time of acquisition, could have articulated in any precise sense the nature of each contributor’s intended entitlement to Property A. On the contrary, the evidence suggests that, at the time of acquisition, and in view of the family arrangements, they would have been puzzled by the question. However, it is clear that everyone understood and intended that Amit Laundry was to be able to operate its business from the premises then being acquired and it was the shared understanding and intention that the mortgage repayments were to be made out of the funds generated from the operation of the laundry business from those premises (at least until such time as the laundry could be relocated to the Vacant Land, which was dependent on its re-development).

286. Even if it be accepted that Rajil and Vinay (in assuming liability under the mortgage) expected that registration would confer on them immediate, unconditional beneficial ownership of Property A (which I do not consider to be the case), that was certainly not the intention of Amit Laundry (in paying the deposit) or Amit (in assuming liability under the mortgage).

287. Although I was not taken to it, there is authority to the effect that a presumption of resulting trust may be rebutted partially or conditionally (see Re Kerrigan; Napier v Public Trustee (WA) (1980) 332 ALR 153; Jobson v Beckingham (1983) 9 Fam LR 169 at 170). (An illustration is provided by Dullow v Dullow (1985) 3 NSWLR 531.)

288. However, this was not argued before me. Had such an issue been likely to have been determinative I would have sought further submissions from the parties. It was not necessary to do so. In Muschinski v Dodds, the presumption of resulting trust was rebutted by evidence that the transferee, Mr Dodds, was intended to acquire by registration an “immediate and unconditional” beneficial interest in the property by virtue of registration (see 593 (Gibbs CJ); 598 (Mason J); 603 (Brennan J); 612 (Deane J); 624 (Dawson J)). It is that intention that is missing in the present case.

289. I am not persuaded that registration was intended to confer an unconditional beneficial interest upon Rajil and Vinay. For the foregoing reasons, the fact of registration, though certainly material, cannot be decisive in assessing the evidence of the contributors’ intentions at the time of acquisition. The conclusion that the contributors’ shared intention (drawn from the evidence as a whole) at the time of the acquisition was that any interest vested in Rajil and Vinay was to be subject to and conditioned upon Amit Laundry’s own business concerns means that I cannot find positively on the balance of probabilities that Amit/Amit Laundry intended to confer upon Rajil and Vinay an immediate and unconditional beneficial interest in Property A. Therefore, Rajil has not discharged his onus of proving that it was more likely than not that he (Rajil) and Vinay were intended by the contributors to be the immediate and unconditional beneficial owners of Property A.

290. That, of course, causes a practical difficulty in the present case if, as has transpired, the Vacant Land cannot feasibly be redeveloped for the purposes intended or if it would prove impractical for such a development to be undertaken. It also potentially raises issues as to whether there was any understanding or implied obligation on Amit Laundry’s part to do what it could to facilitate the prompt re-development of the Vacant Land. However, those issues have not been canvassed in the proceedings and they fall away in circumstances where I have found that Amit Laundry is an equitable co-owner of Property A as a consequence of the application of a presumption of resulting trust.

291. Pausing there, even if I had been of the view that Rajil’s ownership at law of Property A was not qualified by Amit Laundry’s rights in equity, the fact remains that Amit Laundry has been in possession of the laundry premises for some considerable time. If not pursuant to its status as a co-owner in equity, then its occupation must have been as a tenant at will. While tenancies at will are terminable ordinarily on one month’s notice (and assuming that the laundry premises, due to the size of the premises, do not fall under the provisions of the retail tenancies legislation – an issue not canvassed in the proceedings), the giving of a mere one month’s notice to quit in the present case strikes me as problematic to say the least. It seems to me that Rajil would have been vulnerable to a claim by Amit Laundry that the notice of termination was not valid and/or for relief against forfeiture in that Amit Laundry was entitled (having regard to the arrangements contemplated or agreed at the time Property A was purchased) at least to a reasonable period of notice to enable it either to complete the development of the Vacant Land for the purposes of relocating thereto or to locate suitable laundry premises elsewhere for that purpose. Hence the precipitate conduct of Rajil in entering into a contract for sale of Property A under which he promised to transfer the land with vacant possession (without first having put in place an agreement on Amit Laundry’s part to relocate from the premises) seems ill-advised, to say the least. However, it is not necessary to consider this aspect of the matter further at this stage.

Conclusion

299. In summary, for the above reasons I have concluded as follows.

300. First, that the alternative claims based on an express or implied trust fail.

301. Second, as to the claim based on a resulting trust, I have found that a presumption of resulting trust did arise such that (in the absence of any non-rebutted presumption of advancement or a contrary actual intention on the part of Amit Laundry (as to the deposit) or shared on the part of the sons (as to the Westpac Loan)), Property A is held by Rajil as to 9.08% on resulting trust for Amit Laundry and as to the balance as to one-third on resulting trust for Amit (Vinay having already transferred his interest in Property A to Rajil).

302. I am not persuaded that the necessary relationship to establish a presumption of advancement has arisen but, in any event, any such presumption of advancement has been rebutted – since I am not persuaded on the balance of probabilities that Amit’s actual intention was that Rajil and Vinay hold the beneficial interest in Property A absolutely (i.e., without any qualification as to the entitlement of Amit Laundry to use the property until such time as the laundry could be relocated to the Vacant Land) and, in relation to the deposit, it is Amit’s intention that is to be imputed to Amit Laundry since he has been its controlling mind throughout.

303. I am not satisfied on the balance of probabilities that the presumption of a resulting trust has been rebutted by the actual intention of the parties. Shortly put, in circumstances where there have been unequal contributions to the purchase of Property A and (at the very least) it can comfortably be concluded that Amit/Amit Laundry did not intend by their contributions to the purchase price or by the fact that Rajil and Vinay became registered on the title to the property to confer on Rajil and Vinay an immediate and unconditional beneficial interest in that property, the presumption of a resulting trust is not rebutted and it operates such that both Amit and Amit Laundry can rely upon the presumed declaration of trust in their favour in respect of their proportionate contributions to the purchase price.

304. Accordingly, the appropriate relief is a declaration that Rajil holds the property on resulting trust as to 9.08% for Amit Laundry and as to one-third of the balance for Amit. Rajil’s beneficial interest in Property A is thus two-thirds of 90.92% (roughly 60.61%). Orders should be made for the rectification of the register of land titles maintained by the Registrar-General for that purpose.

305. As to costs, Amit Laundry has been successful in establishing that title to the property is held on resulting trust for it but only as to a 9.08% interest in the land. However, in practical terms it (as through it, has Amit, though he is not a party to the proceedings) has had a substantial measure of success in that it has been determined that Rajil is not in a position to force it to vacate the premises at this stage and cannot sell with vacant possession. In those circumstances I propose to reserve the question of costs and to direct that written submissions on costs be served with the intent that that issue be dealt with on the papers.

Orders

306. I make the following orders:

1. Declare that the defendant holds the property identified in schedule A (and referred to in these orders as Property A) on a resulting trust as to 9.08% for the plaintiff and as to one-third of the balance for the defendant’s brother, Amit Jain.

2. Order that title to Property A be rectified on the register of land titles maintained by the Registrar-General to record that Property A is held by Rajil Jain, Amit Jain and Amit Laundry Pty Limited, as tenants in common in the following shares: Rajil Jain as to 60.61%, Amit Jain as to 30.31% and Amit Laundry Pty Limited as to 9.08%.

3. Direct that a copy of these orders, once entered be lodged, with the Office of the Registrar-General at Land and Property Information for the purpose of rectification of the register in accordance with order 2 above.

4. Reserve the question of costs.

5. Direct the parties to serve brief written submissions (no more than 3 pages) in relation to costs within 14 days with the intent that the issue of costs be dealt with on the papers.

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Amendments

07 November 2017 - Amendment to heading at [250]

Decision last updated: 07 November 2017