Cetinkaya v Unal
[2018] VCC 480
•24 April 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-08-05385
| RECEP CETINKAYA | First Plaintiff |
| and | |
| BAHAR CETINKAYA | Second Plaintiff |
| v | |
| METIN UNAL | First Defendant |
| and | |
| REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | HER HONOUR JUDGE MARKS | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8, 9, 11, 14, 15, 16, 17, 18, 21 August 2017, 8, 9 November 2017, 30 November, 1 December 2017. | |
DATE OF JUDGMENT: | 24 April 2018 | |
CASE MAY BE CITED AS: | Cetinkaya v Unal | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 480 | |
REASONS FOR JUDGMENT
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REAL PROPERTY – transfer of property allegedly obtained as a result of fraudulent misrepresentations – misrepresentations not proved.
STANDING – plaintiffs bankrupt – rights relating to property vested in Official Trustee in Bankruptcy – Trustee assigned all rights, interest and title in causes of action as pleaded in the statement of claim dated 11 December 2018 to plaintiffs – plaintiffs later amended statement of claim – whether amended claims had been assigned – whether plaintiffs had standing to bring amended claims.
CAUSE OF ACTION – cause of action assigned – meaning of cause of action – whether includes legal remedy sought – Letang v Cooper [1964] 2 All ER 929 – cause of action is the factual situation entitling person to obtain a remedy.
STATUTE OF LIMITATIONS – amendments of pleadings outside limitation period – amendments introducing new cause of action – transfer occurred in 1996 – alleged fraud discovered in 2007 – proceedings instituted in 2008 – whether claims statute barred – ss 8 and 27 Limitation of Actions Act 1958 (Vic) – claims not statute barred.
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiffs | Mr T Sowden | Conlan Cummings Lawyers |
| For the first defendant | Mr R Moore | Tony Hargreaves & Partners |
CONTENTS
INTRODUCTION
THE CLAIMS
The statement of claim
First set of further particulars
Amended statement of claim
Second set of further particulars
Parts of statement of claim not pursued
Application to further amend statement of claim after evidence
Proposed further amended statement of claim
Why the amendments in the PFASoC are not allowed
THE EVIDENCE
The context surrounding the transfer
What Mr Unal said occurred
The evidence given by the Cetinkayas
ONUS OF PROOF
THE WITNESSES
Mr Cetinkaya
Mrs Cetinkaya
Mr Erdal Yilmaz
Ms Zencheddu
Mr Metin Unal
Mr Mehmet Unal
Mr Madafferi
Mr Milder
Ms Farrell
Mr Ganas and Mr Joyce
FINDINGS ON CLAIMS
DO THE CETINKAYAS HAVE STANDING?
ARE CLAIMS STATUTE BARRED?
CONCLUSION
HER HONOUR:
INTRODUCTION
For over 10 years up to December 1996, a company owned and controlled by the plaintiffs, Mr Recep Cetinkaya and Mrs Bahar Cetinkaya, operated a panel beating business from a property owned by the Cetinkayas in Colebrook Street, Brunswick.
In December 1996 that property was transferred to the defendant, Mr Metin Unal.
Mr and Mrs Cetinkaya claim in this proceeding that the property was transferred to Mr Unal as a result of fraudulent misrepresentations made by Mr Unal to them. They want the property back.
The Cetinkayas say they only discovered the alleged fraud in 2007. They then lodged a caveat over the property. They filed the writ in this matter in 2008.
This case has had a tortuous history. Getting it to finally being heard at trial has involving aspects relevant to it being dealt with in other Courts as well as this one.
The fact that Mr and Mrs Cetinkaya became bankrupt in 1997 complicated matters. It was common ground that at that stage any rights of action they may have had against Mr Unal in relation to the property vested in the Official Trustee in Bankruptcy (‘the Trustee’) under s58 of the Bankruptcy Act 1966 (Cth). This includes their rights to claim in relation to the causes of action raised in this County Court proceeding which they commenced after they were discharged from bankruptcy. This meant that at the time they commenced this proceeding they did not have standing to do so.
In a Deed of Assignment dated 24 February 2016 the Trustee assigned to the Cetinkayas all the Trustee’s ‘interest in the causes of action as pleaded in the Statement of Claim dated 11 December 2008’ in this proceeding.
Leave was given to the Cetinkayas in August 2016 to amend their claim to rely on that assignment, and to seek a remedy under s44 of the Transfer of Land Act 1958 (Vic) (‘TLA’). They filed an amended statement of claim on 23 August 2016 with those amendments.
The matter finally came on for hearing at the end of 2017.
After evidence had been completed, written submissions filed, and oral final submissions were underway, the Cetinkayas sought to amend their claims further in a proposed further amended statement of claim (‘PFASoC’).
In summary, the main issues in this case and my decision about them are:
· Were the alleged representations made? The Cetinkayas’ case depends on the Court being satisfied that the alleged representations were made by Mr Unal. I am not satisfied that the representations were made. This means that the Cetinkayas have not made out their case.
· Did the Cetinkayas have standing? Mr Unal said the Cetinkayas did not have standing to bring the s44 TLA claim and the claims sought to be raised in the PFASoC because those claims were not assigned to them under the Deed of Assignment. I find that they did have standing to bring the s44 TLA claim. They did not have standing to bring the claims sought to be raised in the PFASoC.
· Were the Cetinkayas’ claims statute barred? No.
THE CLAIMS
What the Cetinkayas claimed occurred around the time the transfer of the property occurred, and what representations they alleged were made by Mr Unal, changed significantly over the course of the proceeding and trial.
The statement of claim
In the statement of claim dated 11 December 2008 the Cetinkayas plead, relevantly:
7.In or around June 1996 the plaintiffs approached the defendant with a view to obtaining advice as to how the plaintiff could best refinance the mortgage over the property.
Particulars
The first plaintiff met the first defendant at the first defendant’s business premises at Level 1, 456 Spencer Street, West Melbourne on a date in or around June 1996 (the “meeting”).
As at June 1996 the plaintiffs owed approximately $95,000 to the ANZ under the mortgage.
8.During the meeting the first defendant represented to the first plaintiff as follows
(a)the first defendant would arrange for the property to be transferred into a family trust so that the property would not form part of the estate of the plaintiffs for the purposes of any subsequent bankruptcy action;
(b)upon the first plaintiff providing the defendant with $20,000 the defendant would refinance the property from funds obtained by the defendant;
(c)the first plaintiff would service interest on the mortgage obtained by the first defendant by paying monthly amounts of $1,400 in rental per month to the first defendant.
(collectively, the “representations”).
Particulars
The representations were oral and were conveyed to the first plaintiff during the meeting.
9.In or around 13 December 1996 (but unknown to either plaintiff) the first defendant became the registered proprietor of the property.
10.In or around 14 October 1997 each of the plaintiffs became bankrupt.
Particulars
A Notice of Creditors of Bankruptcy and Trustee’s Report are in the possession of the solicitors for the plaintiffs and may be inspected by appointment.
11.Relying on the representations and induced thereby the first plaintiff;
(a)attended the first defendant’s business premises on a date in or around August 1996 and executed documents purporting to be a family trust and related mortgage documents;
(b)from around September 1996 commencing $1,400 per month in mortgage repayments;
(c)provided $6,500 to the first defendant from his own funds and borrowed a further sum of $13,500 from one, Erdal Yilmaz, both of which sums were provided to the first defendant in or around August 1996;
Particulars
The moneys were paid to the defendant by the first plaintiff in the presence of Erdal Yilmaz in or around August 1996. The documents were executed at the same meeting. The second plaintiff did not attend that meeting and therefore did not execute any documents.
The first plaintiff received receipts for each monthly payment made on behalf of the business. Copies of those receipts are in the possession of the solicitors for the plaintiffs and may be inspected by appointment.
The pleading then alleges that in August 1998 Mr Cetinkaya ceased operating his business from the property; by a written lease dated 26 August 1998 Mr Cetinkaya ‘as lessor’ leased the property to Wisco Manufacturing Co. at a monthly rental commencing at $1,500; that from around September 1998 to around October 2001 the Cetinkayas paid the monthly rental received under the lease to Mr Unal ‘as payments under the loan procured by [Mr Unal], and secured over the property’; that they directed their real estate agent to pay monthly rental under the lease directly to Mr Unal from October 2001; and that at all material times they received and paid rate notices regarding the property.
The pleading continues:
18.In or around November 2007 the plaintiffs' son, Ersoy Cetinkaya, attended the offices of the first defendant and was informed by the first defendant that the plaintiff had sold the property to the first defendant in 1996.
19. Since November 2007 the plaintiffs have obtained a title search of the property and a copy of a transfer of land in respect of the property (the “transfer of land”) from the second defendant showing that the property was transferred into the name of the first defendant by instrument purportedly signed by the plaintiffs on 18 December 1996.
…
22.In the premises, the first defendant made each of the representations fraudulently and either knowing full well that they were false and untrue or recklessly not caring whether they were true or false.
…
24. In the premises, the transfer is voidable at the instance of the plaintiffs pursuant to section 72 of the Property Law Act 1958.
In the prayer for relief, the Cetinkayas seek:
A. A declaration that the transfer of the property to the defendant is void against the plaintiffs.
…
C. Further and alternatively, an order for rescission of the transfer of land.
D. Alternatively an order setting aside the transfer. …
First set of further particulars
In further and better particulars of the statement of claim filed six months after the statement of claim, in June 2009, different details were given of the representations allegedly made and the number of meetings at which they were made. Rather than all the particulars being further details of the material facts alleged in the statement of claim, some of them were new facts which contradicted the material facts.
The statement of claim refers to one meeting between Mr Unal and Mr Cetinkaya, at 1/456 Spencer Street, West Melbourne, where Mr Cetinkaya ‘approached Mr Unal with a view to obtaining advice’ about refinancing the mortgage over the property and the three specific representations were allegedly made.
The first set of particulars details three meetings with Mr Unal over the course of four or five days after Mr Cetinkaya was served with ‘the warrant’. Mrs Cetinkaya was now said to have been at the second one. In summary:
· The first meeting was at a different place than that alleged in the one meeting referred to in the statement of claim. The first meeting was said to have taken place at Mr Unal’s office in Sydney Road, Brunswick, ‘some days after’ Mr Cetinkaya was served with the warrant. He showed it to Mr Unal and asked what he should do about it. Mr Unal told him words to the effect of ‘don’t worry about it. Bring me $20,000 and I’ll sort it out’. He also said the money would have to be provided to him well before 2 August 1996 because if the sheriff acted on the warrant Mr Unal would be unable to assist the Cetinkayas. He then said that he would put the shop in a family trust for the benefit of the Cetinkayas to be called the B and R Family Trust.
· The second meeting was the next day, and attended by both Mr and Mrs Cetinkaya and Erdal Yilmaz. Mr Unal was paid $20,000. Mr Unal rang a lawyer on the speaker phone in the Cetinkayas’ presence. The lawyer told them to relax and that no one would take over the shop. Mr Unal said he would arrange finance and that Mr and Mrs Cetinkaya would need to provide him with $1,400 per month in mortgage repayments.
· The third meeting was about two or three days later. Mr Unal contacted Mr Cetinkaya by phone to attend his office, and then Mr Cetinkaya attended and met with Mr Unal. There was a bundle of documents presented to Mr Cetinkaya for signing. Mr Unal told Mr Cetinkaya where to sign each document. Mr Unal did not explain the nature of the documents save that the documents were to transfer the property into the B & R trust and in order to secure the property in favour of a new mortgagee. Mrs Cetinkaya did not attend this meeting. She never signed any documents. Mr Cetinkaya is unable to read English and relied on Mr Unal to explain the nature of the transactions to him.
Amended statement of claim
On 22 August 2016 leave was given to the Cetinkayas to amend the statement of claim to add the following underlined words, such amendment stated to be ‘effective from 24 February 2016’:
10.In or around 14 October 1997 each of the plaintiffs became bankrupt and the Official Trustee in Bankruptcy was appointed their respective trustee in bankruptcy.
…
25. Pursuant to s 58(1) of the Bankruptcy Act 1966 as from the date of their bankruptcy the property of the plaintiffs vested in the Official Trustee in Bankruptcy.
26. By a deed of assignment effective on 11 February 2016 the Official Trustee in Bankruptcy assigned to the plaintiffs, jointly and severally, any and all rights, title and interest in the causes of action as pleaded in the Statement of Claim dated 11 December 2008 in this proceeding.
Leave was also given (as Order 7 of the orders made on 22 August 2016) to the Cetinkayas to amend their statement of claim nunc pro tunc (so that those amendments take effect from the start of the proceeding), to add the following underlined words:
24. In the premises, the transfer is voidable at the instance of the plaintiffs pursuant to section 72 of the Property Law Act 1958, or alternatively void as against the plaintiffs for the purposes of section 44(1) of the Transfer of Land Act 1958.
The question of whether the s44 TLA claim was within the scope of what was assigned by the Deed of Assignment was a central issue in the trial. At the time of making the orders set out above, JR Tran noted in ‘Other Matters’ that:
The Court has not, by granting the leave in Order 7 made any determination as to whether a claim that the transfer is void pursuant to s44(1) of the Transfer of Land Act 1958 is within the scope of the assignment by the Official Trustee. This remains an issue for trial.
The Cetinkayas filed an amended statement of claim incorporating those amendments on 23 August 2016.
Second set of further particulars
Two and a half months later, on 9 November 2016, the Cetinkayas filed a second set of further and better particulars of the amended statement of claim, setting out different allegations of what had transpired in 1996. The Cetinkayas now claimed there had been four meetings. In summary they said:
· The first meeting was in the first half of 1996 at Mr Unal’s office in Sydney Road, Brunswick. Mr Cetinkaya was told by Mr Unal not to bother making payments on the mortgage for the time being.
· The second meeting was two or three days later. Mr Cetinkaya provided $20,000, Mr Unal rang a lawyer on speaker phone and the lawyer said not to worry we would get rid of the sheriff and save the property.
· The third meeting was about two weeks later. Mr Unal contacted Mr Cetinkaya by phone and asked him to attend the office to sign documents. No explanation was given save that the documents were required to obtain a mortgage to refinance the borrowings against the property in order to pay the sheriff. Mr Unal said it would take a week to read the documents and that Mr Cetinkaya should sign them if Mr Cetinkaya trusted Mr Unal.
· The fourth meeting was about a week later. Both Mr and Mrs Cetinkaya met with Mr Unal at the office. Mr Unal explained the property had been refinanced and transferred into a trust. The Cetinkayas would have to service the mortgage. Mr Unal did not trust them to deal with the bank directly. The Cetinkaya would need to do so through his office by making monthly mortgage payments to Mr Unal.
Parts of statement of claim not pursued
Aspects of the claims made in the Cetinkayas’ statement of claim and amended statement of claim were not pursued at trial.
Importantly, this included the allegation (at paragraph 24 of the statement of claim) that the transfer of the property is voidable pursuant to s72 of the Property Law Act 1958 (Vic) (‘PLA’). Counsel for the Cetinkayas advised at trial that this reference to s72 was a mistake; it was supposed to be a reference to s172 of the PLA.
Section 172(1) of the PLA provides:
Save as provided in this section, every alienation of property made, whether before or after the commencement of this Act, with intent to defraud creditors shall be voidable, at the instance of any person thereby prejudiced.
No claim relying on either s72 or s172 of the PLA was relied on in the trial. Instead, reliance was put on s44 of the TLA (which was first pleaded in the amended statement of claim of August 2016).
Section 44(1) of the TLA provides:
Any folio of the Register or amendment to the Register procured or made by fraud shall be void as against any person defrauded or sought to be defrauded thereby and no party or privy to the fraud shall take any benefit therefrom.
Another claim not pursued was an allegation (at paragraph 20 of the statement of claim) that ‘Mrs Cetinkaya did not sign the transfer of land notwithstanding that a signature purporting to be hers is affixed to the document’. Mrs Cetinkaya did not, at trial, seek any relief arising from that allegation, although she gave evidence she had not signed it. It was not alleged that Mr Unal had put the signature purporting to be hers on the transfer of land.
A further claim not pursued was an allegation (at paragraph 23 of the statement of claim) that Mr Cetinkaya acted under a mistake of fact in signing the transfer of land (which execution was not admitted), namely that he was signing a document other than a transfer of land, the mistake being induced by the alleged representations
Application to further amend statement of claim after evidence
The opening submissions and evidence in this case took place over nine days in August 2017.
Written submissions were then filed.
On 8 and 9 November 2017, the trial came back on for what were intended to be final oral submissions.
Part of the defence, put in both the written and oral submissions made on behalf of Mr Unal, was that there was no way the case pleaded in the amended statement of claim could succeed, as the evidence given by the Cetinkayas at trial did not prove their allegations.
After the first day of oral final submissions, Counsel for the Cetinkayas sent a proposed further amended statement of claim to Counsel for Mr Unal at 11 pm on 8 November 2017. On the morning of 9 November 2017, Counsel for the Cetinkayas said he wanted to make application for leave to amend the claim. Counsel for Mr Unal said that the amendments would be opposed to for a number of reasons. Counsel for the Cetinkayas then said he would like time to consider the matters raised by Counsel for Mr Unal, and the final form of the proposed amended statement of claim, and time to put on evidence as to why amendment should be permitted at this stage.
Orders were made on 9 November 2017 adjourning the further hearing to 30 November 2017.
The application to amend, and a supporting affidavit, was filed on 15 November 2017. Written submissions regarding the application were filed.
Oral submissions were then made on 30 November and 1 December 2017.
On 6 December 2017 the Cetinkayas filed the PFASoC, being the final version of the proposed further amended statement of claim they seek to rely on.
Mr Unal objects to them having leave to amend in accordance with the PFASoC.
Proposed further amended statement of claim
In the PFASoC the Cetinkayas now allege that there were four meetings with Mr Unal at which various representations were made. The representations are not all the same as those previously alleged. The meetings are now alleged to have been between 31 July 1996, just after Mr Cetinkaya became aware of a notice to vacate pursuant to a warrant, and September 1996.
As well as new facts, the PFASoC contains new legal pleas.
The statement of claim pleads that Mr Unal made the representations ‘fraudulently and either knowing full well that they were false and untrue or recklessly not caring whether they were true or false’. This plea focuses attention on his state of mind at the time he made the representations.
The PFASoC pleads that by making the representations Mr Unal made an undertaking to the Cetinkayas that he would place the property in a trust for their benefit and they would remain the ultimate owners of the property.
The PFASoC pleads as an alternative claim, that Mr Unal fraudulently resiled from the undertaking by asserting full legal and beneficial ownership of the property. It pleads that this was asserted by him in November 2007 but that the Cetinkayas are unable to say when he first formed the intention to resile from his alleged undertaking.
Unlike the original plea in the statement of claim, this proposed amendment in the PFASoC does not rely on establishing Mr Unal’s state of mind at the time of making the representations.
Relevant changes in the PFASoC from the amended statement of claim are double underlined in the extract below. Those marked in grey shadow are the claims which were withdrawn during the trial:
6.On or about 31 July 1996 the first plaintiff was alerted by his nephew, Tekin Cetinkaya, to the existence of a Notice to Vacate dated 27 June 1996 (the “Notice”) pursuant to a warrant
In or around June 1996 the plaintiffs were served withconferring possession of the property to the ANZ (being warrant no. CP-96-008141-3) requiring the plaintiffs to vacate the property by 2 August 1996.Particulars
The
warrantNotice is in writing a copy of which can be inspected by appointment at the offices of the solicitors for the plaintiffs. The Notice was shown to the first plaintiff at the property by Tekin Cetinkaya who translated the contents of the Notice into Turkish for the benefit of the first plaintiff,7.
In or around June 1996 the plaintiffsOn or about 31 July 1996, after receiving the Notice, the first plaintiff met with the first defendant, showed him the Notice and asked him for his help in dealing with the bank. The first defendant asked the first plaintiff to bring him $20,000 by eight o’clock in two day’s time and that if he, the first plaintiff did that, the first defendant would stop the problem. approached with a view to obtaining advice as to how the plaintiff could best refinance the mortgage over the property.Particulars
The first plaintiff met the first defendant at the first defendant’s business premises in Sydney Road, Brunswick
at Level 1, 456 Spencer Street, West Melbourneon or about 31 July 1996a date in or around June 1996(the “first meeting”).As at June 1996 the plaintiffs owed approximately $95,000 to the ANZ under the mortgage.8.At approximately eight o’clock on or about 2 August 1996, the first plaintiff in the presence of the second plaintiff and a friend, Erdal Yilmaz, attended the business premises of the first defendant and handed him $20,000 in cash at which point the first defendant telephoned a person whom he identified as a solicitor. That person told the plaintiffs to relax and that the sheriff would not be changing the locks (the “second meeting”).
9.Approximately three weeks after the second meeting the first plaintiff attended the first defendant’s business premises at the request of the first defendant (the “third meeting”)
to sign some documents and was told by the first defendant that he, the first defendant:
(a)would be establishing a trust to be called the R & B Family Trust, or words to that effect, for the benefit of the plaintiffs in order to safeguard the property from creditors; and
(b)would refinance the property on their behalf.
(the “first representations”).
10.In or around September 1996 the plaintiffs attended a meeting with the first defendant (the “fourth meeting”) in which the first defendant explained that:
(a) he would be applying for a loan on their behalf;
(b) he would establish a trust account in their names;(c)the loan would be arranged and managed by the first defendant himself as he did not trust the plaintiffs to manage their own affairs; and
(d)the plaintiffs would be required to service the loan through the first defendant by making monthly payments to the first defendant of $1,400.
(the “second representations”)
Particulars
The fourth meeting was at the first defendant’s business premises in Sydney Road, Brunswick.
11.By making the first and second representations the first defendant made an undertaking to the plaintiffs that he would place the property into a trust for the plaintiffs’ benefit and the plaintiffs would remain the ultimate owners of the property (“the undertaking”).
and that by doing so he would protect the propertytelephoned the plaintiff and asked him to During the meeting the first defendant represented to the first plaintiff as follows(a)the first defendant would arrange for the property to be transferred into a family trust so that the property would not form part of the estate of the plaintiffs for the purposes of any subsequent bankruptcy action;(b)upon the first plaintiff providing the defendant with $20,000 the defendant would refinance the property from funds obtained by the defendant;(c)the first plaintiff would service interest on the mortgage obtained by the first defendant by paying monthly amounts of $1,400 in rental per month to the first defendant.(collectively, the “representations”)ParticularsThe representations were oral and were conveyed to the first plaintiff during the meeting.12.By reason of the matters referred to in paragraphs 6 to 10 above and paragraphs 14 and 16 to 20 below the plaintiffs were led to believe by the first defendant, and did in fact believe, that the first defendant had placed the property into a trust for their benefit and refinanced the loan secured over the property on their behalf and that they remained the owners of the property.
…
26.The plaintiffs contend that:
(a)they were in a position of unequable bargaining power vis a vis the first defendant insofar as the first defendant is and was a professional person educated to a tertiary level and the plaintiffs are not;
(b)at all times until 2007 they reposed trust in the first defendant;
(c)the first defendant was the second plaintiff’s accountant and had assisted the first plaintiff to manage his affairs in the past;
(d)they have a limited understanding of legal transactions and documents and trusts in particular;
(e)the first plaintiff’s ability to comprehend written English is limited and the second plaintiff’s ability to do so is non-existent;
(f)the second plaintiff’s ability to communicate verbally in English is practically non-existent and the first plaintiff’s ability to do so is rudimentary at best;
(g)none of the documents signed the first plaintiff during the third meeting were read, translated or explained to him and that he is unable to say what he signed; and
(h)the second plaintiff signed no documents whatsoever concerning the transfer of the property in 1996.
27
22. In the premises, and by reason of the matters referred to in paragraph 26 above, the first defendant:(a)made each of the first and second representations fraudulently and either knowing full well that they were false and untrue or recklessly not caring whether they were true or false; or
(b)alternatively, fraudulently resiled from the undertaking by asserting full legal and beneficial ownership of the property.
Particulars
Save to say that:
(a)the first defendant asserted to the first plaintiff that he had full legal and beneficial ownership of the property for the first time in November 2007: and
(b)by reason of the matters referred to in paragraph 11 the first defendant encouraged the plaintiffs to believe that they owned the property after he had become registered as proprietor of the property
the plaintiffs are unable to say when the first defendant formed an intention fraudulently to resile from the undertaking
28
23. Further and in the alternative, in executing the transfer of land (which execution is not admitted) the first plaintiff acted upon a mistake as to fact, namely that he was signing a document other than a transfer of land, which mistake was induced by the representations of the first defendant.29
24. In the premises, the transfer isvoidable at the instance of the plaintiffs pursuant to section 72 of the Property Law Act 1958, or alternativelyvoid as against the plaintiffs for the purposes of section 44(1) of the Transfer of Land Act 1958.30
25. Pursuant to s 58(1) of the Bankruptcy Act 1966 as from the date of their bankruptcy the property of the plaintiffs vested in the Official Trustee in Bankruptcy.31
26. By a deed of assignment effective on 11 February 2016 the Official Trustee in Bankruptcy assigned to the plaintiffs, jointly and severally, any and all rights, title and interests in the causes of action as pleaded in the Statement of Claim dated 11 December 2008 in this proceeding.
Why the amendments in the PFASoC are not allowed
Mr Unal opposes the application to amend the statement of claim to rely on the PFASoC.
Mr Unal first says that no explanation has been given for making the amendments. The facts alleged by the Cetinkayas have kept changing, from the original statement of claim to the first set of particulars, to the second set of particulars, to what is now put in the PFASoC.
In support of the application to amend, Simon Curry, the solicitor acting for the Cetinkayas said in an affidavit dated 15 November 2017:
3. This proceeding was reinstated by order of Judicial Registrar Tran on 9 August 2016. Shortly prior to the making of the order for reinstatement, the plaintiff sought leave to amend the Statement of Claim. Leave to amend was granted by a further order of the Judicial Registrar made on 22 August 2016. The amendments made at that time were limited to reciting details relevant to the assignment of the cause of action by the Official Trustee in Bankruptcy to Mr and Mrs Cetinkaya, and also to pleading further relief pursuant to section 44(1) of the Transfer of Land Act 1958. Consequently, no detailed instructions were obtained from the plaintiffs at that time in relation to the substance of their case.
4. After I received the first defendant's request for further and better particulars of the Amended Statement of Claim and the Amended Reply and Defence to Counterclaim in this proceeding (which is dated 11 October 2016), I met with the plaintiffs, counsel and a Turkish interpreter for half a day. The plaintiffs' further and better particulars of Amended Statement of Claim and Amended Reply and Defence to Counterclaim dated 9 November 2016 were filed in this proceeding in response to that request, and after receiving the plaintiffs' instructions given at that meeting.
Although Mr Curry deposes to filing the second set of particulars after getting instructions, no explanation is given for the inconsistency between the case pleaded in the statement of claim, the facts alleged in the first set of particulars, and the facts alleged in the second set of particulars. He gives no explanation for the changes proposed in the PFASoC.
Mr Unal says that the failure to give an explanation for the amendment is fatal to the application, relying on Aon Risk Services Australia Limited v Australian National University (2009) 258 ALR 14 at 44-45.
In circumstances where an explanation given by Counsel for the Cetinkayas from the bar table that the amendments in the PFASoC were to bring the pleading into line with the evidence, I would not refuse leave to amend purely because no explanation for those changes was given on oath.
More importantly, Mr Unal submitted that the amendments should not be allowed as it would be futile.
I agree that there is no point allowing the amendments given that the evidence given did not prove the claims in the PFASoC. I discuss the evidence below.
I consider that the amendments proposed to paragraphs 8, 9, 10, 11 and 22 of the PFASoC raise different facts to those raised in the statement of claim, such that they constitute a different cause of action than was contained in the amended statement of claim. On that basis, they are not part of the cause of action assigned by the Deed of Assignment, and the Cetinkayas do not have standing to rely on them.
I discuss what was assigned in the Deed of Assignment later in these reasons.
I also accept the submissions for Mr Unal that it would be unfair to allow the amendments to paragraphs 8, 9, 10, 11 and 22 of the PFASoC as he was not given an opportunity to meet them at trial. His Counsel says that he would have called different evidence, cross-examined differently and made different tactical decisions had the case been put on the basis set out in those paragraphs. I accept this. The representations now put in the PFASoC are different again to those pleaded previously, and in particular the allegation that Mr Unal resiled from promises made at an unknown time between 1996 and 2007 is not something that was the subject of any examination during the trial. It would be unfair for Mr Unal to now have to meet a case significantly different to that pleaded.
I will not give leave to the Cetinkayas to amend the amended statement of claim to plead the matters alleged in the PFASoC.
THE EVIDENCE
The context surrounding the transfer
The evidence of the events surrounding the transfer of the property is as follows.
Between 18 September 1984 and 23 September 1994 the Cetinkayas were joint proprietors of the property with Guerrino and Maria Biasotto operating in partnership a panel beating business under the name Brunswick Motor Body Repairs (‘BMBR’).
In or around May 1994 the Cetinkayas purchased the Biasottos’ interest in the business and the property and obtained a loan from the ANZ Bank, secured by a mortgage over the property to do so.
Mr Cetinkaya said he was in financial difficulties since 1994 (later he said 1995 to 1996). He had a shoulder problem. He could not work as much as he wanted. He had difficulties in paying the instalments on the mortgage on the property. Mr Cetinkaya had tried to obtain further credit or refinance the property and could not.
By about February 1996 the Cetinkayas were in default under the ANZ mortgage.
Mr Cetinkaya approached the ANZ himself to try to reduce the repayment due on the mortgage on the property, but it would not give him credit.
The Cetinkayas did not have the money to pay the ANZ what they owed it.
The Cetinkayas wanted to keep operating their motor repair business at the property (and in fact did so, until 1998).
On or about 1 April 1996 the ANZ commenced proceedings against the Cetinkayas under the mortgage claiming $143,113.39 and possession of the property.
On 14 May 1996 the ANZ obtained default judgment against the Cetinkayas for $146,658.95 and possession of the property.
On 17 June 1996 a warrant of possession was issued.
By letter dated 27 June 1996 from the sheriff to the Cetinkayas, they were given until 10 am on 2 August 1996 to vacate the property (‘the sheriff’s notice’).
The value of the property as at 1 August 1996 was $130,000.
Mr Cetinkaya said that he only became aware of the sheriff’s notice on 31 July 1996. Mr Cetinkaya gave evidence that when he became aware of the judgment for possession, and of the demand for vacant possession of the property by 2 August 1996 he was upset and worried, and went to see his accountant, Mr Unal, to get help with what to do. Mr Unal said he went to see him earlier.
It is in the weeks or months after that that the Cetinkayas say that the various fraudulent representations to them concerning the refinancing of their property were made. As discussed, in the course of this proceeding they have claimed different things were said by Mr Unal. In broad terms they say that that Mr Unal told Mr Cetinkaya he would ‘fix the problem’ but that he would require payment of $20,000. They say that they paid him $20,000. They say they believed that the property remained theirs.
Mr Unal purchased the property ‘as trustee of the BR trust’. The Cetinkayas say those initials stand for their name, Bahar and Recep. Mr Unal says it stands for Brunswick Repairs, the name of the property he purchased, and for his son’s initials, and that it is a family trust for his family which he had established to put the property in and later to do share trading. He took out a mortgage with the Commonwealth Bank of Australia (‘CBA’).
The sale was settled in December 1996 and the Cetinkayas’ mortgage to the ANZ discharged a fortnight later, at the same time as Mr Unal became the registered proprietor of the land.
BMBR continued to operate its business from the property.
From about 1996 to early 1997, Mr and Mrs Cetinkaya began making payments of $1,400 per month to Mr Unal. They say this was to pay off the loan Mr Unal had taken out on their behalf. Mr Unal says it was because he had leased the property to them.
When they stopped using the property for the BMBR business in 1998, they arranged for new lessees whose rent was paid directly to Mr Unal. The rent payments were applied against the loan Mr Unal took out in 1996 with the CBA.
They paid for rates on the property. They also paid for some repairs.
On 13 October 1997 the Cetinkayas signed debtors’ petitions and statements of affairs.
On 14 October 1997 they were made bankrupt. The bankruptcies were discharged on 15 October 2000.
In late 2007, their son Ersoy Cetinkaya and Mr Unal had a discussion. What was said is disputed. The Cetinkayas say that Ersoy told them he attended Mr Unal’s office and was told by Mr Unal that in 1996 he had bought the property from the Cetinkayas. This is when the Cetinkayas say that they became aware that Mr Unal claimed he owned the property and they had no entitlement to it. Mr Unal disagrees. (He was the only person present to give evidence about that meeting, and I accept his evidence as discussed below. The Cetinkayas did not call their son Ersoy to give evidence.)
What Mr Unal said occurred
Mr Unal has a very different version of what occurred.
The Cetinkayas owed more money to the ANZ than they could pay, and the sheriff was about to eject them from the property in order to satisfy its mortgage. They ran their panel beating business via their company from those premises and did not want to lose the property. Mr Cetinkaya went and saw Mr Unal, who put him in touch with a solicitor Mr Milder.
Mr Milder carried out negotiations with the ANZ over some months, and told them they would need a ‘friendly buyer’ in order to avoid losing the property and having their business thrown off it. Mr Unal was that buyer (ironic though the reference to friendly buyer appears given the history of dispute that has since arisen). He bought the property at market value for $131,000. He says they signed the contract of sale and signed the transfer of land.
Mr Unal says that he agreed with Mr Cetinkaya that the Cetinkayas could purchase the property back from Mr Unal within three months of settlement if his finances improved.
Mr Unal says there was a written agreement in the latter part of 1996 between him and the Cetinkayas recording that the purchase of the property by him was conditional on him leasing it back to the Cetinkayas so they could continue to run their car repair business from it. He says a written lease was executed but he no longer has a copy. Mr Unal says Morris Milder of Bourke Law Offices acted for the Cetinkayas in the sale and lease, and prepared the relevant agreements.
Mr Unal says the Cetinkayas only paid $10,000 to him towards legal fees for Bourke Law Offices, and that he gave it to Bourke Law Offices.
In order to pay for his purchase of the property, Mr Unal says he took out a loan from the CBA in his name, as trustee of the BR Trust, a trust he set up. He says that it is a discretionary trust, and his children and his brother’s children are the beneficiaries of that trust. The trust deed cannot be found. He produced in evidence a letter requesting the CBA to produce a copy he had sent it. The bank said it could not find the deed.
The Cetinkayas paid rent pursuant to the lease, and when they left the property in 1998, they arranged for a new lessee for the property to make payments to Mr Unal. Mr Unal arranged for those payments to pay off his loan (as trustee of the BR Trust) with the CBA. He says they were required to pay rates for the property as commercial tenants, and he was not aware they paid for repairs on the property after he purchased it.
Mr Cetinkaya offered to pay $140,000 for the property many years later, and would have gone to $160,000, but by then Mr Unal wanted the increased market price for the property.
Mr Unal says that the contract of sale, an undated draft lease, an undated supplementary agreement, the transfer of land, and invoices for the legal fees of Bourke Law Offices are contemporaneous documents evidencing the transaction. He also relies on receipts for the monthly payments of $1,400 made by the Cetinkayas which are labelled ‘rent’, as being consistent with what he says happened. He says many documents have not been able to be found because the events occurred more than 20 years ago and records could not be located.
He relies on the oral evidence of Mr Morris Milder, solicitor, Ms Jan Farrell, conveyancing clerk to Mr Milder, Ms Rosanna Zencheddu, administrative clerk to Mr Milder, Mr Trevor Joyce, handwriting expert, and his brother Mr Mehmet Unal.
The evidence given by the Cetinkayas
The Cetinkayas’ claims depend on them proving that the alleged representations were said to them by Mr Unal.
After evidence had been given in the case, Counsel for the Cetinkayas filed written submissions on 31 October 2017. He recorded the evidence relied on for them so far as the representations are concerned. Counsel confirmed, when the matter came back on for hearing, that it is all the evidence relied on in relation to the misrepresentations. I have put the evidence relied on as to what Mr Unal is alleged to have said in italics.
6. The plaintiffs were born in Turkey. The first plaintiff’s ability to communicate in and comprehend English is limited. He relied on others to translate written documents including his nephew, Tekin. The second plaintiff’s command of English is even more limited, if non-existent.
7. The first defendant operated a business from premises owned jointly by the plaintiffs at 75 Colebrook Street, Brunswick, from 1994, having in that year bought out the interests of Mr and Mrs Biasotto in the business and property with the assistance of the defendant.
8. The plaintiffs were experiencing financial difficulties in 1996. They had taken out a mortgage with the ANZ to buy out their partners and were now in default. The first plaintiff says that six months prior to becoming aware of a sheriff’s notice on about 31 July 1996, he approached the defendant who advised him not pay the instalments on the loan until he obtained further credit. The defendant did not recall the conversation but did not deny it.
9. On 31 July 1996 the first defendant’s nephew, Tekin Cetinkaya, showed him the sheriff’s notice sent to the premises, which required the plaintiffs to vacate the premises by 2 August 1996. On the same day the first plaintiff approached the defendant and asked for help in dealing with the bank. The defendant asked the first defendant to bring him $20,000 by eight o’clock in two days’ time and said if he did that “we’ll stop the problem.”
10. The next morning the first plaintiff spoke to a friend, Erdal Yilmaz, at the property. Yilmaz offered to help raise the $20,000. The plaintiffs had $6,500 in cash of their own. The first plaintiff handed Yilmaz that amount telling him not to bring the money back if he couldn’t raise the balance.
11. Yilmaz gave evidence that he took the $6,500 and approached a friend, Olcay Togrul, who operated a Caltex Petrol Station in Broadmeadows for $10,000. The remaining $3,500 Yilmaz raised from his own funds. Yilmaz placed the $20,000 in an envelope. Yilmaz returned to the property the next day at about 6.30 pm with the money.
12. The first plaintiff and Yilmaz counted the money in the presence of the second plaintiff. Both Yilmaz and the first plaintiff gave evidence that the sum raised by Yilmaz, being $13,500, was treated as a payment for Yilmaz’s use of the plaintiffs’ property to repair cars for Yilmaz’s own business, and the first plaintiff’s work on them.
13. The plaintiffs and Yilmaz then attended the defendant’s office in Sydney Road, Brunswick, where Yilmaz handed the money to the defendant by placing it on the table in his office. The defendant telephoned a person who identified himself as a solicitor using a speaker phone and told the plaintiffs to relax and not to worry as the sheriff would not be changing the locks.
14. About three weeks later the first plaintiff attended the defendant’s offices by himself to sign some documents. The defendant told the first plaintiff that he would be “establishing a trust account [called the] R & B Family Trust.” He signed the documents, but “[didn’t] know what [he] was signing.”
15. The first plaintiff gave evidence that he met the defendant about a month later in the company of his wife, the second plaintiff. The defendant informed the plaintiffs that he would be establishing a “trust account” and they would be required to make the instalments. The second plaintiff recalled attending a second meeting with the defendant in which the first plaintiff asked for the papers showing the credit the defendant had applied for. The defendant refused saying that he didn’t trust them and that they would bring the monthly repayments of $1,400 to him so that he could make the repayments himself.
16. The first plaintiff remained in possession of the premises in 1997 and commenced making monthly payments of $1,400 to the defendant. The plaintiffs considered that post 1996 the property was owned by them.
[Transcript references omitted]
ONUS OF PROOF
In considering whether the Cetinkayas have proven their case, it must be borne in mind that Mr and Mrs Cetinkaya have the onus of proof on all elements of their cause of action.
In order for them to succeed, they must satisfy me that their case has been proved on the balance of probabilities: s140 Evidence Act 2008. In deciding whether I am so satisfied, I need to take into account the nature of the cause of action, the nature of the subject matter of the proceeding, and the gravity of the matters alleged.
Section 140 enshrines the principle stated by Dixon J in Briginshaw v Briginshaw(1938) 60 CLR 336, 361-362
The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences. …
When the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality.
‘Actual persuasion’ in Briginshaw is understood as equivalent to the state of ‘satisfaction’, as the word is used in s140: see Lam v Lam & Ors [2016] VSC 298 at [15].
In Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 450, the High Court observed that statements to the effect that clear, cogent, or strict proof is necessary where fraud is to be found should:
… be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct. [Citation omitted]
Much of the evidence in this case was of what was said to be people’s memories of conversations that occurred up to 21 years earlier.
As McLelland CJ in Equity observed in Watson v Foxman (1995) 49 NSWLR 315 at 319:
… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the process of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
In the recent English High Court of Justice decision of Blue v Ashley (No 2) [2017] EWHC 1928 (Comm), Leggatt J said at [67]:
… I expressed the opinion in the Gestmin case (at para 22) that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.
In order for the Cetinkayas to prove their case, the Court needs to be satisfied of it to the Briginshaw standard. Inexact proofs, indefinite testimony and indirect references will not do. In reaching my finding, I need to feel an actual persuasion that the facts asserted have occurred.
Given the length of time since the events complained of, I must put primary emphasis on the objective facts surrounding what occurred, including the contemporaneous documents, and the inherent commercial probabilities which led to the transfer of the property: see Bullhead Pty Ltd v Brickmakers Place & Ors [2017] VSC 206 per Sifris J:
Where there is conflicting evidence, the court will place ‘primary emphasis on the objective factual surrounding material and the inherent commercial probabilities’ together with documentation tendered in evidence.’
THE WITNESSES
Mr Cetinkaya
Mr Cetinkaya gave evidence over four days. He was educated until the age of 11 in Turkey and has been in Australia since. He answered his questions through an interpreter in the main, although occasionally he chose to answer a question in English and then say more in Turkish. Much of his evidence was very hard to follow. What was clear is that he has very little recollection of the critical events that occurred 20 years ago. Each time he gave evidence of what had happened at a certain time, his evidence changed a little.
Mr Cetinkaya gave answers as confidently where he later admitted he had been guessing as to what had occurred, as he did when he maintained he actually remembered. Where he gave contradictory answers, his demeanour was the same on each occasion. I reminded him on a number of occasions that he must tell the Court what he remembered and make clear when he did not remember, but he continued to give answers that on some occasions he later agreed were just guessing.
By way of examples of the difficulties with Mr Cetinkaya’s evidence, I note the following:
· He maintained he did not sign the transfer of land to Mr Unal. This was in circumstances where he also said he had no idea what documents he signed at the critical meeting where he signed lots of documents in Mr Unal’s office. It was not part of his pleaded case that he did not sign that document. I am satisfied from the evidence of Ms Farrell that he did sign it in front of her.
· He gave details of what was said at specific meetings with Mr Unal which differed at different times, and differed again from the pleadings that had been filed on his behalf in the past.
· Every now and then it was quite clear he actually remembered something clearly. On those occasions he became animated and alert in his demeanour and said, for example, ‘I do remember this!’ in relation to how he had bought out his former partner’s interest in the car repair business. This contrasted to the non-emotional and recitative way the rest of his evidence was given.
Submissions were made by his Counsel to the effect that Mr Cetinkaya is an unsophisticated businessman, who did not understand much English and relied heavily on external advisers, including Mr Unal.
However, Mr Cetinkaya operated a panel beating business from the property for 12 years, from 1984 to 1998, where he dealt with clients. Mr and Mrs Cetinkaya owned three other investment properties and they entered into mortgages with the CBA for the other properties without assistance. Mr and Mrs Cetinkaya also entered into a mortgage for the purchase of the property without assistance. It is apparent from the statements of affairs prepared for them by Mr Madafferi, and from Mr Cetinkaya’s evidence about that, that Mr Cetinkaya was able to give detailed instructions as to his financial affairs in English to him. I also accept the evidence of Mr Milder that he was able to understand Mr Cetinkaya’s instructions given to him in English for the preparation of the documents he prepared for him in 1996.
The evidence established that Mr Cetinkaya understands what a mortgage means and the consequences of default.
Mr Cetinkaya accepted his memory was ‘60:40’.
Mr Cetinkaya’s overall credibility is also undermined due to the significant shift in his evidence on critical issues from the pleaded case.
Mrs Cetinkaya
Mrs Cetinkaya was born in Turkey. She migrated to Australia in 1977. She finished Year 5, having had five years of schooling. She gave evidence that she does not have much ability to speak English and cannot read it. At the time the most relevant matters occurred in 1996, she was working at night in a factory. Her husband handles her business affairs, according to her evidence.
Mrs Cetinkaya gave evidence as to which of the relevant documents she did and did not remember signing. She gave evidence of what she remembers, or says she remembers, of the events that led to the transfer of the property from her and Mr Cetinkaya to Mr Unal. Her evidence was very confusing to follow. It was contradictory. She said with as much certainty that she had not signed documents, as she later said that she had signed them. She had set phrases that she repeated again and again, such as ‘Commonwealth Bank I did sign’, suggesting that she knew that she needed to say that she had signed a document with that bank and needed to explain it, but that otherwise she needed to deny signing everything.
Mrs Cetinkaya often guessed answers to questions and was warned about it. She gave confusing answers to questions and changed her evidence when challenged. For example, she first gave evidence that she was at the property when Tekin Cetinkaya explained about the letter from the sheriff to both ‘my husband and I at the same time’. Later, she said that Tekin did not tell her, he talked to her husband. She said it was her husband who told her about the letter after he had already been to see Mr Unal. A further example is that she said she did not see Mr Unal again in 1996 after the meeting where he was given $20,000. The next day in cross-examination she said that she did see Mr Unal again in 1996: she saw Mr Unal three weeks after that meeting, and gave evidence of what he said then.
In evidence the Cetinkayas said that Mrs Cetinkaya was present at the meeting when $20,000 was supposedly given to Mr Unal. The statement of claim specifically stated she was not.
Save where her evidence is supported by other evidence, I do not accept it.
Mr Erdal Yilmaz
Erdal Yilmaz was a friend of Mr Cetinkaya. Mr Cetinkaya knew him through Mr Yilmaz’s father-in-law and had known him for 30 years. Both of them had worked as panel beaters. Mr Yilmaz gave evidence of having closed down his own panel beating shop in 1996 and brought the cars that needed repairs to Mr Cetinkaya’s premises. He gave evidence that he had found $13,500 that was required to be given to Mr Unal and he was with Mr Cetinkaya at a meeting where he saw $20,000 handed over to Mr Unal.
In giving evidence he had a stock set of phrases that he repeated, which were almost identical to those that had been used by Mrs Cetinkaya in giving evidence the day before in relation to how the money was counted. He was definite in saying that he remembered in great detail how money had been placed on the table at Mr Unal’s office 20 years earlier. This included a detail that Mrs Cetinkaya had only mentioned for the first time in the course of re-examination on the day before.
His evidence about how he was repaid the money he said that he lent to Mr Cetinkaya was contradictory and not credible. I am not satisfied on the balance of probabilities that he lent Mr Cetinkaya $13,500, or that he attended the meeting with Mr Unal and heard the conversation he gave evidence about.
Ms Zencheddu
Ms Zencheddu was the legal secretary of Mr Milder. She gave evidence of having typed up documents and so on at the Bourke Law Offices when Mr Milder had worked there. She said she did not remember meeting Mr and Mrs Cetinkaya. I found her evidence to be careful and honest. Her credit was not put in issue.
Mr Metin Unal
Mr Unal gave evidence of his dealings with Mr and Mrs Cetinkaya from 1994 and ongoing. He was in the witness box for nearly two days. My overall impression of him was that he was an honest witness. He changed his evidence on some points and was occasionally a little casual in agreeing to things put to him by Counsel that he later clarified he did not specifically remember. However, he did not pretend to remember all details relating to events twenty years or more ago.
He made some contradictory statements in a police report in 2007 compared to his evidence in 2017. Mr Unal’s credit was attacked on the basis of the police report. He accepted that the matters in the report were what he told the police at the time but he explained that not all matters were told to the police and that he gave the draft statement in very trying circumstances. Mr Unal’s credit was also attacked on the basis of unrelated criminal charges. This attack goes nowhere as the charges were withdrawn with costs.
I accept, however, that since he made those statements he has reviewed the documents that he has and that his evidence on both occasions was as he then remembered matters.
Unlike the Cetinkayas, Mr Unal’s evidence was consistent with his pleaded case.
Mr Mehmet Unal
Mr Mehmet Unal is the brother of Mr Metin Unal.
Mehmet Unal gave evidence of two important events going to the credibility of the Cetinkayas’ case. The first was of a conversation he heard between his brother and Mrs Cetinkaya in 2001 and a conversation he heard between his brother and Ersoy Cetinkaya in 2007. Mehmet Unal was not challenged on that evidence and his credit was not put in any serious issue.
He also gave evidence in relation to his recollection of the purchase of the property by his brother and of various tax returns or draft tax returns that had been produced for the BR Trust.
I accept his evidence.
Mr Madafferi
Mr Mark Madafferi is a solicitor who, in 1997, operated as Chiodo Madafferi. He gave evidence of having had matters referred to him from various accountants. He gave evidence as to circumstances in which two statements of affairs in relation to a bankruptcy application were prepared by him and signed by Mr Cetinkaya and Mrs Cetinkaya. He was careful to make clear what he did not remember, as well as what he did. Where he thought he remembered something, he referred to having a sneaking suspicion of something without insisting that it must be so or endeavouring to give the impression he remembered something. I accept his evidence.
Mr Madafferi was candid in conceding that he had no independent recollection of meeting the Cetinkayas. He gave evidence on the basis of his usual practice. He said that it was Mr John Cincotta who referred the Cetinkayas to him and that he did not know Mr Unal in 1997. He was not seriously challenged on these issues.
Mr Milder
Mr Morris Milder was the solicitor at Bourke Law Offices involved in the preparation of various documents relied on by Mr Unal. He said that he acted for Mr and Mrs Cetinkaya in 1996 in their arrangements with Mr Unal. He said he met them a number of times, and discussed with them the fact that if they did not find a friendly buyer for the property they would lose it. He said he also prepared a trust deed for Mr Unal. He was older and very hard of hearing. Adjustments were made in the Court so that questioners were able to be closer to him. Even so, it was difficult on occasion to be sure that he had heard what was being asked. He spoke slowly and definitely. He told a story and it was quite clear he had come along ready to tell every element of the story. He needed very little prompting.
He conceded that he had looked at relevant documents over recent months and that some of what he gave evidence about was based on his memory as a result of seeing those documents. He was very definite that he had not spoken to Mr Unal about the case since June 2012 when he was asked to give a witness statement. He was precise, mentioning a further brief discussion two months ago outside the Counsel’s chambers.
Counsel for Mr Unal says that Mr Milder is a disinterested witness and has no ‘barrow to push’ or, as Mr Milder put it, he has ‘no dog in this fight’. I accept that Mr Milder was giving generally truthful answers. Critically, it was never put to Mr Milder that his evidence was untruthful.
Ms Farrell
Ms Jan Farrell was a law clerk or conveyancing clerk at Bourke Law Offices in the relevant period. I found her honest and straightforward in giving her evidence. She said where she could not recall matters. She was very clear on the salient point, which was if she said she witnessed a signature then she ‘literally did so’. It was her evidence that her unwavering practice was to be physically present when witnessing a client’s signature. This was corroborated by Mr Milder who stated that ‘it was a hanging offence if someone didn’t adhere to it’. It was never put to Ms Farrell that she did not witness the signatures of Mr and Mrs Cetinkaya to the transfer of land.
I accept that she witnessed both Mr and Mrs Cetinkaya sign the transfer of land.
Mr Ganas and Mr Joyce
Mr John Ganas gave evidence on behalf of Mr and Mrs Cetinkaya. He found that it was more probable than not that Mr Cetinkaya’s signatures were his. He said, so far as Mrs Cetinkaya’s signatures were concerned, they were inconclusive.
Mr Trevor Joyce gave evidence for Mr Unal. He said it was highly probable that Mr Cetinkaya wrote the queried signatures. He also said there may be more than one writer in relation to various signatures attributed to Mrs Cetinkaya.
I accept the evidence of both the experts.
FINDINGS ON CLAIMS
I am not satisfied, or persuaded of, the matters alleged by the Cetinkayas, in the statement of claim, the amended statement of claim or the PFASoC.
As outline above, there are significant inconsistencies as to what was supposedly said by Mr Unal to Mr Cetinkaya or Mrs Cetinkaya, and between the pleaded case and the two sets of particulars filed for the Cetinkayas. The evidence given by Mr and Mrs Cetinkaya was different again.
I have considered the conflicting evidence given in this matter.
There are no contemporaneous documents supporting the Cetinkayas’ allegations of fraud.
The Cetinkayas have sought to prove their case on the critical allegations on the oral evidence of the Cetinkayas and their friend of long standing, Erdal Yilmaz. However, I am not satisfied to the necessary standard that, after all this time, they remember what was said at the various meetings they gave evidence about.
The various allegations of fraud were never put squarely to Mr Unal. An allegation of fraud should be clearly and distinctly pleaded and put: Permanent Trustee Australia Ltd v FAI General Insurance Company Ltd (in liq) [2003] HCA 25 [38].
Nothing emerged in the evidence explaining why Mr Unal would embark on the elaborate fraud alleged. It was never put to Mr Unal any motivating factor that drove him to commit the fraud.
It was not credible that at no stage after entering into the arrangement they alleged did the Cetinkayas make any serious attempt to find out how much Mr Unal had borrowed on their behalf or how much they needed to pay him back. Mrs Cetinkayas’ evidence of asking Mr Unal, and not being answered, about once a year when she went to get her tax return done by Mr Mehmet Unal was not convincing. Nor was Mr Cetinkayas evidence that he offered to pay $140,000 for the property without having any idea how much he still owed to Mr Unal.
It was never put to Mr Milder that he was a party to the alleged fraud. I accept his evidence of the meetings he had with the Cetinkayas and the work he did for them.
The allegations of fraud, as pleaded or otherwise, are not proven. I am not satisfied that the representations alleged were said by Mr Unal.
I am not satisfied that the Cetinkayas paid Mr Unal $20,000. I am satisfied that they paid $10,000 to Mr Milder in advance of him carrying out legal work for them.
I consider that the commercial reality of what occurred is likely to be broadly in line with the evidence given for Mr Unal.
Counsel for the Cetinkayas submitted that there are many difficulties with the evidence given by and for Mr Unal. I agree that there are unsatisfactory elements to some of this evidence. Some of that is explained by the length of time since events occurred.
However, it is not the Court’s role in this case to investigate all that happened in the transactions that took place and make findings about that. The Court needs to decide if the Cetinkayas have proven their case to the requisite standard. They have not.
As the Cetinkayas have not proven their case, I will give judgment for Mr Unal.
I will deal briefly with the issues of whether the Cetinkayas had standing to bring their claims, and whether their claims were statute barred, since some time was spent on them in trial.
DO THE CETINKAYAS HAVE STANDING?
Relevantly, the Deed of Assignment states:
CONTEXT:
This Deed is made in the following context:
A. By letter dated 20 June 2013, the Assignees through their solicitor wrote to the Assignor and requested the assignment of the Chose in Action to them.
B. By Originating Application dated 26 July 2013, the Assignees commenced proceedings in the Federal Circuit Court of Australia bearing number MLG1165/2013 against the Assignor (the Claim), seeking various orders under s. 178 of the Bankruptcy Act 1966 (Cth) including, in particular that the Assignor assign the Chose in Action to them.
C. By Originating Application filed in the Federal Circuit Court of Australia on 8 November 2013, being proceeding number MLG 1946/2013, the defendant to the County Court Proceeding numbered Cl-08-05385, and Applicant in the application, Mr Metin Unal (Mr Unal) sought to review certain decisions of the Assignor, the First Respondent in the application, pursuant to s. 178 of the Bankruptcy Act 1966 (Cth) and sought orders restraining the Assignor from assigning the Chose in Action to the Assignees, the Second and Third Respondents in the application, together with other relief:
D. By Originating Application filed in the Federal Circuit Court of Australia on 20 December 2013, being proceeding number MLG 2307/2013, the Assignor as Applicant, sought directions from the Court under s. 134(4) of the Bankruptcy Act 1966 (Cth) as to whether it:
(a)was empowered to assign the causes of action referred to in County Court proceeding number Cl-08-05385 ('Causes of Action') to a third party;
(b)would be justified in assigning the Causes of Action to a third party;
(c)would be justified in assigning the Causes of Action to the proposed plaintiffs or the proposed defendant to the Causes of Action; and
(d)would be justified in assigning the Causes of Action to Recep Cetinkaya and Bahar Cetinkaya on the terms proposed by them in application MLG 1165/13 dated 26 July 2013.
E. The three applications were heard together by her Honour Judge Whelan on 6 March 2014 and judgment was delivered on 1 July 2014.
F. In MLG 1165/2013 Whelan J ordered that:
“1.The First Respondent assign to the First and Second Applicants all its interest in the causes of action as pleaded in the Statement of Claim dated 11 December 2008 in the County Court proceeding number Cl-08-05385 … in consideration of the following:
(a)In the event that the First and Second Applicants are successful in pursuing cause(s) of action similar to the County Court proceeding numbered Cl-08-05385, after payment/reimbursement of legal costs incurred by the First and Second Applicants in that matter, the First and Second Applicants pay to the First Respondent out of the proceeds or fruits of the cause(s) of action similar to the County Court proceeding number Cl-08-05385:
(i)Such sum as is required to pay in full all claims proved in the bankruptcy up to the limit of the recovery, net of the First and Second Applicants' legal costs; and
(ii)The First Respondent's reasonable costs reasonably incurred in the administration of the bankrupt estates.”
Clause 1.1 provides that ‘Chose in Action’ means:
all the Assignor’s interest in the causes of action as pleaded in the Statement of Claim dated 11 December 2008 in [this] County Court proceeding…
Clause 1.3(a) provides:
1.3 Guidance on construction of Deed
(a)This Deed records the entire agreement between the parties in relation to its subject matter.
Clause 2.1.1 provides, relevantly:
2.1 Assignment of Chose in Action
2.1.1The Assignor hereby transfers, conveys and assigns to the Assignees, jointly and severally, any and all rights, title and interest in the Chose in Action and, subject to this clause 2.1, the proceeds of any such action, in consideration of the following:
(a)In the event that the Assignees are successful in pursuing the Chose in Action, after payment/reimbursement of legal costs incurred by them in that matter they will, within the timeframe described in clause 2.1.3, pay to the Assignor out of the proceeds or fruits of the Chose in Action:
(i)such sum as is required to pay in full all claims proved in the bankrupt estates of Recep Cetinkaya and Bahar Cetinkaya … up to the limit of the recovery; and
(ii)the Assignor's reasonable remuneration and expenses reasonably incurred in the administration of the bankrupt estates.
.
Mr Unal submits that the Deed of Assignment assigned only the rights, title and interests in the causes of action pleaded in the statement of claim at the time the Deed was entered into.
He says that this did not include a cause of action relying on s44 of the TLA, or the cause of action contained in the PFASoC, and so they do not have standing to bring those claims.
Mr Unal submits that unless the Cetinkayas can establish that Mr Unal became the registered proprietor by fraud, the principle of indefeasibility will prevail. He says that s44 of the TLA is an essential element of the cause of action they rely on, which under Rule 13.02(1)(b) of the County Court Civil Procedure Rules 2008 (‘the County Court Rules’) should have been specifically pleaded. He submits that the attempt to now rely on s 44(1) of the TLA raises a new cause of action.
The Cetinkayas say that the Deed of Assignment should be construed such that the s44 TLA claim, and the amendments in the PFASoC, were assigned, and they do have standing. They say that, having regard to the whole of the Deed, and particularly clause F of the Recital, the definition of ‘Chose in Action’ does not limit what was assigned to what was actually pleaded in what they call ‘the first iteration’ of the statement of claim.
The Deed is subject to the canons of constructions that apply to all commercial contracts. Its meaning is to be ascertained objectively having regard to the language of the instrument, the surrounding circumstances and the commercial purposes.
I consider that the language of the Deed is clear as to what is assigned by it: it is only the rights, title and interest of the Trustee in the causes of action as pleaded in the statement of claim (and the proceeds of any such action).
By Clause 2.1, the Trustee assigned any and all rights, title and interest in the Chose in Action (and the proceeds of any such action) to the Cetinkayas.
The ‘Chose in Action’ is defined to mean all the Trustee’s interest in the causes of action as pleaded in the statement of claim.
Whilst paragraph F of the Recital of the Deed sets out the terms of an order of Judge Whelan enabling the assignment in consideration of the Cetinkayas paying money to the Trustee if they are successful ‘in pursuing causes of action similar to [this] County Court proceeding’, the specific terms of what was enabled by the order were not followed in the Deed.
It would have been a simple matter to replicate the wording of the terms of Judge Whelan’s order in clause F of the Recital in defining a Chose in Action if the parties had wanted to widen what was assigned to include causes of action similar to that pleaded in the statement of claim. This was not done.
The surrounding circumstances of the Deed were that the Cetinkayas wanted to pursue the claims they had commenced in this Court but did not have standing to pursue, and the Trustee was willing to assign its rights to pursue those claims to the Cetinkayas.
The commercial purpose of the Deed was to enable the Cetinkayas to pursue the causes of action pleaded in the statement of claim, and if successful, to pay some of the proceeds to the Trustee.
It is the Trustee’s interest in the causes of action as pleaded in the statement of claim that was assigned. So the issue is: what is a cause of action?
The Cetinkayas submit that a cause of action is the facts that give an entitlement to a legal remedy.
Mr Unal says that it includes the legal remedy sought by reference to s44 of the TLA.
The cause of action is the facts giving rise to the action. The action may be in contract, or tort, or on some other legal basis. The facts giving rise to such action are the cause of the action.
As stated in Letang v Cooper [1964] 2 All ER 929 at 934-935 by Diplock LJ a cause of action is:
simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person.
…
…it is used as a convenient and succinct description of a particular category of factual situation which entitles one person to obtain from the court a remedy against another person.
A party who has pleaded material facts is at trial free to present in argument whatever legal consequences are appropriate to the facts as found by the court: Drane v Evangelou [1978] 2 All ER 437. If a party does allege the legal result of the fact he is not precluded at trial from seeking to persuade the court to draw different legal consequences from those pleaded: Re Vandervell’s Trusts, (No. 2); White v Vandervell Trustees Ltd [1974] Ch 269; Hancock Family Memorial Foundation v Belle Rosa Holdings Pty Ltd (1992) 8 WAR 435. The party can do that even if he or she has stated the legal consequences inaccurately or incompletely: Karsales (Harrow) Ltd v Wallis [1956] 2 All ER 866 at 869.
If a claim or defence rests on a statute the facts necessary to bring the case within the statute must be pleaded under Rule 13.02(1)(b) of the County Court Rules. However, if those facts are pleaded, any failure to identify the specific provision of the Act relied on is capable of being cured by amendment: see Agtrack (NT) Pty Ltd (t/as Spring Air) v Hatfield [2005] HCA 38 at [40].
The Trustee did not assign a legal remedy. He assigned the rights, title and interest in the facts pleaded in the statement of claim.
The statement of claim sets out the facts relied on by the Cetinkayas in paragraphs 1-23. Those are the same facts relied on in the amended statement of claim (together with the necessary plea of the assignment of the Trustee’s right, title and interest in the causes of action as pleaded in the statement of claim, in paragraphs 10, 25 and 26 of the amended statement of claim).
Although an additional legal remedy is pleaded in the amended statement of claim (that the transfer is void as against the Cetinkayas for the purposes of s44 of the TLA), that remedy relies on the same facts as already pleaded in the statement of claim.
The facts underlying the s44 claim in the amended statement of claim were assigned. The Cetinkayas have standing to rely on the s44 claim.
However, the new claims proposed by the PFASoC assert a new cause of action in that they contain different facts to those pleaded in the statement of claim. They include different representations made at different times. The Cetinkayas do not have standing to raise that cause of action as it was not assigned to them.
ARE CLAIMS STATUTE BARRED?
The transfer of the property from the Cetinkayas to Mr Unal took place on 31 October 1996.
Mr and Mrs Cetinkaya commenced this proceeding in 2008.
The Cetinkayas’ claims evolved from those first pleaded in 2008, to including the s44 TLA claim in 2016, to potentially including the further claims included in the proposed further amended statement of claim.
Mr Unal says that the Cetinkayas’ claims are statute barred.
Mr Unal first says that the Cetinkayas’ claim against him arose when the transfer of land was made in 1996. If that is so, then their claim was statute barred at the time this proceeding was issued in 2008, having been commenced 12 years after their cause of action accrued. He argues that under s5 of the Limitations of Actions Act 1958 (Vic) (‘LAA’), proceedings must be brought within six years.
It is not clear which aspect of s5 Mr Unal says the claim arises under. The relevant parts of the LAA appear to be:
5 Contracts and torts
(1)The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—
(a)Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law) or actions founded on tort including actions for damages for breach of a statutory duty;
…
(8)This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any provision thereof may be applied by the Court by analogy in like manner as the enactment corresponding to that provision was applied before the repeal of that enactment by the Limitation of Actions Act 1955.
The claims made are not founded on simple contract or tort.
In any event, the Cetinkayas say that they did not discover the fraud they complain of until 2007 and so time starts running at that stage, rather than at the time of the transfer of the property. They rely on s27 of the LAA which provides:
27. Where, in the case of any action for which a period of limitation is prescribed by this Act –
(a) the action is based upon the fraud of the defendant…;
the period of limitation shall not begin to run until the plaintiff has discovered the fraud… or could with reasonable diligence have discovered it.
For the analysis that follows, I will proceed on the basis that, contrary to my findings, there was a fraud against the Cetinkayas which they discovered in 2007.
On that basis, I agree with the submissions for the Cetinkayas that s27 of the LAA has the effect that the period of limitation for the actions they seek to bring began to run in 2007, if the relevant action is one ‘for which a period of limitation is prescribed by this Act’.
Section 27 operates to postpone the commencement of the period of limitation in cases of fraud, concealment by fraud or mistake: see Levy v Watt (2014) 308 ALR 748 per Santamaria JA at [38]. An allegation that a cause of action is statute barred is raised by way of defence. If the Court is satisfied of the matters in s27, then that defence will fail because the claim will not be statute barred.
If on the proper analysis the action is not one for which a period of limitation is prescribed in the LAA in the first place, then s27 may have no role to play in any event. None of the causes of the action (including amendments) will be statute barred as no limitation period will run.
In Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5th Edition, LexisNexis Butterworths, 2015) at [36-065], the learned authors comment in relation to limitation periods:
there are few statutory provisions directly affecting equitable proceedings. To take but some examples, there is no provision imposing a time limit on proceedings to rescind transactions induced by undue influence or innocent misrepresentation, no time within which proceedings for rectification may be brought, and no limitation on the institution of proceedings for specific restitution of valuable chattels.
Although the precise basis on which the claim is made is pleaded in a confusing fashion, the statement of claim seeks amongst other things to rescind the transaction made by Mr Unal’s alleged misrepresentations.
Mr Unal says that the s44 TLA claim in the amended statement of claim is statute barred, as it was not added until 2016. However, the Cetinkayas say that under s8 of the LAA an action could be brought up to 15 years from the time they discovered the fraud in 2007, and so they were still within time when they issued in 2008.
Section 8 provides:
No action shall be brought by any person to recover any land after the expiration of 15 years from the date on which the right of action accrued to him ….
The Cetinkayas say that their claim, though based on fraud, is for the recovery of land. They rely on Bonifacio v NSW Trustee and Guardian [2015] NSWSC 124.
Mr Unal contends that Bonifacio is distinguishable, having been decided in relation to a different statute in NSW. He submits that:
…the plaintiff in an action for recovery of land must be a person who is out of possession, but who claims to have a right to the immediate possession of the land: Bullen & Leake, Precedents of Pleadings, 12th ed. P 67. The plaintiffs do not at present have the right to immediate possession. At common law a person out of possession must recover the land by the strength of his own title, and not by reason of any defect in the title of the person in possession: Martin v Strachan (1744) 5 Term Rep 107n, and see Lyell v Kennedy (1882) 20 Ch.D 484, at 488, 490. At the moment, Metin Unal has an indefeasible title which acts in rem, albeit the existence of the plaintiffs' claim that he has obtained it by fraud. Unless and until his paper title is defeated, no other person has a better title to possession. He says the causes of action on which the Cetinkayas rely do not include a cause of action for recovery of land per se. Section 8 together with s 18 have been held to embrace the doctrine of adverse possession, a claim not made in this proceeding: See JNM Pty Ltd v Adelaide Banner [2001] VSCA 428 [3].
I do not consider that s8 is limited to claims of adverse possession, although it includes them. The Cetinkayas’ claim is to recover land in a sense encompassed by s8 of the LAA.
The amendment to the statement of claim is not statute barred.
The proposed claims in the PFASoC are not statute barred.
CONCLUSION
The Cetinkayas’ case depended on them satisfying the Court that Mr Unal made representations as pleaded by them. I am not satisfied that the representations were made.
I will give judgment for Mr Unal.
It follows that the Cetinkayas are not entitled to maintain their caveat over the property.
I will make an order that:
The Registrar of Titles pursuant to section 90(3) of the Transfer of Land Act 1958 remove the caveat lodged in dealing number AG079702Y from the land in Volume 7122 Folio 379.
I direct the parties to consider any further orders that should be made as a result of these reasons, and provide me with proposed consent orders, or if the parties cannot agree, separate proposed orders and submissions as to why they should be made, by 4pm on 1 May 2018. If any party requires it, those further matter will be listed for hearing.
---
Certificate
I certify that these 45 pages are a true copy of the reasons for decision of her Honour Judge Marks, delivered on 24 April 2018.
Dated: 24 April 2018
Samantha Marinic
Associate to Her Honour Judge Marks
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