Fourniotis v Vallianatos
[2018] VSC 369
•20 July 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
REAL PROPERTY LIST
VCAT Reference No BP246/17
| ANGELA FOURNIOTIS v ANDREW GERRY VALLIANATOS | Applicant Respondent |
| and: | |
| ANDREW GERRY VALLIANATOS v ANGELA FOURNIOTIS REGISTRAR OF TITLES | Applicant by Cross claim First Respondent to Cross claim Second Respondent to Cross claim |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 4, 5, 6, 7, 29 June 2018 |
DATE OF JUDGMENT: | 20 July 2018 |
CASE MAY BE CITED AS: | Fourniotis v Vallianatos |
MEDIUM NEUTRAL CITATION: | [2018] VSC 369; (Building and Property) [2018] VCAT 1092 |
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LIMITATION OF ACTIONS – Adverse possession – Co-ownership – Doe v Bird (1809) 11 East 49; 103 ER 22 – Culley v Doe d Taylerson (1840) 11 Ad & E 1008; 113 ER 697 – Real Property Limitation Act 1833 (Eng) ss 2, 12 – Beaumont v Hochkins (1889) 15 VLR 442 – Real Property Statute 1864 s 28 – Meaning of adverse possession – JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 – Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 – Limitation of Actions Act 1958 ss 3(1), 8, 14(1), 14(4), 18.
LIMITATION OF ACTIONS – Adverse possession – Co-ownership – “shall be deemed to be adverse possession of the land” under Limitation of Actions Act 1958 s 14(4) – Muller v Dalgety & Co (1909) 9 CLR 693 – Commissioner of Taxation (Cth) v Comber (1986) 10 FCR 88 – Limitation of Actions Act 1958 s 14(4).
LIMITATION OF ACTIONS – Adverse possession – Co-ownership – Aggregation of successive periods – Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 – Doe v Bird (1809) 11 East 49; 103 ER 22 – Culley v Doe d Taylerson (1840) 11 Ad & E 1008; 113 ER 697 – Lai Wai Kuen v Wong Shau Kwong [2004] 4 HKC 528 – Wills v Wills [2004] 1 P&CR 37; [2003] UKPC 84 – Limitation of Actions Act 1881 (Jamaica) s 14 – Limitation of Actions Act 1958 s 14(4).
LIMITATION OF ACTIONS – Fraudulent concealment requires moral turpitude, wrongdoing or unconscionability –Hamilton v Kaljo (1989) 17 NSWLR 381 – New South Wales v McCloy Hutcherson Pty Ltd (1989) 17 NSWLR 381 – Seymour v Seymour (1996) 40 NSWLR 358 – Limitation of Actions Act 1969 (NSW) s 55(1) – Limitation of Actions Act 1958 s 27(b).
PARTNERSHIPS AND JOINT VENTURES – Partnership relationship is contractual – Duke Group Ltd (in liq) v Pilmer (1998) 144 FLR 1– Tenancy in common does not create a partnership under general law – French v Styring (1987) 78 ALR 588 – Federal Commissioner of Taxation v McDonald (1987) 78 ALR 588 – Jolley v Commissioner of Taxation (1989) 86 ALR 297 – Co-ownership does not create a partnership at general law – Property Law Act 1958 s28A – Limitation of Actions Act ss 27B, 14(4) – Partnership Act 1958, s 8, s37(1).
PARTNERSHIPS AND JOINT VENTURES – Co-owners are deemed partners for the purposes of the Income Tax Assessment Act 1936 (Cth) – Federal Commissioner of Taxation v McDonald (1987) 78 ALR 588 – Jolley v Commissioner of Taxation (1989) 86 ALR 297 – Income Tax Assessment Act 1936 (Cth) ss 6, 90, 91, 92.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant/First Respondent to Cross claim | Mr R D Shepherd | MW Law |
| For the Respondent/Applicant by Cross claim | Mr J Evans QC with Mr P R Miller | Madgwicks |
HIS HONOUR:
Introduction
This is a proceeding which was issued in the Real Property List of the Victorian Civil and Administrative Tribunal (“VCAT”) which was, at the request of the then VCAT President, Garde J, to be heard by a judge of the Supreme Court who was appointed an Acting Member of VCAT under s 29 of the Victorian Civil and Administrative Tribunal Act 1998 (“the VCAT Act”). Accordingly, I heard this matter as an Acting Member of VCAT, as a judge of the Supreme Court and also constituted the Supreme Court for the purpose of hearing this matter in accordance with s 29(8) of the VCAT Act.
By her amended points of claim dated 18 December 2017, the Applicant, Angela Fourniotis (“Angela”), seeks a declaration that she is the owner of a one sixth share of 26 Gurner Street, St Kilda (“Gurner Street”) and orders pursuant to ss 225, 228 and 233 of the Property Law Act 1958. On 2 March 2018, the Court made orders setting the proceeding down for trial, with the trial of the Applicant’s claim for compensation pursuant to s 233(1) and 228(1) of the Property Law Act 1958 deferred until the determination of the balance of the proceedings.[1]
[1]Orders made by the Honourable Justice Croft on 2 March 2018, [1], [2].
By his defence to the amended points of claim and cross claim dated 20 December 2017, the Respondent, Andrew Vallianatos (“Andrew”), seeks:[2]
[2]Respondent’s Outline of Closing Submissions (22 June 2018), [3].
(1) a declaration that with respect to Gurner Street:
(a)any right of action held by Angela as registered proprietor of one of a total of six undivided shares in Gurner Street to recover that land has been extinguished by operation of the Limitations of Actions Act 1958;
(b)Andrew, having acquired title by possession, is entitled to the estate in fee simple in the land of which Angela is the registered proprietor;
(2)an order that Andrew be recorded by the Registrar of Titles as the registered proprietor of Gurner Street.
In general terms, the position of the parties is that the Applicant contends that the Respondent, Andrew, has failed to establish that he adversely possessed the registered interest held by the Applicant in Gurner Street; Andrew having failed to discharge the onus of proof upon him in relation to each element of adverse possession. More particularly, but again in general terms, the Applicant contends that the evidence establishes that at all material times in which Andrew alleges adverse possession Angela consented to Andrew and his predecessors in title having possession of Gurner Street; there were representations both in the family dealings and in documents, including wills and a codicil, that Angela remained the owner of her interest in Gurner Street; that the company Vallianatos Investment Co Pty Ltd (“VICPL”) at all material times was the landlord of Gurner Street receiving the whole of Andrew’s share of rent and that it was immaterial how this was recorded in the financial statements of various entities, and that it received the rent from the property within in the meaning of s 14(4) of the Limitation of Actions Act 1958 (“LOAA”); Andrew has failed to make out his case that VICPL was his agent for the receipt of rent and, accordingly, cannot rely on s 14(4) of the LOAA for that and other reasons, including that, were he to do so, he would be taking advantage of his own wrong. For the reasons which follow, I reject the Applicant’s contentions.
Having regard to the nature of these proceedings, I accept that it is important to be very clear in relation to the issues which are presently before the Court and VCAT. More particularly, I accept the submissions of the Respondent that, despite the tenor of much of the evidence adduced by Angela during the trial, this proceeding does not concern any question of the morality of the distribution of wealth as between Andrew and Angela out of the estate of Anna Vallianatos (“Anna”). The Court and VCAT should not be asked to exercise “palm tree justice” on the grounds of some undefined notion of fairness; and, were this to be the case, it is not an exercise properly embarked upon. In this respect, I note and accept the Respondent’s submissions that the following issues are not raised by the pleadings and, consequently, do not fall for consideration:[3]
(1)undue influence: any suggestion of undue influence exerted by Andrew over Anna in respect to the making of any decision by Anna with respect to disposal of property or her wills;
(2)testator’s family maintenance: Angela’s position under either of her parents’ wills, including any allegation that Anna disposed of property inter vivos, or that Anna failed to discharge any responsibility to provide maintenance and support for Angela;
(3)proprietary estoppel: proprietary estoppel in Angela’s favour, based on contributions in money or of labour by Angela to the purchase or maintenance of Gurner Street.
[3]Respondent’s Outline of Closing Submissions (22 June 2018), [4].
Having regard to these matters, I accept the submissions on the part of the Respondent that the questions for determination in these proceedings are limited to the following:[4]
[4]Respondent’s Outline of Closing Submissions (22 June 2018), [5].
(1) has Angela’s right of action to recover her interest in Gurner Street been extinguished by operation of ss 8, 14(1), 14(4) and 18 of the LOAA?
(2) if yes to (1):
(a) was Angela ever a partner in any partnerships, being the partnerships described by Angela as the First Firm,[5] Second Firm,[6] and Third Firm?;[7] and
[5]Angela submits that the entity called “Vallianatos & Family” was made up of Andreas Vallianatos (“Andreas”), Anna Vallianatos (“Anna”), Denise Fitzsimmons, Irene Sintelis, Angela and Andrew (and later Andreas, Anna, Angela and Andrew), by reference to the Partnership Income Tax Return for the financial year ending in 1985, and was a firm for the purposes of the Partnership Act 1958: see Applicant’s Amended Points of Claim (18 December 2017), [7A] and following.
[6]Angela submits that the entity called “Vallianatos A & AG” was made up of Anna, Andreas and Angela, and was a firm for the purposes of the Partnership Act 1958: see Applicant’s Amended Points of Claim (18 December 2017), [7E] and following.
[7]Angela submits that an entity made up of Andrew and Angela was a firm for the purposes of the Partnership Act 1958: see Applicant’s Amended Points of Claim (18 December 2017), [7F] and following.
(b) if so, by her being a partner in the First Firm, Second Firm and Third Firm, does Angela’s right of action to recover her interest in Gurner Street survive the operation of ss 8, 14(1), 14(4) and 18 of the LOAA?
(3) if no to (2), does s 27(b) of the LOAA operate such that Angela’s right of action to recover her interest in Gurner Street survives the operation of ss 8, 14(1), 14(4) and 18 of the LOAA?
A further observation should be made in relation to these proceedings with respect to evidentiary matters having regard to the position that evidence as to factual matters concerns events from the 1970s to date. In general terms, it is clear from human experience that memory is fragile and potentially very unreliable after long periods of time. Consequently, in circumstances where memory is being tested over long periods—as in these proceedings—significant weight must be given to contemporaneous documentary evidence. For the reasons which follow, this is particularly significant in these proceedings. In any event, the position, in general terms, was helpfully stated by Lewison J (as his Lordship then was) relatively recently.[8]
[8]See Food Co UK LLP (t/a Muffin Break) v Henry Boot Developments Ltd [2010] EWHC 358 (Ch), [4] (Lewison J as his Lordship then was):
Although some of the representations on which the tenants rely were made in writing, in all cases they allege that these representations were confirmed, expanded, or supplemented by oral representations. These oral representations were made in conversations and at meetings of which there is scant record. In approaching the evidence I have tended to place weight on contemporaneous documents and documents which came into existence before the problems emerged. In assessing the recollections of witnesses, it is also important to avoid the benefit of hindsight. I must try to assess what people did, said and thought at the time. In that connection I have borne in mind the words of Lord Pearce in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd's Rep 403, 431:
Credibility involves wider problems than mere ’demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.
Factual matters
Background
Andrew was born on 28 May 1965, and has three sisters: Denise Fitzsimmons (“Denise”) (born 1953), Irene Sintelis (“Irene”) (born 1954) and Angela (born 24 October 1957).[9] Andrew’s father was Andreas Vallianatos (“Andreas”) and his mother was Anna. Andreas died on 19 March 1994. Anna died on 11 April 2015.[10]
[9]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [2]: Witness Statement of Angela Fourniotis (as at 29 June 2018), [2]; Witness Statement of Denise Fitzsimmons (as at 7 June 2018), [1].
[10]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [2].
Andreas migrated to Australia from Greece during 1942 as a merchant sailor and Anna migrated to Australia from Greece in 1951.[11]
[11]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [3].
During the 1960s, 1970s and 1980s, Andreas purchased the following properties (together “the rental properties”):[12]
[12]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [5].
(1) 26 Emo Road, Malvern East, which contained a block of ten flats (“Emo Road”);
(2) 25 Tennyson Street, Elwood, which contained a block of nine flats (“Tennyson Street”);
(3) 76 Westbury Street, St Kilda East, which contained a block of eight flats (“Westbury Street”); and
(4) Gurner Street, which was land, with an old brick house on it.
By a transfer of land registered on 8 September 1970, Andreas purchased Gurner Street for $18,000.[13] Andreas then demolished the old dwelling on Gurner Street and constructed a block of nine flats on the land.[14]
[13]Transfer of land registered 8 September 1970 (Land Titles Office Dealing Number D824169).
[14]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [18].
Gurner Street
In about 1970, Andreas decided to split Gurner Street into six shares (to divide among his wife and children).
Andreas’ purpose in doing so was to minimise the income tax payable in respect of the income from Gurner Street. Andrew gave evidence that Jim Cox said (in the presence of Andreas) that the purpose of dividing the shares was to minimise the income tax payable on the rental income from Gurner Street.[15] Denise gave evidence to this effect also.[16] There is no basis for the allegations of dishonesty or concealment on the part of Andreas vis-à-vis the Applicant as submitted on her behalf; generally or with respect to alleged partnership arrangements.[17] As to the latter, as discussed in these reasons, no partnership including the Applicant ever arose. Although some “partnership” may have arisen under the Income Tax Assessment Act 1936 (Cth), this is not, as discussed in the reasons which follow, relevant for the present proceedings.
[15]Transcript, 50–1, 152–4.
[16]Transcript, 489.
[17]See Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [20]–[24].
By a transfer of land dated 30 October 1970 but registered on 7 June 1971, Andreas divided the legal interest in Gurner Street and transferred Gurner Street to himself as to two sixths, and to Anna, Denise, Irene and Angela as to four shares of one sixth each, for a total consideration of $12,000.[18] At 30 October 1970, Angela had just turned 13 years old.
[18]Transfer of land registered 7 June 1971 (Land Titles Office Dealing Number E64338).
By a transfer of land dated 18 July 1983 and registered 14 September 1983, Andreas transferred to Andrew a one-sixth interest in Gurner Street.[19] At this time, Andrew was 18 years old and had just started working full time in the management of the rental properties.[20] Andrew did not pay Andreas for his interest.[21]
[19]Transfer of land registered 14 September 1983 (Land Titles Office Dealing Number K547728).
[20]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [13], [22].
[21]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [22].
By a transfer of land registered 16 September 1985, Denise transferred to Andrew her one-sixth interest in Gurner Street.[22]
[22]Transfer of land registered 16 September 1985 (Land Titles Office Dealing Number L890052Q).
By a transfer of land registered 14 July 1987, Irene transferred her one-sixth interest in Gurner Street to Andrew.[23] In about 1985, Irene had commenced legal proceedings against Andreas seeking to enforce her entitlement to her registered interest as to one-sixth of Gurner Street and one-fifth of Tennyson Street.[24] In about 1986, Andreas and Irene settled the proceeding on the basis that Andreas would pay Irene $100,000, and Irene would transfer to Andrew her interest in Gurner Street.[25]
[23]Transfer of land registered 13 July 1987 (Land Titles Office Dealing Number N573641S).
[24]Witness Statement of Angela Fourniotis in Reply (as at 29 June 2018), [20] (Paragraphs 22 to 24(d)); Transcript, 52–3, 151–2, 459, 478.
[25]Witness Statement of Angela Fourniotis in Reply (as at 29 June 2018), [20]; Transcript, 52–3, 151–2, 159, 478; see also handwritten file note of George Morgan of McCracken & McCracken dated 4 August.
Following Andreas’ death, and by transfer of land registered 10 November 1994, Anna received Andreas’ one-sixth interest in Gurner Street.[26]
[26]Transfer of land registered 10 November 1994 (Land Titles Office Dealing Number T406248A).
By a transfer of land registered 8 January 2010 (but dated 22 December 2009), Anna transferred to Andrew a one-sixth interest in Gurner Street.[27]
[27]Transfer of land registered 8 January 2010 (Land Titles Office Dealing Number AG962027N).
By a transfer of land registered 21 March 2014 (but dated 28 April 2011), Anna transferred to Andrew a one-sixth interest in Gurner Street.[28]
[28]Transfer of land registered 21 March 2014 (Land Titles Office Dealing Number AK978174A).
Angela’s acquisition of an interest in Gurner Street
Although not a fact directly relevant to any issue in dispute, Angela maintained that she paid Andreas in 1970 or 1971 for the transfer of her one sixth interest at the age of 13.[29]
[29]Witness Statement of Angela Fourniotis (as at 29 June 2018), [15]–[17]; Transcript, 350–55, 357, 438.
Under cross-examination, Angela was, in my view, evasive as to how much she allegedly paid.[30] At one point, Angela accepted that she was asking the Court to believe she paid $3,000.[31] In re-examination, Angela stated she could not remember the amount.[32] In any event, the story Angela told was that Andreas took her to the bank, and the teller placed a thick wad of bank notes in her hand. Angela then paid Andreas the money.[33]
[30]Transcript, 350–55, 357.
[31]Transcript, 353–4.
[32]Transcript, 438.
[33]Transcript, 350–55.
Angela admitted she did not have a job until she was over 18 years old.[34] Angela also admitted that Andreas did not pay her for working in the boarding house.[35] Given the average weekly wage in September 1970 was $81.10 (for an adult man) it defies common sense that Angela (as a 13 year old girl) could have saved any significant amount of money (such as would constitute either a large wad of bank notes, or $3000).[36] On the other hand, during the course of the trial, Angela asserted that Andreas deposited money into a bank account in her name[37] and that she used that money to pay Andreas.
[34]Transcript, 349.
[35]Transcript, 349.
[36]Acting Commonwealth Statistician, Commonwealth Bureau of Census and Statistics, Average Weekly Earnings, September Quarter 1970 (27 November 1970).
[37]Transcript, 350.
In my view, as submitted by the Respondent, this assertion of vendor finance from adult father to 13 year old daughter lacks all credibility. Why would Andreas ask Angela to pay him using his own money? Why would Andreas take his 13 year old daughter to the bank, have her physically withdraw cash (out of his own monies) and then have her physically pay him?
There is no apparent reason why Andreas would embark on such a process and, indeed, it is at odds with the manner in which he treated the rental income flow from Gurner Street in using the fact of the six shares for income splitting.[38] Moreover, such an account on Angela’s part appears to me to be self-serving in that it goes to the tenor of the case she has put—of a person who had given value in terms of money and labour for and to Gurner Street and who had then been misled and wronged by her family.[39] In any event, Angela’s story is contradicted by Denise’s evidence that Andreas never gave Denise any money growing up,[40] and that Denise did not “pay a cent” to Andreas for the interest in Gurner Street transferred to her in the same transaction.[41] Last, it is contradicted by Andrew’s evidence that he did not pay Andreas for his interest in 1983.[42] For these reasons, I regard Angela’s account of payment for Gurner Street as being entirely implausible.
[38]See above, [12]–[13].
[39]cf Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [13].
[40]Transcript, 476–7, 485; see also Transcript, 54–5.
[41]Transcript, 485.
[42]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [22].
Receipt of rent from Gurner Street
Despite dividing Gurner Street into six shares, it is clear that Andreas continued to collect the whole of the rent from Gurner Street from 1970 onwards, and treated it as his own money, until his death.[43] In her evidence, Angela admitted to not receiving any rent from Gurner Street at any time (including in 1985 when a distribution was recorded to her in the partnership tax return for that year).[44]
[43]Transcript, 54–5, 91–92, 150.
[44]Transcript, 358, 367–9; see also the Partnership Income Tax Return for the financial year ending in 1985.
From the time of Andreas’ death, Andrew has collected the rent from the rental properties (including Gurner Street) and applied it for his own benefit, and for the benefit of Anna until her death.[45] Again, Angela admitted to never receiving any rent from Gurner Street,[46] and included a positive allegation to this effect in the original version of her points of claim dated 3 February 2017.[47]
[45]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [34]-[37].
[46]Transcript, 358, 367–9.
[47]Applicant’s Points of Claim (3 February 2017), [7].
Each of the nine apartments at Gurner Street was continuously rented to separate tenants from the early 1970s onwards, with vacancies only for a short period (between two and six weeks[48] — or such time necessary to clean, paint, repair carpets and blinds and other things to put the apartment into good condition).[49] The schedule created by Angela’s solicitors in this regard, based on what is positively evidenced from Andrew’s discovery which, due to the passage of time, does not include all documents that ever existed. This schedule is, for whatever reasons, manifestly incorrect, incomplete, and takes matters no further in terms of Angela’s case.[50]
[48]Transcript, 195.
[49]Transcript, 119, 195.
[50]Witness Statement of Angela Fourniotis (as at 29 June 2018), Schedule 3; Transcript, 379; cf Bundle of Residential Tenancy Agreements and Condition Reports concerning Gurner Street between 1993 and 1995.
From 11 April 2015 until present, Andrew has received the rent from Gurner Street and applied it for his own benefit.[51]
[51]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [37].
So, on this basis, from the time of the purchase of Gurner Street until present, Angela has not received any rent from Gurner Street.
Tax accounting for rent from Gurner Street
Additionally, the documentary evidence corroborates Angela’s exclusion from the receipt of rent from Gurner Street from at least the end of financial year 1986. At the end of financial year 1985, Angela was recorded as an equal participant in the distribution of the net rental income from Gurner Street.[52] In fact, by her own admission, Angela never received any rent or income from Gurner Street during that year, or at all.[53]
[52]Partnership Income Tax Return for the financial year ending in 1985.
[53]Transcript, 358, 367–9; see the Partnership Income Tax Return for the financial year ending in 1985.
In any event, from financial year 1986 onwards, Angela is recorded as having been excluded as a participant in the distribution of the net rental income from Gurner Street. This appears in the partnership income tax return for 1986.[54]
[54]Partnership Income Tax Return of “Vallianatos & Family” for the financial year ending in 1986.
From 1988 to 1994, the partnership income tax returns record Andreas (as to one quarter), Anna (as to one quarter) and Andrew (as to one half) as partners in the receipt of rent and in the distribution of the net rental income from Gurner Street.[55] From 1995 to 2014, the partnership income tax returns record Anna (as to one half) and Andrew (as to one half) as partners in the receipt of rent and in the distribution of the net rental income from Gurner Street.[56] From 2015 to present, all of the rent from Gurner Street has been declared as gross income in Andrew’s individual tax returns.[57]
[55]Partnership Income Tax Returns of “Vallianatos & Family” for the financial years ending in 1988 to 1994; see also records of Rental Income and Rental Accounts for the rental properties in the financial year ending in 1987. No tax return for the financial year ending in 1987 was included in the court book. The document recording rental income for Gurner Street in 1987 is headed “Vallianatos Family” in line with the records of rental income for the other years in respect of which partnership income tax returns were included in the court book. In my view, nothing turns on the absence of the 1987 income tax return for the purposes of these proceedings.
[56]Partnership Income Tax Returns of “Vallianatos A & A G” for the financial years ending in 1995 to 2014.
[57]Individual Income Tax Returns of Andrew Gerry Vallianatos for the financial years ending in 2015 to 2017.
Angela’s estrangement from Anna from 1995 onwards
There is clear evidence that Angela was estranged from Anna from 1995 onwards. Angela’s evidence to the contrary must, for the reasons which follow, be rejected.
The background to the estrangement is apparent on the face of Andreas’ and Anna’s wills. On 20 March 1989, Andreas made a will leaving all of his estate to Anna if she survives him by one month, otherwise Angela was to be left one three-eighths share in Westbury Street (with the majority of the estate being left to Andrew).[58] Anna made a mirror will on the same day.[59] On 18 May 1994 (and after Andreas’ death), Anna made a new will, leaving a one half share in Westbury Street to Angela (with the majority of the estate being left to Andrew).[60] Evidently, at this time, Anna was still prepared to make a bequest to Angela.
[58]Last Will and Testament of Andreas Vallianatos (20 March 1989).
[59]Last Will and Testament of Anna Vallianatos (20 March 1989).
[60]Last Will and Testament of Anna Vallianatos (18 May 1994).
Denise gave evidence that after Andreas’ death, Denise and Angela went to see Anna at Denman Avenue. Denise and Angela complained that it was not fair that Andrew “should get three-quarters of the will.”[61] Anna got angry and threw Denise and Angela out of the house.[62] Denise said that Angela then made a threat to Anna:[63]
I do remember at the door, my mum said, “What about Xenophon and Jacinda.” And Ange was saying, “Well if you don’t do the right thing, how do you expect me to be helping you ever again, concerning Jacinda and Xenophon.” Because Angie was really mad that my mum had reacted that way and Angie was upset that my mum didn’t want to do the right thing. So, she thought, “Right, you want to see Xenophon and Jacinda, the kids, you’ve got to do the right thing, mum. You can’t expect me to give, give, give and you not do the right thing.
[61]Transcript, 479.
[62]Transcript, 479.
[63]Transcript, 493.
Andrew gave evidence of Anna’s account of this meeting. Andrew said that in 1995, Anna told him that Denise and Angela had come to Denman Avenue with a copy of Andreas’ 1989 will. Denise and Angela told Anna they did not like the will, and wanted Anna to change her future will to show that they would receive one property each (that is, one of Gurner Street, Emo Road, Westbury Street, or Tennyson Street each).[64] Anna refused to do this, and became angry. Angela then threatened Anna that if she did not make the future will as demanded Angela would cut her children off from visiting Anna and Angela would also stop seeing Anna.[65]
[64]Transcript, 53–4, 113–6, 124– 5.
[65]Transcript, 53–4, 116, 168, 184–5.
The documentary evidence corroborates the oral evidence given by Denise and Andrew. In 1996, Anna made a new will. In contrast to her 1994 will, Anna left nothing to Angela (but still made provision for Denise and Irene). Anna stated:[66]
I have made the provisions notwithstanding the threats which have been made by my said daughters to withdraw contact from me and to prevent me from seeing my grandchildren. Although such actions on the part of my daughters greatly grieve me, I have attempted to provide for them carefully considering the various moral claims upon me and responsibilities which I have to my children.
[66]Last Will and Testament of Anna Vallianatos (18 November 1996), [6].
Further, there is clear evidence that Angela carried out the threat after 1995, and “excommunicated” herself (along with her children) from Anna’s life.
Andrew gave evidence that after 1995, Angela stopped visiting Anna and did not visit for Easter, Christmas, birthdays or at all (save Anna occasionally telephoned Angela for Christmas and Easter).[67] Angela also cut her children, Xenophon and Jacinda, out of Anna’s life.[68] Andrew said that he and his family lived with Anna at Denman Avenue during the period 1996 to 2005 and Angela never visited.[69]
[67]Transcript, 132–3.
[68]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [27]; Transcript, 135, 146.
[69]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [29]–[30].
Andrew’s son, Gerry Vallianatos (“Gerry”), gave evidence that during the period 1996 to 2005, Gerry lived with Anna at Denman Avenue. After that time, Gerry saw Anna on average about once per week. Gerry never saw Angela visiting Anna, and never met Angela.[70]
[70]Witness Statement of Gerry Vallianatos (as at 7 June 2018), [8]–[10].
Andrew Wilson gave evidence that during the period 2003 to 2010 he visited Denman Avenue about ten times per year.[71] Andrew Wilson never saw Angela visiting Anna, and never met Angela.[72]
[71]Witness Statement of Andrew Wilson (as at 7 June 2018), [8]; Transcript, 243–4.
[72]Witness Statement of Andrew Wilson (as at 7 June 2018), [8]; Transcript, 229.
Kathryn Lawson gave evidence that during the period 2003 to 2013, she attended Denman Avenue two times per week to provide personal care for Anna. Kathryn Lawson never saw Angela visiting Anna, and never met Angela (until 2018).[73]
[73]Witness Statement of Kathryn Lawson (as at 7 June 2018), [5].
There is also documentary evidence recording Anna’s statements to the same effect. In 2004, Anna made a codicil to her 1996 will. On 8 August 2004, Anna spoke with George Morgan of McCracken & McCracken Lawyers in regard to the codicil. Mr Morgan’s file note records: “minimal contact with mother and doesn’t feel to be rewarded…Angela doesn’t ring”.[74] On 11 August 2004, Anna met with Mr Morgan (with the aid of an interpreter). Mr Morgan’s file note states:[75]
…
when I started to speak to her about her daughters and grandchildren, she indicated that XENOPHON FOURNIOTIS had recently had a 21st birthday and she had not been invited although the other side of the family had all been invited. She said that she does not see any of the grandchildren and expressed concern…
…
Mrs Vallianatos also confirmed that she had very little contact with the three (3) daughters since the last Will in 1996…
…
[74]Note of Attendance of George Morgan (11 August 2004), 2.
[75]Note of Attendance of George Morgan (11 August 2004), 2, 3.
At some point in about August 2004, Mr Morgan made a draft codicil for Anna that stated “Angela Fourniotis very rarely rings me.”[76] The final version of the codicil[77] omitted those words but did include the words, “I wish to record that since making my Will dated the 18th day of November 1996 I have had minimal contact with any of my three daughters”.[78]
[76]See hand amendments to [9] of the draft Codicil attached to the letter from McCracken & McCracken Lawyers to Andrew Vallianatos (10 August 2004).
[77]Codicil (11 August 2004) to the Last Will and Testament of Anna Vallianatos (18 November 1996).
[78]Codicil (11 August 2004) to the Last Will and Testament of Anna Vallianatos (18 November 1996), [9].
In 2011, Anna executed a deed of gift by which she transferred her shares in Vallianatos Nominees Pty Ltd (which held properties not subject to the present dispute) to Andrew.[79] On 9 December 2011, Anna met with an interpreter, Anthoula Paraskeva, in respect to the execution of the deed. Ms Paraskeva signed a statutory declaration recording the meeting.[80] In the declaration, Ms Paraskeva said, “Mrs Vallianatos said ‘no undue influence’ and went on to talk about her daughters not visiting her.”[81]
[79]Deed of Gift from Anna Vallianatos to Andrew Gerry Vallianatos (9 December 2011), Exhibit AP-1 to the Statutory Declaration of Anthoula Paraskeva (22 December 2011).
[80]Statutory Declaration of Anthoula Paraskeva (22 December 2011).
[81]Statutory Declaration of Anthoula Paraskeva (22 December 2011), [3].
In 2012, Anna made a new will. On 17 January 2012, Anna met with Associate Professor David Fonda in respect to the will. Associate Professor Fonda recorded the meeting in a letter to Andrew,[82] making positive assessments of Anna’s mental capacity, and stating: [83]
[82]Letter from Associate Professor David Fonda to Mr Andrew Vallianatos (17 January 2012), attachment “A” to the Last Will and Testament of Anna Vallianatos (21 March 2012).
[83]Letter from Associate Professor David Fonda to Mr Andrew Vallianatos (17 January 2012), attachment “A” to the Last Will and Testament of Anna Vallianatos (21 March 2012), 1–2.
…
[Anna] indicated that she has not seen her youngest daughter Angela for many years after some sort of “grudge” many years ago. She does not see Angela’s children.
…
She says as she has become older and more frail and needing more help, her daughters have never come forward to offer any assistance.
…
When I specifically questioned whether she would want to leave anything to her grandchildren of her daughters, she indicated that they made no effort to contact her or come and see her. She felt deprived of not having closer contact watching them grow up
…
Like the 1996 will, Anna’s 2012 will left nothing to Angela, and stated:[84]
I FURTHER WISH TO RECORD THAT I have not seen my youngest daughter Angela for many years.
[84]Last Will and Testament of Anna Vallianatos (21 March 2012), [5].
In her evidence, Angela initially asserted that she saw Anna three times per week during the period 1995 to 2001, and that in the period from 2001 to the date of Anna’s death in 2015 she visited Anna from time to time, but not much after 2006.[85] Angela accepted that this meant that during that period she saw Anna about 150 times per year, and a total of 700 or 800 times (or in that range).[86] Angela gave evidence that Andrew was present for half of these visits, and Anna would cook lunch for Andrew and Angela.[87] In light of the documentary evidence to which reference has been made, Angela’s evidence in relation to her contact with Anna is not to be accepted. It both flies in the face of the documentary evidence and the oral evidence of others who would be expected to have seen Anna on a number of—if not numerous—occasions if her evidence were correct. Moreover, having regard to the number of visits her version of events entails, it is, in these circumstances, implausible. Additional doubt is thrown on Angela’s version of events by her evidence in cross-examination.
[85]Witness Statement of Angela Fourniotis (as at 29 June 2018), [74],[79]; Transcript, 396–8.
[86]Transcript, 396–8.
[87]Witness Statement of Angela Fourniotis (as at 29 June 2018), [74].
Under cross examination, Angela made a series of admissions contradicting her earlier evidence:
(1) Angela had only seen Andrew between 10 and 20 times since 1994.[88] When asked in cross examination which version of her evidence was the truth: that she had seen Andrew half of the 700 or 800 visits during 1995 to 2001, or that she had seen Andrew less than 20 times since 1994, Angela’s answers became evasive;[89]
[88]Transcript, 402–3.
[89]Transcript, 414–6.
(2) Angela stopped seeing Anna at some point. Angela asserted that after 2001 she saw Anna rarely, and stopped seeing Anna in 2005 or 2006;[90]
[90]Transcript, 330.
(3) Angela did not see Anna three times per week during the period 1999 to 2001;[91]
[91]Transcript, 434.
(4) from 1995 Angela’s children stopped seeing Anna;[92]
(5) between 1996 and 2001, Angela’s children did not see Anna at all.[93] In this regard, Angela appeared to give the explanation that her children were too busy to see Anna;[94]
(6) Anna was not invited to Xenophon’s 21st birthday.[95]
[92]Transcript, 420–1.
[93]Transcript, 399–400.
[94]Transcript, 421.
[95]Transcript, 424–6.
In his evidence, Harry accepted that Angela had been estranged from Anna, but asserted this occurred from 2001 or 2002.[96]
[96]Transcript, 462, 464.
Having regard to the matters to which reference has been made, I am of the opinion that Angela and Harry’s evidence is simply not credible. The overwhelming weight of the oral and documentary evidence supports a finding that Anna and Angela were estranged from 1995 onwards as a result of Angela making, and carrying out, a threat against Anna to “excommunicate” Anna from Angela and her children. Rather, it is clear, in my view, that Angela and Harry’s evidence is demonstrably self-serving. It has all the hallmarks of a recent fabrication in reaction to Andrew’s claim for adverse possession, so as to provide a credible foundation for Angela’s further evidence that Anna regularly made oral assurances to Angela that Anna recognised Angela’s right to receive rent from Gurner Street. In my view, both this foundation and the further evidence must be rejected.
Angela’s 1983 Conversation with Anna, Andreas, Andrew, Denise and Irene
In her evidence, Angela asserted that in 1983 she had a conversation with Anna, Andreas, Andrew, Denise and Irene to the effect that they agreed to conduct a business renting out Gurner Street.[97] Andrew denies this conversation ever occurred.[98]
[97]Witness Statement of Angela Fourniotis (as at 29 June 2018), [26]–[29]; Transcript, 338, 347, 369–71.
[98]Transcript, 55–6, 85–8, 90, 92, 99, 359, 458–9, 486–7.
The Respondent submits that Angela’s assertion of the 1983 conversation is a recent fabrication in support of the (recent) allegation of partnership. In this regard, Angela’s original points of claim,[99] and reply and defence to counterclaim[100] do not contain any reference to a partnership or the 1983 conversation. In particular, paragraph 7 of Angela’s original points of claim positively alleged that the rent was received by Andrew without Angela’s authority.[101] Further, the letters sent by Angela’s solicitors on 8 September 2015 made no mention of any partnership, or of any agreement to that effect.[102] Having regard to these and further matters to which I now turn, I am of the view that Andrew’s submission should be accepted.
[99]Applicant’s Points of Claim (3 February 2017).
[100]Applicant’s Reply and Defence to Cross Claim/Counterclaim (12 June 2017).
[101]Applicant’s Points of Claim (3 February 2017), [7].
[102]See letters from MW Law to McCracken &McCracken Lawyers dated 8 September 2015.
Moreover, aside from constituting a complete about-face in the way Angela frames her case,[103] and the evidence in support of it, the assertion of the 1983 conversation simply does not make sense in all the circumstances. In 1983, Angela was 26 years old, and had been on title in respect to Gurner Street since 1971. She had married five years earlier (in 1978), and had left home. I readily accept the Respondent’s submissions that it defies belief that Angela would have waited 12 years from 1971 until 1983 to then suddenly enter into an agreement to run a business in respect to Gurner Street, and receive rent from it. Furthermore, it also, in my view, defies belief that Andrew would assert the family members should conduct a family business at the age of 18, in the presence of Andreas, and that Andreas would have said, “this would be a good thing for all of us”.[104] Andreas had collected all of the rent from Gurner Street since 1970, had never shared the rent, and otherwise there was a strong consensus in the evidence that he ruled his financial affairs with an iron fist.[105] In my view, this state of affairs casts overwhelming doubt on any suggestion on Angela’s part that she raised issues with respect to the Gurner Street rent or any family business arrangements with Andreas at any time. It is also a position entirely consistent with Andreas having established the proportionate ownership of family members in Gurner Street and other properties for the purpose of income splitting for taxation purposes—and leaving the ultimate distribution of this property to later inter vivos and testamentary gifting arrangements. Last, Angela’s reference to real estate agents being discussed in 1983[106] is contradicted by the evidence that real estate agents were not engaged until 1999.[107]
[103]See, particularly, Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [5]–[25].
[104]Which was Angela’s evidence: Witness Statement of Angela Fourniotis (as at 29 June 2018), [27].
[105]See Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [6]; Transcript 62, 90, 92.
[106]Witness Statement of Angela Fourniotis (as at 29 June 2018), [28].
[107]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [34]–[35].
Angela’s 1994 and 1995 Conversations
In her evidence, Angela asserted that after Andreas died in 1994, she had a conversation with Anna and Andrew. Angela asserts that during this conversation Anna said she would make decisions about the family business, and that Angela would be paid her share of the profits from the business.[108] Andrew denies this conversation ever occurred.[109] Angela further asserted that in 1995, Anna told her that she was controlling the leasing business and Andrew was helping her run it, and that Angela would be paid her share of the rent when she dies.[110] Andrew denies this conversation ever occurred.[111]
[108]Witness Statement of Angela Fourniotis (as at 29 June 2018), [60]–[61]; Transcript, 386–9.
[109]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [54]; Transcript, 113–5.
[110]Witness Statement of Angela Fourniotis (as at 29 June 2018), [64]–[65].
[111]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [55]; Transcript, 113–5.
It is submitted by the Respondent that these assertions are recent inventions in support of the recent allegation of partnership, and the submissions regarding Angela’s original points of claim and reply and defence to counterclaim are repeated. Further, the letters sent by Angela’s solicitors on 8 September 2015 make no mention of such conversations.[112] In my view, the position as submitted by the Respondent should be accepted. In addition to the matters relied upon in support of these submissions it does, in my view, defy belief that Anna would assert control of the rental properties in 1994 in circumstances where Andrew had been managing them with Andreas since 1983, and where (according to Angela’s evidence), her mother had always sought to teach her that the “men in the family make business decisions”.[113] And, in any event, the evidence as to how this patriarchal family conducted itself prior to this time also supports this position.
[112]See letters from MW Law to McCracken &McCracken Lawyers dated 8 September 2015.
[113]Witness Statement of Angela Fourniotis (as at 29 June 2018), [9].
In my opinion, the truth of what occurred after Andreas’ death is, as submitted by the Respondent, that Angela demanded Anna provide her with a larger inheritance, and then excommunicated herself (and her children) from Anna when her demands were rejected. Moreover, the documentary evidence to which reference has been made strongly supports this position.
The Applicant makes long and detailed submissions with respect to the contents—particularly the dispositive provisions—of the wills of Andreas and Anna (and a codicil in Anna’s case).[114] In some respect, these submissions appear to rely on provisions of the Administration and Probate Act 1958,[115] though it is conceded that no application was made by Angela under that Act.[116] There is certainly no application under that Act in these proceedings. In my opinion, the matters raised in these submissions and, particularly, the inferences sought to be drawn on the basis of these testamentary provisions—or the lack of them with respect to Angela—are pure speculation and do not assist the Applicant’s case with respect to Gurner Street, whether in relation to alleged representations, concealment or otherwise. These submissions also go to subsequent events and conversations with respect to Anna. For the reasons set out previously,[117] this aspect of these submissions should also be rejected—particularly as it is at odds with both the content of Anna’s will and other evidence which could not be characterised as self-serving to Angela.
[114]Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [31]–[63].
[115]Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [42].
[116]Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [32].
[117]See above, [35]–[52].
Angela’s 1999 Conversation
In Angela and Harry’s witness outlines, as initially filed, both Angela and Harry asserted that Anna had a heart attack in 2004, following which Anna visited them after she was discharged from hospital. It must be observed that, given the limitation period of 15 years, the 2004 date had a significance that a 1999 visit did not. Angela and Harry asserted that during this visit, Anna confirmed Angela would be paid her share of the profits when Anna died.[118] Harry also asserted that Anna was admitted to the Alfred Hospital.[119] Both Angela and Harry then resiled from this evidence upon giving evidence at trial, and recast the visit as occurring in 1999 following Anna’s hospitalisation for a “bad heart”.[120] Andrew had denied that this visit ever occurred.[121]
[118]Witness Statement of Angela Fourniotis (as at 29 June 2018), [81]–[82]; Witness Statement of Harry Fourniotis (as at 7 June 2018), [54]–[55].
[119]Witness Statement of Harry Fourniotis (as at 7 June 2018), [54].
[120]Transcript, 323–4, 413–4, 466–7.
[121]Transcript, 142–4.
The credibility of Angela’s and Harry’s change of evidence must, in my opinion, be viewed in light of their original evidence being clearly contradicted by Dr Szental’s witness statement[122] which was served on Angela prior to trial, and his evidence given at trial.[123] Dr Szental gave evidence that Anna had never had a heart attack, but rather was admitted to the Epworth hospital in 1999 for an aortic valve replacement. In these circumstances, Angela’s assertion of the post-hospital visit, whether the meeting is said to have occurred in 2004, or as compelled to be revised by the objective evidence, 1999, appears, in my opinion, to be a recent invention in support of the postponement of limitations allegation, particularly having regard to the allegations made in Angela’s original points of claim and reply and defence to counterclaim to which reference has been made. Additionally, the letters sent by Angela’s solicitors on 8 September 2015 make no mention of any such conversation[124] which also appears to support this position. Moreover, I would have to observe that Angela and Harry’s assertions as to the conversations with Anna during this visit have a tinge of absurdity – or worse, the macabre – according ordinary human experience having regard to the nature of this visit. Significantly it was to a person who was not young and who had recently undergone major heart surgery or a heart attack; depending on Angela’s or Harry’s version of this visit.
[122]Witness Statement of Dr Stephen Szental (as at 7 June 2018).
[123]Transcript, 246–66; see also Respondent’s Outline of Closing Submissions (22 June 2018), [64] fn 109. Dr Szental’s file on Anna Vallianatos included material from 1990 to 2015 and made up a significant proportion of one of the three volumes of the court book prepared for the trial.
[124]See letters from MW Law to McCracken &McCracken Lawyers dated 8 September 2015.
As I accept that Angela was estranged from Anna from 1995 onwards, it must be regarded as very doubtful that this visit occurred at all. Consequently, I accept the submission that Andrew’s evidence should be accepted. In any event, Angela and Harry’s evidence is highly unreliable, having shifted in significant details over time, and should not, in my view, be accepted as having evidentiary value on this additional basis.
Angela’s 2001 Conversations
Angela asserted that in March or April 2001 she attended Denman Avenue and that Andrew told her that he had changed the locks on the Gurner Street apartments, and that Angela was not to attend Gurner Street ever again. Angela then asserts that Andrew slammed the door on her. As a result of this meeting (“the exclusion meeting”) Angela asserts she has been too scared to make any demand for her share of profits or see a lawyer to exercise her rights as co-owner of Gurner Street.[125] Andrew denies that this meeting ever occurred.[126]
[125]Witness Statement of Angela Fourniotis (as at 29 June 2018), [76]–[77]; Transcript, 400–2.
[126]Witness Statement of Andrew Gerry Vallianatos (as at 7 June 2018), [57]; Witness Statement in Reply of Andrew Gerry Vallianatos (as at 7 June 2018), [17](10); Transcript, 136, 141.
Angela also asserts that in June or July 2001, she attended Denman Avenue, with Denise, and spoke to Anna, and that Anna told her she would get her share of the profits when Anna died.[127] Denise did not give any evidence to this effect.
[127]Witness Statement of Angela Fourniotis (as at 29 June 2018), [78].
In regard to the exclusion meeting, it does not ring true that Andrew would need to change the locks to Gurner Street in 2001 to exclude Angela. Even on Angela’s evidence, she had not attended Gurner Street for many years, and did not hold keys at that time.[128] Further, it is notable that the letters sent by Angela’s solicitors on 8 September 2015 make no mention of the exclusion meeting, or the alleged conversation in June or July 2001.[129]
[128]Transcript, 401–2; see also Witness Statement in Reply of Andrew Gerry Vallianatos (as at 7 June 2018), [17](10).
[129]See letters from MW Law to McCracken &McCracken Lawyers dated 8 September 2015.
In any event, having accepted that Angela was estranged from Anna from 1995 onwards, it follows that both the exclusion meeting and the following meeting in June or July are unlikely to have occurred at all and Andrew’s evidence in respect of these events should be accepted. Even if it were to be found that the exclusion meeting occurred, as a matter of fact, it predated the commencement of the proceeding by more than 15 years, which in fact is of positive assistance to Andrew’s case. Moreover, as observed in the Respondent’s oral closing submissions, Andrew’s denial that the exclusion meeting took place speaks loudly as to his credibility as a witness, as the self-serving response to enhance his case would have been to agree that this meeting took place, as described in Angela’s evidence.
Credibility of witnesses
For the preceding reasons, I find against Angela’s credibility in a general sense, to the effect that her evidence is not to be accepted unless independently corroborated by a reliable witness or documents. In this regard, the inconsistencies in Angela’s evidence are significant. Additionally, the adverse credibility finding is also supported by the following particular matters:
(1) Angela’s inherently incredible evidence that she paid a large sum of money to Andreas at 13 years of age or that any such payment occurred at all;
(2) Angela’s self-serving evidence that she maintained visits three times per week to Anna between 1995 and 2001 and from time to time between 2001 and 2015, despite all the evidence to the contrary;
(3) Angela’s evidence that she was bullied by Andrew when he was ten years of age, and she was 18 years of age[130] (apparently as context evidence in support of the exclusion meeting); and
(4) Angela’s almost formulaic evidence that she repeatedly sought assurances that she would be paid her share of profits from the family business—and in a number of circumstances which, at best, strain credulity.
On this basis and having regard to other matters going to her credibility, it follows that Angela’s evidence as to promissory non-specific and specific statements with respect to Gurner Street and its profits must also be rejected.[131] Moreover, it is clear, in my opinion that Angela never consented to the treatment of rent from Gurner Street. She knew she was not receiving any rent from that property, but did nothing about it. There is no evidence of any express consent and no basis for inferring it from those assurances and responses Angela alleges given the view I have expressed as to the credibility of her evidence in this respect.
[130]Witness Statement of Angela Fourniotis (as at 29 June 2018), [23]; Transcript, 364; cf Witness Statement in Reply of Andrew Gerry Vallianatos (as at 7 June 2018), [16].
[131]cf Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [26]–[30].
The Applicant makes significant criticism of the evidence of the other principal witness—the Respondent, Andrew. Among other things, his evidence is said to be argumentative, disingenuous, self-serving and evasive. In my view, it was, in contrast to Angela’s evidence, responsive; direct and non-argumentative and not self-serving. The latter is well illustrated by his evidence with respect to the exclusion meeting in 2001.[132] Andrew, in his evidence, denied that this meeting took place and thereby precluded the chance to use evidence of an agreed exclusion event which may have triggered time running for the purposes of the LOAA.
[132]See above, [63]–[64].
Limitation of Actions
Current legislation
Under s 3(1) of the LOAA:
…
landincludes … rentcharges and any legal or equitable estate or interest therein…
…
rentincludes a rentcharge and a rentservice[133]
…
[133]As to the difference between rentcharge and rentservice, see Robert Megarry and William Wade, The Law of Real Property (Street & Maxwell, 8th ed, 2012) [31-014]-[31-039].
Under s 8 of the LOAA, no action shall be brought by any person to recover any land after the expiration of fifteen years from the date on which the right of action accrued.
Section 14(1) of the LOAA provides:
No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as ‘adverse possession’)…
Section 14(4) of the LOAA provides:
When any one or more of several persons entitled to any land or rent as joint tenants or tenants in common have been in possession or receipt of the entirety or more than his or their undivided share or shares of such land or of the profits thereof or of such rent for his or their own benefit or for the benefit of any person or persons other than the person or persons entitled to the other share or shares of the same land or rent, such possession or receipt shall not be deemed to have been the possession or receipt of or by such last-mentioned person or persons or any of them but shall be deemed adverse possession of the land.
Under s 18 of the LOAA, at the expiration of the period prescribed by the LOAA for any person to bring an action to recover land the title of that person to the land is extinguished.
Historical versions of s 14(4) of the Limitation of Actions Act
Section 14(4) of the LOAA has a long ancestry in the State of Victoria. The earliest incarnation of s 14(4) was s 28 of the Real Property Statute 1864 (based on the Real Property Limitation Act 1833 (Eng) s 12). Section 28 of the Victorian legislation provided:
When any one or more of several persons entitled to any land or rent as coparceners joint tenants or tenants in common shall have been in possession or receipt of the entirety or more than his or their undivided share or shares of such land or of the profits thereof or of such rent for his or their own benefit or for the benefit of any person or persons other than the person or persons entitled to the other share or shares of the same land or rent such possession or receipt shall not be deemed to have been the possession or receipt of or by such last mentioned person or persons or of any of them.
Section 28 of the Real Property Act 1890 was in the same terms and contained the following note “(a)”:
…
When one co-parcener, joint tenant, or tenant in common, is receiving all the profits, the other has a right to make an entry or bring an action without any ouster to recover his portion of the profits or share in the land – Beaumont v Hochkins, 15 VLR, 442.
Section 28 of the Real Property Act 1915 and s 286 of the Property Law Act 1928 re-enacted this provision in the same terms, and contained the same note.
The modern version of s 14(4) was introduced by the Limitation of Actions Act 1955, which was in substantially the same terms, with the addition of the final words:
…but shall be deemed to be adverse possession of the land.
There is nothing in the parliamentary records identifying a stated parliamentary purpose in inserting these words.[134] In my view, it is clear, having regard to the language and history of s 14(4) of the LOAA and its English provenance that the purpose is apparent on the face of the words: that is, to create a binding statutory fiction to the effect that if the conditions referred to in the subsection are satisfied, including (relevantly here) receipt of rent in respect of land, this is adverse possession of the land for the purpose of s 14(1) of the LOAA.
[134]See (first reading speech) Victorian Legislative Council, Parliamentary Debates, 15 November 1955, 1591 (P T Byrnes); (second reading speech) Victorian Legislative Council, Parliamentary Debates, 24 November 1955, 1998 (A G Warner); (second reading speech) Victorian Legislative Council, Parliamentary Debates, 29 November 1955, 2079–86 (F M Thomas); Statute Law Revision Committee, Victorian Legislative Assembly and Legislative Council, Report on the Limitation of Actions Bill (1949); Statute Law Revision Committee, Victorian Legislative Assembly and Legislative Council, Report on Limitation of Actions (1950); Statute Law Revision Committee, Victorian Legislative Assembly and Legislative Council, Report on the proposals contained in the Limitation of Actions Bill 1955 (1955).
Historical development of adverse possession between co-owners
At common law, possession by one co-owner was possession of all co-owners. In order for one co-owner to establish legal title against the other co-owner, it was necessary to prove ouster.[135] So in Doe v Bird,[136] receipt of the whole of the rent from a property was insufficient to establish legal title against the other co-owner. It was necessary for the plaintiff to establish actual ouster.
[135]And see W R Cole, Cole on Ejectment by (1857, H Sweet, London), 17.
[136](1809) 11 East 49; 103 ER 922, [49]–[51].
In 1833, the Real Property Limitation Act 1833 (Eng) was enacted, containing provisions upon which the early Victorian legislation was based. The text of s 12 of the original English legislation and the reason for the provision in the context of the position of co-owners at general law is set out in Carson’s Real Property Statutes,[137] with the following a helpful extract.[138]
When any one or more of several persons entitled to any land or rent as coparceners, joint tenants, or tenants in common, shall have been in possession or receipt of the entirety, or more than his or their undivided share or shares of such land, or of the profits thereof, or of such rent, for his or their own benefit, or for the benefit of any person or persons other than the person or persons entitled to the other share or shares of the same land or rent, such possession or receipt shall not be deemed to have been the possession or receipt of or by such last-mentioned person or persons, or any of them.
…
Coparceners, joint tenants, and tenants in common, having a joint possession and occupation of the whole estate, it was a settled rule of law that the possession of any one of them was the possession of the others or other of them, so as to prevent the statutes of limitation from affecting them; nor did the bare receipt of all the rents and profits by one operate as an ouster of the other (Co. Litt. 243 b, n. (1), 373 b; Ford v Grey, 1 Salk. 285; 6 Mod. 44; Br. Coparceners; 1 Moore, 868; Burton’s Compendium, 395 et seq.; see Doe v Keen, 7 T.R. 386; Doe v Pearson, 6 East, 173; O’Sullivan v M’Swiney, 1 Long. & T. 111; Denys v Shuckburgh, 4 Y. & C. Ex. 42). But the possession of one heir in gavelkind was held not to be that of the other, where he entered with an adverse intent to oust the other (Davenport v Tyrrel, 1 Bl. R. 675).
And see Darby and Bosanquet on the Statutes of Limitations;[139] and also the discussion of adverse possession in the context of co-ownership by Mendes da Costa[140] and Dal Pont.[141]
[137]Thomas H Carson and Harold B Bompas, Carson’s Real Property Statutes (Sweet and Maxwell, 2nd ed, 1910), 148-50.
[138]Thomas H Carson and Harold B Bompas, Carson’s Real Property Statutes (Sweet and Maxwell, 2nd ed, 1910), 148-9, [12].
[139]J G Darby and F A Bosanquet, Statutes of Limitations (1893, William Clowes and Sons), 375-9.
[140]D Mendes da Costa, ‘Co-ownership under Victorian Land Law’ (1961) 3 Melbourne University Law Review 137 at 148-9.
[141]G E Dal Pont, Law of Limitation (2016, Lexis Nexis Butterworths), 196 [8-34].
In Culley v Doe d. Taylerson (“Culley”)[142] (decided in 1840) Lord Denman CJ explained the common law position as follows:[143]
Generally speaking, one tenant in common cannot maintain an ejectment against another tenant in common, because possession of one tenant in common is the possession of the other, and, to enable the party complaining to maintain an ejectment, there must be an ouster of the party complaining. But, where the claimant, tenant in common, has not been in the participation of the rents and profits for a considerable length of time, and other circumstances concur, the Judge will direct the jury to take into consideration whether they will presume that there has been an ouster…
[142](1840) 11 Ad & E 1008, 1014; 113 ER 697, 700.
[143](1840) 11 Ad & E 1008; 113 ER 697.
Lord Denman CJ then explained the effect of s 2 of the Real Property Limitation Act 1833 (Eng) (equivalent to s 5 of the LOAA) as follows:[144]
The effect of this section is to put an end to all questions and discussions, whether the possession of lands, &c, be adverse or not; and, if one party has been in the actual possession for twenty years, whether adversely or not, the claimant, whose original right of entry accrued above twenty years before bringing the ejectment, is barred by this section.
[144](1840) 11 Ad & E 1008, 1015; 113 ER 697, 700.
The earliest Victorian case on point is Beaumont v Hochkins[145] in which Hodges J considered s 28 of the Real Property Statute 1864. Referring to Culley, Hodges J said:[146]
That case clearly shows what the law was before, and what the law was as altered by that section. It shows that before the Act came into operation, possession of one coparcener, joint tenant or tenant in common, was the possession of the other; but after the Act came into operation, possession of one coparcener, joint tenant or tenant in common was not the possession of the other, even as between coparceners, joint tenants, or tenants in common themselves. When one coparcener, joint tenant or tenant in common, is receiving all the profits, the other has a right to make an entry or bring an action without any ouster to recover his portion of the profits or share in the land.
[145](1889) 15 VLR 442.
[146](1889) 15 VLR 442, 448–9.
The historical development of the law of adverse possession between co-owners (by enactment of statute) was also summarised to the same effect in Paradise Beach and Transportation Co Ltd v Price-Robinson[147] and in JA Pye (Oxford) Ltd v Graham (“Pye”).[148]
Section 14(4) Limitation of Actions Act
[147][1968] AC 1072 at 1081–85.
[148][2003] 1 AC 419 at 433–4, [33]–[35]; see also Wills v Wills [2004] 1 P&CR 37; [2003] UKPC 84, [14]–[16].
As is clear from both its language and English and Victorian history, s 14(4) of the LOAA is a deeming provision. As such, if the matters provided for in s 14(4) are satisfied, the receipt of rent “shall be deemed” to be adverse possession of the land. Having regard to the utilisation of this legislative device in these provisions, it is helpful to review some of the authorities on the effect of statutory “deeming”.
In Muller v Dalgety & Co Ltd,[149] Griffith CJ said:[150]
The word ‘deemed’ may be used in either sense, but it is more commonly used for the purpose of creating what James LJ and Lord Cairns LC called ‘a statutory fiction’ (see Hill v East and West India Dock Co) [(1884) 9 App Cas 448 at 456], that is, for the purpose of extending the meaning of some term to a subject matter which it does not properly designate. When used in that sense it becomes very important to consider the purpose for which the statutory fiction is introduced.
[149](1909) 9 CLR 693.
[150]Muller v Dalgety & Co Ltd (1909) 9 CLR 693 at 696.
In Commissioner of Taxation (Cth) v Comber,[151] Fisher J said: [152]
In my opinion deeming provisions are required by their nature to be construed strictly and only for the purpose for which they are resorted to: Re Levy; Ex parte Walton (1881) 17 Ch D 746 per James LJ at 756. It is improper in my view to extend by implication the express application of such a statutory fiction. It is even more improper to do so if such an extension is unnecessary, the express provision being capable by itself of sensible and rational application.
[151](1986) 10 FCR 88.
[152]Commissioner of Taxation (Cth) v Comber (1986) 10 FCR 88 at 96 (followed in East Finchly Pty Ltd v Federal Commissioner of Taxation (1989) 90 ALR 457 at 478; Salton v Commonwealth Superannuation Corporation (2013) 209 FCR 349 at 356 [32]).
Thus the words “but shall be deemed to be adverse possession of the land” in s 14(4) of the LOAA create a statutory fiction. The effect of that statutory fiction is that if the matters referred to in the subsection are satisfied, including any one or more of possession of land by one co-owner to the exclusion of others, receipt by one co-owner of an excess share of the profits in respect of land, or receipt by one co-owner of an excess share of rent in respect of land, then this state of affairs is deemed to be adverse possession of the land. This means that an action to recover the land, or the dispossessed share of it, may be taken by the other co-owner; in contrast to the position at general law prior to this statutory intervention—the “deeming”. To the extent that these provisions create a statutory fiction, they do so for the benefit of both the dispossessed co-owner, by stating the preconditions upon which its cause of action is established, and for the dispossessing co-owner, by activating the 15 year limitations time limit within which the dispossessed co-owner must bring an action to recover the land, or have its title extinguished under s 18 of the LOAA.
As follows from the provisions of s 14(1) of the LOAA and as the decisions in Pye[153] and Whittlesea City Council v Abbatangelo (“Abbatangelo”)[154] elucidate, the meaning of adverse possession in this context simply means possession by a person in whose favour time can run.
[153][2003] 1 AC 419.
[154](2009) 259 ALR 56, [6](a).
In Pye, Lord Browne-Wilkinson described the requisite intention to possess as an element in adverse possession more generally in the following terms:[155]
In Buckinghamshire CC v Moran (1988) 56 P&CR 372 at 378-379 the trial judge (Hoffman J) had pointed out that what is required is ‘not an intention to own or even an intention to acquire ownership but an intention to possess’. The Court of Appeal in that case ([1989] 2 All ER 225 at 238, [1990] Ch 623 at 643) adopted this proposition which in my judgment is manifestly correct. Once it is accepted that in the Limitation Acts the word ‘possession’ has its ordinary meaning (being the same as in the law of trespass or conversion) it is clear that, at any given moment, the only relevant question is whether the person in factual possession also has an intention to possess…
[Emphasis added.]
[155][2002] 1 AC 419 at 436-7, [42].
In Abbatangelo, the Court of Appeal approved of Lord Browne-Wilkinson’s statement of principle, and described two elements of adverse possession in similar terms: [156]
Factual possession requires a sufficient degree of physical custody and control. Intention to possess requires an intention to exercise such custody and control on one’s own behalf and for one’s own benefit. Both elements must be satisfied by a putative adverse possessor, although the intention to possess may be, and frequently is, deduced from the objective acts of physical possession.
[156](2009) 259 ALR 56, [6](b).
It is important to note, however, that Pye[157] and Abbatangelo[158] are not cases involving s 14(4) of the LOAA or its English equivalent and so the discussion of the nature of the requisite possession as an element in adverse possession is unassisted or untrammelled by any statutory intervention.
[157][2003] 1 AC 419.
[158](2009) 259 ALR 56.
However, the position is otherwise where the operation of s 14(4) of the LOAA is enlivened. That is because this is a deeming provision, which renders it unnecessary to show an intention to possess the land in a case of adverse possession between co-owners, at least when the deeming occurs by the receipt by one co-owner of an excess share of profits or rent. This follows because, unlike in the ordinary case of adverse possession by someone with no interest in the land, or even a claim between co-owners based on possession, with a claim under s 14(4) of the LOAA, there is no need to prove factual possession. The only matter that is required to be proved is receipt of an excess share of profits or rent by one co-owner for its benefit or the benefit of other persons. In a case such as this one, there is no need to establish animus possidendi. Were, however, this to be regarded as incorrect, it would follow, in my view, on the basis of the language and historical context of s 14(1) of the LOAA, that the only intention on the part of the possessing co-owner or co-owners which it would be necessary to establish to enliven the operation of these provisions is an intention to receive and retain the rent from the land to the exclusion of the other co-owner or co-owners. If neither of these propositions is ultimately accepted, then the ordinary principle of intention to possess land as explained by the Victorian Court of Appeal in Abbatangelo[159] should be applied. Were this position reached, I am of the opinion that, having regard to the circumstances of this proceeding and the position taken in the analogous decisions which are considered in the reasons which follow, ouster should, applying the general law, be presumed against Angela. Nonetheless, as indicated previously, I regard the correct position as being that there is no need to establish animus possidendi on the part of the possessing co-owner or co-owners who seek to rely on the operation of s 14(4) of the LOAA.
[159](2009) 259 ALR 56.
Aggregation of successive periods of adverse possession
It is permissible to aggregate successive periods of adverse possession. In Mulcahy v Curramore Pty Ltd,[160] Bowen CJ in Equity said: [161]
Where there is a series of trespassers, not deriving title from each other, who have been in adverse possession for a continuous period of twenty years or any extended period required by the Act, s 34 will operate to extinguish the true owner’s title...
[160][1974] 2 NSWLR 464.
[161]Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476.
There is no reason to suppose that the same position does not apply with respect to periods of “adverse possession” the result of the operation of the deeming provisions of s 14(4) of the LOAA.
Analogous decisions
There are only a limited number of reported cases involving adverse possession by receipt of rent by one co-owner to the exclusion of another co-owner or co-owners. Nevertheless, it is helpful to consider some of these cases, as illustrative of the issues raised and positions discussed in the preceding reasons.
Doe v Bird[162] involved receipt of the whole rent and denial of possession by one co-owner against the other sufficient to establish ouster at common law. Culley[163] appears to be a case of possession as between co-owners; although this is not entirely clear from the report. In that case, Lord Denman CJ acknowledged that receipt of rents for a considerable length of time could amount to ouster at common law,[164] and further concluded that the possession of one co-owner to the exclusion of the other would cause time to run under the limitation statute.[165]
[162](1809) 11 East 49; 103 ER 922.
[163](1840) 11 Ad & E 1008, 1015; 113 ER 697.
[164](1840) 11 Ad & E 1008, 1015; 113 ER 697, 700.
[165]The claim of the dispossessing co-owner to the whole of the land failed by reason of what would now be called a transitional provision, which provided a 5 year period after the statute was introduced within which a claim to recover the land could be made, notwithstanding adverse possession for more than 20 years being established.
There is an analogous decision of the High Court of Hong Kong, which is not directly applicable in the present case given Hong Kong does not have any equivalent to s 14(4) of the LOAA and still applies the position at common law hence the requirement of ouster.[166] In Lai Wai Kuen v Wong Shau Kwong,[167] Hong Lam J found ouster in the following circumstances:
we have a very long period (from 1950’s to today) during which the Defendant did not have any occupation or access to the property. He did not make any demand for account and there had been no payment of rent or profits to him throughout the years. There was also no acknowledgement of title. Madam Lai and her tenant had a long undisturbed and quiet possession. The case is indistinguishable from Doe d Fishar & Taylor v Prosser (1774) 1 Cowp 217. The court can presume ouster in such circumstances and I will so presume.
[166]See above, [79].
[167][2004] 4 HKC 528, [11].
The most directly analogous reported decision is the decision of the Privy Council in Wills v Wills.[168] In that case, Mr Wills and Mrs Wills were joint owners of Newleigh Avenue and Sunrise Crescent in Jamaica. Mrs Wills eventually left Mr Wills to live in America. Mr Wills then started a new relationship with another woman. For a period of in excess of 20 years, Mr Wills (George) and his new partner (Myra) received all of the rent from Newleigh Avenue and occupied Sunrise Crescent (also receiving rent from Sunrise Crescent at different times). They did not account to Mrs Wills (Elma) for any of the rent. After Mr Wills died, Mrs Wills asserted her claim as a co-owner of Newleigh Avenue and Sunrise Crescent. The Privy Council’s advice stated:[169]
…
It was established by the evidence that Elma never set foot in Sunrise Crescent after 1976. She never received any rental income, either from the flat at Sunrise Crescent or from Newleigh Avenue, for a longer period. From 1976 at latest, Myra was living with George at Sunrise Crescent, and joining with him in managing the rented property, to all appearances as if they were co-owners as man and wife. In 1991 Elma visited Jamaica but did not go to Sunrise Crescent because George did not invite her. She never positively challenged Myra’s evidence that none of her possessions (except her abandoned wedding ring) was to be found at Sunrise Crescent after 1971. In the Court of Appeal counsel for Elma conceded (as recorded in the judgment of Langrin JA (Ag)) that George had been in exclusive possession since January 5, 1974. Was there, in these circumstances, any possible basis for the conclusion that Elma had not discontinued her possession, or been dispossessed, more than 12 years before the issue of the originating summons?
Partnership is the relationship which subsists ‘between persons carrying on a business in common with a view of profit’: Partnership Act, s 1. The reference to ‘business’, defined in the statute as including every trade occupation or profession (Partnership Act, s 45), indicates ‘a commercial enterprise as a going concern’: see Hope v Bathurst City Council (1980) 144 CLR 1 per Mason J at 8; 29 ALR 577 at 582. Purely domestic transactions are thus excluded from the definition: see Fletcher, op cit, p 28. The ‘business’ must be ’carried on’. This suggests some active occupation or profession: see Commissioner of Inland Revenue v Marine Steam Turbine Co Ltd (1919) 12 TC 174 per Rowlatt J at 179. It also suggests an element of continuity although it has been recognised that it is possible that a single joint venture will suffice: see Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 3 ALR 409; 131 CLR 321 United Dominions Corp Ltd v Brian Pty Ltd (1985) 60 ALR 741; 157 CLR 1 at 15; Fletcher, op cit, at pp 31-3. On the other hand, in the case of a private individual as distinct from a company, ‘it may well be that the mere receipt of rents from properties that he owns raises no presumption that he is carrying on a business’: see American Leaf Blending Co Sdn Bhd v Director-General of Inland Revenue [1979] AC 676 per Lord Diplock at 684.
His Honour applied the decision in French v Styring[200] and found that there was no partnership at general law:[201]
In the present case, a number of indications point to the conclusion that the parties were not carrying on a business, with the consequence that their relationship was that of co-ownership rather than partnership.
[198](1987) 78 ALR 588.
[199]Federal Commissioner of Taxation v McDonald (1987) 78 ALR 588 at 599.
[200](1857) 140 ER 455.
[201]Federal Commissioner of Taxation v McDonald (1987) 78 ALR 588 at 600.
The position at general law that co-ownership of property does not, of itself, create a partnership is reflected in the provisions of s 28A of the Property Law Act 1958:
28A Liability of co-owner to account
(1)A co-owner is liable, in respect of the receipt by him or her of more than his or her just or proportionate share according to his or her interest in the property, to account to any other co-owner of the property.
(2)In this section, co-owner means a joint tenant, whether at law or in equity, or a tenant in common, whether at law or in equity, of any property.
If the position were different and a partnership created, these statutory provisions would be unnecessary as there would be a liability to account on the part of co-owners—as partners. Moreover, were there to be a partnership flowing from co-ownership of property, of itself, a failure to account would amount to a breach of fiduciary duty on the part of the co-owner or co-owners purporting to “exclude” another co-owner thus enlivening s 27(b) of the LOAA—which would mean that time would never begin to run and s 14(4) of that Act would never operate.[202]
[202]And see below [126] and following.
Dissolution by death
Under s 37(1) of the Partnership Act, subject to any agreement between the partners every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner.
The partners may agree that death will not effect a dissolution, but must enter into the agreement before the date of death.[203] Further, the agreement should be specific (such as a provision in a partnership agreement).[204] In any event, as contended by the Applicant, pre-existing fiduciary obligations would continue after dissolution—or in the event that dissolution is avoided by such an agreement.[205] However, as indicated in these reasons, no partnership or partnerships arise in any relevant sense, hence the issue does not arise or have any significance.
[203]Keith L Fletcher, The Law of Partnership in Australia (9th ed, 2007, Lawbook Co) [7.25].
[204]Keith L Fletcher, The Law of Partnership in Australia (9th ed, 2007, Lawbook Co) [7.25].
[205]Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [6].
Partnership considerations
In my view, the evidence, as previously summarised, does not support Angela’s allegation of the existence of the First Firm, Second Firm and Third Firm. Angela was estranged from Anna and Andrew during the period from 1995 until Anna’s death, and until present. Moreover, as I have found, none of the conversations alleged by Angela to constitute partnership agreements ever occurred. The Applicant’s submissions devote considerable attention to the fiduciary duties which partners owe to each other in a partnership; and on various bases allege that these duties were breached.[206] These issues do not, however, arise in these proceedings because, as discussed in these reasons, no partnership at general law arises between the parties. Moreover, these issues are not enlivened merely because a partnership may arise for taxation purposes under the Income Tax Assessment Act 1936 (Cth).
[206]Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [5] and following.
In any event, even if Angela’s evidence is accepted, and is sufficient to constitute agreements at each relevant time (including upon the death of Andreas, and upon the death of Anna), there is no partnership at general law by application of French v Styring and Federal Commissioner of Taxation v McDonald. This is because an agreement between co-owners to share rental profit does not constitute a partnership. Further, none of the other usual indicia of a partnership are present. Angela never received any of the rental profits, never participated in any business relating to the management of Gurner Street, and never filed any tax return, or had any role in the preparation of partnership financial statements or tax returns pursuant to her purported belief that she was a partner. This position is not affected by the fact that the Applicant, Angela, and her husband Harry, undertook a variety of cleaning and other work at Gurner Street to assist Andreas.[207] In whatever family or other capacity this work was undertaken over time, it does not follow that this was an indicia of partnership.
[207]See Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [19].
Further, even if Angela’s evidence is accepted, and as a matter of law the partnerships are proved to exist at the relevant times (including upon the death of Andreas, and upon the death of Anna), this does not overcome the operation of ss 8 and 14(4) of the LOAA, because it is clear that as a matter of fact, all the rent from Gurner Street was paid to Andreas, Andrew and Anna, and nothing was ever paid to Angela. There is no evidence which would support the position that rent was being received on her behalf; whether by any partnership or individual. The Applicant, Angela, does, however, assert that she consented to the use by the “Vallianatos Partnership” of her interest in Gurner Street and that there was a common understanding as to her interest in the property—presumably an implication being that rent to which she was entitled was being received on her behalf.[208] However, as observed, the evidence does not support this position and neither does it support the implication of a more general agreement in this respect. Finally, reference should be made to the issue raised by the Applicant with respect to the entity being used by the Respondent, Andrew, to collect Gurner Street rents—and effect leases of units in the property at various times—a company which was not the landlord.[209] This issue does not, in my opinion, take the Applicant’s position any further. The company was clearly utilised for convenience as a collection agent for the rent—and as an agent for interests other than the Applicant.
[208]See Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [17], [18].
[209]See Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [2](c)–(d), [100].
For completeness, the fact that Andrew, Andreas and Anna continued to file partnership income tax returns (and that one was filed in 1985 including Angela) does not bear on the question of whether partnerships existed at general law. This is because under ss 6, 90, 91, 92 of the Income Tax Assessment Act 1936 (Cth) co-owners in receipt of profits are considered to be deemed partners for the purposes of income tax. As Beaumont J explained in Federal Commissioner of Taxation v McDonald:[210]
He accepted that if no more appeared in the case than that he and his wife were joint tenants, that is to say, that for the purposes of the general law, they were merely co-owners and not partners carrying on a business in common with a view of profit…then although their receipt of income jointly would deem them to be ‘partners’ for taxation purposes, the respondent would, by virtue of s 92(1), be allowed a deduction of only one-half of the losses incurred. The respondent’s concession was, I think, rightly made. It is common ground that the respondent and his wife were beneficially entitled to the premises as joint tenants. As joint tenants, they were entitled in equal shares to the rents and profits: see Helmore: The Law of Real Property in New South Wales, 2nd ed, p 274. For taxation purposes the [Income Tax Assessment Act 1936 (Cth)] takes the taxpayer’s income as it finds it, that is to say, subject to the general law in all its aspects.
…
In my opinion, no partnership under the general law subsisted between the respondent and his wife. Their relationship was one of co-ownership, and even if they were deemed to be partners by reason of s 6(1) of the [Income Tax Assessment Act 1936 (Cth)], this circumstance is immaterial for our purposes.
[210](1987) 78 ALR 588 at 598–9.
In Jolley v Commissioner of Taxation,[211] Burchett and Lee JJ applied the decision in Federal Commissioner of Taxation v McDonald[212] and said: [213]
The term ‘partnership’ as used in the [Income Tax Assessment Act 1936 (Cth)] is defined by s 6(1) as follows: ‘“partnership” means an association of persons carrying on business as partners or in receipt of income jointly, but does not include a company.’ For the purposes of the [Income Tax Assessment Act 1936 (Cth)] a broader set of circumstances will satisfy that definition than would be sufficient to justify the definition of partnership in law as contained in s 7(1) of the Partnership Act 1895 (WA).
[211](1989) 86 ALR 297.
[212](1987) 78 ALR 588.
[213](1989) 86 ALR 297 at 304.
It follows, for the preceding reasons, that the answer to both limbs of the second question[214] is “no.”
[214]See above, [6](2).
Fraudulent concealment of the right of action
Section 27(b) of the LOAA provides as follows:
27 Postponement of limitation periods in case of fraud or mistake
Where, in the case of any action for which a period of limitation is prescribed by this Act –
…
(b)the right of action is concealed by the fraud of any such person as aforesaid…
…
the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it…
Fraudulent concealment - s 27(b)
Section 27(b) of the LOAA is concerned with the concealment of a right of action, by the fraud of the defendant or his agent or of any person through whom the defendant claims. The right of action asserted by Angela here is relevantly the right to recover an interest in land, which first accrued upon the receipt of the rent from Gurner Street by Andreas (alternatively Andreas, Anna and Andrew) to the exclusion of Angela in 1971.
There is significant divergence of authority as to what is meant by the words “concealed by the fraud” in s 27(b) of the LOAA. In particular, whether “fraud” means conduct which is dishonest (i.e. in the common law sense), or whether it means lesser conduct which might be considered “against conscience” (i.e. in the equitable sense).[215]
[215]See, inter alia, Hamilton v Kaljo (1989) 17 NSWLR 381; Seymour v Seymour (1996) 40 NSWLR 358; C E Heath Underwriting & Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (Supreme Court of Victoria, Batt J, 3 August 1995, unreported); Levy v Watt (2014) 308 ALR 748; and also the cases cited in the Written Closing Submissions of the Applicant/First Respondent (22 June 2018), [73]–[77].
In Hamilton v Kaljo,[216] McClelland J considered the meaning of “fraudulently concealed” in s 55(1) of the Limitation Act 1969 (NSW). His Honour said:[217]
For my own part, I would regard it as a misuse of language, and unsound, to apply the statutory expression ‘fraudulently’ in s 55 to any conduct which did not involve some form of dishonesty or moral turpitude.
In the result, his Honour was not satisfied that “any dishonesty or moral turpitude” had been established on the evidence.[218]
[216](1989) 17 NSWLR 381.
[217]Hamilton v Kaljo (1989) 17 NSWLR 381 at 386.
[218]Hamilton v Kaljo (1989) 17 NSWLR 381 at 386.
Hamilton v Kaljo[219] was applied in New South Wales v McCloy Hutcherson Pty Ltd[220] and in Victoria in CE Heath Underwriting and Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (“CE Heath Underwriting”).[221] In CE Heath Underwriting, Batt J would have been prepared to find fraud in the equitable sense, and therefore, his Honour’s decision turned on the meaning of fraud for the purposes of s 27(b) of the LOAA. His Honour referred to Hamilton v Kaljo,[222] among other decisions, and said:[223]
On the whole, whilst acknowledging the claim of equitable principles I prefer the reasoning of McLelland J [in Hamilton v Kaljo] and therefore proceed on the footing that (leaving aside equitable claims) ‘fraud’ means common law fraud and that intentional concealment is requisite.
[219](1989) 17 NSWLR 381.
[220](1993) 116 ALR 363 at 380.
[221](Supreme Court of Victoria, Batt J, 3 August 1995, unreported).
[222](1989) 17 NSWLR 381.
[223]CE Heath Underwriting and Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (Supreme Court of Victoria, Batt J, 3 August 1995, unreported).
In Seymour v Seymour,[224] the New South Wales Court of Appeal considered Hamilton v Kaljo.[225] Mahoney ACJ, with whom Meagher JA and Abadee AJA agreed, said that s 55 of the New South Wales legislation “is not confined to simple common law fraud” but “extends to conduct beyond that”.[226] His Honour found however that there must be wrongdoing, and said:[227]
In my opinion, there must be in what is involved a consciousness that what is being done is wrong or that to take advantage of the relevant situation involves wrongdoing. At least, this is so in the generality of cases. (There is in this as in many things, the problem of dealing with the person who ‘closes his eyes to wrong’ or is so lacking in conscience that he is not conscious of his own lack of proper standards).
[224](1996) 40 NSWLR 358.
[225](1989) 17 NSWLR 381.
[226]Seymour v Seymour (1996) 40 NSWLR 358 at 372.
[227]Seymour v Seymour (1996) 40 NSWLR 358 at 372.
Hamilton v Kaljo[228] was further applied in the New South Wales Court of Appeal in Mann v Eccott.[229]In that case, Stein JA, with whom Priestley and Sheller JA agreed, quoted from Hamilton v Kaljo[230] with approval, and applied the principle to the facts of the case, holding that there was no evidence that would support fraudulent concealment.
[228](1989) 17 NSWLR 381.
[229][1998] NSWCA 137.
[230](1989) 17 NSWLR 381.
Further, in Di Sante v Camando Nominees Pty Ltd,[231] Warren J (as her Honour then was) quoted from Hamilton v Kaljo[232] and Seymour v Seymour[233] with approval. More recently, in Commonwealth v Cornwell the High Court has noted the divergence in authority, without deciding the correct approach.[234]
[231][2000] VSC 211, [51]–[53].
[232](1989) 17 NSWLR 381.
[233](1996) 40 NSWLR 358.
[234]Commonwealth v Cornwell (2007) 229 CLR 519 at 532–4, [40]–[48].
On the other hand, a recent decision of the Victorian Court of Appeal appears to have approved an approach based on the equitable notion of fraud. In Levy v Watt,[235] Santamaria JA considered and approved Beaman v ARTS Ltd[236] and said:[237]
[235](2014) 308 ALR 748.
[236][1949] 1 KB 550.
[237]Levy v Watt (2014) 308 ALR 748 at 722, [85].
Having canvassed the authorities that followed Beaman, in Bartlett v Barclays Bank Trust Co Ltd (No 1) Brightman J said:
“Fraud”, in the context of section 26(b), does not mean common law fraud or deceit. But it does seem to envisage conduct which, if not fraudulent in the more usual sense, is unconscionable having regard to the relationship between the parties: see Kitchen v Royal Air Force Association. “Fraud” is used in the equitable sense to denote conduct by the defendant or his agent such that it would be against conscience for him to avail himself of the lapse of time.
In my opinion, were Mr Watt to have made a claim in conversion, it would have been ‘against conscience’ for the thief to have set up, as a defence to the claim, s 5 of the Limitation of Actions Act 1958 (Vic). That circumstance also affects those who claim through the thief even if not a party to the theft.
[Citations omitted].
As this passage makes clear (being based on a hypothetical claim in conversion), these remarks are properly understood as obiter dicta and are not strictly binding in this proceeding.
Having regard to the content of Beaman v ARTS Ltd[238] and the position in the New South Wales decisions in Hamilton v Kaljo[239] and in Seymour v Seymour[240] where the question of fraudulent concealment was directly in issue, I am of the opinion that the approach applied in New South Wales is to be preferred, and applied in this case. Nevertheless, it is appropriate to also consider the position were the Levy v Watt[241] approach to be applied in case the Victorian Court of Appeal takes a different view.
[238][1949] 1 KB 550.
[239](1989) 17 NSWLR 381.
[240](1996) 40 NSWLR 358.
[241](2014) 308 ALR 748.
Fraudulent Concealment – consideration in the present circumstances
In my opinion, the evidence does not support Angela’s allegation of fraudulent concealment of her right of action to recover Gurner Street for the following reasons:
(1)the Court can, and, in my view, should find (at the very least), that it cannot be satisfied (Angela bearing the burden of proof in this respect) that any of the conversations that Angela asserts constitute fraudulent concealment of her right of action - including the 1983, 1994, 1995, 1999 and 2001 conversations discussed above[242] - ever occurred. The majority of these conversations purportedly happened during a time that Angela was estranged from Anna and Andrew, and should not be accepted as fact for the reasons discussed previously;
(2)even if the Court were to accept that the 1983, 1994, 1995, 1999 and 2001 conversations occurred, the evidence of the content of those conversations does not go high enough to constitute fraudulent concealment under s 27(b) (whether Hamilton v Kaljo[243]/Seymour v Seymour[244] is applied or Levy v Watt[245]). In this regard, Angela must prove either moral turpitude (Hamilton v Kaljo[246]), wrongdoing (Seymour v Seymour[247]) or unconscionability (Levy v Watt[248]). On any view, Angela needs to prove more than a representation by Anna that Angela would be “paid her share of the profits” or “looked after” when Anna dies. A representation that Anna would leave something to Angela in her will, which is all the representations could reasonably be taken to have meant (if made), has no relationship to an entitlement to be paid rent. It is not, for example, a representation that rent collected from Gurner Street was being held in an account or other place on trust for Angela. Only a representation to the latter effect (if it were false at the time it was made) would be sufficient to postpone the right of action under s 27(b) (on any approach);
(3)Angela must be taken to have understood that income tax was payable on the rental income from Gurner Street, yet she made no inquiries about the taxation position in respect of the income from Gurner Street, ever;
(4)while Andrew denies that the exclusion meeting of March or April 2001 occurred, Angela’s evidence was to the effect that she knew from that time that Andrew at least (and by inference Anna) was intending to deny any claim of Angela to any entitlement to be paid any share of the net rental income from Gurner Street, ever. So Angela’s own case relies on the proposition that she had been told, more than 15 years before she commenced this proceeding, that she was being excluded from any share of the rent from Gurner Street;
(5)other than the alleged representations by Anna and Andrew, there is no evidence of any relevant moral turpitude, wrongdoing or unconscionability on Andrew or Anna’s behalf, in the sense of inducing a false belief in Angela that she was entitled to a share in the net rental income from Gurner Street.[249] Moreover, there is no evidence that Angela was at any relevant time subject to any relationship of influence or special disability, whether based on emotional dependency, trust, family values, lack of information about financial matters or otherwise.[250] Neither is there evidence to support submissions by the Applicant that there existed a relationship of trust and confidence between Angela and Andreas, Anna and Andrew such as would raise issues as to the representational conduct she alleges.[251] Moreover, her evidence that she raised, repeatedly, the issue of her entitlement with respect to Gurner Street suggests otherwise; particularly in light of her evidence as to an hierarchical family—whether patriarchal, matriarchal or male dominated. Andrew and Anna’s continued management of the rental properties, including Gurner Street, and receipt of rent did not involve any concealment of Angela’s right of action. Rather, Andrew (and Anna) were merely continuing (without any concealment) to manage the rental properties and derive the whole of the net rental income from them in circumstances where Angela (of her own accord) had excommunicated herself from Anna’s (and Andrew’s) lives from about 1995;
(6)on the evidence, the suggestion that Angela’s right of action to recover the land was concealed from her is, as the Respondent submits, nonsensical.[252] Angela knew she was a co-owner and knew she was not receiving any of the rent, from at least 1985. She knew she was not paying tax on any rental income from Gurner Street, from that time. She sat back and did nothing. As already observed, Angela has not asserted that Andrew or Anna ever told her that her share of the rent was being held in an account for her benefit; and
(7)further, Angela knew her sister Irene had claimed against Andreas in 1985 in respect to her interest in Gurner Street, and received payment from Andreas to settle that claim, and to transfer her share in Gurner Street. In those circumstances, Angela must be taken as knowing that from that time that she was entitled to claim for rent or sale orders for Gurner Street.[253]
[242]See above, [53]–[66].
[243](1989) 17 NSWLR 381.
[244](1996) 40 NSWLR 358.
[245](2014) 308 ALR 748.
[246](1989) 17 NSWLR 381.
[247](1996) 40 NSWLR 358.
[248](2014) 308 ALR 748.
[249]cf Written Closing Submissions of Applicant/First Respondent (22 June 2018), [6]–[25].
[250]See Written Closing Submissions of Applicant/First Respondent (22 June 2018), [7].
[251]cf Written Closing Submissions of Applicant/First Respondent (22 June 2018), [64]–[67].
[252]cf Written Closing Submissions of Applicant/First Respondent (22 June 2018), [6]–[25].
[253]A position which is, indeed, made clear in Written Closing Submissions of Applicant/First Respondent (22 June 2018), [17].
For the preceding reasons, it follows that the answer to question three[254] is “no.”
[254]See above, [6](3).
Conclusion and orders
For the preceding reasons, Angela’s cause of action to recover her registered one-sixth interest in Gurner Street is statute barred, and by operation of s 18 of the LOAA her title to Gurner Street is extinguished. In those circumstances, Andrew is entitled to be registered on title as the sole registered proprietor of Gurner Street.
The parties are to bring in orders to give effect to these reasons. I otherwise reserve the question of costs and will—having regard to the provisions of the Supreme Court Act 1986, the Supreme Court (General Civil Procedure) Rules 2015 and ss 29(8), 109 and other provisions of the VCAT Act—hear the parties on the issue of costs.
CERTIFICATE
I certify that this and the fifty-two preceding pages are a true copy of the reasons for Judgment of Croft J of the Supreme Court of Victoria delivered on 20 July 2018.
DATED this twentieth day of July 2018.
Associate
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