Madar Pty Ltd v Ali
[2019] VCC 1608
•14 October 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
EXPEDITED LIST
Case No. CI-18-04674
| MADAR PTY LTD (ACN 607 034 462) | Plaintiff |
| V | |
| HAMSO ALI | Defendant |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27, 28 and 29 May 2019 | |
DATE OF JUDGMENT: | 14 October 2019 | |
CASE MAY BE CITED AS: | Madar Pty Ltd v Ali | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 1608 | |
REASONS FOR JUDGMENT
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Subject: EQUITY, CONTRACT
Catchwords: TRUSTS – whether an express trust or a resulting trust created in respect of ownership of property; alternatively, whether the plaintiff lent monies to the defendant to assist with the purchase of property pursuant to an oral loan agreement
Legislation Cited: Property Law Act 1958 (Vic)
Cases Cited: Browne v Dunn (1893) 6 R 67 (HL);
Buffrey v Buffrey [2006] NSWSC 1349;
Byrnes v Kendle (2011) 243 CLR 253;
Korda v The Australian Executor Trustees (SA) Ltd (2015) 255 CLR 71;
Vlahos Pty Ltd v Vlahos [2017] VSCA 166;
Wilkins v Wilkins [2007] VSC 100;
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APPEARANCES: | Solicitor | Solicitors |
| For the Plaintiff | Mr K Boden | Starnet Legal Pty Ltd |
| For the Defendant | Mr A Rana | Ammanah Legal |
HER HONOUR:
1 This proceeding involves a dispute over the ownership of two shops. The shops are numbered 1 and 2 and located at 51 The Mall, Heidelberg (“the Shops”).[1]
[1]More particularly described in Certificates of Title Volume 11641 Folios 809 and 810.
2 The defendant (“Ali”), is the registered proprietor of the Shops. The main issue for determination is the capacity in which Ali holds the Shops. The plaintiff (“Madar”) claims Ali holds the Shops in equal shares on behalf of the parties to the proceeding pursuant to an express trust. Madar contends this arrangement is evidenced by a written document entitled “Agreement & Declaration of Trust” dated 1 October 2016 (“the Agreement”)[2]. In the alternative, Madar claims Ali holds a half share of the Shops on behalf of Madar pursuant to a resulting trust because of contributions made by Madar towards the purchase price of the Shops.
[2]Court Book (“CB”) 161-164.
3 For her part, Ali denies that there was any express or resulting trust. Ali contends that the contributions made by Madar towards the purchase price of the Shops represented a loan to assist her with the purchase of the Shops. Ali claims the monies paid by Madar were advanced under an oral loan agreement.
4 For the reasons that follow, I am satisfied an express trust was created pursuant to the Agreement whereby it was agreed that Ali would hold the Shops in equal shares on behalf of herself and Madar.
Background
5 The director of Madar is Ms Malyun Ahmed (“Ahmed”). Madar is the trustee company of Ahmed’s family trust known as the Faroole Family Trust. Ahmed first met Ali in about 2006 when Ali sought her advice relating to a migration matter. They subsequently became close friends. In or about 2012, Ahmed started a small business as a family day care operator. Ali worked in this business on and off from between 2012 and 2018.
6 In late 2015, Ahmed became aware that the landlord of shops 1 to 5, 51 The Mall, Heidelberg had died and the shop tenants had an option to purchase the shops. Ali was the tenant of shop 4. An existing tenant of the shops, Muna Hussein, had signed contracts of sale to purchase shops 1 and 2 and also shop 5.
7 A contract of sale for the Shops was entered into by the executor of the estate of the late owner dated 1 December 2015 with Mura Ibrahim Hussein[3] and/or nominee as purchaser. The purchaser’s legal practitioner was noted as “ASAP”. The purchase price payable for the Shops was $320,000 with a deposit of $32,000 payable on 2 December 2015. Settlement was due to occur on 1 March 2016. The Shops were sold subject to a commercial lease with Muna Hussein as lessee. The lease commenced on 15 October 2014 with a term of two years. The expiry of the lease was 15 July 2016. It could be renewed for three further terms of one year each. The Shops’ use was for a café and meeting room. The monthly rental was $1,480 plus GST (if applicable).
[3]Ms Hussien’s first name was listed variously as “Mura” or “Muna”. The correct reference is Muna and will be referred to as such hereafter.
8 On 2 December 2015, Ahmed, Ali and a Mr Mohamed, met Mr Neil Crosthwaite, a solicitor, at the offices of ASAP Lawyers for an hour. Ali gave evidence that Mohamed was Ahmed’s husband. Ahmed was initially unsure but ultimately came to the view that the man who attended the meeting was Mohamed, the tenant of Shop 3. Mr Crosthwaite’s file note for the meeting records that Muna Hussein could not manage the finances and had waived right of first refusal. The file note also records Shop 1 and 2 going to Ali (referred to as “Humsa”) and “Malyun and Mohammed”. Shop 4 was to go to Ali. There was discussion about the deposits payable that day and that they should be paid by Ali and the contracts be nominated later. Ahmed said in her evidence that it was discussed during that meeting that the Shops would be shared by her and Ali.
9 As Ms Hussein and the other tenants were unable to purchase Shops 3, 4 and 5, these shops were subsequently nominated to Madar. Ahmed decided she would use her family trust to purchase Shops 3, 4 and 5. Madar paid the deposits of $16,000 each for Shops 3, 4 and 5, being a total of $48,000.
10 In respect of the Shops, Ali and Ahmed agreed they would each pay $16,000 towards the deposit which was due on 2 December 2015. It was also agreed that they would own the Shops in equal shares in the names of the parties to this proceeding.
11 On 2 December 2015, Ali informed Ahmed that she did not have $16,000 to pay her share of the deposit monies. Accordingly, Ahmed agreed to pay all the deposit monies due on the Shops. The discussion was to the effect that Ahmed would agree to cover the deposit and it could be adjusted later at settlement. A sum of $32,015 was paid on 2 December 2015 from Madar’s Commonwealth Bank account, which represented the deposit and bank cheque fee. Ahmed arranged for bank cheques to be drawn for the deposit and she gave those to Ali to give to the real estate agent because Ahmed had to rush back to work. Ahmed later rang the real estate agent and confirmed that Madar had paid the deposits due on all five shops.
12 Hocking Stuart issued receipts for the deposits received on all five shops on 2 December 2015. A separate receipt was issued for the Shops by Hocking Stuart in the sum of $32,000 and noted as having been received from “Hamso Ali on behalf of Mura Hussein”.[4]
[4]Exhibit “P2”.
13 A nomination form was signed on 3 December 2015. This was signed by Muna Hussein and Ali. Hussein said in her evidence that this form bore her signature. The form nominated Ali as substitute purchaser for the Shops.
14 ASAP Lawyers wrote to Ali on 16 December 2015 confirming they had instructions from her to act on her behalf as purchaser of the Shops.
15 A file note dated 13 January 2016 recorded a meeting held at ASAP Lawyers’ offices. Present were Ahmed and her husband, Mohammed, and a law clerk from the firm, “Maria”. Mr Crosthwaite, gave evidence that his law clerk, Maria Mak, conducted most of the dealings with the parties. This file note records that Shops 1 and 2 are to be shared 50/50. The tenant, Hussein, had nominated Hamso Ali. It was noted that a new nomination was needed, showing 50/50 between Hamso Ali and Maluyn Ahmed’s interests, being Madar Pty Ltd. The file note records the remaining Shops 3 to 5 were to be owned solely by Madar and the firm was to do the nomination forms.
16 A nomination form was signed on 22 January 2016 whereby Hussein nominated Ali and Madar as substitute purchasers. Ahmed gave evidence that she signed this form and that Ali witnessed her signature. Both Hussein and Ali denied they signed this form despite what appears to be their signatures on the document. Another undated version appears at CB 127. Hussein denied the signature on the document was her signature. This version did not bear a signature of Ali.
17 The parties signed an undated transfer of land which recorded the transferees as Ali and Madar. Ahmed said she signed this document in her capacity as a director of Madar, as did her husband as director/secretary. Ali denied she signed this document. The parties also signed State Revenue Office forms dated 23 February 2016.
18 Ahmed and Ali approached a mortgage broker, a Mr Abdurahnam Saedi, of HPCC Loans Solutions Australia, in order to obtain finance for the Shops. Ahmed gave evidence that she and Ali decided to go 50/50 for a loan and that the titles of the Shops would reflect that both of them had a joint ownership.
19 Madar was unable to obtain finance with the recommended lender, Liberty Finance (“Liberty”), due to existing borrowings. Ali was able to obtain finance from Liberty for her half share of the Shops. Liberty sent Ali a letter of offer dated 9 March 2016 saying the loan had been conditionally approved by Secure Funding Pty Ltd (“Secure”). Secure offered to lend Ali the sum of $176,000 with the security being the Shops. The offer was subject to a condition that the lender be provided with a copy of a draft transfer of land reflecting Hamso Ali as the sole purchaser.
20 Madar paid half of the purchase price of the Shops from its own funds without bank finance. Madar provided a bank cheque in the sum of $131,528.32 which was payable to the vendor’s solicitors. A statement of account prepared by ASAP Lawyers lists this amount as forming part of the settlement funds. The deposit of $32,000 had already been paid by Madar. The balance of the settlement funds was provided in the sum of $158,090. This represented the loan amount of $176,000 to Ali, less a payment to Liberty of $2,042 and fees payable to Hunt & Hunt Lawyers in the sum of $15,868.
21 Ahmed gave evidence that because the joint loans were not going to be issued, there were discussions with ASAP lawyers about how Madar’s interests were going to be reflected on the title. This lead to a discussion about a declaration of trust being executed. Mr Crosthwaite confirmed that he recommended to Ahmed that a declaration of trust be prepared and a caveat lodged to reflect the fact that Madar had bought a half share.
22 Ali does not dispute the amounts paid by Madar. However, she claims these amounts were made in part by way of a loan to her to assist with the purchase of the Shops and also represented monies which she said were owed to her. Her evidence was that Ahmed owed her $63,000 from a Somalian community lending scheme known as “Ayuuto”, together with $20,000 she had paid Ahmed in cash. Ali conceded she owed Madar a figure of $63,528.32, being the balance of the half share of the purchase price paid by Madar less the sum of $83,000. Ahmed denied that the sums advanced by Madar towards the purchase price of the Shops represented a loan to Ali. She further denied she owed any monies to Ali.
23 Madar paid the balance of $446,910.60 for Shops 3, 4 and 5 on or about 5 April 2016. Madar subsequently became the registered proprietor of Shops 3, 4 and 5.
24 Ahmed gave evidence that she paid her proportion of the stamp duty payable for the Shops by paying Ali’s daughter’s Ivanhoe Grammar School fees on or about 18 April 2016 in the sum of $9,223 at Ali’s request. The amount paid was more than the half share of stamp duty payable but was done on the understanding that the women were friends. Ali denied that Ahmed paid half of the stamp duty as alleged by Ahmed. The amount of stamp duty in the sum of $14,270 was deducted from the loan monies advanced by Liberty.
25 Ali was overseas from 23 April 2016 until 24 May 2016.
26 Settlement of the Shops occurred on 26 April 2016. Ali was registered as proprietor with Secure lodging a first mortgage over the property.
27 Madar subsequently obtained insurance from insurance brokers, Insurance Vision (Aust) Pty Ltd. The insurance policy noted the insured as Madar and Ali as joint owner of the Shops. The policy covered all five shops. The period of cover was from 17 November 2107 to 26 October 2018.
28 Some time after the settlement took place, the Agreement was prepared by Mr Crosthwaite of ASAP Lawyers. He gave evidence that he had prepared this document principally to ensure that the interests of Madar were noted in circumstances where Ali was registered as the sole proprietor. He said it was necessary for the arrangement between the parties to be documented, not only for their interests but also for ASAP Lawyers’ protection in the event of a dispute. He also gave evidence that the Agreement needed to be prepared and signed so that a caveat could then be lodged over the Shops in order to record Madar’s equitable interest.
29 Mr Crosthwaite gave evidence that it had been the case of two friends buying a property together – a fairly typical joint venture. There had been various discussions at to how it would proceed and “….in the end, it was decided only to be in Hamso’s name, for the variety of reasons that were put to me.”[5] He said that Ali was to borrow her half and Ahmed would put in cash for her half –“And that was our complete understanding the whole way through.”[6] Madar was always going to be a purchaser or to acquire the property and at one stage she was going on title. The changes in instructions had been a frustrating exercise as the firm had to prepare new sets of documents to reflect the changes.[7]
[5]T163.
[6]T165.
[7]T167-168.
30 The evidence of Ahmed was that Ali had attended at her home one evening, together with Ali’s husband, Mr Mohamed. Ali provided the Agreement to Ahmed for signature. Ahmed had previously had a discussion with Mr Crosthwaite about the preparation of the Agreement. Ahmed said Ali presented the document and said “Neil wanted her to sign and both of us need to sign it.” Ahmed gave evidence that she then signed the Agreement on behalf of Madar. She said she saw Ali sign and that Ali’s signature was witnessed by Ahmed’s daughter. For her part, Ali denied she attended Ahmed’s home with her husband on that occasion and said she had not signed the Agreement. This matter is dealt with more fully in paragraphs 43 to 52 below.
31 The Agreement is dated 1 October 2016. Neither Ahmed or her daughter gave evidence about the date of the meeting at Ahmed’s home when the Agreement was signed. During the course of his evidence, Mr Crosthwaite said he had put the date on the document. The parties to the Agreement are referred to as the Owner and the Investor. The Owner is described in the attached schedule as being Hamso Mohmaud Ali. The Investor is identified in the schedule as Madar. The Agreement records that Madar, being the Investor, advanced the monies set out in Item 3 of the schedule, to the Owner, being Ali. It is also noted that the Owner had applied the advance towards the purchase of the properties, being the Shops, together with loan funds from Liberty Finance.
32 Paragraph 3 of the Agreement provides as follows:
“The Owner acknowledges that the Investor has an equitable interest in the Properties (less the extent of the Investor’s liability for the Loan) and the Owner hereby acknowledges that the Owner holds a one half interest in the Properties (less the extent of the Investor’s liability for the Loan) on trust for the Investor and that the Investor is the beneficial owner of the Properties to the extent of such half interest.”
33 Mr Crosthwaite was unable to recall how the signed Agreement was returned to his office, but he gave evidence that he had checked the signature on the document to confirm that it was that of the defendant. He compared Ali’s signature with signatures that he had of hers on other documents and was satisfied that the signature on the Agreement was the defendant’s signature. He had acted for Ali in the past, as well as Ahmed, in other transactions.
34 Clause 5 of the Agreement contains a charge whereby the Owner charges all of its rights, title and interest in the properties in favour of the Investor as chargee, and the parties agree that the interest created in the Properties can be the subject of the caveat. The Owner irrevocably authorises the lodging of a caveat. ASAP Lawyers lodged a caveat on 26 October 2016 noting Madar’s interest as chargee pursuant to the Agreement.[8]
[8]Exhibit “P3”.
35 ASAP Lawyers sent an executed copy of the Agreement to Ali under cover of a letter dated 27 October 2016. The letter also confirmed that a caveat had been lodged over the titles of the Shops. A copy of the Agreement was also forwarded to Ahmed by the firm.
36 Following settlement, Madar engaged various tradesmen to carry out various rectification works. Madar paid a sum in the order of $10,000 for renovations. Ali paid about $5,000 with respect to those rectification works which included tiling and flooring. The invoices and work orders are all addressed to Madar. The evidence about who paid what and the amounts paid for renovations was inconclusive, as was the evidence regarding the payment of outgoings, such as utilities for the Shops.
37 The Shops have been tenanted from time to time and rental was collected by Ali. Madar contends that Ali is liable to account for half of any rental received.
38 The parties had a falling out in about the middle of 2018 following a trip to India.
39 This proceeding was commenced by writ on 22 October 2018.
40 For the purposes of the hearing, the parties identified the following as the issues in dispute:
(1)whether there exists an express trust between the parties by reason of the Agreement and whether the Agreement trust was executed by the defendant;
(2)whether the plaintiff by reason of its equal payments towards the acquisition and subsequent maintenance has an equal shared interest in Shops 1 and 2 pursuant to the doctrine of resulting trust; and
(3)whether the plaintiff is merely a lender pursuant to an alleged oral agreement for five years between the parties and therefore only entitled to the return of the monies advanced.
41 On behalf of the plaintiff, Ahmed gave evidence together with her daughter, Idil Mohamud, who is a qualified legal practitioner. Madar also called Mr Neil Crosthwaite, the solicitor from ASAP Lawyers, who had been involved in preparing the various conveyancing documents associated with the purchase of the Shops. He also drafted the Agreement.
42 For the defendant, Ali gave evidence as well as her husband, Ali Hassan Mohamed. In addition, the defendant called Muna Hussein, who was the original purchaser of the Shops prior to the nomination to the defendant and is currently the tenant of Shop 5.
Is there an express trust between the parties for ownership of the properties to be held on a 50/50 basis?
43 The examination of the issue regarding the creation of an express trust requires close consideration of the evidence given, in particular, by the two principal witnesses. Ahmed’s and Ali’s evidence are in direct conflict with each other about their understanding concerning the ownership of the Shops.
44 One of the key issues in dispute in the proceeding is whether Ali signed the Agreement dated 1 October 2016. Ahmed’s evidence was to the effect that Ali had come to her home in the company of Ali’s husband and produced the Agreement for signing. Ahmed’s evidence was that she then signed it and that her daughter, Idil Mohamud, who was at home, witnessed the signature of Ali, which is simply signed “Hamso”. Ahmed’s evidence was that she saw Ali sign the document. This is confirmed by her daughter, Idil Mohamud, who said that she had been called in by her mother to witness the signing of the document in her family home. She said that she saw Hamso sign the document and witnessed her signature in the space provided. Ms Mohamud also gave evidence that Ali’s partner had been present at the time of signing, which was in the early evening. She said that she asked Ali prior to her signing whether she had read the document and Ali answered in the affirmative. At the time of these events, Ms Mohamud was living at home. She was aged 23 and working as a paralegal. She is now a practising legal practitioner.
45 Neither Ahmed nor her daughter were challenged about their evidence relating to the execution of the Agreement by Ali. It was not put to them that they were mistaken or being untruthful when giving their evidence that Ali signed the Agreement in front of them at Ahmed’s home. Further, the solicitor appearing for the defendant failed to comply with the rule in Browne vDunn[9] and did not put his client’s or her husband’s version of the events of this meeting to either Ahmed or her daughter. I have taken these matters into account when weighing up the credibility of the evidence of Ahmed and her daughter concerning the meeting at Ahmed’s home.
[9](1893) 6 R 67 (HL).
46 In contrast, Ali denies that she attended upon Ahmed’s home in the circumstances described above. She further denied that the signature which appears on the document is her signature. Her husband, Ali Hassan Mohamed, gave evidence that that signature on the Agreement was not his wife’s signature. He first saw this document when the court proceedings were about to commence.
47 When cross examined, Mr Mohamed was reluctant to concede that he had ever visited Ahmed’s home. He said he sometimes went to houses to collect children, but was at pains to stress said he did not normally visit houses. This evidence seemed somewhat implausible given his evidence-in-chief that the relationship with Ahmed had been as family friends since he came to Australia in 2012. Additionally, his professed ignorance of the process concerning the acquisition of the Shops by his wife was similarly implausible. I found him to be an unimpressive witness.
48 Mr Crosthwaite gave evidence that when the executed Agreement was returned to him he checked that the defendant’s signature on the Agreement matched her signature from other documents he had on file. He was satisfied the signature on the Agreement was that of the defendant.[10] He had dealt with Ali probably half a dozen times over the years. Mr Crosthwaite’s evidence was that the caveat and the Agreement were prepared at the same time and needed to be cross referenced which was why he had dated the Agreement 1 October 2016.
[10]T175.
49 A copy of the executed Agreement was forwarded by Mr Crosthwaite to Ali by letter dated 27 October 2016.
50 Despite having admitted that the address on the letter forwarded to her by ASAP Lawyers was current at the time, Ali initially vacillated as to whether she had received a copy of the executed document before saying that she did not receive it. Her evidence was that she only had seen the Agreement some time after the dispute arose.
51 Given the conflict in the evidence regarding the circumstances of the execution of the Agreement, it is necessary to make a finding as to whose version of events is to be preferred. On balance, I prefer the evidence of Ahmed and that of her daughter ahead of Ali and her husband. I consider both Ahmed and her daughter were credible and convincing witnesses and have no hesitation in accepting their evidence as being truthful. As to Ali, I did not form the same view and consider that at times she was evasive and gave self-serving answers. Additionally, her version of events is unlikely in circumstances where, having received a copy of the Agreement from ASAP Lawyers, she did not then take the matter up immediately with Mr Crosthwaite’s firm and inform the firm she had not signed the document. I reject her evidence that she did not receive a copy of the letter enclosing the Agreement from ASAP Lawyers.
52 As for Ali’s husband, I consider he was not an impartial witness and was tailoring his evidence to advance the case of his wife. Accordingly, I find that Ali did sign the Agreement at Ahmed’s home on or about 1 October 2016 and her signature was witnessed by Ms Mohamud.
53 I am satisfied that the Agreement did give rise to an express trust by reason of its terms. As the trust was in respect of land, the requirements of s53(1) of the Property Law Act 1958 (Vic) needed to be satisfied. Section 53 provides as follows:
“(1)Subject to the provisions hereinafter contained with respect to the creation of interest in land by parol—
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing or by will.
(2)This section shall not affect the creation or operation of resulting, implied or constructive trusts.”
54 Having found that Ali executed the Agreement, the requirement for writing is satisfied pursuant to ss53(1)(a) and (b). It was no part of the defendant’s case that the Agreement should be set aside because of any vitiating factors. Her defence rested solely on her assertion that she did not sign the Agreement.
55 As for the creation of a valid express trust by declaration, it is accepted that three certainties are required; these being certainty of intention necessary to create an express trust, certainty of subject matter, and certainty of object.[11]
[11]Per French CJ in Korda v The Australian Executor Trustees (SA) Ltd (2015) 255 CLR 71.
56 In Byrnes v Kendle,[12] the High Court held that where there has been an explicit written declaration of trust unaffected by vitiating factors, evidence is not admissible to contradict the intention to create a trust manifested by that declaration. The necessary intention is imputed when manifested by an express explicit declaration. I am satisfied, having regard to the terms of the Agreement, that there is an explicit declaration of trust. No submissions were made about the construction of the document by either party. It was certainly not suggested by the defendant that the Agreement was invalid or ineffective in any way.
[12](2011) 243 CLR 253, 274 [55] (Gummow and Hayne JJ, with French CJ agreeing).
57 In paragraph 3 of the Agreement, it is expressly acknowledged that Madar has an equitable interest in the properties as to the extent of one‑half of the value of the properties. There is an express acknowledgement by the Owner that the Owner held a one-half interest on trust for the Investor, and that the Investor is the beneficial owner of the property to the extent of such half interest.
58 Certainty of the subject matter is met in that the Shops are clearly identified. Similarly, there is certainty of object being the investor, namely, Madar. Accordingly, in my view, the Agreement does constitute an enforceable agreement pursuant to which an express trust was created by way of declaration of trust in favour of Madar as to a half share of the beneficial ownership of the Shops.
Alternatively, was there a resulting trust created?
59 Having found that there was an express trust entered into, it is unnecessary to make any findings regarding the alternative claim put that a resulting trust was created. However, if I am wrong in respect of the creation of an express trust, I consider that a resulting trust did arise. This is in circumstances where the evidence discloses Madar made payments from its bank account towards the purchase price of the Shops in the amounts of $32,000, representing the deposit, and $131,528.32, being Madar’s contribution to the balance of the purchase price. For the reasons set out in paragraphs 63 to 69 below, I was not persuaded that the monies advanced by Madar represented a loan to Ali or repayment of monies said to be due to Ali.
60 Where a person purchases property and places the property in the name of someone else, the law presumes that the person holds the property under a resulting trust for the purchaser who paid the cost of acquisition of it.[13]
[13]Per Kaye J in Wilkins v Wilkins [2007] VSC 100 at [8].
61 Similarly, in Buffrey v Buffrey,[14] Palmer J said the following:
“(1) one begins with the presumption that the equitable title to the property is at home with the legal title but that presumption, like all evidentiary presumptions, gives way to facts showing the contrary;
(2)where property is held in joint names but the joint tenants have not contributed equally to the cost of acquisition, it is a presumption of equity, not lightly displaced, that the beneficial interests in the property are to be held between the parties upon a resulting trust in proportion to their respective contributions to the acquisition cost.”
[14][2006] NSWSC 1349 at [14].
62 In Vlahos Pty Ltd v Vlahos,[15] the Court of Appeal noted that where two or more parties make unequal contributions to the purchase price but the property is held in the name of only one of them, or in all their names, there is a presumption that the parties take a beneficial interest in the property as tenants in common in shares that are proportionate to their respective financial contributions to the purchase price. I am satisfied a resulting trust does exist in this case in the proportions reflected by the respective financial contributions made to the purchase price by the parties.
[15][2017] VSCA 166 at [53] – [55].
Was Madar merely a lender pursuant to an alleged oral agreement?
63 The case of the defendant is that the monies advanced by Madar towards the purchase price of the Shops were provided to Ali by way of loan. The terms of the oral loan agreement set out in paragraph 1 of Ali’s defence dated 26 April 2019. It is alleged that Ali paid the deposits for all 5 shops totalling $80,000 from her money pooling turn in an Ayuuto lending scheme to Ahmed, who then drew the cheques used to pay the deposits. As for the balance of the settlement funds paid by Madar in the amount of $131,528.32, it is pleaded in paragraph 1E that this sum had the following constituents:
“a. $48,000 in repayment of the deposit paid by Ali for the purchase of Ahmed’s shops;
b. $20,000 given by Ali to Ahmed for the purchase of Shops 1 and 2;
c. $63,528.32 being the amount lent by Ahmed to Ali for the purchase of Shops 1 and 2.”
64 Ali made reference in her evidence to a Somali community lending scheme arrangement whereby parties pool amounts in a scheme referred to as “Auyuto”. The parties take turns to receive funds from the scheme which runs in cycles. On Ali’s case, she accepted that she owed about $63,000 to Ahmed.
65 Ahmed denied the existence of any loan to Ali.
66 Ali’s evidence about the initial advance of $80,000 was not convincing. She claimed to have asked Ahmed for $80,000 from the Ayuuto but was told it was not her turn. At T187 she said “…after telling me it’s not the Ayuuto – it is not my turn, Malyun and I went to the bank, and she made that deposit – ah, that cheque – for me, of $80,000.” Pausing here, I was not persuaded, even on Ali’s evidence, that Ahmed had agreed that the sum of $80,000 allegedly due to Ali from an Ayuuto scheme could be and was in fact transferred to Ahmed. There was no evidence at all of any monies passing from Ali to Ahmed in the sum of $80,000 or that Ahmed received $80,000 from an Ayuuto scheme, being Ali’s supposed share. Nor was I persuaded that Ali had paid $20,000 in cash to Ahmed.
67 Given my reservations regarding the credibility of the defendant, I am not persuaded that her evidence about an oral loan should be accepted. Ali agreed in cross-examination that there was no document which recorded the loan. The evidence called did not establish that any loan would be for a period of five years, being the pleaded case. In my view, Ali failed to discharge the onus of proof regarding this alleged oral loan agreement. Further, the evidence of Ali is that she lent money to Ahmed. There was no evidence at all that she lent money to Madar, being the entity that paid the deposit and the balance of the settlement funds from its bank account.
68 Mr Crosthwaite gave evidence that at no time was Madar ever considered to be a lender throughout the dealings he had with the parties and that it was always going to be a purchaser.
69 For all these reasons, I find that the monies advanced by Madar were not the subject of any alleged oral loan agreement with Ali.
70 During the course of the hearing, the plaintiff obtained leave to file a Further Amended Statement of Claim. Apart from amending the particulars in paragraph 2 regarding the payments made by the plaintiff, the main amendment was in the claim for relief.
71 Sub paragraph “(f)” in the prayer for relief was introduced which reads as follows:
“(f) an order that the properties known as Shops 1 & 2, 51 The Mall, Heidelberg be sold by public auction and that the plaintiff be entitled to 50% of the gross proceeds of sale (noting that the defendant may be further findebted [sic] to the plaintiff depending on the sale price and the mortgage, which remains over the property).”
72 The proposed amendment was not objected to by the defendant.
73 The defendant’s solicitor was in agreement that if the Court was satisfied that the Shops were held on a 50/50 basis, that an order for sale would be an appropriate form of relief. The Court expressed concerns when informed that the mortgagee of the Shops was unaware of the proceeding and of the relief being sought which could affect the mortgagee’s rights. At the Court’s direction, the defendant’s solicitor wrote to Liberty on 28 May 2019 seeking its attitude in respect of the relief sought by the plaintiff, including a proposed order for sale.
74 The Court was provided with a response from Mr David Templeton, Senior Legal Counsel of Liberty dated 29 May 2019. Mr Templeton advised that he represented Secure, the defendant’s lender and first mortgagee in relation to the Shops. Secure did not object to a declaration that the defendants holds the Shops on trust, providing any such declaration was consistent with the mortgagee’s rights as lender and as first mortgagee. Secure did object to any order directing the defendant to transfer any part of the land to the plaintiff other than subject to Secure’s mortgage and subject to the plaintiff assuming liability together with the defendant for the money secured by the mortgage. Secure had no objection to the proposed orders sought in paragraphs D to G of the prayer for relief in the further amended statement of claim, which included an order seeking a sale by public auction, as such an order would not affect Secure.
Conclusion
75 Having regard to the foregoing, I am satisfied that the Shops are held by Ali pursuant to an express trust in accordance with the terms of the Agreement. Accordingly, there should be a declaration made that the defendant holds a one-half share in the Shops on trust for the plaintiff and that the plaintiff is the beneficial owner of the Shops to the extent of such half interest.
76 Given the parties’ relationship has irretrievably broken down, it is appropriate that there should be an order for the sale of the Shops as sought by the plaintiff. This proposed order was not opposed by the defendant, assuming the Court found in the plaintiff’s favour. Accordingly, I will order a sale of the Shops as sought in paragraph (f) of the prayer for relief in the Further Amended Statement of Claim.
77 There should also be an order for the taking of accounts, which is a further form of relief sought by the plaintiff. The taking of accounts will be necessary to determine what sums have been paid and/or received by each of the parties and what adjustments should then be made and in whose favour. The taking of accounts will be referred to a Judicial Registrar for determination.
78 The parties are directed to confer and submit Minutes of Order which should be made to give effect to these reasons. The orders should set out the form of declaration proposed and the precise mechanisms in respect of the proposed sale. Prior to such orders being made, it will be necessary for Secure to be provided with a copy of these reasons and inquiries made as to whether it wishes to be heard on the parties’ proposed form of orders. As registered first mortgagee, Secure will be entitled to recover the sums secured under the mortgage from any sale proceeds. Whether there will be any funds left over to distribute to the parties after the taking of accounts is as yet unknown. It will depend upon the sale price achieved for the Shops, less the amount presently secured under the first mortgage.
79 Finally, as the plaintiff has been successful, costs should follow the event. Subject to hearing from the parties, I propose ordering the defendant pay the plaintiff’s costs of the proceeding, including any reserved costs, to be taxed on the standard basis in default of agreement.
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Certificate
I certify that these 19 pages are a true copy of the Reasons for Judgment of Her Honour Judge A Ryan delivered on 14 October 2019.
Dated: 14 October 2019
Associate to Her Honour Judge A Ryan
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