Koczka v Koczka

[2004] NSWSC 343

CITATION:	Koczka v Koczka [2004] NSWSC 343
HEARING DATE(S):	14/04/04
JUDGMENT DATE:	29 April 2004
JUDGMENT OF:	Gzell J
DECISION:	Declaration that dwelling held by father and son on trust as tenants in common in shares proportionate to contributions to purchase price and that father's only contribution was his share of the mortgage.
CATCHWORDS:	EQUITY - Equitable Estates and Interests - Dwelling purchased in names of father and son as tenants in common - Portion of purchase price raised by mortgage - Whether father's interest held on trust for son - Whether presumption that interests held in trust as tenants in common in shares proportinate to contributions to the purchase price applies - Prior to purchase father was the lessee of the dwelling as prescribed premises under the Landlord and Tenant (Amendment) Act 1948 - Whether discount from market value in purchase price a contribution by the father - Father died intestate - Defendant administrator of the estate
LEGISLATION CITED:	Landlord and Tenant (Amendment) Act
CASES CITED:	Napier v Public Trustee (WA) (1981) 55 ALJR 1 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Martin v Martin (1959) 110 CLR 297 Calverley v Green (1984) 155 CLR 242 Muschinski v Dodds (1984-1985) 160 CLR 583
PARTIES :	David Karl Koczka - Plaintiff Alexander Christopher Koczka - Defendant
FILE NUMBER(S):	SC 1862/03
COUNSEL:	Mr John Shaw - Plaintiff Mr Trevor Hall - Defendant
SOLICITORS:	Cabarrus & Associates Solicitors - Plaintiff Salmon & Co Solicitors - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

THURSDAY 29 APRIL 2004

1862/03 DAVID KARL KOCZKA v ALEXANDER CHRISTOPHER KOCZKA

JUDGMENT

1 The plaintiff and his late father were the registered proprietors as tenants in common of a dwelling at Canley Vale in New South Wales. The defendant, the brother of the plaintiff, is the administrator of the estate of their father who died intestate. The plaintiff sought a declaration that his brother held the deceased’s half share in the dwelling on trust for him.

2 Prior to the purchase of the dwelling, the deceased had lived in it for many years as lessee. The dwelling fell within the definition of the term “prescribed premises” in the Landlord and Tenant (Amendment) Act 1948. Section 88A of the Act prevented the owner from selling the dwelling unless it was first offered to the lessee at a price not greater than the price at which the dwelling was agreed to be sold.

3 The deceased was informed by the then registered proprietor of her intention to offer the dwelling for sale at auction. The plaintiff said that he discussed the matter with his father who wished to buy the dwelling but did not have the funds. The plaintiff said he would utilise his savings and raise the balance by mortgage.

4 At auction, a bid of $42,000 was made and the auctioneer announced that it would be offered to the deceased at that price, failing which the highest bidder would have the property.

5 The plaintiff said he provided the deposit and portion of the purchase price from his savings, the balance being raised by a mortgage executed by his father and him. He said that by mistake the property was registered in their names as tenants in common rather than joint tenants. The plaintiff said his father paid none of the moneys on purchase nor in reduction of the mortgage nor in payment of insurance, rates and charges.

6 Susan Juliett Pepper, a sister of the plaintiff and the defendant, gave evidence. She asserted that the plaintiff had possession of their father’s bank account and she suspected that his moneys were utilised in reduction of the mortgage. She said that the plaintiff had informed her at a meeting in the solicitor’s office when the plaintiff and her father signed documents in relation to the purchase of the dwelling, that he managed to get $2,300 out of their father’s account. The defendant swore an affidavit supporting much of his sister’s affidavit. He did not, however, support this assertion. It was denied by the plaintiff. It was put to him in cross examination that his funds had been pooled with those of his father and contributions made from the pooled fund. He denied this proposition.

7 Ms Pepper saw no reason for her father to purchase the dwelling. She was under the impression that her father could not be evicted by a purchaser. The Landlord and Tenant (Amendment) Act 1948, s 62(5)(g)(i) provided that a notice to quit could be given on the ground that the dwelling was reasonably required by the lessor for personal occupation as a residence. Section 62(5)(m) provided that a notice to quit could be given if the dwelling was reasonably required by the lessor for reconstruction or demolition. Section 65(1) provided that a purchaser could not give a notice to quit on those grounds within a period of 12 months from agreement to purchase unless, in the case of s 62(5)(m), the leave of the Court had been obtained. Advice from Legal Aid New South Wales to this effect was provided to the plaintiff and his father and while the advice was also addressed to Ms Pepper she said she had not seen it.

8 I have no doubt that the purchase of the dwelling enhanced the security of tenure of the deceased.

9 There was no direct evidence to contradict the plaintiff’s account of events. The fact that he and no other members of the family was on the title with their father and to their knowledge, supports his contention that he contributed to the acquisition of the dwelling. Ms Pepper’s suspicions as to the plaintiff’s control of their father’s bank account is not sufficient to cause me to reject the plaintiff’s evidence. He was asked what his father’s level of savings was before he entered a nursing home and what it was at death. He said the deceased had about $4,000 in savings when he entered the nursing home and about $4,500 in savings at his death. This evidence was not challenged by the defence. It is not suggestive of the plaintiff having caused his father to make payments in reduction of the mortgage.

10 I accept the plaintiff’s evidence that he alone paid for the purchase of the dwelling, the reduction of the mortgage and the payments of insurance, rates and charges.

11 Where a purchaser pays a vendor and directs a transfer of the property into the name of someone else without consideration passing from that person, there is a presumption that the transferee holds the property on trust for the purchaser (Napier v Public Trustee (WA) (1981) 55 ALJR 1 at 3). On the other hand, where the legal title is vested in someone to whom the purchaser is under an obligation to support, such as a child, there is no presumption of a resulting trust in favour of the purchaser and, on the contrary, there is a presumption that the property was vested in that person as an absolute gift or as an advancement (Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353). Each presumption can be rebutted by evidence of a contrary intention (Martin v Martin (1959) 110 CLR 297).

12 In this case there is no question of a presumption of advancement because the plaintiff owed no duty of support to his father. Nor is this a case in which the presumption of a resulting trust arises. By executing the mortgage, the deceased made a contribution to the purchase price and in those circumstances there cannot be a resulting trust in favour of the plaintiff alone (Calverley v Green (1984) 155 CLR 242 at 258).

13 If the deceased held his entire interest in the dwelling in trust for the plaintiff, that must be grounded on the common intention of the parties at the time the dwelling was purchased. The only evidence on the topic was that of the plaintiff who said that he discussed the offer to purchase the dwelling with his father who said he wanted to stay in the premises but he did not have the funds with which to purchase the property. The plaintiff said he told his father:

“I have some savings which we can use to purchase the property and I am going to apply for a loan to meet the shortfall to make up the $42,000 being sought by the landlady.”

The plaintiff said his father seemed relieved when this was said.

14 I do not regard that evidence as sufficient to constitute a common intention on the part of the parties that the deceased would hold his interest in the dwelling on trust for the plaintiff.

15 There is a further equitable presumption that where purchasers contribute to the purchase of property in unequal shares they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contributions (Calverley at 258). There is nothing in the evidence, in my view, which rebutted or varied this presumption.

16 The plaintiff said he paid from his funds towards the purchase of the dwelling $22,528.87. The solicitor’s statement of account was in evidence. It revealed the amount as $22,028.87. Mortgage payments totalled $150 per month which I have found were paid by the plaintiff alone.

17 It was agreed between the parties that the current market value of the dwelling was $270,000. Jeffery Keith Perkins a registered practising real estate valuer expressed the opinion that if the dwelling had not being prescribed premises at the time of sale, the market value would have been $110,000.

18 It was submitted on behalf of the defence that I should regard the difference between that value and the purchase price as a contribution of $68,000 made by the deceased. I do not regard the discount in value to be a contribution for the purposes of the equitable presumption. It is confined to contributions to the purchase price. In any event, the discount was greater than the purchase price. It could hardly be said that the plaintiff contributed nothing.

19 The contributions to the purchase price were, respectively, $33,028.87 by the plaintiff and $11,000 by the deceased. It is on these proportions that I conclude the deceased and the plaintiff held their interests in the dwelling upon trust as tenants in common.

20 In Calverley at 264, the question whether the defendant was entitled to any relief against the plaintiff in respect of his payments of the mortgage instalments was to be remitted to the court below if the parties did not agree upon orders finally disposing of the issues. In his statement of claim the plaintiff sought the taking of accounts but abandoned that relief at trial. In those circumstances I make no order with respect to the mortgage payments.

21 In Muschinski v Dodds (1984-1985) 160 CLR 583 it was held that the parties held their legal interests as tenants in common upon trust after payment of any joint debts incurred in improvement of the property in question to repay to each their contributions and as to the residue for them both in equal shares. I do not regard that type of trust as being applicable to the instant circumstances. That was a case in which the presumption of resulting trust arising from the woman’s payment of the whole of the purchase price was rebutted. This is a case in which the presumption that the legal estate is held by each contributor in trust for them both in proportion to their contributions was not rebutted.

22 I direct the parties to bring in short minutes of orders reflecting these reasons. I will hear the parties on their terms and I will hear the parties on costs.

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Last Modified: 05/03/2004