Faraday v Rappaport

[2007] NSWSC 34

CITATION:	Steven Faraday v Thomas Gabor Rappaport & 2 Ors;Steven Faraday v Thomas Gabor Rappaport ;Rosalia Rappaport by her tutor Thomas Gabor Rappaport v Steven Faraday [2007] NSWSC 34
HEARING DATE(S):	7-11/08/06, 14-17/08/06, 21/02/07 and written submissions.
JUDGMENT DATE :	7 March 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	White J
DECISION:	See paragraphs 291-294 of judgment.
CATCHWORDS:	CONTRACTS – Plaintiff in proceedings no. 2649/02 claimed beneficial interest in properties in New South Wales and Queensland held by third defendant on trust for first and second defendants – Where plaintiff paid moneys to first defendant for purposes of property investment but did not reach agreement with defendant that plaintiff should have any defined beneficial interest in properties – Where no compliance with ss 23C or 54A Conveyancing Act 1991 (NSW) or ss 11 or 59 Property Law Act 1974 (Qld) – Where no evidence of acts of part performance – Khoury v Khouri [2006] NSWCA 184 applied – Held that plaintiff not entitled to beneficial interest in properties - CONTRACTS – Agreements not intended to create legal relations – Domestic, social and other agreements – Plaintiff in proceedings no. 3668/03 claimed that defendant agreed to leave property to plaintiff upon defendant’s death in exchange for moneys contributing towards purchase price of property – Whether plaintiff and defendant intended to create legal relations – Held that plaintiff contributed moneys to defendant as gift - LIMITATION OF ACTIONS – Plaintiff in proceedings no. 3668/03 claimed that defendant failed upon demand to return moneys and goods given to defendant for safekeeping – Plaintiff’s claim in detinue – Plaintiff’s claim statute-barred by virtue of ss 14 and 21 Limitation Act 1969 (NSW) – No questions of principle.
LEGISLATION CITED:	Limitation Act 1969 (NSW) Conveyancing Act 1919 (NSW) Evidence Act 1995 (NSW) Property Law Act 1974 (Qld) Civil Procedure Act 2005 (NSW)
CASES CITED:	Khoury & Anor v Khouri [2006] NSWCA 184 Young v Queensland Trustees Ltd (1956) 99 CLR 560 Ogilvie v Adams [1981] VR 1041 Haller v Ayre [2005] 2 Qd R 410 Hamilton v Kaljo (1989) 17 NSWLR 381 Bannister v Bannister [1948] 2 All ER 133
PARTIES:	Steven Faraday v Thomas Gabor Rappaport & 2 Ors; Steven Faraday v Thomas Gabor Rappaport; Rosalia Rappaport by her tutor Thomas Gabor Rappaport v Steven Faraday
FILE NUMBER(S):	SC 2649/02 ; 1684/03 ; 3668/03
COUNSEL:	Plaintiff: In Person Defendant: M A Bradford
SOLICITORS:	Plaintiff: N/A Defendants: Slater & Gordon

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Wednesday, 7 March 2007

2649/02 Steven Faraday v Thomas Gabor Rappaport & 2 Ors
1684/03 Steven Faraday v Thomas Gabor Rappaport
3668/03 Rosalia Rappaport by her tutor Thomas Gabor Rappaport v Steven Faraday

JUDGMENT

1 HIS HONOUR: These three proceedings were heard together. Mr Steven Faraday (known as Steve Faraday) was the brother of Mrs Rosalia Rappaport. She died on 26 May 2006. Her only child was her son, Mr Thomas Rappaport. Because these proceedings concern five members of the Rappaport family, I shall not refer to each of them using their titles Mr, Mrs and Ms, but shall use their first names. I do so for ease of reading and without meaning disrespect.

Mr Faraday’s Claims in Proceedings No 2649/02

2 In proceedings No. 2649/02, Mr Faraday claims a beneficial interest in three properties acquired by Thomas Rappaport and his wife, Vivian Rappaport, between 1987 and 1990. Those properties are now held by the trustee of the Rappaport family trust, Tovir Investments Pty Ltd. The defendants disclaimed any reliance on ss 42 and 43 of the Real Property Act 1900 (NSW) or the equivalent Queensland legislation (s 184 of the Land Title Act 1994 (Qld)). Mr Faraday also claims that Thomas Rappaport should account for moneys allegedly owed by Thomas Rappaport to him. As at 3 February 2000, the sum allegedly owed was $84,159.53.

3 Mr Faraday claims that in late 1986, Thomas Rappaport told him that there was a shop for sale in Surfers Paradise which had the TAB as a tenant (the “Chevron Island property” or “TAB premises”). Mr Faraday claims that he and Thomas Rappaport agreed that Mr Faraday would contribute half of the purchase price to the Chevron Island property, and Thomas Rappaport would hold a half interest in the property on trust for him. Mr Faraday contends that it was agreed that he would be entitled to half the rental income from the property after the payment of rates and levies. He claims that his money was used by Thomas and Vivian Rappaport to acquire the Chevron Island property, although he is unable to identify how much of his money was applied in that way.

4 On 9 February 1987, Thomas and Vivian Rappaport purchased the Chevron Island property. They purchased as joint tenants. Mr Faraday was not included on the title. The cost of purchase was $175,000. Thomas and Vivian Rappaport claim that all of the purchase moneys were provided by them from their savings and moneys borrowed by them. Thomas Rappaport denies receiving any moneys from Mr Faraday for investment.

5 The second property in which Mr Faraday claims a beneficial interest is in Belmore Road, Randwick, New South Wales (the “Belmore Road property” or “the butcher’s shop”). It was purchased by Thomas and Vivian Rappaport on 30 November 1988 for $244,000. Mr Faraday claims that in or about October 1988, he and Thomas Rappaport agreed to the purchase of the property. According to Mr Faraday, Thomas Rappaport told him that it would cost about $150,000.

6 Mr Faraday claims that at this time, he had an account with Thomas Rappaport consisting of his share of the rental income from the Chevron Island property, less his share of expenses, plus moneys paid by him to Thomas Rappaport. Mr Faraday contends that Thomas Rappaport told him that he had about $60,000 in the account which would be enough to give Mr Faraday a 40% interest in the Belmore Road property. Mr Faraday says they agreed to go ahead on the basis that he would have a 40% share of the Belmore Road property.

7 Thomas Rappaport denies making any such agreement. He denies that any such account with Mr Faraday existed. He and Vivian Rappaport deny that Mr Faraday made any contribution to the purchase of the Belmore Road property.

8 On 10 January 1989, Thomas and Vivian Rappaport entered into contracts to purchase two factory units in Brisbane Road, Labrador, Queensland, for a total price of $190,000 (the “Brisbane Road properties”). The contract was completed on 16 March 1990 when the construction of the factory units was finished. Mr Faraday claims that he and Thomas Rappaport agreed that one of the factory units would belong to Mr Faraday, and the other would be Thomas Rappaport’s. He claims that Thomas Rappaport used an amount of $100,000 then standing to the credit of Mr Faraday’s account with Thomas Rappaport in purchasing the property. According to Mr Faraday, it was initially proposed that they would buy one unit together and hold it in equal shares, but when the second factory unit became available, they agreed to buy two units, to be divided between them. Mr Faraday claims to be entitled either to a half-share of both factory units, or to the whole of one or other of them.

9 Again, Thomas Rappaport denies that the alleged agreement was made. He and Vivan Rappaport deny that Mr Faraday made any contribution to the purchase of the Brisbane Road properties. Thomas Rappaport denies having held moneys for Mr Faraday.

10 There is no note or memorandum signed by or on behalf of Thomas and Vivian Rappaport evidencing the terms of the agreements for which Mr Faraday contends.

11 Mr Faraday claims that from about 1987 Thomas Rappaport regularly provided to him statements of account. Mr Faraday produced such statements, which he called “running sheets”, for the period from 25 May 1995 to 3 February 2000. These documents record a credit balance in favour of Mr Faraday made up of various credit items which Mr Faraday says were amounts of cash which he provided to Thomas Rappaport, together with a credit for rental income derived from the three properties, less expenses referable to those properties and payments said to have been made to or on behalf of Mr Faraday. The running sheets show a crediting of interest to the account balance from time to time. The last of the sheets shows a credit balance in Mr Faraday’s favour of $84,159.53 as at 3 February 2000. Mr Faraday says that those are moneys which Thomas Rappaport owed him as at 3 February 2000 in addition to his beneficial interest in the properties.

12 Thomas Rappaport denies producing any of the running sheets. He says they are fabrications of Mr Faraday’s.

13 Mr Faraday also relies on a number of documents which he claims are in Thomas Rappaport’s writing which record the deposit of moneys to the credit of Mr Faraday derived from the “TAB” (that is the Chevron Island property), and the “butcher” (that is the Belmore Road property), or which otherwise corroborate his claim. Thomas Rappaport denies authorship of most of the documents.

Mr Faraday’s Claim in Proceedings No 1648/03

14 Mr Faraday owns a house in Moffatts Drive, Dundas, New South Wales (the “Dundas property”). He purchased the house in 1979 for $43,500. Thomas Rappaport presently holds the certificate of title to that property. In proceedings No. 1684/03, Mr Faraday claims the return of the certificate of title. He claims that he provided the certificate of title to Thomas Rappaport for safe keeping in 1995 shortly before he left for an extended overseas trip.

15 Thomas Rappaport says that the certificate of title was provided by Mr Faraday to Thomas Rappaport’s parents (Alexander Rappaport and Rosalia Rappaport) as security for a promise allegedly made by Mr Faraday in 1979 to leave the Dundas property in his will to Thomas Rappaport’s parents, or as security for a loan allegedly made to assist Mr Faraday with the purchase of that property.

Claims made by Thomas Rappaport on Behalf of Rosalia Rappaport in Proceedings No 3668/03

16 Proceedings No. 3668/03 were instituted by Thomas Rappaport, acting as tutor for his mother, Rosalia Rappaport. Mr Faraday is the defendant in those proceedings. There are five claims. The first relates to the purchase and sale by Mr Faraday of a unit at 8/9 Dalley Street, Bondi Junction, New South Wales (the “Dalley Street property”). The unit was purchased by Mr Faraday in 1971 for $14,000. Thomas Rappaport claims that Rosalia Rappaport provided $3,500 to Mr Faraday to assist in the purchase of the unit pursuant to an agreement that Mr Faraday would leave that property to Rosalia Rappaport or her estate on his death. The property was sold in 1987. (Mr Faraday claims he sold it in 1979.) Thomas Rappaport claimed that the sale of the unit was a breach of that agreement. He claimed damages or equitable compensation. Alternatively, he claimed repayment of the alleged loan of $3,500. Mr Faraday denies receiving any money from Rosalia Rappaport. He denies the alleged agreement. This claim was ultimately not pressed.

17 The second claim is that Rosalia Rappaport paid $12,500 as a contribution towards Mr Faraday’s purchase in 1979 of the Dundas property. It is alleged that Mr Faraday agreed to leave the Dundas property to Rosalia Rappaport or her estate on his death. Thomas Rappaport claims that Mr Faraday is obliged to leave the Dundas property to the estate of Rosalia Rappaport on his death. He claims that the Dundas property is held on trust for Rosalia Rappaport’s estate, subject to a life interest in favour of Mr Faraday. Alternatively, he claims that Mr Faraday owes Rosalia Rappaport’s estate $12,500 together with interest, and claims that that debt is charged on the Dundas property.

18 The third claim is that on or about 24 January 1989, Rosalia Rappaport gave Mr Faraday money and goods for safekeeping. The money consisted of US$2,300 and AS$700 in cash. The goods were a ring and a gold bullion piece weighing 2.5 ounces. It is claimed that Mr Faraday has failed to return the money and goods after demand. Mr Faraday denies receiving the money or the goods. He also relies on the Limitation Act 1969 (NSW) as a defence to the claim.

19 The fourth claim is that on or about 16 August 1999, Rosalia Rappaport gave Mr Faraday $11,000 cash to deposit into her account. It is claimed that he failed to do so and failed to account for the moneys. Mr Faraday denies receiving these moneys.

20 The fifth claim is that in August 1999, Mr Faraday obtained $28,000 from various accounts belonging to Rosalia Rappaport and has appropriated those sums to his own benefit without her consent. Mr Faraday denies the allegations. He admits receiving $3,700 on behalf of Rosalia Rappaport, and to receiving $4,074.18 being the balance of her account with the St. George bank. He is obliged to account for these sums.

Outline of Principal Events

21 Mr Faraday’s older sister, Rosalia Rappaport, and her husband Alexander Rappaport, emigrated to Australia from Romania in 1961. Alexander Rappaport was a plumber. Their son, Thomas Rappaport, was 14 when the family arrived in Sydney. In due course, Thomas Rappaport qualified as an electrician.

22 Mr Faraday emigrated to Australia from Romania in January 1969. At that time, Alexander and Rosalia Rappaport owned a property consisting of two flats in Blair Street, Bondi, New South Wales (“the “Blair Street property”). Thomas Rappaport was the registered proprietor of a duplex at 6 Kent Street, Waverley, New South Wales. He and his parents lived in one flat and the other was let. Thomas Rappaport purchased the property with the assistance of a gift of almost half the purchase price from his parents.

23 Mr Faraday lived with the Rappaports for about a month before moving to a room in Bondi Junction, and later in Kingsford, which he rented. He obtained work as a printer with the Government Printers Office. After about three years he became a proofreader. He received award wages but supplemented his income by giving music lessons.

24 Mr Faraday has another sister, Ms Malvina Hollander, who also emigrated to Australia with her husband.

25 In 1971, Mr Faraday purchased the Dalley Street property for $14,500. He borrowed $8,000 from the Commonwealth Bank. Thomas Rappaport says, and Mr Faraday denies, that Rosalia and Alexander Rappaport gave or lent him $3,500 to assist with the purchase. Mr Faraday moved to the Dalley Street property and let out one room.

26 Thomas and Vivian Rappaport married in 1974.

27 In 1976, Mr Faraday left the Government Printers Office and took up employment with a private printing company paying higher wages. In about 1978, he and a partner established a printing business. It was not profitable and was closed after a year. Mr Faraday continued to teach music privately. From about 1979, after his own printing business was closed, he worked full-time as a piano teacher.

28 The mortgage over the Dalley Street property was discharged in September 1978.

29 In about mid 1979, Mr Faraday purchased the Dundas property for $43,500. Thomas Rappaport says, and Mr Faraday denies, that Rosalia and Alexander Rappaport gave or lent him $12,500 to assist with the purchase, on terms that Mr Faraday would leave the Dundas property to Rosalia and Alexander Rappaport by his will, or if they predeceased him, to Thomas Rappaport. Thomas Rappaport says, and Mr Faraday denies, that the certificate of title to the Dundas property was provided at this time by Mr Faraday to his parents as security for the arrangement. Mr Faraday moved to the Dundas property and rented the Dalley Street property.

30 Mr Faraday claims that in about 1980 or 1981, Thomas Rappaport proposed that he and Mr Faraday invest in property together. He says that he began giving money to Thomas Rappaport from time to time. Whenever he had a few thousand dollars he would give it to Thomas Rappaport in cash.

31 In 1982, Rosalia and Alexander Rappaport separated. Thomas Rappaport deposed that between 1982 and 1996, Rosalia Rappaport gave money to Mr Faraday to bank into Thomas Rappaport’s bank account to be used to buy investment properties.

32 In 1983, Mr Faraday married Ms Puiu Valeria (hereinafter “Valeria Faraday” or “Mrs Faraday”). Mr Faraday was interviewed by officers of the Department of Immigration in connection with Valeria Faraday’s application for permanent residency status. The notes of the interview record Mr Faraday as saying that his income was $200 per week, that he fully supported his wife, and that he had no debts as such.

33 On 30 April 1984, Mr and Mrs Faraday purchased a unit in Warners Avenue, Bondi Beach, New South Wales for $40,000 as tenants in common in equal shares (the “Warners Avenue property”). Thomas Rappaport claims that Mr Faraday admitted that Alexander and Rosalia Rappaport provided all the funds for the purchase.

34 On 23 November 1985, Mr Faraday and Thomas and Vivian Rappaport exchanged contracts to purchase a unit at 4/23 Armrick Avenue, Broadbeach, Queensland for $77,500 as tenants in common (the “Broadbeach property”). Mr Faraday had a 50% share of that property. Thomas and Vivian Rappaport had the other 50% share.

35 On 16 January 1987, Mr Faraday entered into a contract to sell his half interest in the Broadbeach property to Thomas and Vivian Rappaport for $38,000. The transfer was signed by Mr Faraday on 21 January 1987. Mr Faraday claims that he believed at the time that the property was sold to a third party. He says that he did not appreciate that Thomas and Vivian Rappaport had bought his half interest in the property. He denies having received the purchase price for his half-share. He says that those moneys were left with Thomas Rappaport for investment in other properties. Thomas Rappaport says that the proceeds were used by Mr Faraday to repay loans from Alexander and Rosalia Rappaport.

36 One of the reasons for Mr Faraday selling his interest in the property was that some conflict had arisen between him and Vivian Rappaport. He was also dissatisfied with the property as an investment property.

37 On 6 February 1987, Mr Faraday signed a memorandum of transfer of the Dalley Street property. The transfer was registered on 16 February 1987. The sale price was $62,000.

38 On 9 February 1987, Thomas and Vivian Rappaport purchased the Chevron Island property. The purchase price was $169,000. The total cost of the purchase was $175,000. Thomas Rappaport gave evidence that about $46,000 was provided by he and his wife from cash savings and two term deposits in their joint names and the balance was borrowed by them from the National Australia Bank or the Select Credit Union.

39 Mr Faraday says that it was from 1987 that he started to receive running sheets from Thomas Rappaport showing the state of his “account”.

40 On 24 September 1987, Thomas Rappaport made a will by which he left to Mr Faraday a legacy of $135,000 indexed according to movements in the Consumer Price Index. At this time, Thomas Rappaport had a wife and two children aged 10 and 7. Mr Faraday said that the reason for the will was that he was concerned that he had property partly belonging to him but standing in Thomas Rappaport’s name, and that Thomas Rappaport told him that the legacy represented Mr Faraday’s share of what had been invested. This is denied by Thomas Rappaport.

41 In late 1988, Rosalia Rappaport advised Mr Faraday that she had found tins of paint in her cupboard. Thomas Rappaport had been prosecuted but acquitted on a charge of theft of paint tins in 1986. Mr Faraday formed the view that Thomas Rappaport had concealed stolen paint in his mother’s house. Mr Faraday admitted this caused him not to trust Thomas Rappaport as he had done before.

42 On 10 January 1989, Thomas and Vivian Rappaport exchanged contracts to buy the Brisbane Road properties off the plan. The purchase was completed on 16 March 1990.

43 For reasons given below, I accept that on 24 January 1989, Rosalia Rappaport delivered cash of US$2,300 and A$700 to Mr Faraday, together with a ring and a gold bullion piece for safekeeping.

44 Mr Faraday turned 65 on 25 December 1989. On 18 October 1989, he applied for the aged pension. He received the pension from January 1990. On applying for the pension he declared that he owned real estate apart from the house he lived in. He agreed that this was a reference to the Warners Avenue property which he owned with his wife.

45 Mr Faraday did not include any income or expenses in relation to the properties in Thomas and Vivian Rappaport’s name in his own tax returns.

46 Between February and October 1990, Mr and Mrs Faraday travelled overseas. Between March and September 1990, Thomas Rappaport transferred moneys to Mr Faraday’s account. Mr Faraday produced handwritten notes allegedly written by Thomas Rappaport suggesting a crediting of funds from rent from the TAB premises and the butcher’s shop. For example, on 1 May 1990, $1,900 was transferred to an NAB account for Mr Faraday made up of $100 in notes and two cheques of $800 and $1,000. Mr Faraday produced a note which read:

“ For Month of April 1990
Butcher $ 380.00
TAB $ 720.00
$1,100.00
plus $800 from your S/Acc
Total $1,900.00
Deposited to NAB Master ”

There were similar notes in relation to deposits made on 1 March 2000, 3 April 2000, 1 June 2000 and 4 September 2000. Thomas Rappaport says that the notes are forgeries concocted by Mr Faraday.

47 Mr Faraday says that at some time after 1987, Thomas Rappaport told him he would mark the changes to the market value of the investment properties on Mr Faraday’s copy of Thomas Rappaport’s will and initial it to show what Mr Faraday’s investments were then worth. Mr Faraday says that Thomas Rappaport amended the figure of $135,000 on Mr Faraday’s copy of Thomas Rappaport’s will to $320,00 and initialled the change. Thomas Rappaport denies that such a conversation occurred and denies the writing is his.

48 On 19 March 1992, Mr Faraday made a will. He dealt specifically with the Dundas and Warners Avenue properties. He made no reference to having any interest in any of the three investment properties in the name of Thomas and Vivian Rappaport.

49 In 1992, Rosalia Rappaport asked Mr Faraday to return the cash, ring and gold bullion piece handed to him in January 1989. He denied having received the goods. He denied having given a receipt for the goods. Rosalia Rappaport, influenced by Mr Faraday, formed the view that Thomas Rappaport had taken the property. Thomas Rappaport denied having received the goods, but relations between his mother and him were soured.

50 In May 1995, Mr and Mrs Faraday sold the Warners Avenue property. Mr Faraday received $75,000 from the sale. Mr Faraday produced “running sheets” of his alleged account with Thomas Rappaport covering the period from 25 May 1995 to 3 February 2000. The running sheets record 16 deposits made with Thomas Rappaport between 30 May 1995 and 21 August 1995 of $69,450. Thomas Rappaport admitted to receiving $65,000 in instalments of approximately $10,000 on six or seven occasions during this period. He says, and Mr Faraday denies, that he converted these moneys into foreign currency and delivered the foreign currency to Mr Faraday. This was in anticipation of Mr Faraday’s leaving for an overseas trip.

51 Mr Faraday says that in 1995 he had another discussion with Thomas Rappaport about the value of his investments. He says that Thomas Rappaport again altered Mr Faraday’s copy of Thomas Rappaport’s will, by crossing out the figure of $320,000 and substituting $410,000. The alteration is purportedly initialled by Thomas Rappaport and dated 29 October 1995. Again, Thomas Rappaport says that the handwriting is a forgery.

52 Mr Faraday left for an overseas trip on 11 November 1995. He was absent from Australia until September 1996. Mr Faraday says, and Thomas Rappaport denies, that he left his certificate of title to the Dundas property with Thomas Rappaport for safekeeping before he left.

53 Before he left for overseas, Mr Faraday made a new will. Again, it made no mention of his having any interest in properties registered in the names of Thomas and Vivian Rappaport.

54 Alexander Rappaport died in September 1997.

55 On 4 September 1998, Rosalia Rappaport and Thomas Rappaport entered into an agreement to make mutual wills. The agreement was made because Thomas Rappaport had secured a bank loan to carry out renovations to the Blair Street property. That property was jointly owned by Rosalia Rappaport and Thomas Rappaport. The loan was secured over the property. The agreement set out terms on which Rosalia Rappaport was to take up residence in the bottom flat. The agreement for mutual wills recited that both parties wished to ensure that Thomas Rappaport’s children would ultimately receive the Blair Street property. Thomas Rappaport made a will giving his interest in the Blair Street property to his wife for life and then to his children. He left the balance of his estate to his wife, or if she did not survive him, to his children. Rosalia Rappaport left her property, including her interest in the Blair Street property, to her grandchildren.

56 Mr Faraday was involved in the negotiations relating to these agreements. He was present when the agreements were signed. He witnessed Rosalia Rappaport’s will. He raised no objections to Thomas Rappaport’s will. He did not assert to the solicitor who documented the transactions, Mr Gellert, that he had any interest in property in Thomas Rappaport’s name. Although his legacy was revoked, he did not ask Thomas Rappaport for any other form of “security” for his investment. Thomas Rappaport says that this was because he had no such investment.

57 On 18 August 1999, Rosalia Rappaport moved into a nursing home. She was then 86. In May 2000, Thomas Rappaport discovered two documents in Mr Faraday’s hand. One relates to his funding of the purchase of the Dundas property. The other was the receipt for the property given to Mr Faraday in January 1989, that is, the cash, ring and gold bullion piece.

58 Disputes arose in October 2000. According to Mr Faraday, he told Thomas Rappaport that he was thinking of moving from Dundas to closer to Bondi and would need to draw down a substantial amount to buy a house or unit. He asked to draw down $50,000 to buy some term deposits. He said that Thomas Rappaport refused that request, and offered instead that Mr Faraday could move into one of Thomas Rappaport’s units in Bondi rent-free, or he could choose a place to live which Thomas Rappaport could buy in Thomas Rappaport’s name in which Mr Faraday could live for the rest of his life without paying rent.

59 Thomas Rappaport denied this conversation. He said that he told Mr Faraday that Mr Faraday could not afford to borrow the balance of the money which he would need to buy a house or unit in the eastern suburbs, and that it was unlikely that Mr Faraday would be able to raise a loan to buy such a property. He proposed that Mr Faraday move into one of his existing units, and that Mr Faraday could rent out the Dundas property and Thomas Rappaport would receive the rent.

60 On 8 October 2000, Mr Faraday wrote a long, rambling and emotional letter to Thomas Rappaport, which does Mr Faraday no credit. In his affidavit of 7 July 2004, Thomas Rappaport said that:

“ At no point throughout this letter does the plaintiff make a clear reference to the accumulation of moneys which I had allegedly received from him over many years for the purpose of purchasing investment property upon his behalf .”

61 However, Mr Faraday said in the letter:

“ If I move into a flat at $300 the annual rent is $15,600. If divided by $400,000 that means that I need 25.6 years to use up the money. ”

62 Thomas Rappaport did not reply to the letter. In some circumstances, failure to reply to such a letter, which impliedly asserted that Thomas Rappaport was holding moneys or property to the value of $400,000 belonging to Mr Faraday, might be an admission. However, the rest of the contents of the letter is such that it is perfectly understandable that Thomas Rappaport would not reply to it. I do not treat his failure to reply as an implied admission by him of Mr Faraday’s assertions.

63 Nonetheless, Thomas Rappaport understood the words “If I move into a flat at $300 the annual rent is $15,600” to be referring to Mr Faraday’s moving into one of Thomas Rappaport’s investment properties rent-free. That is consistent with Mr Faraday’s version of the conversation with Thomas Rappaport, but not inconsistent with Thomas Rappaport’s version of the conversation. Thomas Rappaport said that he had no idea what Mr Faraday was talking about when Mr Faraday said “if divided by $400,000 that means that I need 25.6 years to use up the money”. He said that he rang Mr Faraday about it, but he was not making any sense. However, this sentence is consistent with Mr Faraday’s believing that Thomas Rappaport was holding $400,000, or property of that value, for Mr Faraday, so that it would take 25.6 years of rent-free accommodation in one of Thomas Rappaport’s units for Mr Faraday to get an equivalent benefit which Thomas Rappaport had of holding Mr Faraday’s money or property. The fact that Mr Faraday should impliedly assert such a matter does not establish his assertion as valid. Nonetheless, whilst the letter is emotional, bitter and accusatory, and shows the depth of ill-feeling Mr Faraday has to Thomas Rappaport, the assertions in it in relation to Thomas Rappaport’s holding Mr Faraday’s money or property, seem to reflect a genuinely held view that that was the case.

64 Mr Faraday’s first proceeding was commenced on 13 May 2002.

65 It is convenient to deal with the claims brought on behalf of Rosalia Rappaport first.

Credibility of Mr Faraday and Thomas Rappaport

66 Mr Faraday was extensively cross-examined. He was 81 at the time of the hearing. He had an impressive command of the dates and details of his own case. Nonetheless, I concluded that his recollection of events was unreliable, and his evidence was tailored to what he perceived to be the best advantage for his case. That is not to say that there is no underlying merit to his case.

67 For reasons which I give later, I have concluded that Mr Faraday did provide money to Thomas Rappaport for investment. At least some of that money was sourced from money given to Mr Faraday by Rosalia Rappaport. Nonetheless, I do not accept Mr Faraday as a credible witness either on matters of detail or substance. I have also concluded that he was prepared to manufacture evidence to support his case.

68 Five matters in particular reflect adversely on his credit. The first was his denial that Rosalia Rappaport provided him with financial assistance when it is clear both from his own lack of income and his own note (referred to at para [82]) that she did so. The second is his assertion that he sold the Dalley Street property in 1979 when the documents establish unequivocally that the unit was sold in 1987. He asserted that the Dalley Street property was sold in 1979 to provide an explanation as to how he had funds to buy the Dundas property in 1979. It appeared to me that he genuinely believes that he had sold the Dalley Street property in 1979. However, that showed how his perception of the facts has become distorted by what he perceives to be his interest in the litigation. The third was his false denial both in court and earlier to his relatives that he had received money and property from Rosalia Rappaport for safekeeping. The fourth was his denial of being aware that he had sold his half interest in the Broadbeach property to Thomas and Vivian Rappaport, when the documents he prepared and signed show that he must have known that was what he was doing. The fifth was the production of three versions of amendments to Thomas Rappaport’s 1987 will showing increased legacies, at least two of which I am forced to conclude, on the balance of probabilities, were prepared by Mr Faraday himself, and not by Thomas Rappaport as Mr Faraday asserted.

69 Except where otherwise indicated, I do not accept Mr Faraday’s evidence unless it is corroborated by other acceptable testimony, or documents whose authenticity is otherwise established, or is consistent with the objective probabilities.

70 It is difficult to assess Thomas Rappaport’s credibility because he was not effectively cross-examined. Mr Faraday represented himself. He was incapable of conducting an orderly or effective cross-examination. It was noteworthy that during the hearing Mr Faraday at no stage had before him any of Thomas Rappaport’s affidavits, although he had clearly read them and remembered parts of them. The cross-examination consisted of Mr Faraday’s putting propositions about his case that Thomas Rappaport easily rebutted. I accept the submission of Mr Bradford of counsel, who appeared for the Rappaports, that Thomas Rappaport should not be prejudiced by Mr Faraday’s inability to cross-examine him properly.

71 My assessment of Thomas Rappaport’s credibility does not depend on his demeanour in the witness box.

72 Nonetheless, I do not accept Thomas Rappaport as a reliable witness. It is not just that he is an interested party, although that is a relevant consideration indicating that his evidence should be considered with caution. In reaching my conclusion as to his credit, I have had regard to his evidence in his first affidavit as to the arrangements for the investment of moneys provided to him by Mr Faraday, (which he asserted belonged to Rosalia Rappaport), and his later inconsistent evidence as to the source of funds for investment. I have also had regard to documents which are admittedly in his own hand, and to documents which I have found on the evidence of a document examiner, Mr Dubedat, are in his hand. Those documents are inconsistent with Thomas Rappaport’s testimony. I have also concluded, contrary to his evidence, but consistently with the evidence of Mr Gellert (a solicitor who acted for Rosalia Rappaport), that Thomas Rappaport prepared a draft of a statutory declaration for his mother in 2000 which he provided to Mr Gellert. This last matter, if standing on its own, would not be of much significance, but it has had some slight bearing on my assessment of Thomas Rappaport’s credibility.

73 Except where otherwise indicated, I do not accept Thomas Rappaport’s evidence unless it is corroborated by other acceptable testimony, or by documents whose authenticity is otherwise established or not in dispute, or is consistent with the objective probabilities.

Rosalia Rappaport’s First Claim: Purchase of the Dalley Street Property

74 The first claim related to an amount of $3,500 it was claimed Rosalia Rappaport had sent or given to Mr Faraday to assist with the purchase of the Dalley Street property. I think it likely that some assistance was given to Mr Faraday by Alexander and Rosalia Rappaport. However, such assistance was by way of gift. There was no contract that Mr Faraday should leave the property to Rosalia Rappaport in his will. He sold the property in 1987 without any complaint from Alexander or Rosalia Rappaport. No demand was made for repayment of moneys advanced to assist with the purchase. Not surprisingly, in final submissions this claim was abandoned.

Rosalia Rappaport’s Second Claim: Financial Assistance for the Purchase of the Dundas Property

75 In her affidavit, Rosalia Rappaport said:

“ 9 Steven always said to me, ‘If I die I will leave everything to my family. I will give half of my property to you as my sister and the other half to my sister Malvina. In the end, it will all go to your son Gabor (Thomas).’ We never discussed any of these matters in detail because there was no need to. Neither Steven nor Malvina had any children, so we all understood that all the property they owned would go to my son Gabor (Thomas).
10 I gave my money to Steven because he wanted it. But not all at once. I do remember helping Steven with a second house. I do not remember how much I gave him. But he could not buy this house without my help. I cannot remember this house now. If I didn’t help him, he could never buy this house. ”

76 The evidence from Rosalia Rappaport was, in substance, that she made a gift of money to Mr Faraday to assist him with buying the Dundas property. She did so because he was her brother. There is no indication in her affidavit that she and her brother entered into a contract intended to have legal effect or otherwise entered into any legal relationship in relation to that gift. She expected that Mr Faraday would leave all his property to her and her sister, and thence to her son. That is very different from there being a contract that Mr Faraday would leave the Dundas property to her in return for her advance.

77 The second house to which Rosalia Rappaport referred was the Dundas property. Her affidavit was prepared in 2001 when she was in a nursing home. The solicitor who prepared it deposed that she was able to converse with him in English and he observed that she had a sufficient knowledge of conversational English in order to understand his questions and to make herself properly understood.

78 Her solicitor also deposed to having later been told by Rosalia Rappaport, when accompanied by a Hungarian interpreter, that:

“ I helped my brother many times with money. … I gave money many times to my brother but he never gave me any money back. I remember giving the money to my brother to help him buy a house. I did this because he asked me for the money. But he never gave the money back to me. The money I gave to my brother was to be returned to me if ever I needed it. My brother had always agreed that on his death he would leave his house to me and my sister Malvina in equal shares. Eventually it will go to my son Gabor as Malvina had no children. ”

79 This conversation took place when Rosalia Rappaport was 93 and shortly before her death. It is consistent with her affidavit and reinforces the view that she did not intend to enter into legal relations with her brother. Rather, the provision of funds was a family arrangement. The money was provided as a gift, but she expected the money to be given back if she needed it. She told her solicitor that Mr Faraday had agreed to leave his house to her and to his sister Ms Hollander in equal shares. Her evidence does not suggest that this “agreement” was the quid pro quo for an advance to Mr Faraday for him to buy the house, or that the parties would enter into any legal relationship.

80 There is no evidence that Rosalia Rappaport ever asked to be repaid money provided to Mr Faraday to assist with the purchase of the Dundas property.

81 Mr Faraday denied receiving any money on any occasion from Rosalia Rappaport or her husband. I do not accept that denial.

82 Mr Faraday purchased the Dundas property in about mid 1979 for $43,500. He prepared a document which he left with Rosalia Rappaport which recorded his holding a bank balance and other moneys totalling $30,000. It recorded that he “owed” $44,500, which is clearly a reference to the moneys which he needed to complete the purchase of the Dundas property, including stamp duty. He recorded that he needed a loan of $15,000 of which $2,500 might be obtained from “Laci” (a reference to Ms Hollander’s husband) and $12,500 from “Shoni” and “Babus”, a reference to Alexander Rappaport and Rosalia Rappaport. He also noted his weekly income included $50 per week rent. This was a reference to rent to be obtained from letting out the Dalley Street property.

83 Mr Faraday did not borrow money from a bank or a commercial lender to acquire the Dundas property. It is unlikely that his income would have been sufficient at that time to have enabled him to save the whole of the purchase price of the Dundas property. His note recording his bank balance as at 30 April 1979, showed a shortfall of $15,000 in the moneys needed for the purchase of the Dundas property.

84 Mr Faraday stated that he obtained the funds to purchase the Dundas property by having sold in 1979 the Dalley Street property. However, he was wrong about that. The Dalley Street property was not sold until 1987. Mr Faraday signed and dated the transfer. The transfer was dated 6 February 1987. It was registered on 16 February 1987. There could be no reason that Mr Faraday would have signed and dated a transfer as at 6 February 1987 if the property had in fact been sold in 1979. Nor is it conceivable that had Mr Faraday sold the property in 1979, the purchaser would have waited until 1987 to register the transfer. In cross-examination, Mr Faraday suggested that he might have made a mistake when he wrote the date on the transfer by transposing the last two numbers in the date, that is, that he had intended to date the transfer as 6 February 1978. However, that explanation is fanciful. There would be no reason why, if the property were sold in 1979, the transfer would be dated 6 February 1978 and not registered until 16 February 1987.

85 In his prenuptial agreement of 5 August 1983 with Valeria Faraday, she agreed not to make any claim to either the Dundas property or the Dalley Street property. That is obviously inconsistent with his having sold the Dalley Street property in 1979.

86 Mr Faraday’s evidence in relation to this transaction showed his unreliability as a witness.

87 Thomas Rappaport deposed to recollecting two conversations with Mr Faraday in February 1979. The first was said to have taken place in the presence of Thomas Rappaport’s parents and his wife Vivian. Thomas Rappaport deposed that Mr Faraday said:

“ I am considering purchasing a house in Dundas for $43,500. I don’t have enough money myself to complete the purchase. Your parents have already offered to lend me $12,500 on the same arrangements as with the Bondi Junction property. There will be no repayments and my existing will already provides that all of my assets will go to your parents and then to you and your children. You are the executor in my will. As the security for this loan, I will give the title deed to your parents and on my death the title deed will then be available to enable a solicitor to do the paperwork to transfer the house to your parents or if necessary, to you and your children. ”

88 According to Thomas Rappaport, his mother said that they would think about the matter and discuss it the next time Mr Faraday came for dinner. According to Thomas Rappaport, Mr Faraday came to the house the following Friday night, and during dinner his mother said to Mr Faraday:

“ We agree to your proposal. We will lend you $12,500 in cash in order to purchase the house and we will hold the title deed as security. ”

89 According to Thomas Rappaport, Mr Faraday agreed and said:

“ On my death, my house will go to Babusa (referring to Rosalia Rappaport) and to Shoni (referring to Alexander Rappaport) and then to Tom and his children. ”

90 Vivian Rappaport did not deal with this conversation specifically in her affidavit. She said that she was present “during the exchange of conversation as between [Mr Faraday] and Tom as outlined in [paragraph 14 of Thomas Rappaport’s affidavit]. I was also present during the exchange of conversation between Tom’s mother and [Mr Faraday] as outlined in paragraph 15 of Tom’s said affidavit. This conversation took place at the home of Tom’s parents and not at our house as set out in the first sentence of this paragraph.”

91 Neither Thomas nor Vivian Rappaport was cross-examined on this evidence. Mr Faraday represented himself and was incapable of framing proper questions or conducting an orderly cross-examination. Nonetheless, these matters were clearly put in issue. I accept the force of the submission of Mr Bradford that the assessment of their credibility should not be prejudiced by the fact that Mr Faraday was unable properly to cross-examine them. Nonetheless, I do not accept that after the passage of more than twenty-four years, Thomas Rappaport or Vivian Rappaport, could have such a precise recollection of a conversation over the dinner table as Thomas Rappaport deposed to. It is much more probable that there was a degree of reconstruction from the note found in Rosalia Rappaport’s possession, to which I have previously referred, and from the fact that Thomas Rappaport is holding the certificate of title to the Dundas property.

92 There was a dispute as to how Thomas Rappaport came to have possession of Mr Faraday’s certificate of title. According to Mr Faraday, he left the certificate of title in Thomas Rappaport’s custody in 1995 shortly before he (Mr Faraday) left for an extended overseas trip. According to Mr Faraday, he left a dossier of documents with Thomas Rappaport comprising the certificate of title to the Dundas property, his citizenship certificate, his itinerary, and papers related to his travel insurance. He says that it did not occur to him to ask Thomas Rappaport to return the documents until many years later after the present dispute arose. This is an unlikely version of events. Relations between Mr Faraday and Thomas Rappaport had deteriorated by the 1990s owing to Mr Faraday’s discovery of the paint and accusations as to who had taken delivery of Rosalia Rappaport’s property. Mr Faraday had made two previous extended overseas trips in 1990 (8 months) and 1992 (8 months) without feeling the need to deliver his certificate of title to a family member.

93 Thomas Rappaport denies Mr Faraday’s version of events. According to him, about two months after the conversations to which he deposed, Mr Faraday visited his parents’ house, at which time Rosalia Rappaport handed over $12,500 in cash to Mr Faraday. Thomas Rappaport says that a short time later, Mr Faraday came to his parents’ house and brought with him the certificate of title to the Dundas property telling his mother that “here is the deed to the house which you can hold as security”. Thomas Rappaport also deposed that Mr Faraday told him that “your mother can hold the title deed as security because there won’t be any need for me to make any repayments of the loan. There won’t be any interest payments either. When I die, she will be holding the certificate of title and together with my will the whole of the property will pass to her.” According to Thomas Rappaport, about two weeks later, Rosalia Rappaport gave him the certificate of title asking him to keep it in his safe. At this time, Thomas Rappaport was living at 34 Imperial Avenue, Bondi, New South Wales.

94 I think Thomas Rappaport’s explanation is the more likely, given my conclusion that Mr Faraday did receive $12,500 from Rosalia Rappaport. That does not mean it is true. The payment of $12,500 and the taking of the certificate of title would suggest that the moneys were advanced as a loan.

95 According to Thomas Rappaport, the parties sometimes described the advance as a loan. However, on his evidence, it was not expected that the advance or any part of it would be repaid. Nor would the advance attract interest. Rather, Thomas Rappaport says that the certificate of title was left as security for Mr Faraday’s promise to leave the Dundas property to his sisters in his will. However, the provision of the certificate of title would not be security for the performance of the alleged promise. Handing over the certificate of title would not prevent Mr Faraday from making a different will. All it would do would be to inhibit, and perhaps prevent, any attempt by Mr Faraday to sell the Dundas property.

96 Even allowing for the close family relationship, I find it very surprising that if the arrangement were as deposed to by Thomas Rappaport, nothing was put in writing to record that arrangement. As Bryson JA said in Khoury & Anor v Khouri [2006] NSWCA 184 at [33]:

“ It must be obvious to anyone with any business experience and to any adult who gave any thought to his or her own interests that an arrangement involving significant sums of money about something so important as ownership of a family home should be written down. There has been a law requiring dealings with land to be in writing if they are to be effective in England for well over three centuries, and in Australia for as long as there has been a legal system here, and what that law requires is no more than reasonable people would do if they considered their own interests. ”

97 I am not dealing at the moment with the question of whether the agreement, if one were made, would be unenforceable by reason of s 54A of the Conveyancing Act 1919 (NSW). I am rather dealing with the question whether it is likely that if an agreement were made between Mr Faraday and his sister that he would leave the Dundas property in his will to his two sisters in return for an advance of $12,500, there would be no writing to evidence such an agreement. In my view, it is improbable that if such an agreement were made there would be no written record of it.

98 In my view, Rosalia Rappaport expected that Mr Faraday would leave the Dundas property to her and Ms Hollander, but there was no promise intended to have legal effect that he should do so.

99 The question then is whether, having regard to the fact that I have not accepted Thomas Rappaport’s evidence in this respect, I should nonetheless find that the money was provided by Rosalia Rappaport as a loan, rather than a gift. The indicia that it was a loan are the note referred to in paragraph [82] above, the fact that the note must have been handed to Rosalia Rappaport, and the delivery of the certificate of title to Rosalia Rappaport. The claim that Rosalia Rappaport made the advance of $12,500 as a loan repayable on demand was advanced for the first time in an amended statement of claim which I gave leave to file shortly before the hearing. Until that time, the only pleaded claim in respect of this transaction was that Mr Faraday would have only a life interest in the Dundas property and that Rosalia Rappaport and her heirs would have the remainder interest. (It may be noted that this agreement as pleaded does not accurately reflect the agreement which Thomas Rappaport deposed had been made.)

100 As I have said, Rosalia Rappaport’s evidence suggests that the money was paid as a gift, not as a loan. There is corroboration of that in that at no time has there been any payment of interest or repayment of principal, or any request made for the payment of interest or the repayment of any principal. I conclude that the payment was not made as a loan, but as a gift.

101 That still leaves the question as to why the certificate of title to the property was delivered to Rosalia Rappaport. She makes no reference to receiving the certificate of title. Having rejected Mr Faraday’s evidence that he delivered it to Thomas Rappaport in 1995, and having rejected Thomas Rappaport’s version of the events which Thomas Rappaport said led to the certificate of title being given to his mother and then to him, it can only be a matter of speculation as to how Thomas Rappaport comes to be in possession of the certificate of title. I do not conclude from the fact that Thomas Rappaport has possession of the certificate of title that it was provided as security for a loan. This is a loose thread. However, that such a loose thread should exist is hardly surprising when one of the principal protagonists is dead, when I have rejected the evidence of all of the living witnesses who have given evidence on the topic, and where there may well be alternative explanations in a close family relationship which no party has chosen to put forward.

102 Had I been of the view that the moneys were advanced as a loan, the loan would have been repayable on demand. A cause of action for its repayment would have arisen immediately the advance was made, not when demand was made for it on the service of the amended statement of claim (Young v Queensland Trustees Ltd (1956) 99 CLR 560; Ogilvie v Adams [1981] VR 1041; Haller v Ayre [2005] 2 Qd R 410). Mr Faraday would have been entitled to plead s 14(1)(a) of the Limitation Act 1969 (NSW) as a defence to the claim. He did not do so. However, he was incapable of recognising that such a defence would be available. Having regard to the lateness with which the claim was made, it would be essential in the interests of a fair hearing to consider a defence under the Limitation Act to a claim for the recovery of the alleged loan, notwithstanding that such a defence was not pleaded. Such a defence would defeat the claim for recovery of moneys lent.

103 It is unnecessary for me to consider whether, had I found an agreement had been made as alleged by Thomas and Vivian Rappaport, such an agreement would have been unenforceable pursuant to s 54A of the Conveyancing Act in the absence of a note or memorandum of the agreement signed by Mr Faraday. No such defence was pleaded by Mr Faraday, although he had legal representation at the time he filed a defence. The view might then have been formed that in the interests of promoting Mr Faraday’s credibility generally it was better to rest with the denial that any moneys had been advanced to Mr Faraday. Mr Bradford acknowledged that there would be no prejudice to his client if the defence were amended. Mr Faraday did not seek leave to amend his defence to raise the issue. When the question was raised, he handed up drafts of a statement of claim in the 2002 proceedings which had been prepared by his solicitor. This confirmed my belief that Mr Faraday was unable to appreciate the point for himself. He contented himself with repeating his denial that he had received any money from Rosalia Rappaport.

104 It is unnecessary for me to express a view on whether I should myself consider the application of s 54A of the Conveyancing Act when it has not been pleaded. There is no explanation as to why it was not originally pleaded in the defence. It is possible that this was a deliberate decision made by Mr Faraday’s solicitor.

105 It follows that the second claim of Rosalia Rappaport fails. It also follows that there is no basis for Thomas Rappaport to continue to hold the certificate of title. A caveat has been lodged over the title to the Dundas property asserting an interest in that land pursuant to the alleged agreement. Mr Bradford accepted that if the second claim failed, consequential orders should be made for the removal of the caveat.

Rosalia Rappaport’s Third Claim

106 The claim that Mr Faraday received money, a gold ring, and a gold bullion piece from Rosalia Rappaport in January 1989 was supported by a document in Mr Faraday’s writing which was located by Thomas Rappaport in May 2000. He and his mother had previously searched for the receipt without success. He found the document under the lining in one of the drawers of Rosalia Rappaport’s wardrobe which had been moved into his premises following her admission to a nursing home in August 1999. Part of the document was in Rosalia Rappaport’s hand. Part of it was in Mr Faraday’s hand. The document was partly written in Hungarian. When translated into English, Mr Faraday wrote:

“ USA dollars 23 x 100 = 2.300
A dollars separately = 700
3000 ”

107 Underneath that, Rosalia Rappaport had written:

“ 2 3AA USA
Gold
Signet Ring ”

108 Underneath that, Mr Faraday had written:

“ Gold
R/R Signet ring
All belong to Babus
24.1.89”

109 Mr Faraday agreed that he had traced the box around the gold bullion piece. “Babus” was a familiar name by which Rosalia Rappaport was known.

110 Thomas Rappaport gave evidence that “in about 1992 the plaintiff began asking the defendant for the return of [these] items”. He said that Rosalia Rappaport said to Mr Faraday, “I gave you my gold signet ring with my initials on it, a gold bullion piece, US$2300 and AUD$700. I want all of these items back. They were not a gift. You were to give them back to me. You were only to hold them for me for safekeeping because I did not want to leave them in my flat.”

111 According to Thomas Rappaport, Mr Faraday denied having received any of the items and told Rosalia Rappaport to ask Thomas and Vivian Rappaport. Thomas Rappaport says that on the same occasion he asked Mr Faraday if he could remember giving his mother a receipt if he took the items. Mr Faraday replied, “No, I never took them, I never gave any receipt”. Thomas Rappaport says that as a result of this incident the relationship between Rosalia Rappaport, himself and his family became strained until 2000. She accused him of stealing the missing items. I accept this evidence.

112 Rosalia Rappaport signed a statutory declaration on 22 November 2000 confirming that she had entrusted the cash and jewellery referred to in the handwritten document to Mr Faraday. There was also unchallenged evidence from Rosalia Rappaport’s granddaughter, Michelle Rappaport, that during the school holidays in 1989, she was present when her grandmother brought out the gold bullion piece, signet ring, and the bundles of American and Australian dollars and gave them to Mr Faraday for safekeeping. She also deposed that in about 1995, her grandmother told her that she had been asking Mr Faraday for the last two or three years (that is from 1992 or 1993) if he had the items which she gave him for safekeeping. She deposed to having been told by Rosalia Rappaport that Mr Faraday said that he hadn’t received the items and that she must have given them to Thomas Rappaport or Thomas Rappaport had taken them without asking. She corroborated the evidence of Thomas Rappaport and the statutory declaration of Rosalia Rappaport that this incident created a great deal of tension in the family.

113 Mr Faraday denied receiving the items referred to in the note. He said that Rosalia Rappaport asked him to prepare an inventory of items which she had and that the note is a copy of the inventory which he prepared.

114 At one point in his cross-examination, Mr Faraday agreed that in 1992, Rosalia Rappaport asked him to return the items and that he told her that he did not have them. Later, he denied that she asked for the return of the items in 1992.

115 Mr Faraday said that the reason he outlined the perimeter of the piece of gold bullion was because he also had a gold bullion piece which was a little bit bigger and he did it so the two would not be mixed up.

116 According to Mr Faraday, the reason he was asked to prepare the inventory was because Rosalia Rappaport did not trust her family, except for her granddaughter, Michelle Rappaport.

117 However, if that were Rosalia Rappaport’s concern, she might be expected to leave the property with Mr Faraday for safekeeping, rather than obtain an inventory of it. I do not understand how the preparation of an inventory with a note that the property on it belonged to Rosalia Rappaport would have been of any assistance to her. There could be no dispute about who owned the property if it were left in her possession.

118 The reason which Mr Faraday gave as to why it was necessary to draw an outline of the perimeter of the piece of gold bullion to differentiate Rosalia Rappaport’s piece from his piece was:

“ If ever comes up some discussion about this, to be able to know which piece belongs … you never know when will come up such a case, as I didn’t know that this will come ever in front of the court. Automatically I made circumference of other but I didn’t make on the paper for myself, I made on the paper only for her to see that if ever we have some doubt, we can identify that that is mine. ”

119 However, there would only be a need for Mr Faraday to differentiate his piece of gold bullion from Rosalia Rappaport’s piece if both pieces came into the possession of the same person. He did not intend to leave his gold bullion piece with Rosalia Rappaport.

120 I am satisfied that Rosalia Rappaport provided the items to Mr Faraday in January 1989 for safekeeping. I am also satisfied that she requested the return of the goods in 1992, but was told by Mr Faraday that he did not have them. I also accept that at this time there was discussion about the preparation of a receipt, that Rosalia Rappaport could not find the receipt, and that Mr Faraday denied having given a receipt.

121 In his defence to this claim (prepared when he had legal representation) Mr Faraday pleaded the provisions of the Limitation Act as a defence to this claim.

122 Section 14(1)(b) of the Limitation Act prescribes a six-year limitation period for actions in tort. Section 21 of the Limitation Act provides:

“ 21 Successive wrongs to goods
Where:
(a) a cause of action for the conversion or detention of goods accrues to a person, and
(b) afterwards, possession of the goods not having been recovered by the person or by a person claiming through the person, a further cause of action for the conversion or detention of the goods or a cause of action to recover the proceeds of sale of the goods accrues to the person or to a person claiming through the person,
an action on the further cause of action for conversion or detention or on the cause of action to recover the proceeds of sale is not maintainable if brought after the expiration of a limitation period of six years running from the date when the first cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims. ”

123 Rosalia Rappaport’s proceedings were commenced on 8 July 2003. Rosalia Rappaport’s claim is in detinue. The cause of action arose from the time Mr Faraday’s detention of the goods became wrongful, namely, after demand was made by Rosalia Rappaport for their return and that demand was refused. There may have been further periods of wrongful detention of the goods, but at no time did Rosalia Rappaport recover possession of them. Accordingly, by reason of ss 14(1)(b) and 21 of the Limitation Act, the cause of action is not maintainable if brought after six years running from the date when it first accrued to Rosalia Rappaport.

124 Rosalia Rappaport made demand for the return of the goods in 1992. The proceedings were therefore statute barred after 1998. Mr Bradford argued that time did not run because when demand for the return of the goods was made on Mr Faraday, he falsely denied having received the goods and falsely denied having given a receipt for them. The submission seemed to invoke subs 55(1) of the Limitation Act, which relevantly provides:

“(1) Subject to subsection (3) where:
…
(b) a cause of action … is fraudulently concealed,
the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having … the cause of action first discovers, or may with reasonable diligence discover, the … concealment, … does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the … concealment.”

125 One problem with this submission is that Rosalia Rappaport has not pleaded a case of fraudulent concealment as a postponement to the bar. Another difficulty is that the postponement only operates for such period until Rosalia Rappaport could with reasonable diligence discover the concealment. As she always had in her possession the document which, when shown to her in 2000, led to her appreciating that the goods had in fact been entrusted to Mr Faraday in 1989, it was always open to her to make that discovery by searching her own possessions.

126 Rosalia Rappaport was 79 in 1992. There is evidence that she became confused on being told by Mr Faraday that he did not have the goods and had not given a receipt for them. However, it is also part of the Rappaports’ case that, nine and ten years later, Rosalia Rappaport was able to understand the contents of her statutory declaration and affidavit. In 2002, she deposed to having given Mr Faraday her ring, money and gold bullion piece for safekeeping. In her statutory declaration of 22 November 2000, she deposed to understanding from the receipt of 24 January 1989 that she had entrusted the property to Mr Faraday.

127 Mr Faraday’s denial of having received his sister’s goods and providing a receipt does not amount to a concealment of the plaintiff’s cause of action. He denied the facts which give rise to the cause of action. He did not conceal it. Moreover, before s 55 can be satisfied, the defendant must be guilty of moral turpitude or dishonesty (Hamilton v Kaljo (1989) 17 NSWLR 381 at 386). An allegation of fraud must be pleaded. It was not suggested to Mr Faraday in cross-examination that when he told Rosalia Rappaport in 1992 that he told a deliberate lie, or that he intended to conceal from his sister that he was holding her property. Even if it were open to the Rappaports to rely upon s 55 of the Limitation Act to extend the limitation period, I would not be satisfied that s 55 was satisfied.

128 It follows that the third claim of Rosalia Rappaport’s is barred by ss 14 and 21 of the Limitation Act.

Rosalia Rappaport’s Fourth and Fifth Claims

129 Rosalia Rappaport’s fourth claim that Mr Faraday received $11,000 in cash from Rosalia Rappaport in 1999 was based partly on hearsay and partly on admissions allegedly made by Mr Faraday to Thomas Rappaport. Thomas Rappaport deposed that Rosalia Rappaport had told him that she had given to Mr Faraday just over $11,000 in cash which she kept in her drawers (which I take to be the drawers of her cupboard).

130 Thomas Rappaport also deposed that after speaking to Ms Hollander, he had a conversation with Mr Faraday in which he told Mr Faraday that he had been informed by Ms Hollander that Mr Faraday had deposited the savings of $11,000 into his name with the NRMA, instead of placing the moneys in Rosalia Rappaport’s account with St George. According to Thomas Rappaport, Mr Faraday admitted having taken that step, and told him that he did so in order to earn higher interest, and because he did not have the documents to make up 100 points of identification as required to open an account in Rosalia Rappaport’s name. Thomas Rappaport said that Rosalia Rappaport had told him that she had given Mr Faraday the cash in order for him to deposit it into her St George account.

131 The fifth claim is that before Rosalia Rappaport went into the nursing home in August 1999, Mr Faraday obtained $28,000 from various accounts and cash held by her and took the money without her knowledge or consent. The Rappaports did not tender Rosalia Rappaport’s bank statements to seek to identify what moneys were wrongfully withdrawn by Mr Faraday.

132 Mr Faraday denied receiving $11,000 in cash. He denied the conversations deposed to by Thomas Rappaport. He denied taking $28,000 of Rosalia Rappaport’s money. There was no issue that for a period of time he was an authorised signatory on his sister’s bank account with St George. He admitted that he closed the St George account, apparently in 2002, which at the time had a balance of $4,074.18. He said that he added the sum of $925.82 to make an investment of $5,000 which was deposited with Suncorp. He still holds those moneys in a term deposit in his name.

133 Vivian Rappaport annexed to her affidavit a copy of a certificate of reinvestment of a term deposit of Mr Faraday with the Commonwealth Bank for the reinvestment of an amount of $10,575.45. Mr Faraday deposed that that investment was his money. The Rappaports relied upon his handwriting on the document which read:

“ 10,500 Com
5,000 St George – Com Rap (I topped up with $925-82)
5,800 Com Diff $4,074-18
3,200 HRM 925-82
3,700 Rap R $5,000-00
28,200 Valid ”

134 He acknowledged that the sum of $3,700 belonged to Rosalia Rappaport. Apart from this sum, and apart from the sum of $4,074.18 which he admitted having taken from Rosalia Rappaport’s account with St George when that account was closed, Mr Faraday contended that each of the other investments was his money.

135 It was common ground that Mr Faraday had been able to draw moneys from Rosalia Rappaport’s account. He said that prior to his withdrawing the balance of the account of $4,074.18, the moneys he withdrew from the account were used to pay expenses of Rosalia Rappaport.

136 I do not consider that Mr Faraday’s handwritten notes quoted in paragraph [133] above indicate that any of the investments listed were made with money belonging to Rosalia Rappaport, other than the two amounts of $4,074.18 and $3,700. No other moneys of Rosalia Rappaport were traced into Mr Faraday’s possession. The claim that he received $11,000 in cash from Rosalia Rappaport depends upon the admission which it is said he made to Thomas Rappaport and hearsay evidence from Thomas Rappaport of what he had been told by his mother. However, I am not satisfied that the evidence of Thomas Rappaport is reliable. I take into account not only my general assessment of his credit referred to above, but also the delay in the making of the allegations. I also take into account the degree of hostility in the family.

137 Mr Faraday’s note which identifies some of the moneys forming $28,200 as belonging to Rosalia Rappaport tends to corroborate his denial of having received $11,000 from her. If he had received funds from Rosalia Rappaport other than the moneys in her St George account, but was falsely denying such receipts, it is unlikely that he would acknowledge holding $3,700 of her money.

138 Mr Faraday’s explanation of the source of the $3,700 was that this was money which was given by Rosalia Rappaport to her sister Ms Hollander, and given by Ms Hollander to him because Ms Hollander did not want to keep it. He said the amount he received was $3,600 which with interest had grown to $3,700 by the time he wrote the note, which was apparently some time in 2002.

139 Mr Faraday said that “altogether I am holding $8,700 for her, originating from $3,600 and from $4,000 when I closed her St George book.” Mr Faraday said that he would make this money available to Thomas Rappaport on the same day that Thomas Rappaport settled his debt with Mr Faraday.

140 However, the money he is holding does not belong to Thomas Rappaport. Thomas Rappaport is not even a beneficiary under his mother’s will. There is no justification for Mr Faraday’s continuing to withhold from the executrix of Rosalia Rappaport’s estate the moneys he acknowledges he received from Rosalia Rappaport.

141 Thomas Rappaport has not established that Mr Faraday received more than the $3,700 and $4,074.18 which he acknowledged receiving. Mr Faraday is liable to repay those moneys together with interest.

142 No claim was made that Mr Faraday should pay compound interest on the moneys of Rosalia Rappaport which he is holding. He should pay interest at Supreme Court rates on the sum of $4,074.18 from the time those moneys were withdrawn from Rosalia Rappaport’s St George account. That date was not specifically identified. It must have been withdrawn by the time Mr Faraday wrote the note, which I will presume against him was on or about 6 May 2002.

143 It is not clear when he received the sum of $3,600, but his own evidence is that that sum, with interest, was $3,700 by the time he wrote the note on the term deposit certificate of reinvestment. That note was written some time after 6 May 2002. Only Mr Faraday could say when he received the moneys. He did not identify with any particularity how the moneys were invested. I should presume against him that as at 6 May 2002, he was holding $3,700 of Rosalia Rappaport’s money. Interest at the prescribed rates on the sum of $7,774.18 from 6 May 2002 to 7 March 2007 is $3,399.34.

144 He should account for both sums with interest at Supreme Court rates from 6 May 2002.

145 Otherwise proceedings No. 3668/03 should be dismissed.

Mr Faraday’s Claims in Proceedings No. 2649/02

146 Mr Faraday gave evidence that in 1980 or 1981, Thomas Rappaport suggested to him that they buy property together. According to Mr Faraday, Thomas Rappaport said:

“ I can manage the investment and solve any problems that arise. I know you much better than anyone else and I know that I can trust you. You can give me the money and I will buy it and we can become equal owners. I can account for any income tax and then just give you a half share or less so that it does not affect your pension. ”

147 I do not accept that evidence. In 1980 or 1981, Mr Faraday was still working. He was 56 or 57 years old. He did not start receiving a pension until the beginning of 1990. Mr Faraday has later said that he has an interest in property registered in the name of Thomas and Vivian Rappaport, and asserted that this was done in order to protect his pension (although he later resiled from that assertion). In my view, Mr Faraday made up the conversation referred to in para [146] above to attempt to provide a context for the later agreements which he says were made.

148 Mr Faraday also said that sometime after 1981, he began giving cash to Thomas Rappaport from time to time, whenever he had accumulated a few thousand dollars. This is denied by Thomas Rappaport.

149 Mr Faraday deposes that in about 1982, he and Thomas Rappaport, together with Vivian and Rosalia Rappaport, inspected a two-bedroom unit at Broadbeach in Queensland and that Thomas Rappaport proposed that they buy the property. Thomas Rappaport denies that that conversation occurred in 1982. He said that there was a conversation to the same effect in 1985. The Broadbeach property was purchased in November 1985. I do not accept that such a conversation occurred in 1982.

Purchase of the Warners Avenue Property

150 On 30 May 1984, Mr Faraday and Valeria Faraday purchased the Warners Avenue property as tenants in common in equal shares. The purchase price was $40,000. According to Thomas Rappaport, Mr Faraday told him at the time that:

“ I have bought this unit in cash. All of the money for this unit I obtained from your parents on loan. It is in both our names, half each and it will be rented out. Valerie will pay to me her half from her wages because she will be working. ”

Mr Faraday denied the conversation. He denied that Thomas Rappaport’s parents lent him any money to purchase the Warners Avenue property.

151 In paragraph 37 of Thomas Rappaport’s first affidavit sworn 7 July 2003, he deposed that, to the best of his recollection, Alexander and Rosalia Rappaport lent Mr Faraday most, if not all, of the purchase price for the Warners Avenue property and that after the defendant sold his unit in Bondi Junction in 1987, he repaid Alexander and Rosalia Rappaport in full for the moneys he had borrowed. He said that upon receiving those moneys, Alexander and Rosalia Rappaport then gave Thomas Rappaport a lump sum of $25,000 as a gift which he used to purchase other real estate.

152 In submissions, it was put for Thomas and Vivian Rappaport that the purchase price for the Warners Avenue property was provided by loans of $17,000 from Rosalia Rappaport and $20,000 from Alexander Rappaport, with Valeria Faraday contributing $3,000. There is no corroboration of those figures. Thomas and Vivian Rappaport did point to a record prepared by an officer of the Department of Immigration of an interview with Mr Faraday in connection with Valeria Faraday’s application for permanent resident status. It appears that the interview took place in late 1983. The record of the interview noted that Valeria Faraday had assets in Australia of $2,750. It recorded that Mr Faraday’s income was approximately $200 per week and that he fully supported his wife. He had “no debts as such”. However, this document says nothing as to whether Alexander or Rosalia Rappaport lent all or part of the purchase price of the Warners Avenue property.

153 The question of whether Mr Faraday borrowed $37,000 or thereabouts from Alexander and Rosalia Rappaport to purchase the Warners Avenue property has indirect relevance. Thomas and Vivian Rappaport say that it explains how Mr Faraday dealt with moneys which they say they paid him in 1987 on the purchase of his half-interest in the Broadbeach property.

154 Thomas and Vivian Rappaport say that Mr Faraday would have been unable, on the income he was earning, to have saved enough money to have purchased the Warners Avenue property from his own resources.

155 On the basis of Mr Faraday’s estimates of his earnings, it appears that he would have needed to have saved approximately half of his net income after tax to have saved enough money to have purchased the Warners Avenue property without borrowing. Mr Faraday deposed to having lived a very frugal existence. That evidence was not seriously challenged. I do not think it is out of the question that Mr Faraday could have saved enough of his own money to have purchased the Warners Avenue property without borrowing. That is particularly so if one accepts, as I do, that from time to time he received gifts of cash from Rosalia Rappaport. I am not satisfied that Mr Faraday borrowed $37,000 from Alexander and Rosalia Rappaport to acquire the Warners Avenue property.

Purchase of the Broadbeach Property

156 Thomas Rappaport says that Mr Faraday used moneys borrowed from Alexander and Rosalia Rappaport to buy his half interest in the Broadbeach property purchased in December 1985. According to Thomas Rappaport, Mr Faraday told him:

“ I have some savings and the balance I can borrow from the family. I can approach Laci and Malvina as well as your parents. ”

157 Thomas Rappaport said that he and Vivian Rappaport raised the moneys to buy their share of the Broadbeach property using their term deposit moneys of $35,349 and also part of a gift of $16,000 received from his mother. According to Thomas Rappaport, Mr Faraday later told him that he, Mr Faraday, had obtained his half of the share partly using his savings and borrowing the balance from Thomas Rappaport’s parents. Thomas Rappaport deposed that Mr Faraday told him:

“ The loan to your parents can be repaid if the property is ever sold. In the meantime, your parents do not expect any repayments from me and this suits me fine. ”

158 Mr Faraday denies these conversations. Mr Faraday says that he obtained all of the moneys to buy his share of the Broadbeach property from his savings. There are no contemporaneous documents to corroborate one version of events or the other. Neither version of events is consistent with paragraph 45 of Thomas Rappaport’s first affidavit in which he deposed that Rosalia Rappaport’s money had been channelled to him by Mr Faraday, and used in the purchase of “each property”. I am not satisfied that moneys were provided to Mr Faraday by way of loan from Alexander and Rosalia Rappaport. There is nothing to corroborate Thomas Rappaport’s evidence that Mr Faraday made admissions to this effect.

Thomas Rappaport’s Denial of Receiving Money from Mr Faraday for Investment

159 In paragraph 28 of Mr Faraday’s affidavit of 2 December 2003, he deposed that some time after 1981 “I began giving money to my nephew from time to time. Whenever I had a few thousand dollars, I would give him the money in cash.” In response to that paragraph, Thomas Rappaport said:

“ I strenuously deny paragraph 28. During the whole of the period between 1986 to 2000, there has always been friction arising from arguments and disagreements between my wife and the plaintiff, and my wife was always against any other form of investment with the plaintiff after our previous purchase together with him of the unit in Broadbeach in December 1985. Accordingly, she would never have approved the alleged receipt of moneys by me pursuant to the alleged agreement. ”

160 In paragraph 35 of Mr Faraday’s affidavit of 2 December 2003, he deposed that:

“ I continued to give TGR (Thomas Rappaport) money from time to time for the purchase of further investment properties. ”

This sentence was objected to and rejected. It was a conclusion about other primary facts not deposed to. The requirements of s 78 of the Evidence Act 1995 (NSW) were not met for it to be admitted as lay opinion evidence. However, the Rappaports read the following paragraph in Thomas Rappaport’s affidavit of 7 July 2004 (paragraph 37):

243 Thomas and Vivian Rappaport’s income tax returns for the year ended 30 June 1997 were not tendered. However, the income tax returns for the year ended 30 June 1998 were tendered. They showed gross rental from the Chevron Island property of $25,436. The rent recorded in the statement of account attributable to “TAB” was $15,996 (twelve instalments of $1,333). This represented over 60% of the rents received. Thomas Rappaport’s income tax return also showed that expenses were incurred for management fees, maintenance levies, council rates, telephone, postage etc, maintenance and depreciation totalling $7,854.

244 In the year ended 30 June 1996, the gross rents for the Belmore Road property as shown in the Rappaports’ tax returns totalled $36,160. The expenses totalled $4,929 comprising partly interest but also comprising management fees of $3,616, repairs and maintenance of $850 and other small amounts for postage, stationery, telephone and depreciation. The total of expenses, other than interest and depreciation, was $4,539.

245 The rent shown on the running sheets produced by Mr Faraday as having been credited to him for the Belmore Road property for the financial year ended 30 June 1996 comprised twelve payments of $502.22, being a total of $6,026.64. This was exactly one-sixth of the rental income for that year. This is consistent with the 1993/94 income tax calculation document referred to above. There were no entries in the running sheets for Mr Faraday being debited with a share of expenses.

246 It appears from Thomas Rappaport’s income tax return for the year ended 30 June 1998 that in that financial year, the same gross rent was earned from the Belmore Road property. Expenses, other than interest, bank charges and depreciation, consisted of management fees of $3,615, legal expenses of $450, and painting of $1,495. The running sheets produced by Mr Faraday showed twelve monthly credit entries of $502.22, again, precisely one-sixth of the gross rents for the Belmore Road property. The statement of account showed a debit of $75 as a “legal expense”, which was also one-sixth of the expense for this item shown in the income tax return. There was no debit of any expense for the managing agent’s commission, or for the cost of painting.

247 The running sheets are inconsistent with Mr Faraday’s case that he had a 40% interest in the Belmore Road property. Except for the omission of all of the expenses, they are consistent with his having a one-sixth interest in the property.

248 The income tax return for the year ended 30 June 1996 for Thomas and Vivian Rappaport shows the receipt of gross rents from the two Brisbane Road properties totalling $14,400. The income tax return shows expenses in respect of those properties of $26,668 for interest on borrowings, and $11,719 for other expenses in relation to the properties, namely, council rates, maintenance levies, management fees, pest control, postage, repairs and maintenance, stationery, telephone, travel, and depreciation. The running sheets produced by Mr Faraday showed credits for the period from 1 July 1995 to 30 June 1996 totalling $13,710. (Thomas Rappaport calculated the total as $12,530, but he omitted a credit entry for 26 November 1995.) Obviously, this is not consistent with Mr Faraday’s being credited with half of the rental income from the two properties.

249 The running sheets included debits for some of the expenses associated with the Brisbane Road properties totalling $5,200.52. It is not possible to reconcile these expenses with the property expenses recorded in Thomas and Vivian Rappaport’s 1996 income tax return. The debits did not represent 50% of the expenses of the two properties.

250 In the 1998 financial year, the rents credited on the running sheets in respect of the Brisbane Road properties totalled $16,037.50. This was more than the rental income for both of the Brisbane Road properties as disclosed in Thomas Rappaport’s 1998 income tax return for the two properties. Again, there was no correlation between the expenses shown on the running sheets in relation to these properties and the income tax return. Substantially more was charged as an expense on the running sheets for council rates, water rates and body corporate levies than was claimed as deductions for the two properties in the income tax return.

251 These inconsistencies between the statements in the running sheets of Mr Faraday’s share of income and expense in relation to the three properties compared with the information in Thomas and Vivian Rappaport’s tax returns as to the income derived from the properties and the expenses incurred in relation to them, cast considerable doubt on the authenticity of the running sheets.

252 I have already observed that the debit of $100,000 on 27 July 1995, which Mr Faraday attributed to the purchase of one of the Brisbane Road properties, was made years after the purchase of those properties. Of course it is possible that the debit relates to something else; possibly moneys provided by Thomas Rappaport to Mr Faraday in anticipation of his overseas trip which neither Mr Faraday nor Thomas Rappaport was prepared to acknowledge. That, however, is speculation.

253 The running sheets do not cover the 1993-1994 financial year, and there is no entry correlating with the calculation made by Thomas Rappaport of the allowance to be made to him and his wife of $6,519.62 for income tax paid in respect of income derived from the Queensland and Randwick properties in the 1993/94 financial year. However, there are debits of $7,197.25 for “Income Tax 1994/95”, $6,926.00 for “Income Tax year 1995/96”, $4,600 for “Estimated Income tax 1996/97”, $4,800 for “Income tax 1997/98” and $4,998.00 for “Income tax 1998/99”.

254 Apart from this and the correlation between the share of gross rent from the Belmore Road property and Thomas Rappaport’s 1993/94 income tax calculation, there are two further matters that suggest the documents were produced by Thomas Rappaport. The first is that they are the only documents either party has produced, other than Thomas Rappaport’s notes for the 1993/1994 calculation of income tax, which provide any sort of account by Thomas Rappaport for somebody else’s share in any of the investment properties. It follows from Thomas Rappaport’s first affidavit that he understood that his mother intended that Mr Faraday should keep track of her money which was invested in properties registered in the name of Thomas and Vivian Rappaport, and that Mr Faraday should manage that money for Thomas Rappaport’s mother. It is hard to see how Mr Faraday could do that without obtaining some account from Thomas Rappaport. Whether Thomas Rappaport received his mother’s money from Mr Faraday for investment, or Mr Faraday’s money, some account would be needed. The only documents produced which could be of that character are the running sheets. They are consistent with the investment being of Mr Faraday’s money in that the running balance has debits and credits for moneys received from Mr Faraday, and moneys paid to him.

255 The second feature of the statements which points to their authenticity is the handwriting “printed 28/8/97” on the first page of the second bundle. The word “printed” was written in distinctive running writing. Although it was only one word, Mr Dubedat was able to form the view that it was unlikely that anyone other than the writer of the specimen documents wrote the questioned handwriting, including the questioned handwriting on this document. He did observe that the limited amount of writing for comparison did not allow for a “definite conclusion” as to who wrote the questioned documents. Mr Dubedat made a comparison chart of the handwriting on this document in which some of the distinctive letter shapes were enlarged and compared with documents from the specimen documents. The parts of the specimen documents which were used for this purpose did not include the parts of those documents where Thomas Rappaport had disputed the handwriting was his. The cross-examination of Mr Dubedat did not give me any reason to doubt the reliability of his conclusions.

256 The bundle of five pages containing the handwriting “Printed 28/8/97” covered the period from 25 May 1995 to 30 December 1997. All five pages could not have been printed on 28 August 1997. That does not mean that Thomas Rappaport did not write the words on the document. He could have placed them on the document after 30 December 1997. He could have placed them on the first page and attached some or all of the remaining pages at a later date.

257 There are conflicting objective indicators as to the authenticity of the running sheets. The sheets do not reflect the rentals and expenses for the Queensland properties. However, there is a correlation between the rentals received for the butcher’s shop and Thomas Rappaport’s 1993/1994 income tax calculation, i.e. that there was a credit of one-sixth of the rentals received. It is unlikely that Mr Faraday would have fabricated these figures but not asserted a one-sixth interest in the property. The debit entry of $100,000 on 27 July 1995 is unexplained. However, it is unlikely that Mr Faraday would have fabricated this entry which was inconsistent with his own interests. Having regard to the writing on the first page of one of the documents, which I accept is in Thomas Rappaport’s hand, and having regard also to the considerations referred to in paragraph [254] above, I consider that the documents were produced by Thomas Rappaport and provided by him to Mr Faraday.

1995 Payments to Thomas Rappaport

258 In 1995, Mr Faraday sold the Warners Avenue property and received approximately $75,000 from the sale. According to the running sheets, he made deposits with Thomas Rappaport between 30 May 1995 and 21 August 1995 of $69,450. According to the running sheets, there were sixteen different deposits over that period. Mr Faraday’s passbook with the Commonwealth Bank does show withdrawals consistent with the making of such deposits, save that in one case the running sheets credit Mr Faraday with a deposit of $12,000 some days before the corresponding moneys were withdrawn from his account with the Commonwealth Bank.

259 Thomas Rappaport admitted to receiving approximately $65,000 in cash from Mr Faraday at this time. According to Thomas Rappaport, the money was not paid to him as moneys to be invested. It was paid to him in instalments of approximately $10,000 on six or seven separate occasions. Thomas Rappaport took these amounts of cash in Australian dollars and converted them into foreign currency, and then delivered the foreign currency to Mr Faraday. This was in anticipation of Mr Faraday’s leaving for an overseas trip, which he did on 11 November 1995.

260 Mr Faraday was away until September 1996. It does seem likely that he needed moneys to support him whilst he was overseas. Mr Faraday said that whilst he was overseas in 1995, he had use of a National Bank Visa Card on Thomas Rappaport’s account. However, the card he produced was a card in the name of Thomas Rappaport and which would have required Thomas Rappaport’s signature so that it could be used. Mr Faraday was asked how he came into possession of that card and was unable to give an explanation. Thomas Rappaport has accused Mr Faraday of stealing a number of documents from his house. I do not accept that Mr Faraday had the use of a secondary card on Thomas Rappaport’s account when he made his overseas trip in 1995 and 1996.

261 Mr Faraday said that he lived very cheaply in Europe, staying with friends and at YMCA accommodation and in “bed and breakfast youth hotels”. At the time, he was 71 and 72. According to Mr Faraday, during his trip of almost ten months in Europe, he spent in total a sum equivalent of $11,000, not including his airfares. Even allowing for Mr Faraday’s frugality, that stretches credulity.

262 There is an odd feature of both parties’ account of this transaction. According to Mr Faraday, Thomas Rappaport asked him to provide the moneys in smaller amounts. According to Mr Faraday, Thomas Rappaport told him he did not want a cheque and he did not want $75,000 in cash. According to Mr Faraday, Thomas Rappaport asked him to give him smaller amounts which he did, and he visited Thomas Rappaport regularly to deposit the money with him, apparently about seventeen times. According to Thomas Rappaport, Mr Faraday visited him on at least six or seven occasions with amounts of up to $10,000 in cash for him to exchange into foreign currency, and he made at least six or seven foreign currency conversions, and handed the foreign currency cash back to Mr Faraday. Why the parties thought it necessary to deal in this way remains a mystery unless it was to ensure there was no reporting of the cash transactions.

263 Again, there is no real corroboration of either story. I do not think these events assist in resolving the issues of credit.

Conclusions on Mr Faraday’s Claim to a Beneficial Interest in the Three Properties

264 On the basis of the admissions in Thomas Rappaport’s first affidavit, his 1990 notes, his 1993/94 tax calculations, and the running sheets, I conclude that Mr Faraday paid cash to Thomas Rappaport for Thomas Rappaport to invest for him. It is impossible to say whether some or all of the money came from gifts which Rosalia Rappaport made to him. It is possible he was investing the money as trustee for Rosalia Rappaport, but the evidence does not establish that that was so. It is impossible to say how much money was provided by Mr Faraday to Thomas Rappaport. The documents which I accept are in the hand of Thomas Rappaport confirm that someone other than Thomas and Vivian Rappaport was intended to have a share of the income from the three properties, and, by inference, a beneficial interest in them.

265 However, I do not accept Mr Faraday as a reliable witness. I do not accept his evidence of the agreements he said he made with Thomas Rappaport. Moreover, he gave no evidence of an agreement that he should have a 50% beneficial interest in the Chevron Island property. His evidence that he should have a 40% beneficial interest in the Belmore Road property was not corroborated, although it appears that Thomas Rappaport proceeded on the basis that he and his wife had only a five-sixth interest in that property (or at least the income from it). Nor is it possible to say how much of the money provided by Mr Faraday was contributed to the purchase price of any of those properties. Further, for the reasons I gave earlier, Mr Faraday conducted himself on the basis that his investments with Thomas Rappaport did not give him a beneficial interest in any of the properties.

266 Whatever might be the true arrangements in relation to the investment into the three properties, the evidence does not establish that the arrangements were those alleged by Mr Faraday. I am not satisfied that it was agreed that Mr Faraday should have a particular beneficial interest in any of the properties. There was no written or oral declaration of trust in respect of any of the properties. The arrangement for investment was of the loosest kind.

267 It has been necessary to review the conflicting strands in the evidence to conclude that Thomas Rappaport produced the running sheets. It was necessary to reach a conclusion about that because of Mr Faraday’s claim that Thomas Rappaport should account for the credit balance on those sheets.

268 Mr Faraday’s claim to a beneficial interest in the three properties can be dealt with more simply. Section 54A of the Conveyancing Act provides:

“ 54A Contracts for sale etc of land to be in writing
(1) No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.
(2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.
(3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900 .”

269 This section applies to agreements to dispose of an interest in land by creating a trust (Khoury v Khouri).

270 Section 23C of the Conveyancing Act provides:

“ 23C Instruments required to be in writing

(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person’s will, or by the person’s agent thereunto lawfully authorised in writing.
(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts. ”

271 The equivalent Queensland provisions are ss 11 and 59 of the Property Law Act 1974 (Qld).

272 In this case, Mr Faraday did not plead that any of the properties were held for him on a resulting or constructive trust. Nor did the facts indicate that such a claim was available to him. There was no evidence of what moneys were provided by him which were applied towards the purchase of any of the properties. There was no evidence of his acting to his detriment on the assumption that he had a beneficial interest in the properties in circumstances that made it unconscionable for Thomas and Vivian Rappaport to deny such an interest.

273 Sections 23C and 54A of the Conveyancing Act (NSW) and ss 11 and 59 of the Property Law Act (Qld) embody the policy of more than 500 years of Anglo-Australian law that the title to land should not depend on disputed conversations, or conflicting or uncertain inferences, of the kind raised in this case.

274 Mr Faraday’s case was that there was a contract to dispose of an interest in land when it was acquired by Thomas and Vivian Rappaport. To be enforceable, the essential terms of such an agreement must be in writing and signed by the parties to be charged, or some person authorised by them.

275 None of the documents relied on by Mr Faraday is of that kind. Neither the 1990 notes, nor the running sheets, identify any percentage beneficial interest in the property. Such a percentage can be inferred, but is not stated in the 1993/94 income tax calculations. None of the documents identifies Mr Faraday as the person entitled to a beneficial interest in the properties. None of the documents is signed by Thomas or Vivian Rappaport.

276 Accordingly, the agreement and trust asserted by Mr Faraday, if established, would be unenforceable. Mr Faraday did not plead or argue that there were acts of part performance or circumstances giving rise to an estoppel which would preclude Thomas and Vivian Rappaport from relying on the statutes. Mr Faraday was incapable of understanding the concepts involved. I do not consider that there were sufficient acts of part performance to take the case outside s 54A of the Conveyancing Act and s 59 of the Property Law Act. The only acts of Mr Faraday were the payment of some unknown amounts of money to Thomas Rappaport. Such payments are not sufficient. They are not unequivocally referable to some such contract to create a trust in favour of Mr Faraday (Khoury v Khouri at [88]-[92]).

277 As in Khoury v Khouri, in this case there were no acts such as the taking of possession of property, or the payment for the upkeep or the rates for the properties or the receipt of rents. I do not regard the provision by Thomas Rappaport of an account in which such rents were credited and expenses debited to Mr Faraday as acts of part performance by Mr Faraday. He did not carry out any relevant act, apart from the payment of money.

278 Nor can Mr Faraday rely on the principle that equity will not allow the Statute of Frauds to be used as an instrument of fraud. Whatever the scope of that principle, before it can be invoked, it is essential for the plaintiff to prove the bargain “under which some sufficiently defined beneficial interest was to be taken by another” (Bannister v Bannister [1948] 2 All ER 133 at 136). Here, there was no proof of such a bargain. Instead, this case exemplifies the policy behind the requirement that the essential terms of agreements for the disposition of interests in land be evidenced by a signed memorandum.

279 For these reasons, Mr Faraday’s claim to a beneficial interest in the properties should be dismissed.

Account for Balance of $84,159.53

280 In his statement of claim, Mr Faraday made no claim for the balance of $84,159.53 shown as owing to him as at 3 February 2000 on the last of the running sheets.

281 However, Mr Faraday made such a claim in opening. The defendants did not oppose his having leave to amend to make such a claim. I granted such leave, but Mr Faraday was incapable of producing an amended pleading. During the hearing, I directed that the statement of claim should be taken to be amended by the inclusion of a claim for the recovery of those moneys.

282 Naturally, no defence was filed to this claim. It was submitted for Thomas Rappaport that a portion of the claim was statute-barred by reason of ss 14, 15, 23 and 48 of the Limitation Act.

283 I have concluded that Mr Faraday provided moneys to Thomas Rappaport for investment and that Thomas Rappaport produced the running sheets. Sections 54A and 23C of the Conveyancing Act are not a defence to the claim for the return of moneys. The evidence does not show what moneys were provided by Mr Faraday or when they were provided. However, the running sheets contain an acknowledgment that $84,159.53 was owed to, or held on behalf of, Mr Faraday as at 3 February 2000. In my view, the sheets acknowledge the existence of a debt, not a trust of money. There was no obligation on Thomas Rappaport to keep the money given to him in a separate account. There was no evidence of a declaration of trust of the moneys.

284 The provision of the running sheets to Mr Faraday was an admission that a debt of $84,159.53 was due to him as at 3 February 2000. It was a confirmation made to him of that cause of action. A claim for recovery of that sum was not statute-barred when Mr Faraday’s proceedings were commenced on 13 May 2002 (Limitation Act, s 54).

285 The amendment which is taken to be made of the statement of claim substitutes a new cause of action arising from the same facts as those giving rise to the causes of action and claims for relief in the statement of claim. Therefore, unless the Court otherwise orders, the amendment is taken to have had effect from the date on which the proceedings were commenced (Civil Procedure Act 2005 (NSW), s 65(2)(c) and (3)). I see no reason to make a contrary order. Nor was I asked to do so. The claim to recover $84,159.53 owed as at 3 February 2000 is not statute-barred.

286 Mr Faraday is entitled to judgment for the debt of $84,159.53, together with interest at the rates prescribed pursuant to s 100 of the Civil Procedure, Act from 3 February 2000 to the date of judgment. As at 7 March 2007 interest on that sum totals $56,412.49.

Summary of Conclusions

287 In summary, in proceedings No. 2649/02, whilst I have found that Mr Faraday provided moneys to Thomas Rappaport for investment, and that Thomas Rappaport produced the running sheets, I have concluded that Mr Faraday has not established the making of an agreement for him to have any defined beneficial interest in the properties acquired by Thomas and Vivian Rappaport. In any event, his claim to a beneficial interest in the three properties would be defeated by s 54A or s 23C(1)(a) of the Conveyancing Act (NSW) or by s 59 or s 11(1)(a) of the Property Law Act (Qld).

288 Mr Faraday did not plead, and the evidence does not support, a claim that the properties are held on a resulting or constructive trust for him. I have concluded that he is entitled to the credit balance shown on the running sheets of $84,159.53 as at 3 February 2000 with interest at the prescribed rates.

289 In proceedings No. 1684/03, I have concluded that Mr Faraday is entitled to the return of his certificate of title to the Dundas property and an order for the removal of the caveat over that property.

290 In proceedings No. 3668/03, the first of Rosalia Rappaport’s claims was not pressed. As to the second claim, I have found that a payment of $12,500 was made to Mr Faraday as a gift, not as a loan or pursuant to a contract to leave the Dundas property by his will to Rosalia Rappaport or her estate or her relatives. As to the third claim, I have found that the moneys and goods were handed to Mr Faraday as alleged, but that the cause of action for their return, or damages for their detention, is barred by the Limitation Act. As to the fourth and fifth claims, I have found that the plaintiff has only proved that Mr Faraday received the sums of $4,074.18 and $3,600 which he admitted. He is liable to pay the funds he admitted receiving with interest to the representative of Rosalia Rappaport’s estate.

Orders

291 For these reasons, in proceedings No. 2649/02, I give judgment for the plaintiff against the first defendant in the sum of $140,572.02. I order that those proceedings be otherwise dismissed.

292 In proceedings No. 1684/03, I order that within 21 days, the defendant deliver or cause to be delivered to the plaintiff Certificate of Title Volume 8162 Folio 222 in respect of the property known as 113 Moffats Drive, Dundas, NSW. I order that caveat AA813156G lodged in respect of that land be removed forthwith. I order that those proceedings be otherwise dismissed.

293 In proceedings No. 3668/03, I order that within 21 days, the defendant pay Michelle Rappaport as representative of the estate of Rosalia Rappaport the sum of $11,173.52. I order that those proceedings be otherwise dismissed.

294 The exhibits may be returned after 28 days.

295 I will hear the parties on costs.

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