JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MARCHESE -v- MARCHESE [2021] WASC 385
CORAM: HILL J
HEARD: 4-8, 11-14, 21 NOVEMBER 2019
DELIVERED : 8 NOVEMBER 2021
PUBLISHED : 8 NOVEMBER 2021
FILE NO/S: CIV 2521 of 2015
BETWEEN: CARMELO MARCHESE
Plaintiff
AND
THEODORE TINDARO MARCHESE
First Defendant
THE REGISTRAR OF TITLES
Second Defendant
FILE NO/S: CIV 1821 of 2016
BETWEEN: NORMAN NUNZIO MARCHESE
Plaintiff
AND
THEODORE TINDARO MARCHESE
First Defendant
CARMELO MARCHESE
Second Defendant
REGISTRAR OF TITLES
Third Defendant
COMMISSIONER OF TITLES
Fourth Defendant
Catchwords:
Equity and trusts - Express trust - Common intention constructive trust - Joint endeavour constructive trust - Non-financial contributions to Darch property - Legal title to Darch property held by first defendant - Whether express intention to hold Darch property for benefit of plaintiff - Whether common intention implied from parties' actions - Whether first defendant holds Darch property on trust for one or both other brothers
Equity and trusts - Resulting or implied trust - Common intention constructive trust - Joint endeavour constructive trust - Whether joint endeavour between family members concerning purchase, renovation and sale of various properties - Whether financial contribution made to purchase of Darch property - Non-financial contributions to Darch property - Whether first defendant holds Darch property on trust
Estoppel - Equitable estoppel - Whether representation that defendant would hold property on trust for plaintiff in CIV 2521 of 2015 - Whether reliance established - Whether detriment established - Relief
Estoppel - Equitable estoppel - Representation that brothers would share equally in properties on death of parents - Whether reliance established - Whether detriment established - Relief
Real property - Indefeasibility of title - Exceptions - Claim against registered proprietor
Equity - Defence - Laches
Legislation:
Evidence Act 1906 (WA), s 79C
Property Law Act 1969 (WA), s 34
Transfer of Land Act 1893 (WA), s 68, s 134Result:
CIV 2521 of 2015
Declaration that first defendant holds property on trust for plaintiff and first defendant in equal shares subject to adjustment
CIV 1821 of 2016
Plaintiff's claim dismissed
Category: B
Representation:
CIV 2521 of 2015
Counsel:
Plaintiff : D A Lenhoff First Defendant : G A Lacerenza Second Defendant : No appearance Solicitors:
Plaintiff : Lenhoff & Hotz First Defendant : GA Lacerenza & Associates Second Defendant : No appearance CIV 1821 of 2016
Counsel:
Plaintiff : A J Aristei First Defendant : G A Lacerenza Second Defendant : D A Lenhoff Third Defendant : No appearance Fourth Defendant : No appearance Solicitors:
Plaintiff : Irwin Legal First Defendant : GA Lacerenza & Associates Second Defendant : Lenhoff & Hotz Third Defendant : No appearance Fourth Defendant : No appearance Cases referred to in decision:
Austin v Keele (1987) 10 NSWLR 283
AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton Utz (a firm) (No 2) [2019] WASC 306
Bagot's Executor and Trustee Co Ltd v Fudge [1949] SASR 297
Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604
Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 6] [2019] WASC 5
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Bijkerk Investments Pty Ltd v Bikic [2020] NSWSC 1336
Blacket v Barnett [2017] NSWSC 1032
Calverley v Green [1984] HCA 81; (1984) 155 CLR 242
Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353
Conlan v Registrar of Titles [2001] WASC 201; (2001) 24 WAR 299
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 260 CLR 1
Donis v Donis [2007] VSCA 89; (2007) 19 VR 577
Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599
Flack v Chairperson, National Crime Authority (1997) 80 FCR 137
Flinn v Flinn [1999] VSCA 109; [1999] 3 VR 712
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Gadsdon v Gadsdon [2003] WASC 48
George 218 Pty Ltd v Bank of Queensland Ltd (No 2) [2016] WASCA 182; (2016) 313 FLR 287
Hughes v St Barbara Mines Ltd (No 4) [2010] WASC 160
In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben's of Australia) (Unreported, FCA, 29 June 1995)
Lloyd v Tedesco [2002] WASCA 63; (2002) 25 WAR 360
Martin v Martin (1959) 110 CLR 297
Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220
Roberts v Burns Philp Trustee Co Ltd (1985) 5 NSWLR 72
Shephard v Cartwright [1955] AC 431
Sidhu v Van Dyke [2014] HCA 19; (2014) 251 CLR 505
Singh v Kaur Bal [No 2] [2014] WASCA 88
Sivritas v Sivritas [2008] VSC 374; (2008) 23 VR 349
Streeter v Western Areas Exploration Pty Ltd (No 2) [2011] WASCA 17; (2011) 278 ALR 291
Swettenham v Wild [2005] QCA 264
The Nominal Defendant v Cordin [2017] NSWCA 6
Walton Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 38
Watson v Foxman (1995) 49 NSWLR 315
Table of Contents
Background facts
Procedural history of matters
Delay in judgment
Pleadings (CIV 2521 of 2015)
Pleadings (CIV 1821 of 2016)
Issues for determination
Approach to the evidence
Onus and general observations on credibility
Statements by Calogero
The witnesses
Carmelo Marchese
Norman Marchese
Ted Marchese
Jones v Dunkel inference
Legal principles
Express trust
Resulting trust
Constructive trusts
Common intention constructive trust
Joint endeavour constructive trust
Estoppel
Equitable estoppel
Estoppel by convention
Laches
Purchases and sales of properties
Commencement of the 'joint endeavour'
Contributions by each of the Marcheses
When did the 'joint endeavour' cease?
Discussions between family members
Purchase of the Darch property
Financial contributions to the purchase of the Darch property
Instalment payments for purchase of Darch property
Transfer of the Knutsford Street property by Calogero and Maria to Ted
Work on the Darch property
Extent of work undertaken
Were Carmelo and Norman paid for the work they did?
Why did Carmelo and Norman do the work?
Transfer of Calogero's legal interest in the Darch Property to Carmelo
Transfer of Carmelo's interest in the Darch property to Ted
Payment of rates and taxes
Subsequent events until Calogero's death
Proposed subdivision of Darch property
Payment to Carmelo
Appointment of Ted as enduring power of attorney
Death of Maria
Events of 15 December 2009
Execution of the new will
Phone call between Calogero and Norman
Asbestosis claim
Conversations shortly prior to Calogero's death
Events after Calogero's death
Lodgement of caveats
Application under Family Provision Act
Does Carmelo have an interest in the Darch property and if so, what is the interest?
Does Ted hold the Darch property on express trust for Carmelo?
Common intention constructive trust
Joint endeavour constructive trust
Is Ted estopped from asserting the Darch property is legally and beneficially owned by him?
Does Norman have an interest in the Darch property and if so, what interest?
Joint endeavour constructive trust
Resulting trust
Equitable estoppel
Estoppel by convention
Laches
What adjustments, if any, need to be made?
Conclusion and Orders
Attachment A
Attachment B
HILL J:
1Carmelo Marchese (Carmelo), Norman Nunzio Marchese (Norman) and Theodore Tindaro Marchese (Ted) are brothers and the adult children of Calogero Marchese (Calogero) and Maria Marchese (Maria), both of whom are deceased. Given the relevant parties all have the same surname, I will follow the course adopted at the trial of referring to the parties by their first names. In doing so, I intend no disrespect to anyone.
2Each of Carmelo and Norman claim an interest in a property located at 12 Lansdale Road, Darch,[1] of which Ted is the sole registered proprietor, albeit on slightly different grounds. Carmelo and Norman both assert there were various agreements between members of the Marchese family both before and after the purchase of this property. During the trial, this property was variously referred to as the Landsdale property or the Darch property. In these reasons, I will refer to the property as the Darch property.
[1] Lot 43 on Diagram 19427 being the whole of the land comprised in Certificate of Title Volume 1232 Folio 490.
3Relevantly, Carmelo contends there was an agreement that the registered proprietors of the Darch property would hold it beneficially for Calogero, Maria, Ted and himself. On this basis, he asserts that Ted holds the Darch property on trust for their joint benefit to the extent of a 50% beneficial interest for each of them. He also relies on representations said to have been made by Ted when the Darch property was transferred out of Carmelo's name, which he says Ted should not be entitled to depart from.
4Norman alleges he made both financial and non-financial contributions to the purchase and improvement of the Darch property. On this basis, he says that Ted holds the Darch property subject to a resulting trust to the extent of his proportionate contribution to the Darch property. In the alternative, he contends it would be unconscionable for Ted to retain the benefit of his contributions without accounting to him for them.
5In addition to this claim, Norman says he was told repeatedly by Calogero, both in Ted's presence and separately, that when he and Maria died, each of the brothers would receive one third of the family's properties, including the Darch property. He says it would be unconscionable for Ted to be allowed to resile from these representations and for Ted (and his family) to retain the entirety of what were the family assets and for him, effectively, to receive nothing.
6Ted denies the claims of both Carmelo and Norman and says he is entitled to be registered as the sole proprietor of the Darch property.
7For the reasons which follow, in relation to Carmelo's claim, I consider that:
(a)Ted holds the Darch property on trust for the benefit of him and Carmelo in equal shares, subject to a lien of $145,288.06 in favour of Ted;
(b)alternatively, Ted holds 50% of the Darch property on constructive trust for Carmelo, subject to a lien of $145,288.06 in favour of Ted;
(c)alternatively, it would unconscionable for Ted to deny Carmelo's beneficial interest in the Darch property and he should be estopped from doing so.
8There was some evidence before me at trial that Ted had constructed a house on the Darch property. However no evidence was led at trial as to the costs that were incurred, whether this has increased the value of the Darch property or where the house is located on the property. For these reasons, I have not made any specific allowance for this. I will, however, hear from the parties as to whether this should be taken into account before making formal orders.
9In relation to Norman's claim, I do not consider that Norman has established any of the claims made by him. For this reason, his claim should be dismissed and judgment entered for Ted.
Background facts
10Both Calogero and Maria were born in Italy in October 1924 and May 1916 respectively. They were married in December 1944 and had three sons: Ted born on 24 October 1946, Carmelo born on 18 April 1948, and Norman born on 23 February 1950. The family migrated to Australia in the 1950s with Calogero migrating first and the remainder of the family joining him approximately 3 years later.
11It is common ground that the family was (at least historically) a 'traditional' family; that is, Calogero was the patriarch of the family and the primary breadwinner, while Maria took care of the home, the children and the tasks associated with these. Calogero primarily worked in the building industry until his retirement, although he was employed as a gardener at Kings Park for some time. Initially, he was employed by Plunkett Homes and from about September 1969, established and operated a building business, Omega Constructions.[2]
[2] Exhibit 4.11.1.
12Both Carmelo and Norman left school at or before the end of year 10 and joined the workforce. In contrast, Ted completed his schooling in around 1964 or 1965 and went to university where he studied dentistry.[3] He was unable to complete his degree due to ongoing health issues arising out of an accident where he suffered a head injury. When Ted was about 20, he started work in real estate and held a real estate licence for a number of years. On any measure, Ted has been a successful businessman and has accumulated significant assets including both real estate and a share portfolio.
[3] Exhibit 20A [12].
13From about 1961, Calogero and Maria purchased and sold a large number of properties. Some were renovated and then sold; some were renovated and leased; and some were bought and sold within a short period of time. Each of Ted, Carmelo and Norman contend they were involved in this work.
14In about 1972, Calogero and Maria purchased a block of land at 14 Frape Avenue in Yokine (Frape Avenue). A family home was built where Calogero and Maria lived until their deaths in July 2013 and July 2009 (respectively).
15In about 1975, Calogero and Maria bought an investment property at 27 Knutsford Street, North Perth from the accumulated receipts from the sales of previous properties.[4] Initially, this property was rented out but in about 1980, was transferred by Calogero and Maria to Ted.
[4] ts 800.
16In about 1978, Calogero started thinking about retirement and started looking for a property where he and Maria could establish a market garden. The Darch property was identified and was ultimately purchased in October 1978 in the names of Calogero and Ted as joint tenants.
17In July 1982, the ownership of the Darch property was transferred to Carmelo and Ted. In November 1993, the Darch property was transferred to Ted, who has remained the sole proprietor since this time.
18Maria died in July 2009, leaving all of her assets to Calogero. Four years later, in July 2013, Calogero died. The Darch property was not referred to in Calogero's will.
19Since Calogero's death, the brothers have been in dispute as to what, if any, interest each of Carmelo and Norman have in the Darch property and the basis for each of their claims.
Procedural history of matters
20Following the death of their father, Carmelo and Norman each lodged a caveat against the Darch property. At Ted's request, notices were issued by the Registrar of Titles for the removal of the caveats[5] and in September 2015 (in the case of Carmelo) and May 2016 (in the case of Norman) proceedings were commenced in this court.
[5] Exhibit 2.16 (in respect of Carmelo).
21At various stages throughout the proceedings, each of the brothers has been represented and at other times, each has acted for himself.
22On 17 April 2019, at a time when each of the brothers was acting in person, both matters were listed for a five-day trial before me commencing 4 November 2019. Between July and November 2019, a significant number of disputes arose in relation to various matters concerning the preparation for trial. These matters were listed before me on seven separate occasions over this period to address these issues.
23Between late August and mid-September 2019, each of the brothers appointed legal practitioners to act for them at trial. The late instruction of counsel impacted a number of matters which would usually occur in the lead up to trial, such as the preparation of a joint trial bundle. Ultimately, because of the inability of the brothers to agree the contents of the trial bundle or who would bear the cost of its preparation, each of the brothers filed their own trial bundle. As a consequence, there were numerous duplications in the bundles of documents prepared for the trial. Except where expressly noted, ultimately, only one copy of each document was tendered at trial.
24In addition, the witness statements filed in accordance with the original trial directions were prepared by the parties personally and, as a result, did not comply with the Consolidated Practice Direction 4.5 (in its form prior to the amendments in January 2019) or the rules of evidence. Shortly prior to trial, amended or substituted witness statements were filed.
25The matter ultimately ran for a total of 10 days. This was largely due to the significant time in cross-examining each of the brothers in relation to events that took place over more than 40 years. While this was a significant increase on the initial estimate, I did not consider this was disproportionate to the value of the Darch property. While there was no expert valuation evidence adduced at trial (as this was not relevant to any of the parties' claims), I accept that since its purchase in 1978, the Darch property has significantly increased in value.
Delay in judgment
26The hearing of this matter took place towards the end of 2019. It has not been possible to complete the reasons for my decision as quickly as I would have liked.
27I have taken the following steps to ensure that my ability to properly assess the parties' cases and the evidence given at trial has not been impaired by the delay between the hearing and the publication of these reasons. First, I continued to have a clear impression and recollection of the evidence given by each of the parties (Carmelo, Norman, and Ted). Each of them gave evidence in person over a number of days and were the subject of lengthy cross-examination. During the course of the trial, I made contemporaneous notes. My assessment of the witnesses has been assisted by my review of these notes, my review of the transcript as well as the documents that were tendered in evidence. Where the transcript is unclear or hard to follow, I have listened to the oral recording of the evidence.
28Second, I had the benefit of both written and oral closing submissions from each of the parties. The parties made submissions on the evidence given by the witnesses, including as to the findings each contends should be made.
29Third, while I have a strong recollection of the evidence given by Carmelo, Norman and Ted, my conclusions as to their credit and reliability are not based on the demeanour of the witnesses. Specifically, I have not drawn any adverse conclusion on the credibility of a witness based on their demeanour.
Pleadings (CIV 2521 of 2015)
30In these proceedings, Carmelo seeks orders against Ted in relation to the Darch property.
31Carmelo pleads that prior to the settlement of the Darch property, Calogero, Maria, Carmelo and Ted agreed that Calogero would advance the entire funds for the purchase of the Darch property (of $52,751), which was to be used for a market garden business, and that it would be held by Calogero and Ted as joint tenants for the use and benefit of the entire family, including Norman.
32Carmelo contends that Calogero paid instalments of $22,500 and the remainder of the purchase price was paid by Ted. He alleges the payments made by Ted were for his separate purchase of a property (Knutsford Street Property) from his parents for $30,000 and that Calogero directed Ted to pay this sum towards reduction of the purchase price of the Darch property. That is, Carmelo asserts Ted paid no consideration for the Darch property.
33After the purchase of the Darch property, Carmelo says he contributed to its improvement, including by assisting in the building of sheds, installation of reticulation and in planting and harvesting crops for the market garden business conducted at the Darch property.
34In July 1982, Carmelo pleads there was a meeting between the family members at Frape Avenue where it was agreed he would take a more active role in the family's affairs, Calogero would play a less active role, and Calogero would transfer his legal interest in the property to Carmelo. Carmelo alleges the original agreement was varied and it was agreed that he and Ted would hold the Darch property for the benefit of each of Maria, Calogero, Ted and Carmelo and that Norman would receive $20,000 when Calogero relinquished his beneficial interest in the Darch property or on his death, as well as the Frape Avenue property on the death of his parents.
35In about November 1993, as a result of Carmelo's marital problems, further discussions took place between Calogero, Carmelo and Ted at Frape Avenue. Carmelo says it was agreed at this meeting that he would transfer his interest in the Darch property to Ted and that Ted would hold the Darch property for the benefit of Maria, Calogero, Carmelo and himself.
36Carmelo pleads that Ted holds 50% of the Darch property on express trust for him. Carmelo also pleads a number of alternative grounds, namely a joint endeavour constructive trust, alternatively a common intention constructive trust, alternatively that Ted is estopped from denying the Darch property is beneficially owned 50% by Carmelo.
37Carmelo seeks a declaration that Ted holds the title to the Darch property for the joint benefit of him and Ted to the extent of a 50% beneficial interest for each of them and orders for the vesting of the trust and for the transfer of the legal title into the name of Carmelo and Ted.
38Ted denies each of the claims pleaded by Carmelo. Specifically, he denies any conversations took place between the family as to Carmelo receiving a share in the Darch property. In relation to the Darch property, Ted denies Calogero paid for the Darch property and pleads that he contributed most of the funds for the purchase of the Darch property.
39In relation to the meeting in July 1982, Ted acknowledges a meeting took place but says it occurred in late 1981 and not July 1982. Ted says Carmelo did not take an active role in family affairs and shortly after receiving an interest in the Darch property from Calogero moved back to Queensland.
40Ted admits the transfer of Carmelo's interest in the Darch property to him took place at about the time Carmelo was involved in divorce proceedings and admits Carmelo paid the stamp duty on the transfer. However, he says he purchased Carmelo's interest for $110,000.
41Ted relies on the equitable defence of laches, alternatively says any claims are statute barred. He denies Carmelo is entitled to any relief at all.
Pleadings (CIV 1821 of 2016)
42In 2016, Norman commenced proceedings against Ted. Carmelo is a defendant to the proceedings as a necessary party. No relief is sought against him. Norman seeks orders in respect of both the Darch property and the Knutsford Street property.
43Norman pleads that in or about 1968, the family formed a joint endeavour to carry out home renovations on properties acquired in the name of Calogero and Maria. The purpose of the joint endeavour was to combine their resources (both financial and non-financial) to enhance the family's financial position. Norman refers to eight properties that were bought and sold prior to 1968 and 13 properties that were purchased after the joint endeavour was formed. Norman alleges he received no remuneration or compensation for the work he did.
44One of the properties Norman contends was purchased as part of the joint endeavour was the Knutsford Street property which was transferred to Ted in October 1980 for $30,000. Subsequently, this property was subdivided and sold by Ted for a significant profit. Norman pleads that Ted holds his interest in the remaining Knutsford Street properties for his benefit 'in accordance with his contributions to the home renovation business'.[6]
[6] Statement of claim [19].
45In relation to the Darch property, Norman contends that between late 1977 and July 1978, the family formed a joint endeavour to combine their resources (both financial and non-financial) to purchase the Darch property, develop it and operate a market gardening business on the Darch property.[7] Norman says he made both financial and non-financial contributions to the Darch property, including a financial contribution of $20,000 paid by way of a lump sum of $4,000 in July 1978, a lump sum of $5,000 in December 1978 and a contribution of $11,000 as remuneration for his earlier contribution to the home renovation business.
[7] Statement of claim [28].
46Norman pleads that meetings took place in November 1981 and November 1993 at which interests in the Darch property were transferred for no consideration between family members and that these meetings did not impact the joint endeavour agreed prior to the purchase of the Darch property.[8]
[8] Statement of claim [34].
47Norman says that as a result of his contributions, Ted holds his interest in the Darch property subject to a resulting trust in his favour which entitles him to a proportionate interest of 38.46%.
48Norman also pleads a number of alternate claims, namely a joint endeavour constructive trust (arising from his financial and non‑financial contributions to the Darch property), as well as a claim based on estoppel (both promissory and estoppel by convention). Norman says that prior to him making the payments towards the purchase price of the Darch property, Calogero represented that the three brothers would receive an equal share in the properties owned by him and Maria, including the Darch property, on their death. Norman says he relied on this representation by providing the funds and working on the property without payment and without insisting he be registered as a joint proprietor of the Darch property. Norman says it would unconscionable for Ted to deny he is bound by the representation and to retain the entire beneficial interest in the Darch property.
49In the alternative to these claims, Norman seeks equitable compensation.
50Ted denies each of the claims made by Norman. Ted acknowledges there was a joint endeavour to renovate and sell properties but says the joint endeavour only involved him and Calogero and was for their mutual benefit and not for the benefit of the family as a whole.
51In relation to the Knutsford Street property, Ted says he became the sole registered proprietor in 1980, used the property as his family home and only subdivided the property after holding it for about 30 years. He denies Norman has any legal or equitable interest in this property.
52In relation to the Darch property, Ted denies there was any joint endeavour or that Norman made any financial or non-financial contribution to the Darch property for which he has not been paid.
53Ted relies on the equitable defence of laches, alternatively says any claims are statute barred. He denies that Norman is entitled to any relief at all.
54In closing submissions, Norman abandoned any claim in relation to the Knutsford property.[9] The claims that were maintained were:
(a)a claim for a constructive trust in relation to the acquisition and development of the Darch property;
(b)a resulting trust to recognise Norman's financial contributions to the purchase of the Darch property; and
(c)equitable estoppel (either by representation or by convention) to the effect that the three brothers would share equally in the assets of Calogero and Maria when they died, preventing Ted from denying he holds the legal interest in the Darch property for the benefit of the three brothers in equal proportions.
[9] Norman's closing address [1].
Issues for determination
55On the pleadings, the issues I am required to determine in this case are:
(a)What was the extent of work done by Norman (and the other brothers) on the multiple properties purchased and sold by Calogero and Maria? Were these contributions made by reason of a joint endeavour? If so, does this entitle Norman to any interest in the Darch property?
(b)What was the basis upon which the Darch property was purchased? Was there any agreement as to whether Calogero and Ted held their legal interest beneficially for others and if so, whom?
(c)Did Ted make any financial contribution to the purchase of the Darch property? If not, what was the basis on which he had a registered interest in the Darch property?
(d)Did Norman make any financial contribution to the purchase of the Darch property and, if so, does this give him an interest in the Darch property?
(e)On what basis did Calogero transfer his interest in the Darch property in July 1982?
(f)What was the agreement in relation to the transfer of the Darch property from Carmelo and Ted as joint tenants to Ted in November 1993? Does Ted hold a 50% interest in the Darch property on trust and if so, for whom?
(g)If Norman and/or Carmelo have any interest in the Darch property, should the court decline to make orders because of any alleged delay in prosecuting their claims?
Approach to the evidence
Onus and general observations on credibility
56Each of Carmelo and Norman accept they bear the onus of proving the claims they bring. These matters need to be proved on the balance of probabilities.
57In this case, the evidence at trial concerned events that occurred over a period of more than 40 years and took place many years before the witnesses were called to give evidence. Critical elements of the case involved a consideration of what was said by various parties in conversations that occurred in 1978, 1981 or 1982, and 1993.
58Recent authorities have discussed the approach that should be taken by the court where claims are made based on conversations said to have taken place with a deceased person that is said to give rise to equitable rights.[10] In considering the evidence in this case, I have applied the following principles.
[10] Blacket v Barnett [2017] NSWSC 1032 [243] - [257] (Hallen J). See also Belgravia Nominees Pty Ltd v Lowe Pty Ltd [No 6] [2019] WASC 5 [26] (Tottle J).
(a)Evidence of conversations with a person who has subsequently died should be subjected to careful scrutiny. The court can never be certain it knows all the circumstances of the conversation. The deceased is not available at the hearing to admit or deny the specific allegations made by the witness giving evidence of any conversation and it is not possible to hear the deceased's evidence of the conversation. The need for careful scrutiny may be greater where the person giving evidence of the conversations has a self-interest in the outcome of the proceedings.
(b) The court will treat uncorroborated evidence of communications by a person who has subsequently died with considerable caution. While there is no absolute legal requirement for it, the court should look for some independent corroboration.[11]
(c)There is a significant risk of reconstruction of conversations. There are dangers in relying on evidence of what may have been a casual observation made to a person who had no reason to remember the exact words used at the time of the conversation. For this reason, a substantial evidentiary burden is on a party whose case relies upon such evidence.[12]
(d)The court must recognise that human memory of what was said in a conversation is fallible for a variety of reasons. Ordinarily, this will increase over time, particularly where disputes or litigation intervene. This is because the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed.[13]
(e)The credibility of a witness and their veracity may also be tested by reference to the objective facts which can be proved independently, particularly by reference to documents. It is preferable to rely on contemporaneous documents in cases which involve events which occurred long before the litigation. Often the only safe course in such cases is to place primary emphasis on the objective factual surrounding material, the inherent commercial probabilities and the contemporaneous documents. Documents will often provide more valuable information than the attempted recollection of the facts by witnesses with an interest in the outcome of the litigation. This is particularly the case when the documents are accepted as genuine and were prepared by a person who had no reason to misstate the facts in these documents.[14]
(f)Contemporaneous statements and documents are likely to be a more accurate reflection of events than later statements. This is because false memories can intrude, especially when the person recalling events has tried to assemble recollections logically. In doing so, the person can attempt to have some rational explanation in the person's mind as to what has happened. It is important to keep in mind that memories are both fluid and malleable and are constantly rewritten whenever they are retrieved.[15]
(g)The court must be alive to the reality that words that are spoken are capable of bearing different and potentially opposed meanings depending on the nuance and emphasis given to particular words. A person's appreciation of the significance of these matters must necessarily be considerably diminished if there is a significant delay between the date when the conversation took place and the hearing at which the evidence of that conversation is given.[16]
(h)The court must recognise that:
Memory is a constructive and reconstructive process. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempted remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval.[17]
[11] Day v Couch [2000] NSWSC 230 [9].
[12] Webb v Ryan [2012] VSC 377 [22] (Whelan J).
[13] Watson v Foxman (1995) 49 NSWLR 315, 318 - 319 (McLelland CJ in Eq).
[14] In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547 [7] (Black J); Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599 [15]; Hughes v St Barbara Mines Ltd(No 4) [2010] WASC 160 [157] (Martin J).
[15] The Nominal Defendant v Cordin [2017] NSWCA 6 [171] (Davies J, with whom Emmett AJA agreed).
[16] Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben's of Australia) (Unreported, FCA, 29 June 1995), 122 - 123 (Tamberlin J).
[17] McClellan P, 'Who Is Telling the Truth? Psychology, Common Sense and the Law' (2006) 80 Australian Law Journal 655, 665 quoting a passage from Australian Psychological Society, Guidelines Relating to Recovered Memories (2000).
59All of the material witnesses had difficulties in recalling the specifics of events, particularly in respect of the purchase of the Darch property in 1978 and the critical meetings in 1981 or 1982 and 1993. Given the length of time that has passed since these events, this is hardly surprising. In cross-examination of each of the brothers, conflicting evidence was given by each of them which emphasises the difficulty in accepting that the evidence of any of the brothers on these critical events was reliable.
60In considering the evidence, I have assessed the oral evidence of each of the brothers in the context of the contemporaneous documents, objectively established facts and the apparent logic of the events.[18] The context and surrounding circumstances of each of the critical transactions are important.
[18] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [31].
Statements by Calogero
61All of the parties led evidence of statements said to have been made by their father, Calogero. The primary question was whether these statements were admissible only as evidence that the statements were made or whether they were admissible as to the truth of their contents.
62It is trite that the general position at law is that statements that are made outside of the court are not admissible as to the truth of their contents; these statements are inadmissible hearsay evidence. The common law recognises a number of exceptions to this general rule. Relevantly, in the case of statements by a person who is now deceased, there are six recognised exceptions: declarations against interest; declarations in the course of duty; declarations as to public or general rights; pedigree declarations; dying declarations; and statements by testators concerning the contents of their wills.[19]
[19] Heydon J D, Cross on Evidence (12th ed) [33005].
63It is the first of these exceptions that is relied upon by the parties in this case. In Cross on Evidence, the exception is explained in the following terms:[20]
The oral or written declaration by a deceased person of a fact which the declarant knew to be against the declarant's pecuniary or proprietary interest when the declaration was made is admissible as evidence of that fact and of all collateral matters mentioned in the declaration provided the declarant had personal knowledge of the fact and matters.
[20] Heydon J D, Cross on Evidence (12th ed) [33010].
64In Roberts v Burns Philp Trustee Co Ltd, Hodgson J stated that: [21]
In my view, when a person who apparently owns property, or has a residuary interest in the estate of another person who apparently owns property, makes a statement asserting that there is something in the nature of a trust affecting that property, that statement is, prima facie, against the proprietary or pecuniary interests of the maker of that statement. One would readily also infer that the statement was in the belief of the declarant against his proprietary or pecuniary interest. In this case, the circumstance that the matters asserted might be such as to avoid any trust would not, I think, displace that prima facie position: it may be that I ultimately have to decide whether matters such as those asserted in the statement to avoid the trust, but this is a question of some legal technicality and one would not readily assume that the declarant had directed his mind to it. As regards the aspect that the declarant as an employee could share in distributions from the fund, I note that the statement was made not long before the death of the declarant, so that any interest he might have in receiving distributions of income would, in all probability, be small compared to the benefit which he would receive from a substantial share in the capital of the fund.
[21] Roberts v Burns Philp Trustee Co Ltd (1985) 5 NSWLR 72, 78.
65As noted by the author of Cross on Evidence at [33065], there is a question as to whether it is necessary for the declarant to know the statement is against their interest. The learned author submits this is part of the present law, notwithstanding the strong body of opinion to the contrary. This has not been consistently applied by the courts. I consider the better view, for the reasons expressed in Cross on Evidence, is that it is necessary for the declarant to know the statement is against their interest.
66The onus of proof in establishing the declaration made by a deceased person was a statement of fact and not in their interest is on the party seeking to have the statement admitted in evidence.[22]
[22] Bagot's Executor and Trustee Co Ltd v Fudge [1949] SASR 297 (Paine AJ).
67Specifically, in relation to the statutory declaration of 15 December 2009, this document is admissible under s 79C of the Evidence Act 1906 (WA). Ultimately, it was unnecessary for me to determine the basis upon which the statutory declaration could be used because of my reservations about the circumstances in which it was prepared and executed as set out below at [368].
The witnesses
68At trial, a number of witnesses were called by the parties to advance their respective contentions. Evidence-in-chief was given by way of witness statements which were tendered at the trial and each of the witnesses was cross-examined.
69Carmelo gave evidence at the trial and called Darryl McKie (a long-standing friend), his son Michael Marchese and Robyn Patterson, Carmelo's former partner. Carmelo, quite properly in my view, conceded none of these witnesses could be described as independent witnesses.
70Norman also gave evidence at the trial. He called Ms Luciana Russo, a translator who translated a recording of a phone call between Norman and Calogero.
71In relation to Ted, he gave evidence and called Tricia Wong, a solicitor at Slater and Gordon, and Andrea Hosie, a former neighbour at the Darch property.
72Putting to one side the evidence of the parties (which I deal with below in the order in which they gave evidence), the remaining witnesses generally presented as doing their best to give an accurate account of the matters they were asked. However, the evidence of each of these witnesses was only of marginal relevance to the issues in dispute. I accept the evidence of each of these witnesses.
73Generally, I have assessed the contemporaneous documentary evidence as being the most reliable evidence, save for the statutory declaration signed by Calogero on 15 December 2009 which I address below at [353] - [369].
Carmelo Marchese
74Carmelo is the middle of the three brothers. He was 71 at the date of the hearing. Carmelo left school before finishing high school and worked in various occupations over his working life, including as an auto-electrician. He is now retired.
75Carmelo's evidence-in-chief was given by way of witness statements that were filed shortly prior to the trial for the reasons I have set out above at [24]. As I have set out in more detail below, his evidence-in-chief suffered from being given in the most general of terms, particularly in relation to the critical conversations said to constitute the relevant agreements, the statements which he said were made to him by Calogero and what was said to constitute the terms of the joint endeavour. There were also inconsistencies between the matters pleaded in his statement of claim and his evidence at trial. This, however, was an issue common to all of the parties.
76By way of example, the documentary evidence shows that more than 20 properties were bought and sold by Calogero or Calogero and Maria from 1956 until 1976. In his witness statement, Carmelo refers to only 3 properties in the most general of terms. As a result, these properties cannot be easily identified by reference to the documentary evidence.
77More critically, in respect of his evidence in relation to why he said he undertook work at the Darch property, Carmelo's evidence-in-chief was that 'I did all this because my father had always told me that the purchase of any properties would be for the benefit of all members of the family'.[23]
[23] Exhibit 1A [35].
78In his oral evidence, Carmelo generally came across as being honest and endeavouring to answer questions truthfully. However, it was apparent that he was frustrated by the proceedings and some of the questions he was asked. At times, particularly under cross-examination by counsel for Ted, he was argumentative and his answers were non‑responsive. By way of example, when he was cross-examined about the documentation concerning the transfer of his legal interest in the Darch property to Ted, he disputed the documents were genuine despite having tendered these documents in examination in chief without raising any question about their legitimacy.[24] In some instances, I accept Carmelo was confused about the question he was being asked. However, this was not always the case. As a consequence, his cross-examination is, at places, hard to follow. I consider Carmelo's recollection of events has been influenced by his anger and frustration as to what has ultimately occurred and what he considers is a manifestly unfair outcome, namely that Ted and Ted's son have ended up with almost the entirety of the estate of Calogero and Maria and he has received very little.
[24] ts 160 - 162.
79In relation to critical conversations, Carmelo's evidence was unclear and often contradictory. By way of example, in respect of the circumstances in which an interest in the Darch property was transferred to him in 1982, Carmelo's pleadings contend that each of Calogero, Maria, Ted, Norman and he were present at this discussion. Under cross-examination from Norman's counsel, Carmelo agreed that Maria was in the kitchen and that Norman was excluded from the meeting. Under cross-examination from Ted's counsel, Carmelo reverted to his evidence-in-chief that all members of the family were present at this meeting.
80Counsel for Ted did not make any submissions on the credit of Carmelo or the reliability of his evidence. Ted's primary submission was that Carmelo's evidence was vague and did not establish on the balance of probabilities the facts necessary to make out his claim.
81Counsel for Carmelo submitted that his evidence should be given significant weight. He contended that his evidence was consistent with contemporaneous documents and, where his evidence conflicted with Ted's, should be accepted.
82I accept that Carmelo was not able to identify with any precision the words that were said by Calogero or Ted that give rise to the alleged agreements or expectations at either of the critical meetings in 1981 or 1982 and 1993. This is not entirely surprising given the time that has elapsed since these meetings. It is also the case that Carmelo's recollection of the discussions that took place at these meetings is quite limited. However, particularly in respect of the 1982 meeting, Carmelo's evidence is consistent with the contents of the promissory note, a contemporaneous document.
83While there were aspects of Carmelo's evidence on which limited weight can be given, which I address specifically below, I find that Carmelo was an honest witness. In general, Carmelo's evidence was more consistent with the contemporaneous documents. However, this does not mean that I am required to accept all of his evidence as honest witnesses can still be mistaken. In considering Carmelo's evidence, I have also considered the reliability of his evidence. However, where his evidence conflicts with Ted, I prefer the evidence of Carmelo.
Norman Marchese
84Norman is the youngest of the brothers and was 69 at the time of the trial. Norman finished school at the end of year 10 in 1967.[25] Since leaving school, he worked in various trades including bathroom and tiling renovations.[26] He is currently retired.
[25] Exhibit 9A [24].
[26] Exhibit 9A [25].
85Norman's evidence-in-chief was also given by way of witness statements filed shortly prior to the trial for the reasons I have set out above at [24]. His witness statements were considerably more detailed than those of Carmelo, however, this was primarily in relation to his evidence of the sale and purchase of the properties comprising the home renovation business. In relation to the critical conversations and payment of funds on which he relies in support of his claim for a resulting trust, his evidence was given in more generalised terms. This, again, is not entirely surprising given these matters occurred more than 30 years ago.
86In cross-examination, Norman appeared to be easily confused by some of the questions he was asked. In some instances, I accept that this was due to the questions he was asked which were in relatively general terms. In other instances, this was not the case and it appeared that Norman was distrustful of the questions he was asked, particularly by counsel for Ted, which affected the answers he gave. By way of example, at the commencement of his cross-examination by counsel for Carmelo, Norman was asked whether he knew whether Ted became a real estate agent. Norman gave various answers to what was quite a simple question including that Ted never presented any paperwork, he was not sure, and that he found a document that showed Ted had a licence to sell property in 1978.[27] To an extent, Norman realised this was the case as, in a non-responsive answer to a question from Carmelo's counsel, he stated:[28]
Can I just, sort of, say a bit about myself. I've very up - straightforward and heavy, like, in the sense when I say something so don't get me wrong. I've been brought up like this to defend myself so … if I answer you back in a mad manner, can you let me know.
[27] ts 445 - 446.
[28] ts 447.
87A further example is his responses to questions from counsel for Ted as to when the joint endeavour had come to an end. Initially, his evidence was that it hadn't come to an end and then that he was not sure. Ultimately, Norman accepted that no properties were purchased after 1978 and that it came to end at this point.[29]
[29] ts 465 - 466.
88Norman's evidence was clouded by his strong views as to the unfairness of what has occurred (namely that Ted and his family have received the bulk of Calogero and Maria's estate) and the financial impact both these proceedings and previous proceedings have had on him.[30] As a consequence, on occasions, his answers were akin to submissions rather than a recollection of events.
[30] ts 587.
89Each of the brothers claimed that they had a strong or special relationship with Calogero[31] and that they were told things the others were not. In the case of Norman, it was apparent that he was not a party to many of the conversations that occurred in respect of the Darch property or the transactions that had occurred over the years. In his evidence, Norman accepted that 'so much went on without [his] knowledge' and that he had learnt a lot about these matters after Calogero's death.[32]
[31] ts 449.
[32] ts 667.
90On the basis of this evidence, I find that much of Norman's evidence is a reconstruction of events that has been undertaken from his review of documents that have either been discovered in these proceedings, or from investigations he has undertaken. For this reason, I consider the contemporaneous documents are the most reliable evidence.
91Counsel for Ted did not make any specific submissions on the credit of Norman or the reliability of his evidence. Ted's primary submission was that Norman's evidence was vague and implausible and did not establish on the balance of probabilities the facts necessary to make out his claim. He drew attention to the fact that Norman's evidence was inconsistent with Carmelo's, particularly in relation to the 1978 meeting.
92Counsel for Norman submitted that on critical matters, such as the payment of monies to Calogero for the Darch property, Norman's evidence was consistent, 'relatively unchallenged'[33] and consistent with various surrounding circumstances.[34]
[33] Norman's closing address [28].
[34] Norman's closing address [38] - [39].
93While I consider that Ted's criticisms are well founded, I accept that in his evidence, Norman was generally attempting to answer the questions asked of him honestly. I make no adverse credit finding against him. However, as a result of the matters that I have referred to, I am not satisfied that I can treat Norman's evidence as being generally reliable. Where his evidence conflicts with Carmelo, I prefer the evidence of Carmelo. On contested matters, I do not accept Norman's evidence without corroboration.
Ted Marchese
94Ted is the eldest of the three brothers whose witness statement described his occupation as 'businessman'.[35] Ted is the only one of the three brothers who completed high school. On leaving school, he received a bursary from the government to study dentistry at the University of Western Australia.[36] Ted did not complete his degree because of ongoing medical problems arising from an accident when he was about 16.[37] From 1967, when he was about 20, Ted commenced work as a real estate agent.[38] Ultimately, the Real Estate Board terminated Ted's licence.[39] He worked for Bond Corporation for a period of time and subsequently, established Camelot Homes (with a business partner).[40]
[35] Exhibit 20A.
[36] Exhibit 20A [12].
[37] Exhibit 20A [13].
[38] Exhibit 20A [15].
[39] ts 980.
[40] Exhibit 20A [46].
95Ted has a hearing difficulty so a 'hearing loop' was organised for him for the trial and for his evidence. On occasions during his evidence, he indicated there was an issue with the volume and that he had difficulty hearing the question asked of him. In assessing Ted's evidence, I have taken account of his hearing difficulties which I accept are genuine.
96Ted's evidence-in-chief was also given by way of witness statements filed shortly prior to the trial for the reasons I have set out above at [24]. Ted also filed responsive statements to the statements of Carmelo and Norman. The responsive statements, in particular, demonstrate the issues that arise from the previous standard procedure in this court of filing witness statements and the preparation of witness statements in response. The responsive statements largely consist of denials of the evidence of Carmelo and Norman (or 'taking issue' with the contents of their statement) and a repetition of his witness statement (by reference to paragraphs of his witness statement).
97As set out in the Best Practice Guide for the Preparation of Witness Statements for Use in Civil Cases (Best Practice Guide), published by the Western Australian Bar Association, a witness statement is not a pleading and, as a result, should not adopt the form of responding to particular paragraphs in other statements. A witness is not called to argue the case or dispute the evidence of other witnesses but to give his or her own version of the relevant events. Where the testimony is different to that of other witnesses, this is a matter for comment and submission.
98The responsive statements filed by Ted do not comply with the Best Practice Guide or contain evidence. Rather, these statements seek to dispute the evidence of Carmelo and Norman without giving Ted's version of the events. For this reason, I have primarily treated these statements as comments or submissions made on Ted's behalf.
99Counsel for Carmelo submitted that Ted was not a credible witness and that where his evidence conflicts with Carmelo, I should prefer the evidence of Carmelo.[41]
[41] Carmelo's closing submissions [4] - [9].
100Much of Ted's denial of his brothers' claims was pleaded as arising from his close relationship with his father. In his defence to his brothers' claims, in response to many paragraphs, he pleads his father had not disclosed to him the matters or conversations asserted by them and his belief this would have happened had these matters or conversations occurred.
101Ted's evidence spanned events that occurred over more than 40 years. He acknowledged that his recollection is based not only on his memory, but also on documents such as Land Title records. It is clear that in many parts, Ted's evidence has been reconstructed from these documents and that his recollection is not accurate.
102While Ted maintained and emphasised throughout his evidence that he had a close relationship with his father, he stressed that he only provided assistance to Calogero and Maria whenever they needed help. He did not accept that he managed their financial affairs, which was the evidence of Carmelo. He denied that he had 'almost complete control' of their finances. He also did not accept that Calogero and Maria required assistance because they were 'relatively unsophisticated' but said that 'it [his assistance] came in handy'.[42] This evidence was inconsistent with his evidence-in-chief as well as contemporaneous documents. It was not disputed that Calogero had only limited education in Italy. Ted's evidence-in-chief was that while Calogero could speak English relatively well, he had a limited ability to read and write English.[43] Ted stated this was limited to reading basic newspaper articles.[44]
[42] ts 1018.
[43] ts 93.
[44] Exhibit 20A [16].
103Like many other post-war immigrants, Calogero and Maria, on arrival in Australia, worked extremely hard over a long period of time to build a successful life for them and their family. However, I accept they had only relatively limited English written skills and relied on Ted to assist them with the numerous property transactions they undertook and, particularly later in life, to assist them with taxation returns and their financial affairs. Ted's denial of his involvement in Calogero's financial affairs was inconsistent with Calogero's banking records and his evidence under cross-examination when asked about these records, which I address in more detail below.
104In other parts, Ted's evidence was disingenuous and not believable. For example, in his evidence-in-chief, Ted said that he was able to persuade the vendors of the Darch property to give them additional time to enable payments to be made over a 10 year period rather than the two year period stipulated in the offer and acceptance.[45] Ultimately, he accepted in cross-examination that the agreement was varied and a higher interest rate payable and that there was a legal dispute between him and the vendors in respect of payment of the outstanding balance (including interest) for the Darch property.[46]
[45] Exhibit 20A [68].
[46] ts 809.
105Ted also sought to exaggerate the work he did or involvement he had and to downplay any work or involvement of his brothers. By way of example, in relation to the registration of Omega Constructions, Ted originally gave evidence that he arranged for the registration of the business name of the company.[47] When asked in cross-examination what this entailed, his evidence was that he organised the registration by making sure they met the licensing requirements and that he organised the registered builder.[48] Ultimately, his evidence was that he liaised with a law firm to lodge the papers.[49] Subsequently, in cross-examination, Ted accepted that solicitors acted for Calogero in registering Omega Constructions, including in drafting a deed of partnership and an agreement with Mr Watt, the registered builder.[50] A further example is that Ted's pleaded case in CIV 2521 of 2015 was that Omega Constructions was operated by Calogero and Ted for their benefit only. This pleading was in contrast to Ted's witness statement and his evidence to the effect that he did not have an interest in this business.[51] In cross-examination, Ted accepted that his defence was wrong and that Omega Constructions was a partnership between Calogero and Maria.[52]
[47] ts 731.
[48] ts 750; 815.
[49] ts 750.
[50] ts 817; Exhibit 21.
[51] Exhibit 20A [33]; ts 951.
[52] ts 953 - 954.
106Another example of Ted's exaggeration of his evidence was in relation to the costs that Ted claimed to have incurred in the purchase and maintenance of the Darch property. In his defence in CIV 2521 of 2015, Ted denied that Calogero contributed funds to purchase the property or paid instalments of $22,500 and said that he had paid most of the funds for the purchase of the property.[53] In a document he initially filed as his witness statement, Ted stated that 'all monies to purchase and maintain' the Darch property of $1,000,000 were paid by him.[54] In his evidence, Ted accepted that these statements were incorrect and agreed that Calogero had paid both the deposit for the Darch property and the amount that was due on settlement of $20,874.04. He also accepted he had not paid $1,000,000 in purchasing and maintaining the Darch property and that this amount included an allowance of approximately $400,000 which he thought was likely to be payable for capital gains tax on sale of the Darch property.[55]
[53] Defence [6].
[54] Exhibit 2.22.
[55] ts 1031.
107Aspects of Ted's evidence were unsatisfactory in that he gave conflicting answers to the same question and when confronted with this position, tried to explain it away. An example was his evidence in answer to a question as to whether any of the brothers charged Calogero for the work that they did on the properties that were part of the home renovation business. Ted accepted that he 'never ever' charged for the administration work that he did but, as to whether Norman and Carmelo charged for the work they did, Ted's initial response was that they did. When he was asked whether he was mixing up his timeframes and that this only occurred with the Darch property, Ted accepted that he probably was. After asking for the question to be repeated, his answer was that 'they were hardly ever there' and then that 'in their younger age, of course not'.[56]
[56] ts 754.
108Ted's evidence in relation to the enduring power of attorney he held for Calogero was particularly unsatisfactory. In cross-examination, Ted's evidence initially was that the first power of attorney 'wasn't ever really used'. Ted was specifically asked whether it was used for 'financial assets or any of that nature' and his response was 'No. … Never used.'[57] Subsequently, Ted was shown a series of banking documents, including documents evidencing Ted opening bank accounts in the name of Calogero.[58] When asked whether he used the enduring power of attorney to open these accounts, his answer was:[59]
well, it depended on the conditions of the bank whether they would require power of attorney or would not. I mean, if - if I was simply - if a - if their conditions were such that anyone can open an account on behalf of someone else and sign on their behalf, well, perhaps, a power of attorney would not be required. If they required a power of attorney, well, then I would have used the power of attorney.
[57] ts 796.
[58] Exhibit 22.
[59] ts 834.
109When asked again whether he used the power of attorney, Ted's response was:[60]
I probably did. I probably - I'm not sure. I think I may have used it, but as a pre-qualification, I did say it but you disregarded that, I think. You simply said, "You used the power of attorney." I've said, "I probably did, probably didn't. I'm not sure." I would have to refer to the situation. The other thing is as far as gifts go, I don't think I said that was the only gift, but anyway, doesn't really matter, because if there were gifts to me, they were in consideration for something.
[60] ts 855.
110This evidence contradicted Ted's evidence in his responsive witness statement to Carmelo's statement that Calogero's financial affairs were not complicated and consisted of a savings passbook in which his pension was credited each fortnight as well his evidence that if any payments were required to be made or if Calogero needed money, Calogero would attend to it himself.[61] In cross-examination by counsel for Norman, Ted accepted that a number of bank accounts were opened in Calogero's name from 2006 until 2009 and that he had authority to operate these accounts.[62] Ted was asked about a number of sizeable withdrawals from these accounts (amounts of approximately $52,000 and $87,000) but could not recall whether he was responsible for these transactions or what they were for.[63] His evidence was that 'we were chasing interest rates' and that he was helping Calogero 'to get a better interest rate at that time'.[64] Subsequently, his evidence was that it could have been that some of the money was allotted to him in consideration for the work he helped his father with[65] and then:[66]
Alternatively, we were chasing a high interest rate or combination of either or, or both. Or, perhaps, even for paying me back some of the money that I had lent for them.
[61] Exhibit 20B [19].
[62] ts 829 - 836, 842 - 856.
[63] ts 846.
[64] ts 848.
[65] ts 1063.
[66] ts 1064.
111When asked whether these amounts ever went back to his parents' bank account, Ted responded that 'my parents were alive and well, and everything that was done, was done with their authority.'[67]
[67] ts 1064.
112Under cross-examination by counsel for Carmelo, Ted was also asked about various withdrawals from Calogero's bank account shortly prior to his death. Ted's evidence was that he recalled assisting his father and withdrawing some money and that the withdrawals were for the benefit of both Calogero and himself.[68] Ted was also asked about withdrawals that occurred after Calogero's death. Initially, his evidence was that these withdrawals occurred on Calogero's instructions.[69] After it was put to him that this could not have been the case because his father was dead, Ted responded that it did not make sense as he 'wouldn't have the authority to operate [the bank account] after he passed away' before querying whether the document was accurate as he found it 'improbable and difficult to understand'.[70] Ted also said that Calogero had told him to take money to pay his hospital expenses.[71] The Public Trustee queried a number of these withdrawals and in January 2014 requested that Ted repay to Calogero's estate the sum of $23,700,[72] which he did.[73]
[68] ts 945.
[69] ts 946.
[70] ts 947.
[71] ts 948.
[72] Exhibit 28.
[73] ts 1067.
113Ted also accepted in cross-examination that he continued to handle the affairs of Calogero after his death until on or about 23 September 2013 when probate was granted, even though he knew, or at least thought, the enduring power of attorney was void.[74] This included receiving the benefit of an insurance claim that had been made and continuing to provide instructions on the asbestosis claim.[75]
[74] ts 897.
[75] ts 895 - 897.
114During his evidence, Ted gave various answers as to whether he paid Calogero and Maria for the Knutsford Street property. In his evidence-in-chief, his evidence was that this was a gift from his father. This was consistent with the basis upon which his counsel opened the case, namely that this was a gift and was the only gift he received from Calogero.[76] However, in cross-examination, Ted gave various answers. Initially, his evidence was that he obtained finance from Home Building Society and that this had been paid to his father. When asked about the discrepancy between his evidence, Ted response was:[77]
[M]y memory fails me. Look, I'm so sorry. I - I can't rely on my memory unfortunately. I think it's because of my damage.
…
Look, I cannot rely on my memory unfortunately, because due to my accident I suffered from atrophy of the brain and I did have some memory loss unfortunately. I thought it was quite good, but looks as if it's letting me down badly.
[76] ts 711.
[77] ts 870.
115Later in cross-examination, his evidence was that Calogero and Maria 'may have gifted the difference between $40,000 [the amount on the offer and acceptance] and $30,000 [the amount on the transfer of land]'[78] and that the amount he had obtained from Home Building Society had been used for improvements at the Darch property.[79] Ted accepted he had not included this evidence in his witness statement or responsive statement and then said:
Well, once I think about the whole thing and once other information is brought to the fore and if I analyse those documents more fully, well, then it comes - it - it becomes a little bit more - more realistic and tangible.
[78] ts 876.
[79] ts 914.
116Finally, when asked to clarify why he had said in his witness statement that it was a gift, Ted's evidence was that 'it was a gift to us', which he accepted was different to the money being used for improvements on the Darch property.[80]
[80] ts 914.
117It is apparent from Ted's answers that his evidence on these matters were a reconstruction of events undertaken from his review of documents that have either been discovered in these proceedings or from investigations he has undertaken.
118While I accept Ted suffered from a head injury in his teenage years, there was no evidence from a doctor as to whether this impacted his memory and if so, how and to what extent. In his evidence-in-chief, Ted did not suggest the accident affected his memory. This was only raised in answer to a question in cross-examination when he was asked about inconsistencies in the evidence he had given. My observation of Ted in the witness box was that, apart from specific instances when his hearing loop was not working, he was able to understand and respond to questions that were put to him. However, on critical aspects, when compared to contemporaneous documents, Ted's evidence was unreliable.
119Ted struck me as an astute businessman who extracted commercial advantage from the transactions he entered into and was willing to take advantage of the comparative lack of sophistication of his brothers. For the reasons set out above, I consider that Ted was an unsatisfactory witness. It is not possible to accept Ted's evidence as generally reliable. Accordingly, I do not place any weight on his oral evidence unless it has independent corroboration.
Jones v Dunkel inference
120Ted did not call his wife, Yvonne, to give evidence at trial. This gave rise to the question as to whether I should draw a Jones v Dunkel inference from this decision.[81]
[81] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 308, 312, 320 - 321.
121Before considering whether and what inference should be drawn from this decision, it is important to set out the limits of the inference that can be drawn. These were usefully summarised by Vaughan J in AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton Utz (a firm) (No 2).[82] As his Honour noted, the rule in Jones v Dunkel:
(a)does not mean that an adverse inference should be drawn that the evidence that has not been called would be positively damaging to that party's case. As was stated by Menzies J in Jones v Dunkel, the absence of a witness cannot be used to make up any deficiency in the evidence;[83] and
(b)does not prevent a favourable inference being drawn in favour of Ted if other evidence justifies this inference.[84]
[82] AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton Utz (a firm) (No 2) [2019] WASC 306 [145].
[83] Jones v Dunkel, 312.
[84] Flack v Chairperson, National Crime Authority (1997) 80 FCR 137, 148 - 149.
122If matters of fact which are pleaded in the defence are otherwise established by the evidence, the failure to call a witness does not prevent a finding of fact being made.[85]
[85] Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140 [634].
123There are two consequences which may flow from the unexplained failure to call a witness. First, it may enable the court to draw an inference that the evidence of the witness would not assist the party's case. Second, the court may draw with greater confidence an inference which is unfavourable to that party.[86] However, that inference must be available on the evidence. The relevant witness must be one who may be able to 'cast light on the fact relied on as the ground for the inference'.[87]
[86] Morley v Australian Securities and Investments Commission [634].
[87] AVWest Aircraft Pty Ltd as trustee for AVWest Aircraft Trust v Clayton Utz (a firm) (No 2) [146].
Legal principles
124In every form of trust, there are four essential elements: the trustee, trust property, a beneficiary or beneficiaries, and the personal obligations of the trustee to deal with the trust property for the benefit of the beneficiaries.[88]
[88] Heydon J D and Leeming M J, Jacobs' Law of Trusts in Australia (8th ed) [1-10].
125In this case, a number of different types of trusts are pleaded by Carmelo and Norman, namely: an express trust, a resulting trust, a common intention constructive trust and a joint endeavour constructive trust.
Express trust
126An express trust arises where a person expresses the intention, orally or in writing, to create a trust. No formal language is required to create a trust and it can be inferred from the conduct of the person. However, certainty is required on three matters: first, the intention to create a trust; second, the persons to be benefited are ascertainable; and third, specified property is to be the subject of the trust.
127An express trust which creates an interest in land is required to be evidenced in writing.[89]
[89] Property Law Act 1969 (WA), s 34.
128In Jacobs' Law of Trusts in Australia, the learned authors state:[90]
A court cannot hold that an express trust exists unless it is satisfied that there was the intention to create such a trust. The question will be whether there is language or conduct which shows a sufficiently clear intention to create such a trust. No formal or technical words are required; any apt expression of intention will do. The conclusion that the intention existed may be drawn as an inference from the available evidence. In order to infer intention the court may look to the nature of the transaction and the whole of the circumstances attending the relationship between the parties and known to them, including commercial necessity. If the inference to be drawn is that the parties intended to create or protect an interest in a third party, and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then an intention to create a trust may be inferred. Such a trust is an express, not a constructive, trust and the earlier reluctance to infer such a trust no longer obtains, at least in Australia.
The overall question is whether in the circumstances of the case, and on the true construction of what was said and written, a sufficient intention to create a trust has been manifested. It is not necessary that the creator of the trust should know that the particular relationship intended to be created is in law a trust. A trust will be created, whether or not the creator thereof is precisely aware that he is so doing, provided that in substance the creator intends that his or her actions should have the legal effect of creating the relationship which is known in law as a trust.
[90] Heydon J D and Leeming M J, Jacobs' Law of Trusts in Australia (8th ed) [5-02].
129In Bahr v Nicolay (No 2), Mason CJ and Dawson J stated that: [91]
If the inference to be drawn is that the parties intended to create or protect an interest in a third party and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then there is no reason why in a given case an intention to create a trust should not be inferred. … The trust is an express, not a constructive, trust.
[91] Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604, 618 - 619.
Resulting trust
130A resulting trust is a trust that arises in favour of the settlor or parties claiming through the settlor. A resulting trust generally arises in two different circumstances. First, where a person transfers property to another but has not disposed of their beneficial interest in the property. Second, where the purchase price is provided by a person other than the person holding the legal interest without intending the third party to have beneficial ownership of the property.[92]
[92] Heydon J D and Leeming M J, Jacobs' Law of Trusts in Australia (8th ed) [12-01].
131Where a property is purchased or funds are provided to a third party who a person is under an obligation to support, traditionally considered to include a wife or child, the presumption of a resulting trust in favour of the third party does not arise. In these circumstances, there is a presumption the funds were provided as a gift or an advancement. The presumption of advancement, like the presumption of resulting trust, may be rebutted by evidence that at the time of the transfer, the transferor did not intend it to be a gift. The burden of rebutting the presumption of advancement lies upon the person asserting the existence of a trust.[93] The circumstances surrounding the relationship between the parties may be used to rebut the presumption of advancement. An inference of advancement can also be displaced where the common intention of the parties, which was consistent with a presumption of advancement, depended on a continuing state of affairs. If the continuing state of affairs ceases, the presumption of advancement may no longer apply.[94]
[93] Martin v Martin (1959) 110 CLR 297, 304.
[94] Swettenham v Wild [2005] QCA 264 [35].
132In Calverley v Green, Gibbs CJ summarised the relevant principles in the following terms: [95]
Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, ie, a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such - not, for example, as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money.
[95] Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, 246 (Gibbs CJ).
133Evidence of the relationship between the parties - both legal and factual - is admissible on the hearing of any claim.[96] The acts and declarations of the person or persons who contributed to the purchase price of the property both before and at the time of the purchase of the property in question or immediately afterwards are also relevant and admissible.[97] Any subsequent declarations by a party are only admissible as admissions against interest.[98] If the common intention of parties is in issue, evidence of what the parties did or said is admissible. It is not usually found in 'an uncommunicated state of mind'.[99]
[96] Calverley v Green, 269 (Deane J).
[97] Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, 365.
[98] Calverley v Green, 262 (Mason and Brennan JJ) citing with approval Shephard v Cartwright [1955] AC 431, 445; Charles Marshall Pty Ltd v Grimsley 365.
[99] Calverley v Green, 261 (Mason and Brennan JJ).
134The extent of the beneficial interests of the respective parties is determined at the time the property was purchased and the trust created. Acts after the purchase of the property, such as the repayment of any mortgage in relation to the property, are not relevant to the determination of the parties' interests in the land or the extent of the interests. These matters may, however, be relevant on an equitable accounting between the parties.[100] As was noted by Mason and Brennan JJ in Calverley v Green:[101]
[604] Ted's final submissions [6].
[605] Ted's final submissions [11].
[606] Ted's final submissions [38].
469Counsel for Ted submitted that Norman's failure to make any claim against Calogero for the value of his labour or contribution to the joint endeavour over a 40 year period 'defeats the claim' as against Ted.[607] It was not clear from the submissions as to the legal basis for this submission.
[607] Ted's final submissions [63].
470As set out above, Norman did not give evidence of any specific discussions that he would obtain an interest in the properties from the work that was done on the properties. I readily accept, on the basis of the authorities I have summarised above, it is not necessary for the members of the Marchese family to have used any specific words or language to give rise to the requisite common intention; it can be inferred from the circumstances.
471In this case, for the following reasons, I am not persuaded that Norman has established there was a common intention (either express or implied) between him and other members of the family, but more particularly Calogero, that he would obtain a beneficial interest in the Darch property from his work on the properties set out in Attachment A.
472First, the work that was done on these properties was consistent with the evidence given by each of Ted, Carmelo and Norman that they were expected to contribute to this work while they were living at home, in order to build up the family's assets which would ultimately be left to them equally in their parents' wills. It was not suggested that this work gave Norman a beneficial interest in any specific property or properties.
473Second, as both Norman and Carmelo stated, each believed that by doing this work to build up the assets of the family, each would benefit in the long-run by receiving one third of his parents' estate when they died.
474Third, each of the brothers bought and sold a number of properties either by themselves or with each other over this same time period. Both Carmelo and Norman denied these properties formed part of the home renovation business but did not give a satisfactory explanation as to why these were excluded but the properties owned by Calogero and Maria were included. If in fact, there was a common intention that all properties owned by members of the family would give the brothers a beneficial interest in each of the properties, there is no satisfactory explanation as to why these properties would be treated differently.
475Fourth, Norman did not give evidence or make submissions as to what portion of the Darch property would reflect the contributions made by him or how any inference can be drawn that this was the common intention of the parties.
476For these reasons, I find that Norman has not established that in September 1978 when the Darch property was acquired, there was an express or implied common intention that a portion of it be held on trust for Norman.
Resulting trust
477Counsel for Norman submitted that he contributed two sums to the purchase of the Darch property: a cash payment of $4,000 in or about July 1978 and a second cash payment of $5,000 in December 1978.
478On the evidence, counsel for Norman submitted there were three alternative findings open to the court. First, Norman's financial contribution was $20,000 as stated by Calogero to Norman. Second, Norman's financial contribution was $9,000. Third, Noman's financial contribution was $4,000 and the additional $5,000 was used for 'expenditure applied towards the [Darch property] shortly after its purchase'.[608] Norman accepted the sum of $5,000 could not have been contributed to the payment by Calogero on settlement but contended it 'could have been used by [Ted]' to pay the settlement instalment on 5 October 1979.[609]
[608] Norman's closing address [32].
[609] Norman's closing address [33].
479Counsel for Norman said the only evidence which could rebut the inference of a resulting trust was the promissory note. Norman submitted this should be rejected as there was no express or implicit statement that the $20,000 was a repayable loan; this amount was payable without any accrued interest; it was inherently improbable that Norman would have agreed to accept an interest-free lump sum payment in return for the payments he had made; and Norman was not party to the promissory note and was not aware of it until years after.[610] Norman contended the promissory note was evidence of an acknowledgement by Calogero and Ted of 'a financial liability to Norman which related specifically to the block' which could be enforced in equity.[611]
[610] Norman's closing address [38] - [40].
[611] Norman's closing address [41] - [42].
480Counsel for Ted submitted there were no documents, including any banking documents, which provided objective evidence that any sum was transferred from Norman to Calogero and used for the purchase of the Darch property.[612]
[612] Ted's final submissions [66].
481As set out above at [236] - [242], I am not satisfied that Norman made the payments alleged or made any financial contribution to the purchase of the Darch property. For this reason, there is no basis upon which it can be contended that Calogero held any interest in the Darch property on resulting trust for Norman. All of the submissions made by Norman in relation to the promissory note proceeded on the basis that the payments had been made by him. Given my findings in relation to the payments, these submissions do not assist Norman's case.
482However, even if I am wrong in my factual findings as to the payments, these payments do not mean that he has any present interest in the Darch property. There is no evidence that at any stage prior to the transfer from Calogero and Ted to Ted and Carmelo that either Ted or Carmelo had been told by Norman or Calogero that Norman had contributed to the purchase price or Calogero held a portion of his interest in the Darch property on resulting trust for Norman. More importantly, there is no evidence Ted and Carmelo accepted the transfer on the basis they would continue to hold the property on this same basis. Without this evidence, the effect of s 68 and s 134 of the TLA is that on registration, Carmelo and Ted had indefeasible title and, in so far as it concerns any claim by Norman, they did not take the Darch property subject to the resulting trust.
Equitable estoppel
483Norman's claim of equitable estoppel was advanced on a different basis to that contended by Carmelo. Norman contended that the effect of the representation was that the three brothers would share equally in the assets of Calogero and Maria when they died, including the Darch property. He says that based on this representation, he contributed to the development and maintenance of the Darch property without insisting he be registered as a joint proprietor and that Ted was prevented from denying he holds the legal title of the Darch property for the benefit of the three brothers in equal proportions.[613]
[613] Norman's closing address [1.C].
484Counsel for Ted raised a number of matters in defence to this claim. First, Ted denied that any representations were made. Second, even if the representations were made, the claim was against Calogero's estate and not Ted. Finally, Ted pointed to the significant period of time that had passed since the representations were made and the fact that Norman did not act on the representations until after Calogero died.[614]
[614] Ted's final submissions [53].
485I accept that prior to the promissory note, representations were made by Calogero and Maria that the three brothers would share equally in the properties that had been purchased by Calogero and Maria on their death, including the Darch property. It was not clear from Norman's evidence whether any specific representations in relation to the Darch property were made after the promissory note was signed. Counsel for Norman submitted that, on the evidence, it was clear that Norman was not aware of the existence of the promissory note until after Calogero's death. In these circumstances, he contended there was no reason for Norman to believe anything had changed or the representations made by Calogero to him (that Calogero held his interest in the Darch property on trust for him and he would receive a one third share of his parents' properties on their death) did not continue.[615]
[615] ts 1178 - 1179.
486While I accept that Norman was not aware of the existence of the promissory note until after Calogero's death, in my view, this does not advance the matter. The fact that Norman expected based on representations made to him that on Calogero's death, his estate, including the Darch Property, would be split three ways does not elevate this representation into a promise on which equity will intervene. There is no evidence that Calogero made any statements which amount to an irrevocable promise in relation to the Darch property that Norman would receive one third of the Darch property on Calogero's death.
487In any event, I am not persuaded that Norman has established that he suffered any detriment in reliance on any representations. In this regard, I note that previous authorities have spoken of 'life altering' conduct. There was no evidence before the court that could sustain a finding that Norman's contribution to the Darch property has been life altering. I am not satisfied on the balance of probabilities that the reason Norman was unable to obtain his builder's registration was because of the work he undertook for Calogero and Maria. Apart from a broad statement in his evidence-in-chief, no specific evidence was given by Norman which would enable a positive finding to be made in this regard. While I accept that Norman undertook work on the various properties purchased by Calogero and Maria as well as the Darch property, in my view, this work is consistent with the type of work that would be carried out by a dutiful son, which I accept he was. Specifically, I do not accept that he would not have done this work on the Darch property without the representation having been made. In addition, even on his own evidence, the actual costs he incurred in respect of the work were relatively minimal and there is no evidence that the work he has done at the Darch property has substantially increased its value. The evidence before the court is more consistent with an inference that any increase in value of the Darch property is because of its rezoning and the spread of the metropolitan area of Perth since 1978 rather than its development.
488Part of the detriment relied upon by Norman is that he did not insist on being registered as joint proprietor of the Darch property. This is not established on the evidence, which is, in fact, all to the contrary. Norman's evidence was that he raised on a number of occasions an objection that his name was not on the title. This objection did not result in Norman's name being included on the title and there is no evidence that Calogero would have directed this to occur.
489For these reasons, I do not accept that Ted has taken unconscionable advantage of Norman by encouraging him to continue to do work at the Darch property on the basis of any representation made by him or Calogero.
Estoppel by convention
490In relation to the alternate estoppel claim based on estoppel by convention, counsel for Norman contended that the assumed state of affairs was that the three brothers would equally share in the assets of Calogero and Maria when they died, including the Darch property, and that the parties conducted themselves on that basis.
491While I accept that Norman assumed that Calogero would leave all of his assets including the Darch property to the three brothers, there is no evidence that this assumption was shared by Ted, particularly after the promissory note was signed, or that the parties conducted themselves on that basis. As stated at [487], while I accept Norman undertook work on the Darch property, this work is consistent with the work carried out by a dutiful son.
492For these reasons, the estoppel by convention argument must also fail.
Claim for equitable compensation
493In his statement of claim, Norman sought equitable compensation for the value of his contributions. No specific evidence was led in support of this claim although a number of documents were tendered as to the award wages that applied over the relevant periods.
494Consistent with my finding that the work done by Norman on the properties and the Darch property was consistent with the work of a dutiful son and in the expectation he would ultimately receive something on the death of his parents, I do not consider Norman has established an entitlement to equitable compensation and dismiss this claim.
Laches
495Ted, in answer to the claims of both Carmelo and Norman, pleaded a defence of laches. At trial, no submissions were made by Ted as to the basis upon which he contended that this defence applied.
496Ted's only submission was that the failure of both Carmelo and Norman to make any claim against Calogero over a more than 40 year time period defeats the claim brought against Ted.[616] He also contended that any claim either of them had was a claim against Calogero and could only be made against his estate.[617]
[616] Ted's final submissions [63].
[617] ts 1099.
497In closing submissions, in response to a question from the court, counsel for Ted confirmed that this defence was pleaded and relied upon and that the detriment relied upon was the cost to Ted of maintaining the Darch property. He submitted that the relevant period of delay was from 1993, at the time the legal interest in the Darch property was transferred to Ted, and not 2013 when Calogero died. Ted contended that by failing to raise their claim prior to Calogero's death, Ted lost the opportunity to discuss the claim with Calogero and for it to be resolved.
498In relation to the claim by Carmelo, it is my view that the defence of laches does not operate to defeat Carmelo's claim. Ted did not identify any prejudice that, combined with the delay, would give rise to a defence of laches. In my view, Carmelo did not make a deliberate and informed decision not to take action against Ted. Until Calogero died, the beneficial interest in the Darch property did not vest. It was only after this occurred that Carmelo had a right to call for the beneficial interest in the Darch property to be transferred to him. In addition, there is no evidence that any inaction on the part of Carmelo encouraged Ted to have any belief that he accepted Ted was the absolute owner of the Darch property.
499If I am wrong in my assessment of Norman's claim, I would hold for similar reasons that the defence of laches does not defeat Norman's claim.
What adjustments, if any, need to be made?
500There was no dispute that Ted had paid the rates and taxes for the Darch property and that Carmelo has not contributed to these.
501It is necessary that an adjustment be made to reflect 50% of these payments. On the evidence before the Court, I accept that these amounts comprise $145,288.06.[618]
[618] Exhibit 4.11.31; Exhibit 4.1.11.
502I have set out in Attachment B to these reasons the breakdown of these calculations. In his closing submissions, Ted sought significantly higher amounts for these matters. I do not accept the amounts set out in the submissions reflect the evidence. In relation to the land tax, the amounts claimed are the total amounts paid by Ted for land tax, including on other properties unrelated to the Darch property. In addition, there was no evidence before me as to the amounts paid after 30 June 2015 for the Darch property and therefore no allowance is made for this. In relation to rates, there was no evidence before me as to the amounts paid after 2016 and therefore no allowance is made for this. Finally, in relation to the amounts sought for Synergy and water rates, these amounts appear to be claimed for usage. Given Carmelo was not using the Darch property, it is not clear as to the basis upon which it is contended he should be liable for these amounts. In my view, these amounts are payable by the occupier of the property and not the owner.
503On this basis, Ted is entitled to a lien over the Darch property to secure payment of the amount of $145,288.06.
504There was some evidence before me at trial that a house had been constructed on the Darch property however no evidence was led at trial as to the costs that were incurred, whether this increased the value of the Darch property or where the house is located on the property. For these reasons, I have not made any specific allowance for this but will hear from the parties before making orders.
Conclusion and Orders
505For these reasons, in relation to the claim by Carmelo, I consider that Ted holds the Darch property on trust for the benefit of him and Carmelo in equal shares, subject to a lien of $145,288.06 in favour of Ted.
506In relation to Norman's claim, I do not consider that Norman has established any of the claims made by him. For this reason, his claim should be dismissed and judgment entered for Ted.
507I will hear from the parties as to the appropriate orders that should be made to reflect these reasons, including what, if any adjustment should be made for the house constructed on the Darch property as well as in respect of the costs of the action.
508
Attachment A
Attachment B
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
ME
Associate to the Honourable Justice Hill8 NOVEMBER 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MARCHESE -v- MARCHESE [2021] WASC 385 (S)
CORAM: HILL J
HEARD: ON THE PAPERS
DELIVERED : 31 JANUARY 2022
PUBLISHED : 31 JANUARY 2022
FILE NO/S: CIV 2521 of 2015
BETWEEN: CARMELO MARCHESE
Plaintiff
AND
THEODORE TINDARO MARCHESE
First Defendant
THE REGISTRAR OF TITLES
Second Defendant
FILE NO/S: CIV 1821 of 2016
BETWEEN: NORMAN NUNZIO MARCHESE
Plaintiff
AND
THEODORE TINDARO MARCHESE
First Defendant
CARMELO MARCHESE
Second Defendant
REGISTRAR OF TITLES
Third Defendant
COMMISSIONER OF TITLES
Fourth Defendant
Catchwords:
Costs - Applications for costs - Question of apportionment of costs between matters - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA), s 37Result:
Orders for costs made
Category: B
Representation:
CIV 2521 of 2015
Counsel:
Plaintiff : No Appearance First Defendant : No Appearance Second Defendant : No appearance Solicitors:
Plaintiff : Lenhoff & Hotz First Defendant : GA Lacerenza & Associates Second Defendant : No appearance CIV 1821 of 2016
Counsel:
Plaintiff : No Appearance First Defendant : No Appearance Second Defendant : No Appearance Third Defendant : No appearance Fourth Defendant : No appearance Solicitors:
Plaintiff : Irwin Legal First Defendant : GA Lacerenza & Associates Second Defendant : Lenhoff & Hotz Third Defendant : No appearance Fourth Defendant : No appearance Case(s) referred to in decision(s):
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602
Frigger v Lean [2012] WASCA 66
Marchese v Marchese [2021] WASC 385
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388
HILL J:
509On 8 November 2021, I delivered my reasons for decision following the trial in this matter.[619] Orders were made for the parties to file submissions in support of the costs orders they contended should be made. These reasons should be read with my earlier reasons for decision.
[619] Marchese v Marchese [2021] WASC 385.
510The primary dispute between the parties was how the costs of the trial should be apportioned between the parties.
511In my view, for the reasons that follow, I consider that the costs of the trial should be apportioned equally between CIV 2521 of 2015 (2015 proceedings) and CIV 1821 of 2016 (2016 proceedings). In relation to the remaining costs of each of the proceedings, I consider that there is no good reason to depart from the usual order and these costs (including reserved costs) should be paid by the unsuccessful party.
General principles as to costs
512Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. However, the discretion is not unfettered and must be exercised judicially.[620]
[620] Frigger v Lean [2012] WASCA 66 [53].
513The general rule is that costs should follow the event; that is, the successful party should recover their costs from the opposing party. It is incumbent on an unsuccessful party to satisfy the court that there are good reasons it should not pay the successful party’s costs.[621]
[621] Rules of the Supreme Court 1971 (WA) O 66 r 1(1).
514As was noted by the Court of Appeal in Strzelecki Holdings Pty Ltd v Jorgensen:[622]
What constitutes 'success' in proceedings is to be determined by the reality of the circumstances involved in the case. The Court may depart from the general rule that costs follow the event and modify a costs order to take into account matters such as any unreasonable conduct of a generally successful party, or to the failure of that party on one or more specific issues. The exercise of the discretion in that way is recognised by a number of rules in the [Rules of the Supreme Court], together with the practice of the Court, and authority. So, for example, if the Court is of the opinion that the conduct of a successful party - either before or after the commencement of the litigation - has resulted in costs being unnecessarily or unreasonably incurred, the Court may deprive that party of costs, either wholly or in part, and it may further order that party to pay the costs of an unsuccessful party, either wholly or in part….
Under O 66 r 1(3) RSC, where a party, though generally successful in an action, has, by the introduction of some issue or issues on which it has failed, increased the costs, the Court may order such party to pay the costs of such issue or issues. It is well-recognised that an order that a successful party recover only a portion of its costs, where it has not been wholly successful, should not be made as a matter of course, for at least two reasons. First, it is often the case that a successful party will not succeed on every issue raised. Secondly, to attempt, in every case, an analysis of which party was successful on which issue would add uncertainty and complexity to the outcome of litigation, and add to the time and cost of costs arguments. Consequently, the power to apportion costs in this way should only be exercised where there are discrete and severable issues on which the generally successful party failed, and which added to the cost of the proceedings in a significant and readily discernible way. Furthermore, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if, by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case.
Where the Court decides, in the exercise of its discretion, to modify the usual costs orders to reflect the limited success of the successful party, that power will be exercised broadly, and as a matter of impression, and without any attempt at mathematical precision (which is likely to prove illusory in any event). That approach reflects the fact that it may be difficult to separate the factual and evidentiary substratum of different issues, the fact that some issues are more important than others, and the fact that some issues are subsidiary to others. (footnotes omitted)
[622] Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [50] – [52].
515In relation to costs where the proceedings are heard together, as Goldberg J stated in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2):[623]
[W]here a respondent participates in a hearing of multiple proceedings at the same time, it is not unreasonable for an unsuccessful respondent to expect that it will obtain a savings in costs where it is unsuccessful and it is ordered to pay the successful applicant's costs. The price to be paid for having multiple proceedings heard at the same time is for all parties to acknowledge that certain costs consequences may follow. The applicant achieves a saving in relation to the presentation of its cases against the respondents at the expense of all respondents having to be present throughout the whole hearing. The respondents have to be present throughout the whole hearing but it is not unreasonable for them to expect an allowance in respect of any costs ordered against them, if they are unsuccessful, in relation to costs incurred by the applicant in presenting a case against all respondents.
Such an allowance to the unsuccessful respondents in respect of the costs of the applicants which they are ordered to pay ought to reflect the nature of the proceedings, their complexity, their length, the number of separate groups of respondents involved, the range of issues raised and the extent of the unsuccessful respondents' participation in the hearing relative to the participation of the successful respondents.
[623] Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 [100] – [101].
Parties’ submissions
516Carmelo (the plaintiff in the 2015 proceedings and second defendant in the 2016 proceedings) sought an order that Ted (the unsuccessful first defendant in the 2015 proceedings and successful first defendant in the 2016 proceedings) pay his costs of the action in the 2015 proceedings, including any reserved costs. Carmelo did not seek any order as to his costs of the 2016 proceedings, notwithstanding the fact he was named as a defendant in those proceedings.
517Carmelo contended there should be no apportionment of the costs of the trial between the 2015 proceedings and the 2016 proceedings. He submitted that because the evidence in the 2016 proceedings stood as evidence in the 2015 proceedings, it was necessary for Carmelo's counsel to attend the entirety of the trial. Further, because there was substantial overlap between the issues and evidence in each of the proceedings, it was difficult to determine what evidence was led in relation to each matter. In this regard, Carmelo emphasised that the central question for determination at trial in each of the proceedings was whether either or both of Carmelo and Norman had an interest in the Darch property.
518In support of his application for costs, Carmelo referred me to a Calderbank offer made in April 2017 which offered to settle the proceedings on the basis that Ted pay to Carmelo the sum of $800,000.[624] While Carmelo did not rely upon this letter in support of an application for indemnity costs, he submitted it was relevant to the question of what costs orders should be made. Specifically, he contended that had the offer been accepted by Ted, the trial in the 2015 proceedings would have been avoided.
[624] Affidavit of David Lenhoff filed 13 December 2021 ‘DL3’.
519Ted acknowledged he was liable to pay Carmelo’s costs of the 2015 proceedings but contended Carmelo’s costs should be reduced for two reasons. First, Carmelo did not succeed on all of the issues at trial and should not receive the costs of the issues on which he was unsuccessful. Second, the costs of the trial should be apportioned equally between the actions on a 50/50 basis and the costs of the remaining items as agreed by the parties or determined by the taxing officer. In respect of the 2016 proceedings, Ted sought an order that Norman pay his costs of the proceedings. Consistent with the position taken in respect of the 2015 proceedings, Ted contended the costs of the trial in the 2016 proceedings should be apportioned equally between the matters.
520Norman did not dispute that he was liable to pay Ted’s costs of the 2016 proceedings but contended the appropriate apportionment of the trial was at least 55% and up to 65% as to the 2015 proceedings. This was on the basis that a greater number of witnesses were called in the 2015 proceedings and more of the time in both submissions and evidence at trial concerned the 2015 proceedings.
Disposition
521In considering the appropriate order as to costs, it is important to note that while the two proceedings were heard together, the plaintiffs, Carmelo and Norman, were represented by different counsel and solicitors and the primary defendant in both proceedings, Ted, was represented by the same counsel and solicitors.
522On 9 September 2019, an order was made that the 2015 proceedings and the 2016 proceedings be listed and heard together with the evidence in the 2016 proceedings standing as evidence in the 2015 proceedings. The 2015 proceedings was ordered to be the lead action.
523The effect of this order was that Ted did not have to give evidence in each of the proceedings, although he was cross-examined by both counsel for Carmelo and Norman. It also meant that all parties could rely on the evidence of the witnesses in the other proceedings. This had two primary consequences which are relevant to costs. First, all parties saved time and costs in relation to the evidence of witnesses. This was because witnesses only needed to give evidence in chief once and cross-examination of the witnesses was not duplicated. Second, each of the parties needed to participate in the whole of the trial in both proceedings. This primarily impacted Norman, who was not a defendant in the 2015 proceedings, and Carmelo, who was a defendant in the 2016 proceedings as a necessary party, but otherwise may not have fully participated in that trial. However, the effect of these orders was that there was a substantial saving of court time.
524At the trial, the case of each of the parties (including both opening and closing submissions) took approximately three days. That is, at trial the time was divided equally between the 2015 proceedings and the 2016 proceedings.
525Norman was unsuccessful in respect of his claim in its entirety. In the 2015 proceedings, Carmelo was unsuccessful on his claims based on a joint endeavour constructive trust. As noted at [448] of my reasons for decision, the evidence on this issue took up a significant portion of the time at trial. For this reason, it is my view that the costs orders in the 2015 proceedings need to reflect the position that Carmelo was not entirely successful on all of the issues at trial and that, at least in so far as this issue is concerned, this evidence concerned a discrete and severable issue.
526In my view, there are two other factors relevant to the exercise of my discretion. First, the joint endeavour constructive trust and the common intention constructive trust pleaded by Carmelo was of a significantly narrower scope than that pleaded by Norman. The additional evidence required to be led by the parties to address Carmelo’s claims was less significant than the evidence required on the broader claim made by Norman. Second, Carmelo was a defendant in the 2016 proceedings and, as a successful defendant, is entitled to seek an order for costs against Norman. The fact that he has chosen not to do so does not mean that Ted should pay the costs incurred by Carmelo in participating in the hearing concerning the 2016 proceedings.
527While I accept that a mathematical apportionment is arbitrary, to some extent, I consider that in the circumstances of this case, it is an appropriate manner in which to resolve the issue. This approach reflects the fact that it is difficult to separate with any precision the evidence and submissions of the parties on each discrete issue.
528Taking into account the legal principles that I have summarised above and the factual circumstances of this case including the matters referred to at [16] - [18], it is my view that Ted should pay 50% of Carmelo’s costs of the trial. In relation to the other costs of the 2015 proceedings, I do not consider there is any reason to depart from the usual order in respect of these costs. Many of the steps required in the 2015 proceedings were incurred prior to the order of 9 September 2019 that both proceedings be heard together. In respect of these costs, I consider it is more difficult to separate with any precision the costs of the issues on which Carmelo was not successful. For this reason, I consider that Ted should pay Carmelo’s costs of the 2015 proceedings, including reserved costs.
529In respect of the 2016 proceedings, I consider that similar orders for costs should be made. That is, I consider the appropriate order for costs is that Norman pay 50% of Ted’s costs of the trial and otherwise pay all of Ted’s costs of the 2016 proceedings, including reserved costs. As noted above at [18], the evidence that was led at trial by the parties to address the joint endeavour constructive trust pleaded by Norman was significant. While I accept that a mathematical apportionment is arbitrary, in my view as set out at [16], the time spent at trial dealing with the 2016 proceedings was approximately 50% of the total trial length.
Conclusion
530For the reasons set out above, it is my view that the appropriate costs orders in the 2015 proceedings are:
(a)The first defendant pay the plaintiff’s costs of the proceedings, including reserved costs, to be assessed if not agreed subject to the following.
(b)The first defendant pay 50% of the plaintiff’s costs of the trial.
531In the 2016 proceedings, the appropriate costs orders are that:
(a)The plaintiff pay the first defendant’s costs of the proceedings, including reserved costs, to be assessed if not agreed subject to the following.
(b)The plaintiff pay 50% of the first defendant’s costs of the trial.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HW
Associate to the Honourable Justice Hill31 JANUARY 2022
- AGLC
- Marchese v Marchese [2021] WASC 385
- Case
- [2021] WASC 385
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