Malhotra v Tiwari

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 6869 of 2002

DINESH MALHOTRA

Plaintiff

v

SHEELA TIWARI

and

S & D INTERNATIONAL PTY LTD (ACN 075 030 447) (as Trustee for the S & D International Unit Trust)

First Defendant

Second Defendant

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JUDGE:	Balmford J
WHERE HELD:	Melbourne
DATE OF HEARING:	22-26, 29 & 30 November, 1-3, 6-10, 13 & 14 December, 2004
DATE OF JUDGMENT:	16 February 2005
CASE MAY BE CITED AS:	Malhotra v Tiwari
MEDIUM NEUTRAL CITATION:	[2005] VSC 25

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Trusts – Whether express trust exists based on representations made – Whether first defendant can rely on non est factum in regard to written representation – Whether principles of promissory estoppel apply – Brisbane City Council v Attorney-General for Queensland [1979] AC 411, Walton’s Stores v Maher 164 CLR 387, The Commonwealth v Verwayen (1990) 170 CLR 394, Property Law Act 1958 s 53(1)(b).

Unclean hands – Whether right relied upon existed by virtue of illegal or unconscionable conduct – Presumption of advancement rebutted – Ability of Court to mould appropriate relief – Myers v Casey (1913) 17 CLR 90.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Selimi	Starnet Legal Pty Ltd
For the Defendants	Mr J Evans	Velos & Davis

HER HONOUR:

Introduction

In this proceeding, initiated by writ on 19 August 2002, the plaintiff (“Dinesh Malhotra” or “Dinesh”) seeks a declaration that he is a joint beneficial owner of three items of property (together referred to as “the properties”), namely;

An Indian grocery store business conducted at 580 Barkly Street West Footscray under the name “Bharat Traders International” (“the business”);
The shop and dwelling at 580 Barkly Street, West Footscray (“580 Barkly Street”) in which the business is conducted; and
A vacant block of residential land at 45 Boronia Drive, Hillside, in the Shire of Melton (“the Hillside property”).

In September 2004 Mr Lionel Theobald, a property valuer instructed by the plaintiff, valued the business at $390,000, 580 Barkly Street at $630,000 and the Hillside property at $280,000. No evidence was called by the defendant challenging those valuations.

The second defendant (“the company”) was formed on 29 July 1996, since when it has owned and operated the business. The S & D International Unit Trust (“the unit trust”), for which the company is the trustee, was created at the same time. The company then purchased 580 Barkly Street. The Hillside property was purchased by the company in 2002, and both those properties are still owned by it. The first defendant (“the defendant”, “Sheela Tiwari” or “Sheela”) has been, since the formation of the company, a director of the company, the holder of the only two issued shares in the company, and the only holder of issued units in the unit trust.

Legal issues
The submissions of the plaintiff

The principal relief sought by the plaintiff is a declaration that he is a joint beneficial owner of the properties, on the ground that the defendants hold one half of each of the properties on an express trust for him. In his closing address Mr Selimi, for the plaintiff, also relied specifically on the principles of promissory estoppel as enunciated in Waltons Stores (Interstate) Ltd v Maher[1] and The Commonwealth v Verwayen[2] and of constructive trusts as set out in Baumgartner v Baumgartner. [3] The statement of claim also raises claims under the Fair Trading Act 1999, the Trade Practices Act 1974 and Part IX of the Property Law Act 1958. However, no submissions in support of any of those statutory claims were made by Mr Selimi in his closing address, and it may be assumed that they are abandoned.
[1](1988) 164 CLR 387
[2](1990) 170 CLR 394
[3](1987) 164 CLR 137

Express trust

As Lord Wilberforce said, when delivering the judgment of the Privy Council in Brisbane City Council v Attorney-General for Queensland: [4]

To create a trust no formal words are required once the intention is clear. The relevant intention, if a trust is to be held to be created, must be that [the trustee’s] legal ownership of the land is to be held beneficially, in the case of a private trust, for ascertained persons.
[4][1979] AC 411 at 421

To that passage there must be added the requirement of section 53(1)(b) of the Property Law Act 1958 that “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.”
Equitable estoppel

Mr Selimi relied on the well-known passage from the judgment of Brennan J in Walton’s Stores where His Honour said: [5]

In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them, and in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.

[5]at 428-9

He also relied on the extensive exegesis of that extract by Deane J in Verwayen [6] which includes the following passages:

4. The question whether such a departure [by one party from the subject matter of an assumption which has been adopted by the other party] would be unconscionable relates to the conduct of the allegedly estopped party in all the circumstances. That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it . . . In cases [where that party has induced the assumption by express or implied representation], a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption . . .
7. Estoppel by conduct does not of itself constitute an independent cause of action. The assumed fact or state of affairs (which one party is estopped from denying) may be relied upon defensively or it may be used aggressively as the factual foundation of an action arising under ordinary principles with the entitlement to ultimate relief being determined on the basis of the existence of that fact or state of affairs.
[6]at 444-5

Constructive trust

In Baumgartner, the High Court held that joint contributions made by de facto spouses to common property could give rise to a constructive trust where, upon the breakdown of the relationship, it would be unconscionable for one party to assert his or her entire legal interest. Mason CJ, Wilson and Deane JJ said: [7]

Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home, were on the basis of and for the purposes of, that joint relationship. In this situation the appellant’s assertion, after the relationship had failed, that [the property], which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent.
[7]at 149

The submissions of the defendant

It is common ground that, subject only to two submissions of the defendant, if the Court is satisfied as to the making of certain representations by the defendant on all of which the plaintiff relies, the effect of those actions will be to entitle the plaintiff to the relief which he seeks. The defendant submits that even should the Court be so satisfied, first, the plaintiff does not come to the Court with clean hands and accordingly is disentitled to that relief; and second, in accordance with the reasoning of McHugh J in Nelson v Nelson, [8] “the inability of the Court to mould appropriate terms may be a ground for refusing relief”.
[8](1995) 184 CLR 538 at 612-7

Those are the only two potential legal issues in this case; the decision otherwise turns on the factual questions of whether the several representations were made, and the availability of the defence of non est factum in respect of the execution of the document constituting the fourth representation.

The facts
The evidence

Orders were made on 11 October 2004 for the parties to file and serve outlines of evidence, and this was done. While the outlines were relied on to some extent in cross-examination, they were not tendered and I have not read them.

In addition to the plaintiff and the defendant, the following witnesses were called:

For the plaintiff:
Dinesh Malhotra’s eldest brother in Australia, Prabodh Malhotra;
Vinod Malhotra, his second brother in Australia;
Naresh Malhotra, a friend, not a relative, of the Malhotra family;
Jack Yacoub, accountant at most material times for all three parties;
Nick Daris, a real estate agent;
Pardip Singh, a friend of Dinesh Malhotra and customer of the business;
Resham Singh, a friend of Dinesh Malhotra and supplier to the business;
Olcay Kaya, a supplier to and customer of the business;
Jitendra Bhatia, a customer of the business and family friend of the Malhotra and Tiwari families;
Lionel Theobald, the property valuer who prepared the valuation of the properties;
Neil Holland, a forensic document examiner.

For the defendants:
Markandey Tiwari, described by Sheela Tiwari as her husband;
Pradeep Tiwari, their adult son;
Pratima Tiwari, their adult daughter;
Raghu Shukla, Sheela Tiwari’s brother;
Verica Jagodich, a close friend of Sheela Tiwari;
Kamal Dutta, a friend of the Tiwari family.

Relevant individuals who were not called to give evidence are Shyamlal Malhotra, the father of Dinesh Malhotra, Renu Kapoor, otherwise known as Prianka, the second wife of Dinesh Malhotra and Rumiani Dutta (who is not related to Kamal Dutta), the third wife of Dinesh Malhotra.

The evidence in this case occupied three weeks and there are very considerable conflicts between the evidence of the plaintiff and that of the defendant. It has been convenient to begin by dealing with some essential facts which are common ground, and which are sufficient to provide a framework on which to consider the matters in dispute.

As has been said, the case turns principally on whether the representations on which the plaintiff relies were made. That is a matter essentially within the knowledge only of the plaintiff and the defendant. Given the conflicts in their evidence, the decision must turn on the credit of those two persons, and the case was run on that basis by both sides. Much of the evidence is relevant only to credit, and not directly to the issues before the Court. There are matters the subject of evidence to which I have not found it necessary to refer, and many issues to which I have referred but which I have not found it necessary to resolve.

Some essential facts which are not in issue

Sheela Tiwari was born in India in 1966. In 1980, when she was fourteen years old, she married, by a Hindu ceremony, Markandey Tiwari, whom she had never met. In 1981, when she was fifteen, her eldest daughter Pratima, who is now 23, was born. Her only son, Pradeep, was born in 1983, and is now 21, and her second daughter, Pratibha, now 19, in 1985. Markandey Tiwari came to Australia in late 1985 and Sheela and the three children joined him here in June 1987. A third daughter, Pranita, now 16, was born to them in 1988. The family lived in a flat at 19/745 Barkly Street West Footscray, which Markandey Tiwari had bought in November 1986. Sheela Tiwari became an Australian citizen in 1991.

Dinesh Malhotra was born in India in 1961. His evidence that he has a Master’s degree in English Literature and was studying for civil service exams before coming to Australia was not challenged. His English is fluent. He arrived in Australia in December 1985 on a visitor’s visa, valid for six months, to visit his parents and his brothers, who were already here. They encouraged him to stay here because of his mother’s illness.

He worked in a factory until mid 1988, when he left because he did not have a tax file number. He lived with his brother Vinod, who supported him until mid 1990 when he obtained a tax file number and returned to the same factory, where he remained until February 1993, working the afternoon shift.

In 1988 Dinesh and his two brothers joined with some friends to form a religious music group and it was in that context that he met Markandey Tiwari and thus Sheela Tiwari.

On 11 February 1991 the business was established, as a partnership between Dinesh and Vinod Malhotra and Markandey Tiwari, who were registered as the proprietors of the business name “Bharat Traders International”. The nature of the business is described in the Business Names Register as “import, wholesale and retail of Indian groceries”. With effect from 1 June 1992 Vinod Malhotra and Markandey Tiwari left the partnership and Dinesh Malhotra was registered as sole proprietor of the business name.

In late 1992 Sheela and Markandey Tiwari were divorced and on 9 January 1993 Dinesh Malhotra married Sheela Tiwari in Melbourne by a civil ceremony performed by a celebrant.

At about this time officers of the Department of Immigration became aware that Dinesh Malhotra’s visitor’s visa had expired in June 1986, since when he had been in Australia illegally for more than seven years. He was advised that he would have to leave the country before applying for permanent residence, and that because he had overstayed his visa for more than 28 days he would be subject to an exclusion period of six months before he could return to Australia.

On 1 February 1993 the registration of the business name “Bharat Traders International” was transferred from Dinesh to Sheela.

On 8 March 1993 Dinesh left for India with Pratima Tiwari, who was then about twelve years old, and took her to visit Sheela’s parents. While he was in India, Sheela applied unsuccessfully for a waiver of the six months exclusion period. He returned to Australia on 8 November 1993. It appears that at some later date which is not apparent, he became an Australian citizen.

In early 1994 Dinesh Malhotra enrolled for a post graduate diploma in computer science at Victoria University of Technology. Classes were twice weekly, from six to eight in the evening. He completed the diploma in early 1996 and then enrolled for a Master’s degree, but did not finish the thesis. When he was not at the university he was working in the business.

On 16 March 1995 Sheela Tiwari signed an application to divorce Dinesh Malhotra, giving the date of separation as 19 January 1994. The decree nisi became absolute on 5 June 1995. She and Markandey Tiwari have not remarried, and neither of them has married any other person.

On 23 July 1995 Dinesh Malhotra married Renu Kapoor by a Hindu ceremony in India. It was an arranged marriage. He returned to Australia on 13 August 1995. Renu Kapoor joined him in Australia in April 1996.

Renu Kapoor left Australia in October 1998, returning on 15 April 1999, and it appears that she is still living in Melbourne.

In October 1998 Markandey Tiwari, who had had kidney problems, suffered complete kidney failure and commenced dialysis. In January 2001 he underwent a kidney transplant.

At some date in the middle of 1999 Renu Kapoor brought proceedings to divorce Dinesh. In September 1999 she applied to the Family Court for a property settlement, not only seeking orders against Dinesh Malhotra, but also seeking orders restraining Sheela Tiwari from dealing with the shares in the company and restraining both Dinesh Malhotra and Sheela Tiwari from dealing with 580 Barkly Street. By an order of the Family Court made on 19 December 2001 that application was struck out for want of prosecution, but with a right of reinstatement.

The business was initially carried on at premises known as 2/578 Barkly Street West Footscray, and later expanded into the adjoining premises known as 3/578 Barkly Street, which were leased to Sheela and Dinesh with effect from 1 February 1994. A hole was knocked in the downstairs wall between the two. In July 1996 the company was incorporated and purchased 580 Barkly Street and in August or September 1996 the business was moved to that address. Each of these three premises consisted of a shop and dwelling.

In September 1998 Ragu Shuklar arrived in Australia.

In June 1999 the S & D International Superannuation Fund was established, with Sheela and Dinesh as joint trustees and members. On the same date Dinesh was appointed a director of the company. He resigned as a director on 29 September 1999.

In November 1999 an article appeared in a newspaper called “Indian Voice”, which circulates in the Indian community of Melbourne, in which Renu Kapoor is quoted as making a number of accusations against Dinesh Malhotra and Sheela Tiwari. She says that she worked 13 hours a day in the business, but was never paid, that she was the victim of “constant family violence and mental and physical torture”, that she suspected “some affairs between her husband and Sheela” and later “saw clearly with my own eyes some affairs between the two lovers”. As to her claim for a property settlement, she says that Dinesh Malhotra had deliberately transferred all his property to Sheela Tiwari and declared that he had no property.

The Hillside property was bought by the company on 9 June 2000 for $132,000 and on 17 July 2000 Dinesh and Sheela executed a guarantee securing a loan from the Commonwealth Bank to enable that purchase.

On 12 April 2002 Sheela signed a transfer of one share in the company to Dinesh, and the minutes of a meeting of directors of the company appointing Dinesh a director (both dated 14 March 2002), and then tore up those documents.On 22 April 2002 Dinesh was given two letters signed by Sheela requiring him to leave the shop and the dwelling at 580 Barkly Street by 24 April. Letters from his solicitors on 23 April 2002 asserted that he was an owner of the business, the premises and the unit trust. In his absence on 26 April 2002 the locks on the premises at 580 Barkly Street were changed. The writ initiating this proceeding was filed on 19 August 2002

The claimed representations

In the statement of claim four representations are pleaded on which the plaintiff relies to establish his case on each of the several grounds referred to in [4] to [8] above.

The first representation is said to be that in mid January 1993, following the marriage of Dinesh Malhotra and Sheela Tiwari, they represented to each other that they would commence to operate the business as partners and they would become joint owners of the business in equal shares.

The second representation is said to be that in or about June 1995 Sheela Tiwari represented to Dinesh Malhotra that there was no need for either party to seek any property settlement following their divorce because each of the parties would continue to operate the business for their joint benefit.

The third representation is that said to be that in or about July 1996 Sheela Tiwari represented to Dinesh Malhotra that she would hold one of her two shares in the company and half of the issued units in the trust on trust for him.

The fourth representation is said to be contained in a document entitled “Statement of Assets and Liabilities” dated 16 October 2000 and bearing what appears to be the signature of Sheela Tiwari. That document refers to and defines the company and the trust, refers to their properties, sets out Sheela’s position in each and includes the following passages:

5.Despite what the documents show and contrary to the very obvious, the fact is that all assets, shares and other interests held and managed by the Company or the Trust and everything I have personally acquired and own, are owned equally (and jointly), fifty per cent each, between myself and Mr Dinesh Malhotra. . . .
6.Unless explicitly documented otherwise, any future acquisitions of the Company and/or the Trust and anything I acquire personally or for my children (or household) with finances used from the Trust or the Company directly or indirectly, will be held and owned as equal (and joint) owners as stated in clause 5. . . .
8.I will continue to hold in trust anything and everything Mr Dinesh Malhotra entrusts me with, from time to time.

Reliance was also placed on a statement said to have been made in Hindi by Sheela Tiwari and which is recorded on a video clip which, it is not in issue, was made while she was engaged in sexual intercourse with Dinesh Malhotra. An unchallenged translation of that statement is deposed to by Sarbjeet Singh, the professional interpreter and translator who assisted Pardeep Singh and Resham Singh in giving their evidence. The relevant part of his affidavit reads:

In the video clip . . . in which Mr Dinesh Malhotra and Mrs Sheela Tiwari are seen in a very intimate relationship, to a question from Mr Malhotra, “whose is it?” Mrs Tiwari replies, “Everything belongs to you”. Asked again by Mr Malhotra, “who’s?”, Mrs Tiwari repeats in a louder voice, “Everything belongs to you”.

The defendant denies the making of any of the first three representations, and relies on a plea of non est factum in respect of the fourth representation. As to the video, when it was put to Sheela Tiwari that no challenge had been made to the accuracy of the translation she replied, “I don’t know anything about that”.

Hindu culture and tradition

Dinesh Malhotra and his brothers, Naresh Malhotra, the two Mr Singhs, Mr Bhatia, Shyamlal Malhotra, Renu Kapoor, Rumiani Dutta, Sheela Tiwari and all of the defendants’ witnesses except Mrs Jagodich, were born in India, and are members of the Indian community of Melbourne. Most of those who were witnesses acknowledged in evidence being Hindu. Their native language is Hindi, or in some cases Punjabi, a language said to be very close to Hindi. Sheela and Markandey Tiwari, the two Mr Singhs and Jitendra Bhatia all gave their evidence with the assistance, in varying degrees, of an interpreter. The business with which this case is concerned is, as has been said, an Indian grocery store.

Both counsel made much of the importance, in the lives of these people, and especially in the motivation for their actions, of Hindu culture and tradition. However, there was no independent evidence on those subjects, and the evidence extracted from the witnesses, chiefly in cross-examination, was not always consistent, and in some cases was obviously self-serving. Further, the witnesses have all lived in Australia for a number of years and have inevitably been affected, to a greater or lesser degree, by exposure to Australian culture and lifestyle. In all these circumstances, I am not in a position to rely on any of the evidence as to Hindu culture and tradition.

There is, for example, conflict in the evidence as to the possibility of divorce from a Hindu marriage. Both Prahbod Malhotra and Sheela Tiwari gave evidence that in Indian culture divorce does not happen. This enabled Sheela to say, a number of times, that her Hindu marriage to Markandey Tiwari is still in existence, despite her divorce from him in 1992. However, Markandey Tiwari said that if Sheela had ever told him that she did not like him any more he would have given her her freedom and would have told her that he would leave. This statement appears to assume the availability of divorce from a Hindu marriage, although elsewhere Markandey Tiwari said that in Hindu tradition “we never divorce”. Dinesh Malhotra has had two Hindu marriages, one to Renu Kapoor, from whom he was later divorced, and one to his present wife, Rumiani Dutta. No-one suggested that the second of those marriages was invalid because of the invalidity of the divorce.

Another example of conflicting evidence on matters of Hindu culture and tradition relates to the significance of particular terms of endearment used in letters between Dinesh Malhotra and Sheela Tiwari during his absence in India in 1993. He maintains, for example, (supported by Pardip Singh) that the expression “Dear Sheela” would not be used unless there was a significant relationship; Sheela Tiwari, on the other hand says “you can use it to anybody”. This is put as relevant to the issue of whether the marriage was a marriage for love, or a mere device to enable Dinesh Malhotra to return to Australia. I am unable to reach any conclusion as to the significance of those letters.

The credit of Dinesh Malhotra

Dinesh Malhotra has admitted from the outset that in response to the claim by Renu Kapoor for a property settlement in the Family Court he swore affidavits in which he deposed that he had no beneficial interest in the business or the company or 580 Barkly Street. He now maintains, as he must do if he is to succeed in this proceeding, that those affidavits were false. In December 2002 an application by the defendants for summary judgment was dismissed by Beach J and on 21 February 2003 in dismissing an application for leave to appeal against that decision Batt JA (with whom Chernov JA agreed), said of the affidavits in the Renu Kapoor proceeding, “The parties are no doubt aware of the very serious risks they run in explaining the seemingly explosive material to which I have referred”.

In 1988 a woman called Roselie Trewin brought proceedings against Dinesh Malhotra in the Magistrates’ Court for the maintenance of her daughter Heather. Dinesh said that he had known Ms Trewin but he was not the father of her child, and that he had not known of the proceeding until he learned of it in 1994 through the Taxation Office. In an affidavit sworn in that proceeding on 17 July 1996 he deposed that he had been looking for work, but was unemployed, and that he was a student and relied on social security payments.

He said in evidence that he had been looking for work at that time because he needed to supplement the income of the business, and that he was receiving social security benefits in the form of a Newstart allowance, which he applied for because the business was not improving and the overheads, including school fees, were drying up its financial resources. He and Sheela Tiwari had decided that if he could get an office job where he could do the telephoning parts of the business during the day in his employer’s time that would help with the finances of the business. He agreed in cross-examination that he had put false references in the resumé which he prepared to assist him in finding a job.

He agreed that receipt of the Newstart allowance required that he be unemployed, and said that he had told officers of the Department of Social Security that he was working full time in the business but was not being paid. A letter dated 8 July 1997 and signed by Sheela Tiwari as “owner” of the business states that he is not an employee of the business.

In another affidavit in the Roselie Trewin proceeding, also sworn on 17 July 1996 he deposed that he had no property. He said in evidence that he believed that, although he had a fifty per cent interest in the business it was not registered in his name, so that he could not say that he owned it. On 11 December 1996 an order was made in the Magistrates’ Court discharging an order previously made for payment of arrears of child support.

It should also be noted in this context that he overstayed his six months’ visitor’s visa by seven years, from 1985 to 1993, and further that in explaining the entries in the cash book of the business he showed no embarrassment in saying that “the cash book recording the real transactions” was not shown to the company accountant.

Dinesh Malhotra is thus in the position that in order to succeed in this proceeding he must demonstrate that his evidence in the Family Court as to his financial position was false, and thus that he cannot be believed on his oath. Indeed, he must put himself in the position where he may suffer a custodial penalty for perjury. [9] He must show himself to be a person who will not hesitate to make false statements, whether on oath or not, if he sees an advantage to be gained thereby. So far as the matters unrelated to his interest in the properties are concerned, he has already shown by his evidence that he is such a person. I must consider the evidence before me in the light of that circumstance. It is not suggested that in initiating and prosecuting this proceeding he has been unaware of his position in this regard.
[9]The maximum penalty for perjury under section 35 of the Crimes Act 1914 (Commonwealth) is 5 years imprisonment.

The evidence of Dinesh Malhotra
The relationship between Dinesh Malhotra and Sheela Tiwari

Dinesh Malhotra says that there was a loving sexual relationship between himself and Sheela Tiwari from 1988 until 2002. It was for that reason that he stayed in the business all that time, and it was for that reason that they were married. She dominated him emotionally. It was because of his love for her, his trust in her and her domination of him that the arrangements for the ownership of the properties appeared to create the impression that she was the sole owner, and concealed the fact that he was the beneficial owner of a half interest in them.

Sheela Tiwari says that there was never any loving relationship, that the sole reason for the marriage was to enable Dinesh Malhotra to return to Australia when it was discovered by officers of the Department of Immigration that he had overstayed his visa, and that he was no more than an employee of the business who was needed to “do the paperwork” because of his command of English, and who in return for that was allowed to live with the Tiwari family and was paid a small salary.

Thus the existence of the relationship is at the heart of the true issue as to the ownership of the business.

Dinesh Malhotra said that he first met Sheela Tiwari in late 1988. Shortly before Christmas 1989, while her husband Markandey Tiwari was in India, they began an affair. On the first occasion when they had intercourse, he placed red powder in her hair parting, which was a symbolic Hindu marriage and he said that they considered that marriage as more significant than the civil marriage which took place in 1993. However, Sheela denied that he had put red powder in her hair. He said that while Markandey Tiwari was away, he spent every night at her flat. After Markandey’s return in late February 1990, Sheela Tiwari would come to his flat in Coburg at least three times a week, when she was supposed to be at English classes. He described the relationship as perfect. He said that the business was initially set up because he wanted to be close to Sheela.

It was put to Dinesh Malhotra that Sheela Tiwari would deny having had any sexual relationship with him specifically between 1992 and 2001. It was also put to that she would say that in 1989 while Markandey Tiwari was overseas they did have sex together but only once. It had also been put to him that she would say that she did come to his flat in Coburg instead of going to her English classes, but that she did this only occasionally, not more than once a week, not three times a week as he had said. She did not say any of these things.

I should make clear that in referring, here and elsewhere in this judgment, to deficiencies of this kind in the evidence, I intend no criticism of Sheela Tiwari’s legal advisers. I have no reason to find, and I do not find, that any blame falls on them for the foreshadowing of evidence which in the event was not given. I must and do assume that in putting those matters to Dinesh Malhotra counsel for the defendants was acting on instructions from a client who in the event did not swear up to those instructions. This is a matter highly relevant to the credibility of Sheela Tiwari.

Dinesh Malhotra said that he and Sheela Tiwari began living together at 2/578 Barkly Street just after June 1992. Before that Sheela was pressing him to run away with her and leave her children behind. Sheela denied this. He said that he told her that she could not leave her children, the youngest of whom was one year old, and he did not want to run away. He said that he took an overdose of sleeping pills, and that Sheela was concerned after speaking to him on the telephone, and rang his brother, who came to his flat and took him to hospital. His brother Vinod Malhotra gave evidence to the same effect.

He said that they decided in November 1992 to marry, and were married on 9 January 1993. His father and his brother Prabodh were at the wedding, as were Sheela’s children. Sheela denied that the children were present, and the photographs said to be of the wedding do not show them. He said that after the marriage he had a close relationship with the children.

He said that he and Sheela and her children lived as a closely bonded family. He would help the children with their homework and discuss what subjects they should study and take them to buy textbooks, and would go to parent teacher interviews and end of year school social activities. Pradeep and Pratima Tiwari in their evidence were concerned to play down the relationship, but there was no evidence that any other person attended to these specific matters or that Dinesh Malhotra did not do so.

It was put to Dinesh Malhotra that the marriage was a marriage of convenience, to enable him to obtain permanent residence in Australia, and he replied that “at no stage of our relationship since 1989 either her or myself could think of living apart, rather than just a union of two souls and bodies.” Dinesh said that if it had been a marriage of convenience he would not have lived with Sheela Tiwari for twelve years of his productive life. If he had not been a half owner of the business he would not have stayed.

Dinesh Malhotra said that when he returned from India in November 1993 Markandey Tiwari was living in the flat which Markandey had bought at 19/745 Barkly Street and continued to live there and would visit the children frequently at 578 Barkly Street. Dinesh did not know whether he stayed overnight or not. Dinesh and Sheela occupied one bedroom at 2/578 Barkly Street and the children occupied the other bedroom.

Markandey Tiwari said that in 1994 he allowed a friend to live rent free in his flat and there is documentary evidence of a lease of the flat from November 1996 to November 1998.

It was put to Dinesh that Markandey Tiwari and Sheela Tiwari continued to live as man and wife at all relevant times, and he said that Sheela Tiwari had assured him that this was not so, and he would not have shared her with another man. In this context I note the evidence of Sheela and Markandey in [74] and [75] below as to their sleeping in separate rooms after the acquisition of 580 Barkly Street.

Dinesh said that since his return from India he had been expecting Sheela to fall pregnant, because he wanted to have a child. She told him in April 1994 that she had had her tubes tied, and that in any event she did not want to have a family of children with two different fathers. Sheela suggested to him that he should re-marry, and it was understood that they would try to cut down on their physical relationship and they tried to do so. They separated in May 1994, after which they slept in different bedrooms, with Sheela and the children in one room and he in another, but ran the business as before. They tried to reduce their physical contact, but it resumed fully in November 1998.

In February 1995 Dinesh Malhotra went to India and met Renu Kapoor, and their fathers agreed that they would marry, although the marriage did not take place until July of that year.

He said that he and Sheela Tiwari continued to have sexual relations after he had agreed to marry Renu Kapoor and even after he had married her, but it was reduced to a bare minimum. He said that he was still in love with Sheela Tiwari when he married Renu Kapoor.

He said that during his marriage to Renu Kapoor he occupied one bedroom with her and Sheela Tiwari another bedroom with her eldest daughter Pratima. When Markandey Tiwari was found to be suffering from kidney failure, he moved in to 580 Barkly Street and shared a room with his son Pradeep and the other two daughters. Markandey Tiwari never shared a room with Sheela Tiwari. He did not take any responsibility in respect of the children’s education; it was Dinesh Malhotra who discussed choice of subjects, went to their schools and university admissions, parent teacher interviews and end of year social activities.

Sheela Tiwari said that in 1995 when she and Dinesh Malhotra were divorced he was living in Sloane Street, Maidstone, although he came sometimes to 2/578 Barkly Street. However, none of the other witnesses who gave evidence as to the sleeping arrangements mentioned this. She said that when Renu Kapoor came to Australia Dinesh asked if they could come and live with the Tiwaris and they did. The Sloane Street address, which was said by Dinesh Malhotra to be the address of Kamal Dutta, appears on a driver’s licence of Dinesh Malhotra, which he explained by saying he used it because he and Sheela had had an argument and he changed the address on his licence to show her that he was leaving. This does not sound particularly convincing. However, there is no other documentary evidence connecting him with that address. His evidence is that he never slept there, and that he slept every night at 2/578 Barkly Street and later at 580 Barkly Street. No evidence on this subject was given by Mr Dutta.

Verica Jagodich lives at 55 Kiora Street, Altona Meadows, and Dinesh Malhotra said that he used her address for some correspondence in connection with the Family Court proceeding, but that he never slept there. The evidence of Verica Jagodich is that he made arrangements to stay with her, but is inconclusive as to whether he ever did so. Again, had he lived there, it would have been inconsistent with the claim of the defendant that he received his board and lodging in return for helping with the paperwork.

Sheela Tiwari said that after the acquisition of 3/578 Barkly Street she and her husband slept in one room in that building, her daughters in another, and her son and Dinesh Malhotra each in one room. After the acquisition of 580 Barkly Street, Sheela said that Dinesh Malhotra and Renu Kapoor were in one room, Markandey Tiwari and her son in another, she and Pratima in a third. The two other girls were in a room which had two bunk beds, but it is not clear which room that was. There was a very small room which had been an office, and when her brother Raghu Shukla arrived in 1998 he moved in to that room. The evidence of Markandey Tiwari supported this, as did the evidence of Pradeep Tiwari. The evidence of Pratima Tiwari and Raghu Shukla on this matter was confusing.

Markandey Tiwari was asked why he and Sheela Tiwari did not share a room and replied:

Because - you know, Pratima getting - getting bigger - I mean older, and we didn't want to - you know, Pratima and Pradeep sleep together and we sleep together, so there was no choice, and also when the children grow we don't - you know, the sleep together.

Sheela Tiwari was asked the same question and the transcript reads:
MR EVANS: Before that you were sharing a room with your husband? --- Yes.
Why didn't you continue to do that? --- There is no extra room,
and we - - -
HER HONOUR: I'm sorry, I didn't hear that? --- There is no extra room to stay with the husband and I have already elder daughter so I can sleep with daughter too anyway.
So you moved in with Pratima? --- Pratima, yes.
Why didn't Pratima stay where she was? --- She can't sleep with
the brother.

Dinesh Malhotra said that after Renu Kapoor left in 1998, Sheela Tiwari moved into his room in her place. Sheela denied this.

Dinesh Malhotra said that Renu Kapoor worked in the business, but was unhappy because he spent so much time with Sheela Tiwari discussing the business. She did not show much enterprise in picking up the work, but they had a normal relationship. Renu Kapoor went to India in October 1998 and they were not together again, except for a few days in April 1999 when she returned to Australia with his father, Shyamlal Malhotra.

Dinesh Malhotra said that he and Sheela Tiwari together visited a gynaecologist, Dr Ong, for advice as to the reversal of her tubal ligation. The records of the Werribee Mercy Hospital show that the operation took place on 22 December 1987. I note that the letter from Dr Ong on the hospital file records that Sheela Tiwari still has the same husband as when she had her four children; but the source of that statement is unknown, and it cannot be regarded as of evidentiary significance. Dinesh Malhotra is recorded on the hospital file as the person to be contacted, described as a friend and as next-of-kin, and the space for a second contact person has been left blank. Dinesh Malhotra said that he took her to the hospital, visited her in hospital and picked her up from the hospital. A note on the file says “discharged home with husband”, but that statement similarly cannot be given any evidentiary significance.

It was put to Dinesh Malhotra that Sheela Tiwari would say that she had the operation because she was in pain, and because she was contemplating having a further child with Markandey Tiwari. Her evidence was that she had told her daughter that it was because she was in pain, but that the only reason for the operation was that she wanted another son with Markandey Tiwari. When referred in this context to her outline of evidence, which stated that she had the operation because she was in severe pain, she said, “I told my daughter to do the outline because I was so shamed by everything.” It would seem unlikely that her solicitors, preparing the outline, took instructions from her daughter rather than from their principal witness, and Sheela did not make this suggestion in the context of any other aspect of the outline.

In March 1999 Dinesh Malhotra and Sheela Tiwari together visited Dr Anthony Lawrence of Monash IVF for advice on the IVF program, but did not visit him again. Sheela denied that this visit took place, but it is apparent from Dr Lawrence’s records. It was put to Dinesh Malhotra that Sheela Tiwari would say in evidence that she had only learned the meaning of the expression “IVF” the day before the matter was put, but she did not say this. It would seem unlikely that she visited Monash IVF without knowing what “IVF” meant. Dinesh Malhotra said that Sheela Tiwari had now changed her mind and wanted to have his child.

Dinesh Malhotra was shown a number of documents in which he or Sheela Tiwari stated that he had no interest in the company. Document 1407 is his resignation as a director dated 29 September 1999. Document 1407A is a letter to Sheela Tiwari dated 6 October 1999 asking her to provide a statement that he has no interest in the company, to be used against his wife’s claim against the business. Document 1407B to 1416 is a financial statement sworn by him on 22 October 1999 in the application by Renu Kapoor to the Family Court for a property settlement, in which he deposes that his only property is $800 in the Commonwealth Bank. Document 1419 to 1432 is a affidavit sworn in response to that application, sworn on 12 November 1999, shortly after the publication of the article in “Indian Voice”. Document 1417 is a statement by Sheela Tiwari to the effect that she is the sole director and shareholder of the company, which owns the business and 580 Barkly Street and that Dinesh Malhotra has never had any beneficial interest in the company. He and Sheela Tiwari closed their joint bank account on 22 October 1999, the date on which he swore the financial statement in the Family Court proceeding. He said that documents 1407 and 1407A were never used, but were just kept in house. Dinesh Malhotra said that he resigned as a director of S & D International because in the context of the property settlement claim he did not wish to be seen as associated with it.

He stated that the documents referred to in the preceding paragraph were prepared, and the bank account closed, at the insistence of Sheela Tiwari, to ensure that Renu Kapoor, who was aware that he was an equal owner of the business, received nothing out of the business. Sheela reminded him almost daily of this. The documents were all discussed with Sheela. However, by May or June 2000 he was becoming tired of the constant deception and the rumours in the Indian community about the whole situation and decided that he should give Renu Kapoor what she deserved. He sent a message to her that she could come back if she wished to do so. She could live her own life or even have a separate place of residence. He decided that he wanted a peaceful life. When he told Sheela Tiwari of this she said that they must fight and win, and he was not able to make any decision. She had full emotional power over him. It was put to him that Sheela Tiwari would deny his having said that he wanted a peaceful life, but she did not refer to this. After some time he told her that he proposed to correct his position and tell the Family Court that he owned half of the business. She was firm that he should not do this, and made a veiled threat that if he did say that she would say that he had never owned any part of the business, and it was all hers.

It was put to him that Sheela Tiwari would deny any of the conversations about his telling her that he was lying in the Family Court proceedings. She was asked in examination in chief, “Did you have any discussions with Mr Malhotra regarding the filing of affidavits by him in the Family Court proceedings?” and to that leading question she replied, “No.” She denied in answer to another leading question that it was on her insistence that the contents of the affidavits were false.

The business had been publishing a monthly newspaper, “Bharat Times” which was prepared by Dinesh and a statutory declaration was executed on 22 June 2000 by Sheela Tiwari evidencing a transfer of that activity from Sheela Tiwari to Dinesh Malhotra. He said that this was so that he could appear to have a business which had been created after Renu Kapoor left, so that she would have no claim to it.

When Sheela Tiwari was asked when she first had sexual relations with Dinesh Malhotra she said that she could not remember, but later said it was in late 1991.

She was asked whether she was having sexual relations with Dinesh Malhotra prior to tearing up the documents and said that she did not know and could not remember. The question was put again and the answer was “No, never.” That answer was repeated more than once in cross-examination. The question was put again and she said that she did not know. It was put to her in relation to each specific year from 1990 to 2001 and each answer was “No”. She said that she had never been unfaithful to Markandey Tiwari. This was despite her having been reminded by her counsel that there was evidence showing that she did have sexual relations with Dinesh Malhotra in 2001 and 2002. When she was shown the video in court she said that she had never seen it before, which seems unlikely, and suggested that she was drugged or intoxicated at the time.

As to the video, taken on 21 March 2002, although Markandey Tiwari said that his son had told him that these things can be fabricated, no expert evidence was called to suggest fabrication, and the validity of the video is accepted by the defence. In cross-examination Sheela Tiwari suggested that the making of the video was intended to blackmail or to scare her. Mr Evans submitted in his final submission that all except one of the scenes in the video showed Sheela Tiwari as “silent and looking apparently miserable” consistently with their having been made as Sheela suggested, “under threat of being exposed”. However, this was not put to Dinesh Malhotra, nor was it said in examination in chief, and I would have some difficulty in accepting it. I have, of course, viewed the video in question, and would only say that no conclusion can be drawn from appearances as to the state of mind of a person engaged in the activities there portrayed.

It was put to Sheela Tiwari that she had pretended that her marriage to Dinesh Malhotra was a marriage of convenience, that is, a marriage effected purely to enable him to obtain permanent residence in Australia, in order to conceal the fact that she was in a genuine sexual relationship with him, because she would be ostracised in the Indian community if that were known, and she denied this.

She said that the only reason why Dinesh Malhotra married her was so that he could return to Australia. The arrangement had been made with her husband. It was a marriage and a divorce on paper only. She denied that she married Dinesh for love.

She was asked whether she had told her husband that she had had sexual relations with Dinesh Malhotra and after some difficulty agreed that she had told him, but did not know when. She then said that there was no need to tell him because he could see for himself, but agreed that she was not suggesting that he was watching it take place. She then asked rhetorically “Would I talk about this with my husband?” and then said “Whatever my relationship was, I have told all to my husband”. Markandey Tiwari, on the other hand, said in evidence that she had not told him of the relationship.

She said that she and Dinesh did not live as husband and wife. They did not have sexual relations during the period of the marriage.

The ownership of the business

Dinesh Malhotra said that he developed the business and had all the ideas. He was in charge of management and marketing. His role was to manage the business, to do the bulk buying, purchasing from local and interstate suppliers, fixing retail prices, deciding in what sizes to pack goods bought in bulk. No witness except Raghu Shukla suggested that anyone else attended to these matters. Raghu Shukla said that he worked in the shop, chiefly in customer service, but that he also liaised with suppliers and had done so before Dinesh Malhotra left the business. It appears that he made no mention of these activities in his outline of evidence. There is no suggestion that either Sheela Tiwari or Markandey Tiwari had any detailed management role of the kind described by Dinesh Malhotra. He said that after June 1992, when he became sole owner of the business, he would work in the shop from nine in the morning until 3.30 in the afternoon, when he would go to the factory, where he worked afternoon shift from four until midnight. Sheela would take over and look after the shop from 3.30 until it closed at nine p.m. He initially put $5,500 into the setting up of the business, and thereafter contributed the greater part of his wages from the factory to it.

As to the first representation, he said that after the marriage they were at 2/578 Barkly Street and were discussing how they were to expand the business. At this stage the registration of the business name was still in his name. The transcript reads:

I said, "It's not my business, it's our business". We agreed that we will operate the business as partners, run it as partners, and become joint owners and partners of anything we make, not only this business. The discussion was that, "If you buy a property tomorrow in your name, would that mean that this only Sheela's property?" and she said, "Of course not, name doesn’t matter, if we can die for each other then what lies in a name".
Who said that? --- Sheela.
What did you say in response? --- I said, "Of course".
Even prior to the transfer of the registration of the business into her sole name, what was your understanding as to who owned the business from the point of your marriage? --- From the day I married it was clear in between the both of us, that whether it's in my name or whether it's in her name, it belongs to both of us.

From then on, he said, his role was still to manage the business, to be the mind behind the business, while Sheela looked after customer service in the shop and gave him feedback as to what the customers needed.

Dinesh Malhotra’s evidence is that the discussions with the Immigration Department officers referred to in [22] above took place shortly after his marriage. They came to the shop in the third week of January 1993 looking for a Pakistani national, who was a customer, and he volunteered to their leader, Rodger Hyde, of the Entry and Compliance Branch of the Department, that he had overstayed his visa and wanted to apply for permanent residence. He showed Mr Hyde his marriage certificate, and was told that he would have to leave the country before he could apply. He had intended to apply for permanent residence after his marriage, no doubt on the basis that once he was married to an Australian citizen he would be entitled to permanent residence, although this is not spelt out in the evidence, but he had not been aware of the need to leave Australia before he could make that application.

Mr Hyde gave him a letter, which is in evidence, to show the Immigration Officer at Melbourne Airport to the effect that he had been questioned and all necessary information had been obtained. He said that when he sought confirmation of these events from the Department for the purpose of this proceeding, he was told that Mr Hyde was no longer with the Department and it would be almost impossible to locate the records.

He left Australia on 8 March 1993 accompanied by Sheela’s daughter Pratima, and explained that this was because Pratima wanted to visit Sheela’s parents, and also because it would probably be better for his application for waiver of the exclusion period if she was with him.

The reason he gave for the transfer of the business name registration to Sheela on 1 February 1993 was that it was uncertain how long he would have to remain out of Australia. They agreed that if it took as long as twelve months, if the registration was in her name, she would simply close down the business, sell it and join him. He said that he did not at any stage suggest that in transferring the registration he was relinquishing ownership of the business. He took $10,508 from the business bank account which was in the joint names of himself and Sheela, in order to have some money to live on in India and also to pay to his brother in law $5,000 owing on a shipment of rice. The money was paid in Indian rupees. He did not sell the business to Sheela; it was his own business, which he had built up and into which he had ploughed back his wages from the factory. He agreed that he had sworn in the Family Court proceeding that he had sold the business to Sheela Tiwari for $11,000 paid over several months, but said that that was untrue. The figure of $11,000 had been “plucked from nowhere”, and the similarity to the amount he took to India was coincidence.

Asked why he took no steps to have the registration of the business name put back into his name on his return from India in November 1993, he said that his relationship with Sheela Tiwari was such that it made no difference to them whose name anything was in.

On his return, he said that he worked full-time in the business, as proprietor and the manager, controlling purchases, decisions on where to buy, what to buy and how to expand the range of products, deciding what sizes to pack, what to display, what prices to charge, what margins they should be making. Banking, supplies, and imports from India were his job, although he did not necessarily do all the banking and Markandey Tiwari did some of it. Sheela looked after customer service at the counter, and looked after the household. He was not required to report to her on any of his management decisions. Sheela’s counsel said that she would give evidence to the effect that his role was “essentially to deal with people externally in a management capacity”, and this perhaps describes her evidence that he did the paperwork because he spoke and wrote good English. However, there is no evidence of any other person making internal management decisions of the kind which he describes. He did say that he performed some managerial functions in consultation with Sheela, but did not specify those functions.

Asked why Markandey Tiwari gave a mortgage in 1995 over his flat at 19/745 Barkly Street to secure the overdraft of the business, Dinesh Malhotra said that it was because the business was supporting Markandey Tiwari’s four children. Indeed, Markandey Tiwari said effectively the same thing himself.

As to the second representation, Dinesh Malhotra said that when he and Sheela Tiwari were discussing his proposed remarriage, and later in May 1995, towards the time when their decree nisi became absolute, they agreed that they would continue to be good friends and business partners and would retain their business relationship and expand the business, and accordingly there would be no need for a property settlement.

In mid March 1996 Sheela Tiwari and Dinesh Malhotra jointly bought a flat in Mumbai. He said that he paid $15,000 towards the purchase price, and Sheela Tiwari obtained a home loan from a bank in Australia. He said that if he had not had a genuine relationship with her he would not have bought that property

In June 1996 the business was expanding and 580 Barkly Street came up for sale. Mr Yacoub advised Dinesh Malhotra and Sheela Tiwari that the business should be operated by a corporate vehicle. Dinesh Malhotra said that the contract of sale showed Sheela Tiwari as purchaser, but this was replaced by a contract for purchase by “Sheela Tiwari or nominee”. That document has not been produced, but it is common ground that it was the company which purchased the property.

Dinesh Malhotra said that in the discussions with Mr Yacoub about the formation of the company the name “S & D International Pty Ltd” was chosen on the basis that “S & D” stood for “Sheela and Dinesh” and this would reflect the interest of both parties in the company. Sheela said that “S & D” stood for “son and daughters” because her son and three daughters would benefit from the business. Her counsel indicated that she would say that this was appropriate given that part of the purchase price for 580 Barkly Street was obtained by cashing in insurance policies taken out for the benefit of her son and her two elder daughters. However, she did not say this. It is put that Sheela did not understand what was said to Mr Yacoub in English. Her ability to speak English is discussed at [122] to [124] below.

As to the third representation, Dinesh Malhotra said Sheela Tiwari had asked him whether the setting up of the company and the unit trust would mean that they would still be joint and equal owners in the trust and the company, and he had said to her that there was no need to change and that would be the continuing arrangement. He was asked why he did not become a director of the company, and said that it would have been belittling to the relationship if he had said that now that they were buying real estate he did not trust her.

He said that he contributed $15,000 to the purchase of 580 Barkly Street, of which $10,000 was borrowed from Resham Singh. Sheela cancelled her children’s insurance policies, which enabled her to contribute some $11,500 or $12,500.

In July 1999 Dinesh guaranteed a loan from the Commonwealth Bank to the company. His maximum liability under the guarantee was $198,000 plus interest and costs. He said that that loan related to the purchase of 580 Barkly Street, but that purchase took place in 1996. However, the significant point is the fact of Dinesh Malhotra’s giving the guarantee, not the purpose for which it was given. He said that he would not have done so had he not been an owner. He said that he resigned as a director of the company because he did not wish to be seen as associated with it in the context of the property settlement claim.

After the publication of the article in Indian Voice Dinesh Malhotra and Sheela Tiwari consulted solicitors with a view to bringing proceedings for defamation, and a statement of claim was prepared by counsel. However, he said that they were advised that the publisher had no assets and did not proceed with the matter. Had that not been the case they would have issued proceedings. As to the statement attributed to Renu Kapoor in that article that she “saw clearly with my own eyes some affairs between the two lovers”, Dinesh Malhotra said that she had observed him and Sheela Tiwari in a very close embrace one morning in the kitchen.

He said that after he told Sheela that he had decided to give Renu Kapoor what she deserved, and had sent her a message saying that she could come back if she wished, Sheela had said that if he prepared a piece of paper guaranteeing that his fifty per cent share was intact, she would sign it. They discussed the form of the document, headed “Statement of Assets and Liabilities”, and prepared it over a week or ten days. All the discussion was in Hindi, but the document is in English. Essentially it is a statement that all assets of the company are owned equally by herself and Dinesh Malhotra, and is the fourth representation relied upon by him. He said that it was signed by Sheela on 16 October 2000 in the presence of his friend Jitendra Bhatia, who had called that day to get advice from Dinesh Malhotra about the GST.

As to the Hillside property, he said that in May and June 2000 he and Sheela Tiwari were looking for a block of land on which to build a house later on. They selected the block, and it was bought in the name of the company, on the advice of Mr Yacoub. The deposit was paid out of the kitty referred to in [119] below, and on 17 July 2000 he and Sheela guaranteed the bank loan of $90,000. He said that he did this because he owned half of the company which had bought the land. They gave cash from the kitty to Verica Jagodich who went to the bank and obtained a bank cheque for $12,200 for the deposit in order to avoid the taxation implications of producing that much money; Sheela denied this. Verica Jagodich is a pensioner. Her evidence was that she lent the money to Sheela, but was unconvincing, and her bank book for the relevant period shows no comparable transaction.

The S & D International Superannuation Fund was established in June 1999 with Dinesh Malhotra and Sheela Tiwari as the only members.

Dinesh Malhotra said that after Renu Kapoor’s application for a property settlement was struck out on 19 December 2001, he said to Sheela Tiwari that now they could transfer his half interest in the company to him. But she said that it was too early, and that Renu Kapoor would claim half of anything which he had. In February 2002 he had been to India and become engaged to his present wife, Rumiani Dutta (who is not related to Kamal Dutta), and Sheela had not been happy about that because they were still trying to have a baby. But because she had not readily agreed to the transfer of the share, he had lost trust in her.

He said that Mr Yacoub had told him that while he was absent in India Sheela Tiwari had asked Mr Yacoub to prepare documents for the transfer of the whole of the shares in the company to him, but Mr Yacoub had told her that Dinesh Malhotra was only entitled to fifty per cent. Mr Yacoub had prepared documents for the transfer of fifty per cent, but Sheela Tiwari had not come back to collect them. He collected them himself, and they remained in his possession until 12 April 2002. He said that he gave the documents to Sheela Tiwari and she signed them and gave them to him and he said that he was not scared of the Family Court any more, and that Renu Kapoor would get what she deserved. When he said that, Sheela took the documents back and tore them up and threw them in the bin. She threatened to send him to gaol, and at the time he did not realise that she meant that the affidavits he had sworn in the Family Court would stop him from claiming his share in the business, because he had sworn that he had no interest in the business.

He said that on the evening of 12 April 2002 he was counting the cash as usual, and either Pradeep or Markandey Tiwari told him that he had no right to do so. They called the police to turn him out of the building and when the police came he told them that he had a half share in the business, and this was confirmed on the telephone by Mr Yacoub and by his solicitor. The next day, in the presence of Naresh Malhotra and Prabodh Malhotra Sheela said that he was entitled to a half share but she needed time to discuss the matter with her family before signing the transfer and again she said that if she did transfer his half share to him, Renu Kapoor would come back and claim it.

He said that some days later Sheela Tiwari burst into the room where his father and his brothers were and told his father that she had an illegitimate relationship with his son, and nobody could stop her.

He said that on 23 April 2002 Pradeep and Markandey Tiwari told him to leave the building. While he was out on 26 April 2002 applying for an intervention order they changed the locks, and he has been locked out of 580 Barkly Street ever since.

It was put to him that he had transferred the registration of the business name to the name of Sheela Tiwari in February 1993 in part in order to avoid his obligations to Roselie Trewin, and he said that he had not been aware of the proceeding by Roselie Trewin at that time. It was put to him that 580 Barkly Street had been bought in the name of the company for the same purpose, and he said that that was done as part of the establishment of the corporate vehicle and that he was challenging the claim by Ms Trewin. It was put to him that the Hillside property was in the name of the company for the same reason, and he denied this.

Dinesh Malhotra produced a cash book for the period 9 July 2001 to 18 April 2002 which he said was written up each Monday by himself and Sheela Tiwari, showing cash takings for the previous week, their drawings and an amount of cash put on one side in what was referred to as “the kitty”. Particulars of the kitty were not told to Mr Yacoub, the accountant for the business. Other amounts were shown in the cash book as taken out to meet particular needs. He demonstrated cases where it could be shown that the drawings were $750 per week each since early 2001. Of his share, $250 per week was paid directly into his bank account. This was done, he said, to create the impression, for the purposes of Renu Kapoor’s Family Court claim, that he was working part time and receiving a salary of $250 per week.

It was suggested that Dinesh Malhotra had taken from the business a number of similar cash books for earlier periods when he left 580 Barkly Street in April 2002. To that he said that if he had them he would have disclosed them because they would have shown things like how much he actually received and how much was paid for the education of the children.

He was asked whether he had paid rent while living at 2/578 Barkly Street or 580 Barkly Street and said that he had not paid rent because he was an owner, and that Sheela Tiwari had not paid rent either. It was put to him that the Tiwaris were providing him with accommodation in return for his services as manager, and he said that that was ridiculous.

Sheela Tiwari’s evidence

Sheela Tiwari gave her evidence with the assistance of an interpreter. However, counsel for the plaintiff drew attention to the fact that she had not been accompanied by an interpreter while sitting in court during counsel’s opening addresses and the evidence of Dinesh Malhotra and the witnesses called by him. At the outset she said that she could speak English and understood spoken English, could read and write Hindi, and in English could “read a bit” but could write down only her name and address. She said that she had attended classes in English where she was shown “stuff pertaining to real estate”.

She said that since the case began more than two years ago her children had been teaching her English “not about the Family Court or other things but teaching me English so that I could learn a little bit of what’s happening”. If her expressions of ignorance as to the meaning of certain words (“partner”, “director”, “share”, “instructions” and “claims”) are to be believed, her children have not taught her the words which describe what this case is about.

Despite having said that she spoke English and understood spoken English, she was inclined at first to rely on the interpreter, and even when a question was interpreted, frequently said that she did not understand the question. As time went on, she was more and more inclined to answer a question before it had been translated to her by the interpreter and after several days of cross-examination her understanding of English appeared to have greatly improved. I can only assume that it became difficult to sustain the position that she spoke and understood very little English. I note that Mr Evans, for the defendants, conceded that it was not in dispute that in the words of Dinesh Malhotra, “Sheela is well in a position to speak English”.

She said that in late 1992 Dinesh Malhotra begged her and her husband to divorce and allow him to marry her because it would help him because his mother was very sick “over here”. The unstated implication was that marriage to an Australian citizen would enable him to stay in Australia and be with his mother.

In examination in chief she said that after the officers of the Immigration Department had told Dinesh Malhotra that he had to leave Australia, Dinesh said that he did not think it would be possible for him to come back, and he wanted to sell his business. Dinesh wanted $11,000 for the business and she and Markandey Tiwari agreed to buy it. She paid him $10,500 in a cheque from the business and $500 in cash before he left. This conversation was in the presence of her husband, Markandey Tiwari. She said that she never talked about the business except in the presence of her husband, who always knew what was happening in the business. The evidence of Markandey Tiwari does not in any way support that statement. Further, it is not suggested elsewhere that he played any part in this transaction.

However, in cross-examination Sheela said repeatedly that the whole of the agreement in relation to the sale of the business was made with her husband. This is inconsistent with her evidence in chief and inconsistent with paragraph 6(d) of the Second Further Amended Defence which pleads that the agreement for the sale of the business from Dinesh to her, insofar as it was oral, was constituted by a conversation between her and Dinesh. It is also inconsistent with the detailed account in the Further and Better Particulars of the Defendants’ Amended Defence of various conversations between her and Dinesh which are said to have led up to the conclusion of the sale agreement.

When it was put to her that there was no documentary record of the sale of the business to her she said that the paper disappeared from the office. However, it is not pleaded that there was any contemporaneous written document evidencing the agreement.

She said that the officers of the Department of Immigration had come looking for Dinesh Malhotra; they had not, as Dinesh Malhotra said they had, come to the shop after the marriage looking for a Pakistani national who was a customer. However, this was not put to Dinesh in cross-examination. She could not remember whether those officers came before or after she and Dinesh Malhotra were married.

She was shown a form signed by her applying to sponsor Dinesh Malhotra as her spouse to enter Australia and said that Dinesh had brought it to her to sign and she could not read it and had not known what she was signing.

In examination in chief, she was shown a lease to herself and Dinesh Malhotra of 3/578 Barkly Street and said that she did not “rent it with him”. In cross-examination, when referred to the same document, she said that she did not know what a lease of real estate was and that she had never “lived my life in rental” so that she knew nothing about it, and her husband knew. It is, of course, not in issue that she lived in the rented premises at numbers 2 and 3/578 Barkly Street until the purchase of 580 Barkly Street. Asked why Dinesh Malhotra would be a tenant of the property if he had no interest in the business, she said “my husband knows, ask him”.

She said that after Dinesh Malhotra came back from India he had discussions with her husband, but she did not know what arrangement they had. She never decided anything with him. All the arrangements were made with her husband. After that Dinesh helped at the counter sometimes, and did the paper work for the business. In return he lived with the Tiwari family as a family friend. He was given his daily living expenses, for eating and drinking, and her husband arranged for whatever he needed for personal expenditure. Markandey Tiwari confirmed the making of these arrangements.

She said that by “paper work” she meant that because Dinesh understood English and she and Markandey Tiwari did not, she would write out a letter in Hindi and he would translate it into English and fax it to the supplier. Markandey Tiwari also said that Dinesh Malhotra did the “paperwork” but in cross-examination he agreed that by “paperwork” he meant everything to do with the management of the business. It is apparent from much documentary material before the Court that Dinesh Malhotra was in fact, as he said himself, managing the business at all relevant times. In his opening, counsel for the defendants said that Markandey and Sheela Tiwari allowed him to play a managerial role in the business, to look after the operations of the business and to essentially advise them in part as to the financial side of the business. The evidence of Markandey Tiwari is consistent with this. However, what is significant here is the attempt of Sheela Tiwari to downplay the admitted involvement of Dinesh to that of a translator and amanuensis rather than a manager, which, on the basis of the other evidence, is obvious nonsense. Later, in cross-examination she admitted that he had handled everything to do with the general management of the business and agreed that neither she nor Markandey Tiwari could perform those management functions. In cross-examination she said that Dinesh Malhotra had to seek her approval for everything he did in the business. However, this was not put to Dinesh, and is inconsistent with her evidence as to his handling the general management of the business.

She was asked about the joint cheque account opened in the names of Dinesh Malhotra and Sheela Tiwari in February 1993 and said that she did not know anything about it and the whole agreement was made with her husband.

She was referred to the appointment of Dinesh Malhotra as a director of the company for a short period in 1999, but said that she did not understand directors. However, when asked in cross examination who the directors of the company were, she answered the question unhesitatingly and clearly understood its meaning.

Sheela Tiwari said that she had not seen the article which appeared in Indian Voice in November 1999 containing allegations by Renu Kapoor, but said that a friend had told her of something written in the paper which was useless. In cross-examination she said that until the day on which she was speaking she had not known what was in the article, which had been explained to her that day. However, it is not in issue that she and Dinesh Malhotra instructed solicitors and counsel to take proceedings against the newspaper for defamation, and a statement of claim was prepared, although the matter did not proceed because the defendant was apparently without means. I cannot assume that the experienced practitioners who acted for them on that claim would have proceeded so far for a client who did not know what she was suing about. The evidence of Pratima at [166] below is also inconsistent with Sheela’s statement that she had not seen the article.

As to the Hillside property, she said that Dinesh told her that it should be in the name of S & D “because it’s in the name of your children and it will go to them”. $6,000 or $8,000 came from the business, Markandey Tiwari put in $28,000 and Verica Jagodich lent $12,200. Dinesh did not make any contribution. She was shown a guarantee of a bank loan for $90,600 given by herself and by Dinesh and said that she had no knowledge that he had given a guarantee. However, their signatures appear on the same page and both names are typed in the attestation clauses appearing on that page.

As to the document headed “Statement of Assets and Liabilities”, which states that Dinesh Malhotra had a fifty percent share in the business, it was put to her that Dinesh Malhotra had said that they spent some ten days discussing it before it was signed. She replied that she had “never discussed any documents with him, never ever at all in my life or any documents – or this document, any kind of document.” She said that she did not know what “share” meant or what “50 percent” meant. Given that the writ in this proceeding was issued in August 2002, that she is the principal defendant, and the issue is the plaintiff’s claim for a fifty percent share in the business, this seems unlikely. She said that when she signed the document she did not know that by doing so she was giving half the ownership of the properties to Dinesh Malhotra. She never asked Dinesh what was in documents because she and her family trusted him and believed that he was doing his best for them.

As to the events of April 2000 she said that Dinesh Malhotra had told her that the documents he asked her to sign were to do with tax, but she saw the word “transfer” on one of them and tore them up.

Prabodh Malhotra gave evidence of an occasion when Sheela Tiwari had said that Dinesh Malhotra was an equal partner in the business and she denied having said this.

She said that she loved Renu Kapoor as a daughter, and she maintained consistently that she knew nothing about the Family Court proceeding, although she conceded that there was a claim by Renu Kapoor against the business for payment for working there. She said that she treated Renu Kapoor like one of her own children. She said that the article in Indian Voice was entirely wrong but she was upset with the newspaper, not with Renu Kapoor. It was put to her that Mr Bhatia had said that she treated Renu Kapoor badly, and she avoided answering the question.

Consistent themes of the evidence of Sheela Tiwari were:

I know nothing, especially about the Family Court;
My husband made all the arrangements with Dinesh Malhotra;
I do not know anything about the case; My son gives all the instructions to solicitors;

He said that when the purchase of the Hillside property was discussed he suggested to Dinesh Malhotra that it should be bought in the name of the unit trust.

I have no reason not to accept the evidence of Mr Yacoub.

Jitendra Bhatia is a friend of the Malhotra family and an elder in their society. He is considered as a member of the Malhotra and Tiwari families. He is a customer of the business, where he buys Indian groceries and spices for resale in his food business. He said that decisions on pricing were made by Dinesh, never by Sheela. He found out that they had married from rumours. After they were married, Dinesh and Sheela told him that they were equal partners in life and business. He would visit them for meals occasionally. Even after Dinesh Malhotra had married Renu Kapoor, Sheela tried to be the boss of the house. Renu was treated like a servant by both Dinesh and Sheela.

He said that he came to see Dinesh for advice about the GST and Dinesh told him that he wanted to clear his conscience about Renu Kapoor and the property settlement. He had said in a document in the Family Court that he had no share in the business, but he wanted to say that he did have a share. Sheela was yelling and saying that if Renu came to know this she would take everything. She signed the document described as “Statement of Assets and Liabilities” in his presence, and he witnessed it. She said that Dinesh Malhotra used to trust her and now he didn’t trust her so she wanted to sign that document.

Nick Daris, the real estate agent, produced a copy of a lease of 3/578 Barkly Street dated 10 March 1994, which he had caused to be prepared, the tenants being Dinesh Malhotra and Sheela Tiwari. He also produced a copy of a letter to him signed by both of them relating to opening doors in the common wall between 2/578 and 3/578. His evidence as to the apparent ownership of the business was not of assistance.

Pardip Singh gave evidence with the assistance of an interpreter. He said that he was a customer of the business. He said that Dinesh and Sheela had both told him that they were partners in the business and he had guessed that there was something more than that between them. Dinesh had confirmed to him that they were married. Later they told him that Dinesh was to remarry because he wanted children and Sheela did not want to have children with him. After Renu Kapoor arrived it looked as though Renu and Sheela were settled well and working together, but later it became apparent that they did not like each other. In late 2000 Sheela Tiwari told him that Dinesh was going to marry a Bengali girl, and he saw tears in her eyes.

He saw Dinesh after the events of April 2001 and Dinesh told him that he had been locked out, and that the dispute was in this court and said “I’m on the road”. He told Mr Singh that his mistake had been to swear the false affidavit in the Family Court. Mr Singh tried to persuade Sheela Tiwari to settle the action, but she said that she had strong evidence in the Family Court affidavits, and had money; Dinesh had no money and he was not going to get any money from her.

Resham Singh also gave evidence with the assistance of an interpreter. He has had a restaurant and an Indian sweet shop and was a supplier to the business until 1997. He said that both Sheela Tiwari and Dinesh Malhotra had told him that they were partners. In cross-examination he said, which I found to be more convincing, “When you do business with somebody you come to know that they are partners or not”, and that that statement was based on observation as well as what he was told. He lent Dinesh Malhotra $10,000 towards the purchase of 580 Barkly Street, which was repaid in six months. At the time Sheela Tiwari told him that they were buying that property jointly.

I found both Pardip Singh and Resham Singh to be convincing witnesses and have no reason to disbelieve either of them.

Olcay Kaya does not speak Hindi or Punjabi. He is an importer and distributor of food products, specialising in Mediterranean, Middle Eastern and Asian foods. His family has been in business for 21 years in this country, and his business has thirteen or fourteen hundred customers. He was a supplier to and customer of the business with which this proceeding is concerned, and he dealt with Dinesh Malhotra from 1998 until Dinesh left that business. He said that he understood Dinesh to be the owner of the business, saying:

Just by the way someone acts, you know, that they're in charge as if it's their own business by the way they bargain for pricing or - you know, they don't dither when it comes to decision making.

When he was asked in cross-examination whether his basis for assuming Dinesh was the owner was because he was the person he had all the dealings with, he replied:
Well, it's not just an assumption. You ask people, "How long have you been in business?" You ask them questions, and you know, you never assume that someone's a manager, but you can tell when you go into an IGA [supermarket] who the owner is and who the manager is, because normally the manager can't decide on the spot certain things, especially in volume buying.

He described Dinesh as “of all the Indians he’s probably the most professional. As a customer he was a good bloke. A good person to deal with, you know. “ I found Mr Kaya to be a particularly impressive witness.

I should record his unchallenged evidence that in the previous week Markandey Tiwari had rung him and said that he was not going to buy any stock from Mr Kaya until he heard what he said in court. It was not suggested that I take any action as a result of that evidence and I have not done so.

I did not find the evidence of Naresh Malhotra to be of assistance.

The credit of the parties

I do not prepose to analyse in detail the consistencies and inconsistencies in the evidence of the several witnesses.

Dinesh Malhotra was in the witness box for effectively four days. His history of what he now maintains are false affidavits and other dishonest statements is set out in [48] to [53] and [81] to [82] above. Inevitably, that history, if accepted, creates very grave doubts as to his credibility, and those doubts were present to my mind from the outset of the hearing. Nevertheless, having heard his evidence, and considered it with care, I formed the view that on essential matters, notably his love for Sheela Tiwari and her power over him, as well as his position in regard to the business, he was telling the truth. The witnesses called by him generally supported his evidence, and I found them to be generally credible.

I have described at some length in [122] to [159] above the evidence of Sheela Tiwari, and it will be apparent from that description that she is not a witness whom it would be possible for me to believe. She gains little assistance from the evidence of the witnesses whom she called.

Thus on the basis alone of the oral testimony given before me, I must, despite his history, prefer the evidence of Dinesh Malhotra to that of Sheela Tiwari. However there are other matters which go to support his account of his relationship with Sheela and his involvement in the business.

If Dinesh Malhotra wished to marry an Australian citizen solely in order to be able to remain in Australia, why did he select a married woman who had to be divorced before she could marry him, and who was the mother of four children, particularly as the marriage seems to have led to a degree of alienation from his family ? His decision to marry Sheela, rather than some unattached woman, would seem to be explicable only on the ground of mutual attraction, as he maintains. I note the evidence of Prabodh Malhotra in [172] above that he and his father had suggested that Dinesh marry a young Indian woman known to them, but that Dinesh had said that he wanted to marry Sheela. The evidence does not state whether that young woman was an Australian citizen. However, it is difficult to believe that he could not have found an appropriate young woman in the Indian community who was a citizen, if he intended to marry solely for immigration purposes. And I note Sheela’s reiterated statement that she had always remained married to Markandey.

Why would Dinesh Malhotra, who is educated, is fluent in English, and clearly has business ability, work for some ten years managing the business for the benefit of the Tiwari family, in return for his accommodation and some pocket money, if he had no beneficial interest in the business?

Why would Dinesh Malhotra execute two guarantees to secure moneys lent to the company, securing $198,000 in August 1999 and $90,600 in July 2000 if he had no beneficial interest in it?

Why would he execute the guarantee in July 2000 to secure a loan obtained for the purchase of the Hillside property if it was to be the home of the Tiwari family?

Why did Sheela and Markandey Tiwari sleep separately for an uncertain but apparently considerable period? The explanations given by them at [75] above are unconvincing.

There is undeniable documentary material which supports the case of the plaintiff. The records of the Werribee Mercy Hospital and of Dr Lawrence, referred to in [78] to [80] above show Dinesh recorded as the next-of-kin to be contacted by the hospital, and as accompanying Sheela to the doctor, both occasions in a gynaecological context, although Sheela denied visiting Dr Lawrence. This is consistent with Dinesh’s account of the relationship between them.

A large number of documents are listed in what was referred to as “Schedule A” which Mr Selimi, for the plaintiff, described as ”Plaintiff’s List of Documents Evidencing his Continued Ownership and Involvement in the Business of Bharat Traders International”. Many of them indicate that Dinesh was perceived as being the manager of the business, which I do not perceive to be in issue (see [133] above). Those which go to show the likelihood of his having a beneficial interest in the business have already been referred to.

Mr Evans, for the defendants, submitted that the documents produced as supporting Dinesh’s ownership of the business were equivocal and self-serving. However, I do not imagine that in that submission he intended to refer to the documents evidencing the joint lease and joint bank account. As to those documents evidencing Dinesh’s management of the business, it would seem unlikely that he was creating documents from 1993 onwards to be used, adopting the words of Mr Selimi “in the event of an unknown and unexpected future eviction”.

The representations

Given the view which I have formed as to the respective credibility of Dinesh Malhotra and Sheela Tiwari, I accept the evidence of Dinesh Malhotra set out in [93], [102], [106] and [110] above as to the making of the representations on which he relies.

The most significant of those representations is that contained in the document misdescribed as a “Statement of Assets and Liabilities”, as to which see [41] and [110] above. As to Sheela’s evidence in [158] above (on which her counsel rightly did not rely) that she had never signed such a document, I have noted there that no expert witness was called to challenge the opinion of Mr Holland, the forensic document examiner, that the signature on that document was in fact written by the person who wrote other signatures which were indisputably hers.

Mr Evans relied on the decision of the High Court (Barwick CJ, McTiernan, Gibbs, Stephen and Mason JJ) in Petelin v Cullen[10] and submitted that the evidence showed that Sheela had not brought “a consenting mind” to the signature of the document and thus that the defence of non est factum was available to her. The Court said, as to cases such as this “in which a defendant has actually signed the instrument on which he is sued”: [11]

The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; it is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part. Finally, it is accepted that there is a heavy onus on a defendant who seeks to establish the defence.

The court contrasted “innocent persons” with another party to the transaction who is aware of the circumstances in which the document came to be executed and who knows, because the document was signed on his representation, or has reason to suspect, that it was executed under some misapprehension as to its character.

[10](1975) 132 CLR 355

[11]at 359-360

The submission of Mr Evans was that Sheela lacked understanding of complicated English and was unable to read and understand English, and accordingly was “unable to have any understanding of the purport of” the document. My views as to her ability with the English language are set out in [122] to [124] above. The evidence of Dinesh Malhotra is that he and Sheela discussed the form of the document in Hindi and prepared it over a period of ten days. Thus while Dinesh was aware of the circumstances of the execution of the document, his evidence is that Sheela was not under any misapprehension as to its character. He said that if anything was explained to Sheela in Hindi first and then she read the English translation she would understand everything. This sits well with my impression of her ability in English.

Sheela denies (see [138] above) that they discussed this or any other document, and says that she never asked Dinesh what was in documents because she trusted him.

I accept the evidence of Dinesh Malhotra on this matter. I cannot find that Sheela Tiwari’s knowledge of English was such that she did not understand the purport of the document, and I accept that it was prepared in discussion between them. The submission of non est factum accordingly fails.

My acceptance of the evidence as to the making of the four representations means that the requirements for the creation of an express trust, set out in [5] above, are established.

The submissions of the defendants

However, Mr Evans submitted that, if I should make such a finding, first, the plaintiff did not come to the Court with clean hands, and accordingly was not entitled to equitable relief, and second, relief should be refused on the ground of the inability of the Court to mould appropriate terms for the giving of relief.

Clean hands

In Meyers v Casey[12] Isaacs J, with whom Rich J agreed, cited with approval the following passage from the judgment of Lord Chief Baron Eyre in Dering v Earl of Winchelsea, [13] relating to an objection that the plaintiff had been guilty of misconduct:

It is not laying down any principle to say that his ill conduct disables him from having any relief in this Court. If this can be founded on any principle, it must be, that a man must come into a Court of equity with clean hands; but when this is said, it does not mean a general depravity; it must have an immediate and necessary relation to the equity sued for; it must be a depravity in a legal as well as in a moral sense.

His Honour went on to say:
In that case, the Lord Chief Baron thought the plaintiff was the moral author of his own wrong, but not legally, and therefore did not refuse the relief. Now, in attempting to apply the principle as laid down in that case, we find that the rights asserted by the appellant . . . of course exist, if at all, by reason of circumstances wholly independent of the alleged misconduct; the wrong[s] he complains of . . . are equally independent of any misconduct by him. It is therefore impossible to say, in the Lord Chief Baron’s words, that his alleged misconduct has “an immediate and necessary relation to the equity sued for”, or that it was “a depravity in a legal as well as a moral sense”.
It is altogether different from the cases where the right relied on, and which the Court of equity is asked to protect or assist, is itself to some extent brought into existence or induced by some illegal or unconscionable conduct of the plaintiff, so that protection for what he claims involves protection for his own wrong. No Court of equity will aid a man to derive advantage from his own wrong, and this is really the meaning of the maxim.

[12](1913) 17 CLR 90 at 123

[13]1 Cox 318 at 319

The plaintiff in this case has, on his own evidence, engaged in illegal and unconscionable conduct, which is set out in [48] to [53] above and need not be specified here. However, the right relied upon by him, that is his entitlement in equity to a fifty per cent share in the properties, was not brought into existence or induced by any of that illegal or unconscionable conduct. It was a matter of agreement between him and Sheela. Accordingly, if successful in this proceeding, he will not have benefited by his own wrong. Thus it cannot be said that he is disentitled to that fifty per cent share by virtue of unclean hands.

Mr Evans submitted that this case bore some similarity to Gascoigne v Gascoigne, [14] Inre Emery’s Investments’ Trusts, [15] and Tinker v Tinker. [16] In each of Gascoigne and Emery, property had been transferred from a husband to a wife, for specific reasons, namely in Gascoigne, to protect the property from the husband’s known creditors, and in Emery to avoid payment of American withholding tax. In each case the reason for the transfer was found to be not such as to rebut the presumption of advancement, and the property was held to belong to the wife. In Tinker, the evidence of the husband was that the transfer to his wife had been intended to protect the property from possible creditors. The English Court of Appeal held that the finding at first instance that the husband was an honest man meant that he must have genuinely intended that the property belong to his wife.
[14][1918] 1 KB 228
[15][1959] 1 Ch 410
[16][1970] P 136

Mr Evans submitted that the transfer of the business from Dinesh to Sheela in 1993, at a time when they were married to each other, brought into operation the presumption of advancement and the position of ownership by Sheela was maintained by Dinesh until the events of April 2000.

However, it is not anywhere suggested that the transfer in 1993 was effected for any unlawful or unconscionable motive; and I am satisfied that the evidence as to representations which I have accepted was sufficient to rebut the presumption of advancement. I do not find this case to be on all fours with any of the decisions relied on by Mr Evans.

Terms of relief

The other submission of Mr Evans was that it might not be possible to establish the terms on which the Court should make orders in favour of the plaintiff. That submission derived from a passage in the judgment of McHugh J in Nelson v Nelson[17] where His Honour said:

So far as is possible, rights associated with or arising out of unlawful conduct should only be enforced on condition that the wrongdoer takes all lawful steps to overcome the consequences of that conduct. It will not always be possible for the claimant to do so or for the courts to impose terms designed to remedy the wrongdoing.

[17](1995) 184 CLR 538 at 617

However, that passage would only have relevance if I had found the plaintiff’s entitlement to relief to depend on his unlawful conduct. I have made no such finding, and accordingly that submission fails.

Conclusion

For the reasons I have given, there will be judgment for the plaintiff. I invite submissions from counsel as to the form of the orders and as to costs.

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Malhotra v Tiwari [2005] VSC 25

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[2005] VSC 25

16 February 2005