Mazija v Prentice
[2018] FCCA 2491
•7 September 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MAZIJA v PRENTICE | [2018] FCCA 2491 |
| Catchwords: BANKRUPTCY – Application to set aside a Notice issued pursuant to s.139ZQ of the Bankruptcy Act 1966 (Cth) – written agreement for transfer of a half share in property allegedly executed in 1988 but reproduced in 2008 – cross-claim for orders that the title transfer in 2008 is void as against the Trustee – no agreement for transfer of title in 1988 – title transfer in 2008 is void as against the Trustee – declaration made. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.5, 120, 121, 139ZQ, 139ZR Conveyancing Act 1919 (NSW), s.66G |
| Cases cited: Re Parry; Ex Parte Salaman [1904] 1 KB 129 Halse v Norton [1997] FCA 673; (1997) 76 FCR 389 |
| Applicant: | MILAN MAZIJA |
| Respondent: | MAXWELL WILLIAM PRENTICE |
| File Number: | SYG 2444 of 2014 |
| Judgment of: | Judge Nicholls |
| Hearing dates: | 8 and 9 November 2017 |
| Date of Last Submission: | 27 November 2017 |
| Delivered at: | Sydney |
| Delivered on: | 7 September 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr R W Tregenza |
| Solicitors for the Applicant: | Watson Stafford Zipkis |
| Counsel for the Respondent: | Mr S Golledge |
| Solicitors for the Respondent: | Curwoods Lawyers |
DECLARATION
The transfer by Darija Mazija (the Bankrupt) of her half share in the land contained in Certificate of Title Folio Identifier 56/249956 being the land situated and known as 14 Chaucer Street, Wetherill Park in the State of New South Wales (the Property) to Milan Mazija (the Cross-Respondent) is void against Maxwell William Prentice (the Cross-Applicant) pursuant to ss.120 and 121 of the Bankruptcy Act 1966 (Cth).
ORDERS
The matter is listed for further directions at 10:00am on 15 October 2018 before Judge Nicholls at Court 8.3, 80 William Street Sydney.
The parties have liberty to apply for further directions on three clear days’ notice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2444 of 2014
| MILAN MAZIJA |
Applicant
And
| MAXWELL WILLIAM PRENTICE |
Respondent
REASONS FOR JUDGMENT
This is an application made on 1 September 2014 by Mr Milan Mazija seeking an order setting aside a Notice issued pursuant to s.139ZQ of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) (“the Notice”). That application also seeks an order for costs of the proceedings. The Notice was served on Mr Mazija on 8 May 2014.
The Notice is in the following terms:
“I, Mark Shanahan of Level 4, 201 Elizabeth Street, Sydney NSW 2000, as delegate of the Official Receiver, require you, in accordance with section 139ZQ of the Bankruptcy Act 1966 (Cth) (‘the Act’), being a person who has received money or property as a result of a transaction that is void against the trustee of the above administration, to pay to the trustee the sum of $293,500.00, being the current value of property received by you…”
The respondent, Mr Maxwell William Prentice (“the Trustee”), is the Trustee of the bankrupt estate of Mr Mazija’s estranged wife, Mrs Darija Mazija, who was declared bankrupt on 30 September 2011 following the Official Receiver’s acceptance of her debtor’s petition. The Trustee replaced the Official Trustee in Bankruptcy on 7 June 2012 (see the affidavit of Mr Prentice at [1]). The Trustee opposed the making of the orders sought by Mr Mazija, and on 8 October 2014, filed a Notice of Cross-Application which sought the following relief:
“1. A declaration that the transfer by the Bankrupt of her half share in the land contained in Certificate of Title Folio Identifier 56/249956 being the land situated and known as 14 Chaucer Street, Wetherill Park in the State of New South Wales (the Property) to the Cross-Respondent is void against the Cross-Applicant pursuant to ss 120 and 121 of the Bankruptcy Act 1966 (Cth) (the Act).
2. An order that the Cross-Respondent transfer to the Applicant, free from all encumbrances save those to which the interest was subject at the date of the transfer, the one half interest in the Property previously held by the Bankrupt.
3. A declaration that pursuant to s 139ZR of the Act the one half share in the Property referred to in paragraph 1 stands charged in favour of the Cross-Applicant to the extent of the amount of $293,500.
4. An order pursuant to s 139ZQ(8) of the Act that there by a money judgment against the Cross-Respondent for $293,500.
5. An order pursuant to s 66G of the Conveyancing Act 1919 (NSW) that Mr Maxwell William Prentice and Mr David Sampson be appointed trustees for sale of the property.
6. An order that Maxwell William Prentice and Mr David Sampson be entitled to possession of the property.
7. Further or in the alternative, a declaration that the Applicant has a power under s 139ZR(6) of the Act to sell the one half share of the land described in paragraph 1 above.
8. An order that the Cross-Respondent pay the costs of these proceedings.”
[Errors in original.]
The affidavit evidence before the Court is as follows (objections to the affidavit evidence and the disposition of those objections are contained in Schedule 1 to this judgment):
a)The affidavit of Milan Mazija, pensioner, made on 19 August 2014.
b)The affidavit of Milan Mazija, pensioner, made on 23 June 2015.
c)The affidavit of Maria Radas, [no occupation specified], made on 15 December 2014 (see further below at [7]).
d)The affidavit of Maria Radas, [no occupation specified], made on 23 June 2015.
e)The affidavit of Ivan Radas, [no occupation specified], made on 12 February 2015 (see further below at [7]).
f)The affidavit of Ivan Radas, [no occupation specified], made on 3 August 2015.
g)The affidavit of Maxwell William Prentice, registered trustee, made on 14 November 2014 and exhibit “MP1”.
The following exhibits were tendered by Mr Mazija in the proceedings:
a)Letter from the New South Wales Department of Health regarding Mr Radas (“AE1”).
b)The “original” of the reproduced written agreement (“AE2”).
c)St George Bank Limited Residential Loan Agreement dated 27 February 2009 (“AE3”).
d)The affidavit of Ivan Radas, [no occupation specified], made on 12 February 2015 (with attached “post-it” note) (“AE4”).
The following exhibits were tendered by the Trustee in the proceedings (objections to the evidence tendered and the disposition of those objections are contained at Schedule 1 to this judgment):
a)Email dated 18 June 2015 from Mr Prentice’s solicitor to Mr Mazija’s solicitor (“RE1”).
b)Letter dated 10 June 2015 from Mr Mazija’s solicitor to Mr Prentice’s solicitor (“RE2”).
c)A copy of the reproduced written agreement without Mr Mazija’s signature (“RE3”).
d)The affidavit of Maria Radas, [no occupation specified], made on 15 December 2014 (“RE4”).
e)Mortgage document dated 18 March 2009 (“RE5”).
f)St George Bank Limited credit card application dated 20 June 2007 (“RE6”).
g)Email dated 7 April 2008 from Mr Mazija’s solicitor to Simon Azar at Access Valuations with accompanying “File Note” dated 8 April 2008 regarding the transfer of the property on Chaucer Street, Wetherill Park New South Wales (“RE7”).
h)Letter dated 20 March 2008 to Access Valuations from Mr Mazija’s solicitor (“RE8”).
i)Email dated 4 March 2008 from Mr Mazija’s solicitor to Simon Azar at Access Valuations with accompanying “File Note” dated 4 March 2008 regarding the transfer of the Property (“RE9”).
j)A copy of the reproduced written agreement without Mr Mazija’s signature (“RE10”).
k)A “File Note” dated 12 May 2008 signed by Mrs Mazija indicating that she “rec’d letter re a/c for Ct case” (“RE11”).
l)A letter dated 28 April 2008 to Mrs Mazija from Ron Kramer Associates (“RE12”).
m)A “Retrospective Valuation” report by Access Valuations of the Property with a valuation date of 25 June 1988 (“RE13”).
n)A Centrelink Report (tab 9 of the folder containing documents obtained under subpoena) (“RE14”).
o)A Centrelink “archive document” (tab 10 of the folder containing documents obtained under subpoena) (“RE15”).
p)A Centrelink “archive document” (tab 11 of the folder containing documents obtained under subpoena) (“RE16”).
q)A bundle of Centrelink documents (tab 12 of the folder containing documents obtained under subpoena) (“RE17”).
r)A Centrelink “Rent Certificate” and “Application for Payment” form (“RE18”).
s)A letter dated 17 August 1998 to Mr and Mrs Mazija from Fairfield City Council (“RE19”).
t)A Trust Account Receipt dated 11 March 2008 from Mr Mazija’s solicitors (“RE20”).
u)An Australia and New Zealand Banking Group Limited (“ANZ”) “Low Rate” application for Mrs Mazija (undated) (“RE21”).
v)The affidavit of Ivan Radas, [no occupation specified], made on 12 February 2015 (“RE22”).
w)A consent (for two trustees) to be appointed under s.66G of the Conveyancing Act 1919 (NSW) (“RE23”).
x)An Australian Communications and Media Authority (“ACMA”) document (“RE24”).
The affidavit of Mrs Radas made on 15 December 2014 was not read into evidence by Mr Mazija. The Trustee sought to tender the affidavit at the hearing. There was no objection from Mr Mazija. It was marked as “RE4”. The affidavit of Mr Radas made on 12 February 2015 was also not read by Mr Mazija. The Trustee also sought to tender this affidavit at the final hearing. The tender was objected to by Mr Mazija on the basis that the affidavit was being tendered as credibility evidence. The tender was allowed on the basis that it was relevant to a fact in issue. It was marked as “RE22”.
Mr Mazija and Mrs Radas and were cross-examined on their affidavits. Mr Radas was unable to be cross-examined on his affidavits due to illness (see AE1).
Background
Mr Mazija’s former wife, Mrs Darija Mazija, instituted personal injury proceedings in the District Court of New South Wales against the South Western Sydney Area Health Service (“SWSAHS”) in May 2004, for an injury she alleged she had received while visiting Mr Mazija in hospital on 2 December 2003 (see the affidavit of Mr Prentice at [2]).
Mrs Mazija was unsuccessful at first instance, and on an application for leave to appeal. The application for leave to appeal was determined on 18 February 2008 (see the affidavit of Mr Prentice at [2] – [3] and exhibit “MP1” at pages 24 – 26).
The costs orders made against Mrs Mazija in both proceedings formed the basis of a bankruptcy notice which was subsequently served on her on 25 September 2011. Mrs Mazija then successfully petitioned for her own bankruptcy. She was declared bankrupt on 30 September 2011 (see the affidavit of Mr Prentice at [4] – [5]).
Prior to the above events, Mr and Mrs Mazija had acquired property in February 1978 with the folio identifier 56/249956 in Wetherill Park, New South Wales (“NSW”) as joint tenants (“the Property”). Mr Mazija claimed that he and Mrs Mazija separated some time in 1988 (see the affidavit of Mr Mazija made on 23 June 2015 at [1]).
A transfer regarding the Property was executed on 3 May 2008 and lodged with the NSW Land and Property Information (“LPI”) on 3 June 2008. The document transferred Mrs Mazija’s half share in the property to Mr Mazija (“the 2008 transfer document”). The 2008 transfer document indicates that a “nominal” stamp duty of $2.00 was paid, and also contains the following (see the affidavit of Mr Prentice at [9] and annexure “MP1” at page 69):
“(D) CONSIDERATION
The transferor acknowledges receipt of the consideration of nil pursuant to agreement dated 25 June 1988 and as regards
(E) ESTATE
the land specified above transfers an estate in fee simple”
The “transferor” on the 2008 transfer document was identified as both Milan Mazija and Darija Mazija. The “transferee” was identified as Milan Mazija.
The Purported 1988 Original Written Agreement
The main point of dispute between the parties is the efficacy of an agreement allegedly executed between Mr and Mrs Mazija on 25 June 1988 in which Mrs Mazija purported to transfer her half share of the Property to Mr Mazija (“the original written agreement”). The original written agreement was allegedly signed by Mr and Mrs Mazija and witnessed by Maria Radas and Ivan Radas, who are husband and wife, and friends of Mr and Mrs Mazija (see the affidavit of Mr Mazija made on 23 June 2015 at [3] – [4], the affidavit of Mrs Radas made on 23 June 2015 at [10] – [16] and the affidavit of Mr Radas made on 12 February 2015 at [8] – [13]).
Mr Mazija alleged that following the execution of the original written agreement, it was “misplaced” or “lost” (see the affidavit of Mr Mazija made on 23 June 2015 at [6] and see [9] of Mr Mazija’s written submissions). However, Mr Mazija alleged that the original written agreement was subsequently “reproduced” in 2008, and signed, by both Mr and Mrs Mazija, as well as by both Mr and Mrs Radas, who signed as witnesses (“the reproduced written agreement”).
The reproduced written agreement is contained at annexure “B” to the affidavit of Mr Mazija made on 23 June 2015 (see also annexure “A” to the affidavit of Mrs Radas made on 15 December 2014 and annexure “A” to the affidavit of Mr Radas made on 3 August 2015). Although unclear, it appears that the reproduced written agreement was signed some time in 2008 (see the affidavit of Mr Mazija made on 23 June 2015 at
[14] – [15], the affidavit of Mrs Radas made on 23 June 2015 at
[25] – [29] and the affidavit of Mr Radas made on 3 August 2015 at
[19] – [21]).
The reproduced written agreement contains the following:
“In the present of witneses I Mrs: Darija Mazija from No: 14 Chaucer Street Wetherill Park NSW 2161 transfering my half share of the house to Mr: Milan Mazija. In return for my share he will let me stay in the house free of charge (rent) for the sake of the children’s.
From today’s day he will take full responsibility for the repayment of the house.”
[Errors in original.]
Mr Mazija alleged that the consideration for the transfer of the Property was that following the execution of the original written agreement in 1988, he became solely responsible for the mortgage repayments on the Property until it was discharged (see the affidavit of Mr Mazija made on 19 August 2014 at [9]). Mr Mazija also alleged that he was responsible for other expenses such as council and water rates (see the affidavit of Mr Mazija made on 23 June 2015 at [7]), and that he paid for “improvements” to the Property (see the affidavit of Mr Mazija of 19 August 2014 at [10] and of 23 June 2015 at [12]).
Submissions
Mr Mazija submitted that he “need only establish some doubt about the [N]otice for it to be set aside” ([1] of Mr Mazija’s written submissions). Mr Mazija provided three bases upon which he alleged the Notice should be set aside.
First, although the registration of the 2008 transfer document occurred on 3 June 2008, Mr Mazija submitted that he has held the equitable interest in the Property since the execution of the original written agreement (in 1988). This “sale” was supported by consideration, being that Mr Mazija was responsible for the mortgage repayments on the Property ([10] of Mr Mazija’s written submissions). In the alternative, Mr Mazija submitted that if the Court does not accept that the (1988) original written agreement “was brought into existence”, then the (2008) reproduced written agreement should be taken to be evidence of an oral agreement made between Mr and Mrs Mazija in 1988 ([11] of Mr Mazija’s written submissions).
Second, Mr Mazija submitted that ss.120 and 121 of the Bankruptcy Act “avoid the transaction only to the extent necessary to satisfy the debts of the bankrupt and the costs of the bankruptcy” (citing Re Parry; Ex Parte Salaman [1904] 1 KB 129, Re MacDonald; Ex Parte McCullum [1920] 1 KB 205 and Re Last; Ex Parte Butterell (1994) 124 ALR 219). In this light, the Notice is “void” because it claims $293,500, which was “more than what was required to pay out the estate of the bankrupt” ([3] of Mr Mazija’s written submissions).
Third, Mr Mazija submitted that the Notice is also “invalid” because it is “insufficient” for the Trustee to “make out the essential requirement” (being the value of the Property) by an “appraisal” ([4] of Mr Mazija’s written submissions).
The Trustee submitted that the onus lies on Mr Mazija “to call the validity of the s139ZQ Notice into question” (citing Halse v Norton [1997] FCA 673; (1997) 76 FCR 389 (“Halse v Norton”) per Black CJ). Further, the reproduced written agreement was “created” in 2008, and not in 1988 as Mr Mazija alleged ([8] the Trustee’s written submissions).
The Trustee also submitted that the disposition of Mrs Mazija’s (the bankrupt’s) half share of the Property did not occur in 1988, but rather, it took place on or about 3 May 2008 (the date of execution of the 2008 transfer document, not the registration of it). In this light, The Trustee submitted that Mr Mazija will not be able to utilise s.120(3) of the Bankruptcy Act since the transfer took place “less than 4 years before the commencement of the bankruptcy”, and that at the time of the 2008 transfer, Mrs Mazija was not solvent ([6] – [7] of the Trustee’s written submissions).
Further, the Trustee submitted that the execution of the 2008 transfer document in May 2008 and the “judgment creditor’s demand for $110,000 in the same month proves” that the execution of the 2008 transfer document was to “defeat the claims of creditors” and is therefore void as against the Trustee under s.121 of the Bankruptcy Act ([9] of the Trustee’s written submissions).
Consideration
As set out above, Mr Mazija has asked the Court to set aside the Notice made pursuant to s.139ZQ of the Bankruptcy Act. The basis put by Mr Mazija for the setting aside of the Notice is that he asserted a transfer of the Property occurred from Mrs Mazija to Mr Mazija, outside the period of five years before Mrs Mazija became bankrupt (with reference to s.120(1)(a) of the Bankruptcy Act). He asserted that since 1988, he had held “the equitable title” in the land.
Direction to this Court as to how to approach the disposition of this dispute is to be relevantly found in Halse v Norton as follows (at 391):
“…The learned primary judge, Carr J, held that the trustee bore an onus of establishing either that the facts and circumstances alleged in the notice under s 139ZQ and relied upon at the hearing existed, or that other facts or circumstances existed that would bring the transaction, the subject of the notice, within ss 120 or 121 of the Act. He concluded that the trustee had not discharged that onus, and he declared that he was satisfied that Subdivision J did not apply to the transaction in question. Accordingly he made the order against which this appeal is brought setting aside the notice. His Honour’s judgment is now reported: Norton v Halse as Trustee of the Bankrupt Estate of Payne (1996) 137 ALR 593.
In deciding whether s 139ZS(1), by the use of the expression ‘if the Court ... is satisfied that this Subdivision does not apply to the person...’, imposes an onus on an applicant for an order setting aside the notice to prove that Subdivision J does not apply to that person, Carr J concluded that the answer did not depend exclusively upon the terms of s 139ZS, or upon the terms of Subdivision J as a whole, but required consideration of some of the provisions within Division 3. I agree, because those provisions determine the circumstances under which transactions are void against the trustee and it is voidness against the trustee under Division 3 that is an essential precondition to the valid exercise of the power to give a notice under s 139ZQ(1). Carr J observed that Subdivision J only applies where a person has received (in this case) property as a result of a transaction that is void against the trustee of a bankrupt. He described that as ‘a basic jurisdictional fact’: see 137 ALR 593 at 599.
As his Honour pointed out, referring to the decision of a Full Court of this court in Official Trustee in Bankruptcy v Mitchell [1992] FCA 521; (1992) 38 FCR 364 at 369-70, and the cases cited in that decision, a trustee has always carried the onus of proving the facts that make a transaction void and in instances in which the onus of proof is to lie elsewhere the Parliament has clearly so provided…
…
Since a notice is dependent for its validity upon a transaction being void under Division 3, and given that Subdivision J only applies if a person has received money or property as a result of a transaction that is void against the trustee under Division 3, it can truly be said that, the validity of the notice having been called into question, if the court is not satisfied about the only circumstances that will make Subdivision J apply to a person, then the court can be ‘satisfied that [the] Subdivision does not apply to the person on the basis of the alleged facts and circumstances set out in the notice ...’. This leaves the onus of proof to be determined, once there is sufficient reason to call the validity of the notice into question, according to the requirements of Division 3 itself, requirements that, as I have pointed out, vary according to the nature of the issue being considered.
…
It was argued that the use of the word ‘satisfies’ in the expression ‘if that entity satisfies the Court’ in s 139ZR(3) demonstrates that s 139ZS(1) was intended to impose the burden of proof on the applicant since the word ‘satisfied’ is used in s 139ZS(1) and it would be absurd if essentially the same word was used in two different senses within the one part of the Act. The contexts, however, are quite different. Section 139ZR deals with charges over property and s 139ZR(3) alters priorities where an associated entity of the bankrupt satisfies the Court of certain matters expressly provided for, including that the mortgage or other encumbrance is not void against the trustee under Division 3. A notice duly given under s 139ZQ will charge property with the liability to make payments as required by the notice and that charge will have priority over a mortgage or other encumbrances in favour of an associated entity as provided for by s 139ZR(2). Section 139ZR(3) displaces that result but only if the associated entity satisfies the Court of particular matters. Sections 139ZR and 139ZS are dealing with quite different subjects and the notion of satisfaction is used in a quite different context in each case. There is no absurdity or indeed any difficulty in the words having a different effect in the different contexts in which they are used.”
As noted above, Mr Mazija submitted that he need only establish “some doubt” about the Notice for it to be set aside. The Trustee submitted that there is still an onus on Mr Mazija to put sufficient evidence before the Court to, in effect, establish that degree of doubt.
It is in this context that the issue between the parties assumes shape and definition. That issue arises from the dispute between the parties as to whether the relevant transfer of the Property occurred in 1988 or in 2008.
In his submissions to the Court, Mr Mazija characterised the critical issue as being whether there was an agreement in 1988, for the transfer of Mrs Mazija’s interest in the Property to Mr Mazija, for consideration, and whether that agreement was “performed”.
To make good his assertion that there was such a transfer, Mr Mazija submitted that there was an agreement in 1988, and that there exists documentation to support that contention which is also supported by the evidence of three witnesses. That is, the reproduced written agreement “evidenced” Mrs Mazija’s disposition of her half interest in the Property to Mr Mazija in 1988.
Mr Mazija’s argument draws on his affidavit evidence which, in essence, is that in 1988, after he and his wife had “separated” as a married couple, Mrs Mazija proposed that in return for transferring her half interest in the Property to him he would pay for her and their children to return to Croatia and would also be responsible for the mortgage repayments. [Although see below at [48] – [58] for the inconsistent evidence in Mr Mazija’s affidavits.]
Mr Mazija’s evidence is that in 1988, Mrs Mazija produced a document setting out the arrangement. Both he and Mrs Mazija signed the document. Mr and Mrs Radas were present when he signed the document (the original written agreement) (Mr Mazija’s affidavit of 23 June 2015 at [3] – [4]).
Mrs Mazija then left for Croatia with the children. They returned a little while later and ultimately moved back in to the Property. Mr and Mrs Mazija continued to live separately at the house. This arrangement was facilitated by renovations to the house which were paid for by securing a loan. Mr Mazija lived in the renovated part of the Property which had a separate entrance (Mr Mazija’s affidavit of 23 June 2015 at [9] – [12]).
The original written agreement, on Mr Mazija’s evidence, was “misplaced” after it was signed (Mr Mazija’s affidavit of 23 June 2015 at [6]).
“One day” in 2008, Mr Mazija alleges that Mrs Mazija initiated a conversation with him. She asked him whether he had “ever” transferred the Property. He replied that he had not. Mrs Mazija then told him she could not “find the original paper for the transfer”, and that she would “write out a new document” and “call Maria and Ivan [Mrs and Mr Radas] to witness it” (the reproduced written agreement) (Mr Mazija’s affidavit of 23 June 2015 at [14]).
A copy of the reproduced written agreement document is at annexure “B” to Mr Mazija’s affidavit of 23 June 2015. It bears the date, “25/06/1988”. However, Mr Mazija’s affidavit evidence is that it was “not made on that date” (Mr Mazija’s affidavit of 23 June 2015 at [15]).
In essence, Mr Mazija’s affidavit evidence is that the transfer of the Property occurred in 1988, pursuant to the original written agreement, which was then lost. Mrs Mazija, on her initiative, then prepared a document, in 2008, purporting to be a “copy” or “reproduction” of the original written agreement (the reproduced written agreement).
Mr Mazija was cross-examined on his evidence. When asked about various parts of his affidavit, Mr Mazija’s evidence was that he could not remember the relevant events in relation to the signing of either the original written agreement or the reproduced written agreement. His evidence was that he had a poor memory.
At best for Mr Mazija, his evidence was, “I paid her [Mrs Mazija] out. I have signed this and have nothing to do with her anymore”.
In answer to the question of whether he had “a good recollection of events that happened 9 or 29 years ago”, Mr Mazija replied “[n]o, I can’t”. This exchange generally characterised Mr Mazija’s oral evidence.
It was also the case that Mr Mazija was unable to satisfactorily explain important parts of his affidavit evidence, particularly in relation to the circumstances surrounding the drafting and signing of the reproduced written agreement.
In essence, Mr Mazija’s evidence was that Mrs Mazija was responsible for drafting the reproduced written agreement. He knew nothing of what was in it, nor did he have any “conversation” about it with her. All that he knew was that they had separated, he had “paid her out for the share”, and she had transferred the Property to him. In context, his evidence was that the agreement to transfer the Property occurred in 1988, and in 2008, Mrs Mazija created a replacement document for the original written agreement that had been lost.
Mr Mazija also gave evidence that sometime in 1988, he was unable to give an exact date, he had some recollection that Mr and Mrs Radas came to the Property and Mrs Mazija explained to them the need to sign the reproduced written agreement as they were witnesses to the original written agreement.
Mr Mazija’s evidence was that he could not recall what was written in the original written agreement that he and Mrs Mazija had allegedly signed in 1988, and which was said to have been witnessed by Mr and Mrs Radas.
Importantly, Mr Mazija was not able to say what was written in the original written agreement. Nor was he able to say that the reproduced written agreement was “an accurate reproduction” of the original written agreement. It is of note in this context, that Mr Mazija's affidavit evidence purports to set out “words to the effect” of what was written in the (1988) original written agreement as follows (Mr Mazija’s affidavit of 23 June 2015 at [3]):
“I Milan Mazija will pay to Darija Mazija the sum of $18,000.00 and pay for the airfare to Croatia for her and our children and Darija will transfer to me her interest in the property at 14 Chaucer Street, Wetherill Park.”
Mr Mazija’s evidence in which he reported what was written in the (1988) original written agreement, is different in material particulars to what is written in the (2008) reproduced written agreement.
The reproduced written agreement (which is written from Mrs Mazija’s perspective), states that she transfers her half share in the Property to Mr Mazija in return for his letting her “stay in the house free of charge (rent) for the sake of the children” (Mr Mazija’s affidavit of 23 June 2015 at annexure “B”).
In his affidavit evidence, Mr Mazija stated that the (1988) original written agreement was that he would pay the sum of $18,000 to Mrs Mazija to pay for her and the children’s airfares to Croatia, in return for her transferring her half share in the Property to him (see above at [47]).
In relation to the circumstances surrounding the signing of the reproduced written agreement and its contents, the essence of Mr Mazija’s evidence is revealed with reference to the following evidence (which he gave before the Court), “I know nothing because I was not in (sic) talking terms with her [Mrs Mazija]. I know nothing”.
I find that on Mr Mazija’s own evidence, the (2008) reproduced written agreement was not a “reproduction” of the claimed (1988) original written agreement.
In his affidavit evidence, Mr Mazija stated that he had signed the reproduced written agreement (Mr Mazija’s affidavit of 23 June 2015 at [4]). At best, Mr Mazija’s evidence before the Court was that he signed it when Mr and Mrs Radas came to the Property to witness his and Mrs Mazija’s signatures. The copy of the reproduced written agreement at annexure “B” to his affidavit of 23 June 2015 bears his signature.
However, also produced in evidence by the Trustee was another copy of the reproduced written agreement (RE3). This document is handwritten. It is identical in all respects to the document that Mr Mazija annexed to his affidavit of 23 June 2015, except for one important particular. It does not bear his signature.
This document was given by Mr Mazija’s solicitors to the Trustee’s solicitors in response to a subpoena issued in these proceedings.
In his affidavit of 23 June 2015 (at [15]), Mr Mazija stated that the document was prepared by his wife “on or about 13 May 2008” and signed by him and Mr and Mrs Radas.
His evidence before the Court was that Mr and Mrs Radas were at his house when Mrs Mazija gave him the document to sign and he signed it.
Mr Mazija was unable to explain how the document produced on subpoena did not bear his signature, yet he claimed to have signed the document in the presence of Mr and Mrs Radas, and four signatures (those of him and his wife, plus those of the witnesses), did appear on the document annexed to his affidavit.
In submissions before the Court, Mr Mazija’s counsel submitted that, “there must be an appreciation of people such as Mr Mazija. He is not a man who wears a suit and works in an ivory tower …” In essence, I understood the submission to be that some latitude must be extended to Mr Mazija because he was unsophisticated, from a non-English speaking background, English was his second language, and therefore he was not “accustomed to dealing in paper and transactions in the established Anglo-American way”.
It must be said, this submission presupposes that persons from a
non-English speaking background with limited education can be excused from providing clear evidence about events in which they otherwise claimed to have had actual involvement.
The problems with Mr Mazija’s evidence, in my view, were not necessarily as a result of his non-English speaking background or lack of “sophistication”. Rather, the problem with his evidence was that he was unable to present a convincing account of relevant events.
It is of note that no evidence was given in these proceedings by Mrs Mazija (however, Mrs Mazija was present in Court at the final hearing – see further below). That, of itself, and in the circumstances, is not sufficient to dispose of Mr Mazija’s claims. However, given the state of his own evidence, and that of Mr and Mrs Radas (see below), the only person who could have possibly given the better account of relevant events did not give evidence.
Mrs Radas gave evidence in her affidavit of 15 December 2014 (at [10]) that “[o]ne day in 1988” she and her husband were visiting Mr and Mrs Mazija “at their home”. Her evidence was that Mrs Mazija said that she was going to Croatia with the children, Mr Mazija was “paying for the tickets” and “paying [her] money”, and that they needed “to put something in writing” so that Mr Mazija “will get the property”.
Her evidence was that Mrs Mazija produced a “piece of paper”, that Mr and Mrs Mazija signed it and then she and her husband signed it as witnesses. She annexed a “copy” of that document at annexure “A” to her affidavit of 15 December 2014. This is identical to the document at annexure “B” to Mr Mazija’s affidavit of 23 June 2015 (Mrs Radas’ affidavit of 15 December 2014 at [11] – [15] and annexure “A”).
In her affidavit of 23 June 2015, Mrs Radas, in essence, repeated the evidence above. However, she then also gave evidence about events that took place in 2008. She stated that Mrs Mazija asked her to witness a “replacement document” because Mr Mazija had never transferred the Property (the affidavit of Mrs Radas of 23 June 2015 at [25] – [29]).
Mrs Radas’ evidence was as follows (Mrs Radas’ affidavit of 23 June 2015 at [28] – [29]):
“[28] Some days later my husband and I visited Milan’s home. While we were there Darija presented a piece of paper and said:
Darija: ‘I lost the first one from 1988. I wrote it down again. Milan and I will sign it and you two can witness it.’
[29] Milan and Darija both signed the document and my husband and I signed as witnesses. I read the document before signing it. It was to the same effect as the original document which my husband and I witnessed in about 1988.”
In cross-examination, Mrs Radas confirmed that Mrs Mazija was present in Court, and had come out of the Court room and spoken to her before she was called to give evidence.
Mrs Radas was asked whether she had signed as a witness in other documents that Mrs Mazija had presented to her over the years of their friendship. Her ultimate answer was that she could not recall.
In relation to her affidavit of 15 December 2014, Mrs Radas gave oral evidence that she understood that that affidavit was evidence about the circumstances surrounding the (1988) original written agreement, and that she had attended at Mr Mazija’s solicitor’s office to sign the affidavit.
Mrs Radas confirmed that the document at annexure “A” to her affidavit of 15 December 2014, was not an “actual” copy of what was said to have been signed in 1988. She stated that while it was not the “actual date”, it was “the same context of the thing that we signed in – in ‘88”. She also gave oral evidence that she was unsure as to whether it was Mr or Mrs Mazija who had asked her to make her second affidavit of 23 June 2015.
Mrs Radas also gave evidence that she received a “call” from a “solicitor’s office” (in context, Mr Mazija’s solicitors), who explained to her that the “original” document had been “lost”, and that there was a need to “rectify” her affidavit, because the document annexed to her first affidavit was a “reproduction”.
An implication in Mrs Radas’ affidavit of 15 December 2014, that is, her first affidavit, is that the document at annexure “A” is a “copy” of the (1988) original written agreement and not a “reproduction” of it. Mrs Radas was unable to explain (contrary to this implication in her affidavit of 15 December 2014 at [13]) why she was asked, and why she needed to “rectify” her affidavit of 15 December 2014. At best her evidence was she was asked to sign another affidavit when “somebody” told her it was a “reproduction”, and not a “copy” of the (1988) original written agreement. Mrs Radas’ initial lack of understanding about an important characteristic regarding the document in respect of which she was giving evidence, adds to the view that her evidence should be treated with caution. I note also that Mrs Radas’ affidavit of 15 December 2014 (at [13]) refers to the document as being dated “25 June 1998” and not “25 June 1988”.
It is important to note that the sequence of events arising from Mr Mazija’s account of relevant events (and apparently supported by Mrs Radas). This is that a document was signed in 1988, it was lost, and a “reproduction” was signed in 2008. Therefore, by the time Mrs Radas came to make her first affidavit, she would have known, on the state of her other evidence, that she had signed a “reproduction” of the claimed original written agreement. Why she made no reference to this in her first affidavit was never explained.
It was also Mrs Radas’ evidence that she could not recall the exact day in 1988 that she attended the Mazija’s home to sign the document.
Mrs Radas’ evidence before the Court was that she “knew” there had been “a letter done in 1988”. However, she could not remember the date. This was different to her evidence in her affidavit of 15 December 2014 (at [10]), which was that it was “[o]ne day in 1988”. She could not say that she witnessed the signing of the (1988) original written agreement on the date appearing on the “reproduction” annexed to her affidavit of 15 December 2014 at annexure “A” (that is, 25 June 1988).
She also gave oral evidence that she “knew roughly” what was stated in the original written agreement. However, when asked to recount what was in that document, without looking at annexure “A” to her affidavit of 15 December 2014, she said that it was to the effect that “Milan” [Mr Mazija] would pay “her” [Mrs Mazija], Mrs Mazija was then going to return to Croatia with the children and that she would have “nothing to do with the house or anything else anymore”.
As is plain, there is nothing in the document at annexure “A” to her affidavit of 15 December 2014 that says that that Mr Mazija would “pay” Mrs Mazija so that she could return to Croatia. To the contrary, the document states that the transfer of the Property was in response to Mrs Mazija being allowed to stay in the house “free of charge (rent)”.
It was put to Mrs Radas in cross examination that she was asked to make a second affidavit because of a particular difficulty with the document at annexure “A” to her affidavit of 15 December 2014.
That difficulty is as follows. In annexure “A” to her affidavit of 15 December 2014 (the reproduced written agreement), Mrs Radas wrote her telephone number below her signature, name and address.
That telephone number, said to be on a “copy” of the original written agreement, made in 1988, had eight digits. It was put to Mrs Radas that she was asked to make a second affidavit to overcome the difficulty presented in circumstances where telephone numbers in Sydney in 1988 did not contain eight digits.
Mrs Radas gave no satisfactory explanation for this. She merely insisted that the “first” document (the original written agreement), did exist.
Mrs Radas also gave evidence that she had a clear recollection of the day in 2008 when she signed the document at annexure “A” to her first affidavit. That is, the reproduced written agreement.
However, she was unable to recall the date on which this occurred. Her evidence was that she was not asked to come and sign the document (in 2008) rather, “we [in context, herself and Mr Radas] just came over to see them”. They stayed for a “couple of hours”.
It is difficult to accept Mrs Radas’ evidence that she and Mr Radas came over for a social visit with Mr and Mrs Mazija, in light of Mr Mazija’s evidence that he had “nothing to do” with his wife, certainly by 2008.
Mrs Radas’ evidence stands in contrast to Mr Mazija’s evidence given before the Court, that in 2008 (whatever the date) on the occasion of signing the reproduced written agreement, Mr Mazija stayed “outside” talking to Mr Radas while Mrs Radas went inside to talk to his wife.
Importantly, Mrs Radas’ evidence before the Court, that she and Mr Radas “just came over” to visit Mr and Mrs Mazija, without being asked, was in stark contrast to what is stated at [25] of her affidavit of 23 June 2015, where she recounted the following conversation:
“Darija [Mrs Mazija]: ‘You remember the document you witnessed before I went back to Croatia with the kids’
Me [Mrs Radas]: ‘Yes’
Darija [Mrs Mazija]: ‘Milan never transferred the property. He now wants to finish this off. Can you and Ivan come over and witness a replacement document which I have prepared.
Me [Mrs Radas]: ‘Of course’.”
Later in cross examination, after the contradiction in her evidence was put to her, Mrs Radas said, “she [Mrs Mazija] probably asked me to come over”.
Mrs Radas also gave evidence that she saw both Mr and Mrs Mazija sign the reproduced written agreement (in 2008) which had been written out before she arrived. Her evidence was that all four people present (Mr Radas, Mr and Mrs Mazija, and herself) were sitting around a table, Mr and Mrs Mazija signed the document, then she and her husband signed the document. Her evidence was that all four signatures were placed on the document at that time. Again, that leaves open the question of the 2008 document obtained on subpoena by the Trustee and produced to the Court, which omits Mr Mazija’s signature from it (RE3). It also contradicts Mr Mazija’s evidence that he stayed “outside”.
Mrs Radas’ evidence must also be viewed in light of the following. She was asked during cross-examination whether she had ever been asked by Mr or Mrs Mazija to witness their signatures on any other document. She variously replied that she did not know, or was not sure.
Mrs Radas was also shown a mortgage document dated 18 March 2009 (RE5). She confirmed that her signature appeared on page two of that document. She then gave evidence that she could not recall what occurred in March 2009 (the date of the mortgage document).
She was unable to explain why she said she had such a clear recollection of the events of 1988, but not those in 2009. This raises further doubts about the reliability of her evidence.
There was no dispute between the parties that Mr and Mrs Mazija acquired, as joint tenants, the legal and beneficial interest in the Property in 1978. The dispute arises as to what Mr Mazija now asserts occurred in 1988.
As noted above, Mr Mazija submitted that in 1988, Mrs Mazija transferred her half share in the Property to him.
There are two broad elements in support of this proposition. One, the document signed and witnessed in 2008, but dated 1988 (the reproduced written agreement), was evidence of that agreement.
Two, if that is not accepted by the Court, then there is still the evidence of Mr Mazija and Mr and Mrs Radas that an agreement to transfer the Property was made between Mr and Mrs Mazija in 1988.
There is no documentary evidence before the Court from which it could reasonably be said that any such agreement was entered into in 1988.
The document said to have been made in 2008 (the reproduced written agreement), for the reasons set out below, and drawing on the evidence set out above, cannot be said to be a “reproduction” of any document created in 1988. I find it is not a reproduction, or copy, of any document made in 1988 purporting to evidence the transfer of Mrs Mazija’s share of the Property to Mr Mazija.
As set out above, that still leaves the question of whether, notwithstanding the absence of any such written agreement, an agreement to transfer the real property was put in place in 1988. For the reasons that follow, I reject that proposition.
First, Mr Mazija was unable to satisfactorily say what the terms of any such agreement were. The difficulty with his evidence is set out above. The unexplained differences in the various accounts of what the claimed agreement in 1988 involved, are such that it is not reasonably possible to find, on Mr Mazija’s evidence, that any agreement was made. That is, it is not possible to find on Mr Mazija’s evidence that Mrs Mazija transferred any beneficial interest in the Property to him in 1988.
Second, Mrs Mazija’s conduct after 1988, and before the transfer of the Property in 2008, is inconsistent with the proposition that she transferred her interest in the Property in 1988.
As set out above, although present in Court on at least one of the days of the hearing of this matter, Mrs Mazija gave no evidence. Her conduct in relation to the following therefore remained unexplained (see further below).
Third, the Trustee referred to a number of documents received on subpoena from Mr Mazija’s solicitors. These are as follows.
One, in 2007, Mrs Mazija made an application for a credit card with the St George Bank (“the credit card application”) (RE6). Under the heading of “assets” Mrs Mazija listed, “main residence”. A reference to the Property also appears in the document.
The Trustee submitted that if Mrs Mazija had disposed of her interest in the Property in 1988, she would not have listed the Property as one of her assets in this document in 2007. There was no dispute that Mrs Mazija had made this credit card application. However, some care must be taken. While the other assets listed in the document have some monetary value indicated against them, there is no monetary amount indicated as against “main residence”.
As set out above, Mrs Mazija gave no evidence in this proceeding. If any other reasonable explanation was available, it was not put before the Court. In this circumstance therefore, what remains is that it is one thing for Mrs Mazija to put her residential address on the application form. It is another to list under the heading of “assets”, her “main residence”. The clear statement on this credit card application is that Mrs Mazija was asserting that one of her assets was her “main residence”. This is in favour of the Trustee’s position in these proceedings.
Two, Mr Mazija’s solicitors, in an email sent on 7 April 2008 concerning a valuation of the Property (at the time just prior to the 2008 transfer of Mrs Mazija’s interest in the Property), describe their client as Darija Mazija, that is, “Mrs”, not “Mr”, Mazija (RE2).
The Trustee submitted that Mrs Mazija giving instructions for the transfer of the Property at that time, is not consistent with the claim now that an agreement had been reached in 1988 for the transfer of her interest in the same Property to Mr Mazija.
Again, some care must be taken here. It may equally be argued that in 2008 Mrs Mazija took action to “formalise” an agreement that had already been made in 1988. However, the lack of evidence from Mrs Mazija in these proceedings and the unsatisfactory nature of the evidence from Mr Mazija and Mrs Radas, leaves the balance of the disposition of the question of what occurred in 1988 in favour of the Trustee’s position that no transfer of the Property occurred in 1988 (see further below).
Three, the same lawyers sent a letter dated 20 March 2008 to the manager of a valuation company in which they stated that they acted for Mrs Mazija and described Mrs Mazija as one of the “joint owners” of the Property (RE8). This, of itself, again, support’s the Trustee’s position.
In this letter (of 20 March 2008), the solicitors referred to an agreement to transfer the Property made on 25 June 1988, and sought a valuation of the Property as at that date.
It is to be noted that the letter also stated that, “apart from the extension disclosed in the plan [enclosed with the letter] no other changes to the property have been made since June 1988”.
The Trustee submitted that this calls into question one aspect of Mr Mazija’s evidence, which, as with the other factors set out above (such as his inability to recall relevant events), goes to the issue of his credibility generally, but more importantly, the reliability of his evidence.
The Trustee submitted that in his evidence Mr Mazija gave at least three different “versions” of when renovations were carried out to the house on the Property. These were said to be in 1999, 2001, and in 2009 after he became the sole owner of the Property.
The Trustee submitted that given the date of the letter (20 March 2008), the reference to renovations in the letter could not be a reference to any renovations in 2009.
I cannot see that in his evidence Mr Mazija made any specific reference to renovations to the Property in 2001 or 2009. He did make reference to renovations to the Property in 1999 and to seeking a loan for renovations to the Property in 2007 (Mr Mazija’s affidavit of 19 August 2014 at [10] and 23 June 2015 at [12]). However, this is not evidence that the renovations took place at that time. What remains is that this is not inconsistent with what was stated in the solicitor’s letter of 20 March 2008. I cannot see that this argument assists the Trustee.
Four, and further, there is the approval given by Fairfield City Council, upon application by both Mr and Mrs Mazija, to carry out building works on the Property. This approval was given on 17 August 1998 (RE19). That is, the approval was given after the date of the purported transfer in 1988. That is, a transfer said to have been for the purpose (according to the reproduced written agreement), to enable Mrs Mazija to return to Croatia.
The following emerges. Mrs Mazija’s conduct in applying for council approval was consistent with someone who retained some equitable or legal interest in the Property. It is inconsistent with the assertion that she gave up her interest earlier in 1988. This does assist the Trustee’s position.
Five, Mrs Mazija had instituted proceedings in the District Court of New South Wales in 2004, for personal injury, against the SWSAHS (Mr Prentice’s affidavit at [2] and above at [10]). These proceedings were unsuccessful. She was ordered to pay the defendant’s costs. She was then refused leave to appeal to the New South Wales Supreme Court of Appeal.
The Trustee’s submission was that after the dismissal of the Supreme Court proceedings on 18 February 2008, Mrs Mazija embarked on what the Trustee described as a “flurry of activity” directed to achieving the result of transferring the legal title of the Property wholly to Mr Mazija.
That activity included the discharge of the mortgage on the Property, instructions to lawyers to transfer her interest in the Property, and obtaining a valuation of the Property.
Six, a file note and letter obtained from Mr Mazija’s solicitors, dated 12 May 2008, concerning costs orders made against Mrs Mazija (RE11). The Trustee submitted that this should be seen, in context, as part of Mrs Mazija’s initiative in 2008 to effect the transfer of her interest in the Property to Mr Mazija.
Seven, a valuation report in relation to the Property, done on 14 April 2008, but with a retrospective valuation as at 25 June 1988 (RE13). The Trustee referred to page 4 of this document where the valuer states, “[t]he property was extended and partly renovated in about the early 1990s”.
In short, the Trustee’s submission was that this evidence highlighted the unreliable nature of Mr Mazija’s evidence, which can also be seen in light of his own evidence that he has poor memory of the relevant events.
In my view, the valuation report is generally consistent with Mr Mazija’s other evidence that there had been renovations sometime in the 1990s, that is, before 2008. Given the lack of clarity in the source of this evidence, I do not rely on, or accept, this part of the Trustee’s submission.
Eight, the Trustee referred to a report in a Centrelink document (in relation to Mrs Mazija) that sets out information given to Centrelink by Mrs Mazija in 2002 (RE14). The Trustee referred to references in that document that indicate Mr and Mrs Mazija were living under one roof, but had separated, in context, in the late 1990s.
This is consistent with the evidence that renovations were made around that time to accommodate Mr and Mrs Mazija’s living arrangements (that is, separately at the Property), as at that time.
The Trustee’s submission was that while this is evidence that Mr and Mrs Mazija were living separately, it does not necessarily mean that there had been an agreement approximately 10 years earlier (in 1988), for Mrs Mazija to transfer her share of the Property to Mr Mazija. In the circumstances set out above, I accept that submission.
Nine, in another Centrelink document (RE15) is a record of information given by Mrs Mazija to Centrelink in April 2001. The Trustee referred to that part of the document that reports that the Property was subject to a mortgage, relevantly, in “joint names”. Mrs Mazija is reported as saying that “nobody wants to move out” of the Property. Further, that Mrs Mazija’s share of the mortgage repayments was “$200.00 per month”. Again, the submission was that this was not conduct by a person who had no interest in the Property. I agree with that submission.
Ten, the Trustee referred to a further Centrelink document (RE17) containing information provided by Mrs Mazija to Centrelink and created in 2010 (see the page marked page “11 of 11” of RE17). That is, it was information given after the 2008 transfer of the Property. Of relevance here is that Mrs Mazija said she had separated, in context, from Mr Mazija, on 23 February 2001 (see the page marked “2 of 11” of RE17), and that (as at 2010) she did not own her own home, that she paid for “board and lodgings”, telephone rental (the telephone at the Property was in her name) and electricity.
The Trustee compared this to a Centrelink document stamped 3 May 2005 (“the 2005 Centrelink document”) (that is, before the 2008 transfer) (see the document marked as page “854” in RE17). In this document Mrs Mazija stated that she was not paying “board and lodging” (see question seven on the page marked as “852” of RE17). Importantly, in answer to the question, “do you own your own home”, Mrs Mazija, in 2005, answered in 2005, “yes”, and that it was still being paid off. She stated she contributed $250.00 per month for this purpose.
This was also in contrast to Mr Mazija’s evidence that he alone had made the mortgage repayments since 1988.
As for Mrs Mazija, what emerges is that in documents dated prior to 2008, she provided information to expressly indicate that she had an interest, or a share, in the Property. After 2008, her information to Centrelink indicated that she did not. Further, her answers in the
pre-2008 context contradict Mr Mazija’s evidence as to the ownership of the Property, and stand against Mrs Radas’ evidence that the transfer of the Property occurred in 1988.
Eleven, the Trustee referred to another Centrelink document headed “Rent Certificate” and dated 10 September 2009 (RE18). In this document (dated after the 2008 transfer of the Property), Mrs Mazija stated that she was paying rent at the rate of $150.00 per fortnight (see at question 24). This is to be contrasted with what she told Centrelink in the pre-2008 document that she was not paying rent at that time (see above at [130]).
Twelve, the Trustee also referred to a document from the ANZ Bank (RE21). It is an application for a loan made by Mrs Mazija. The document does not contain a date on which it was completed. However, as the Trustee submitted, it can be reasonably inferred that this was sometime in February 2008, given what otherwise appears in the document. That is, again, before the 2008 transfer. This is because, on the evidence, Mr and Mrs Mazija moved into the house on the Property in February 1978 and Mrs Mazija, in the ANZ document, is reported as stating that she has lived at that address for “360 months”. That is, 360 months, or 30 years since February 1978 (being 2008).
This document indicates under the heading of “Financial Details”, the “Value of Property” as “$500,000.00”, the “Amount Owing” as “$40,000.00” and the “Monthly Repayments” as “$300.00”. In context, and again, given the reference in the document to the Property, and no reference to any other property, what was being asserted was that Mrs Mazija had, as part of her “financial details”, an interest in the Property.
Both parties made submissions in relation to Mrs Mazija. It is clear that the reproduced written agreement purporting to be a copy of an agreement said to have been made in 1988 between Mr and Mrs Mazija, and witnessed by Mr and Mrs Radas, was drafted by Mrs Mazija. The terms of the document itself, as that is in evidence before the Court, make that clear.
The Trustee submitted that Mrs Mazija was, on the evidence, present in Court for at least some of the hearing and spoke to a witness, Mrs Radas, during the hearing (outside of the Court room). Given that she was one of the parties to the claimed agreement to transfer the Property, and given, on the evidence, her role in the relevant events, it would be expected of Mr Mazija to have called Mrs Mazija, in spite of their marital difficulties, to have given evidence to explain the difficulties set out above. This expectation is strengthened given the state of the documentary evidence that the Trustee tendered. This again assists the Trustee’s position.
With reference to Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 (“Jones v Dunkel”), Mr Mazija submitted that the Trustee in these proceedings, that is, the respondent, is the trustee of Mrs Mazija’s estate. In that light, he had available to him the provisions of the Bankruptcy Act, and could have examined Mrs Mazija in that context, under oath, and obtained evidence to be used in these proceedings. He did not do so. In that circumstance, the Court should not draw any adverse inference from Mr Mazija not calling Mrs Mazija to give evidence.
Although the Trustee referred to Jones v Dunkel, I did not ultimately understand him to rely on it.
It is the case that Mr Mazija’s explanation, that the Trustee could have elicited the evidence from Mrs Mazija is not, in my view, a reasonable explanation for Mr Mazija himself not calling Mrs Mazija (Fabre v Arenales (1992) 27 NSWLR 437).
However, it is not clear that an inference can be drawn in the current case that Mrs Mazija would have given evidence that would not have assisted Mr Mazija.
The approach I have taken in the current case is that no adverse inference is to be drawn from Mr Mazija’s election not to call Mrs Mazija as a witness. That then leaves the evidence actually before the Court in these proceedings, which to a large part, it must be said, speaks for itself.
On that evidence, and as set out above, I do not accept that the reproduced written agreement is a “copy”, or a “reproduction” of any written agreement made in 1988, notwithstanding that “25/06/1988” is the date appearing on the document itself.
In particular, as is set out above, what is stated in the document is variously inconsistent with evidence given by Mr Mazija and Mr and Mrs Radas.
On the evidence, I also do not accept that there was otherwise an agreement in 1988 to transfer Mrs Mazija’s interest in the property to Mr Mazija at that time.
It was Mr Mazija’s own evidence, and as demonstrated when he gave evidence about relevant events before the Court, that his recollection of the details of the relevant events was non-existent, or at best, can be described as poor.
Other than the documents at annexure “B” to Mr Mazija’s affidavit of 23 June 2015, and annexure “A” to Mrs Radas’ affidavit of 15 December 2014 (the reproduced written agreement), there was no other documentary evidence before the Court offered by Mr Mazija to support the proposition that there was such an agreement in 1988.
As set out above, a significant part of the documentary evidence relied on by the Trustee provides the basis for a reasonable inference to be drawn that up until 2008, Mrs Mazija considered herself to have an interest in the Property, and the assertion that Mrs Mazija had no interest in the Property after 1988 must be rejected.
As is also set out above, Mr Mazija’s evidence was affected by such a level of inconsistency, that even if poor memory was the reason for such inconsistency, it still leads to the conclusion that the evidence is not reliable as to the claimed events of 1988.
What must also be said is that the state of the evidence of Mr Mazija and Mr and Mrs Radas as to the events of 2008, raises serious concerns about the efficacy of that evidence.
Initially all of their evidence, given by way of affidavit, was that the relevant document before the Court was a “copy” of the document they signed in 1988. For the reasons set out above, that proposition is to be rejected.
As it subsequently emerged, their evidence was that it was an attempt to “recreate” the document they said was signed in 1988. Given Mr Mazija’s and Mrs Radas’ difficulties in remembering the terms of the document they said they had signed in 1988, I do not accept that the “recreation” or “reproduction” in 2008 could be said to be any such recreation or reproduction.
This difficulty for Mr Mazija is compounded by the two affidavits (both in evidence) made by Mr Radas. In his affidavit of 12 February 2015 (RE22), Mr Radas gives evidence about the circumstances of the signing of the claimed original written agreement in 1988.
His evidence is that he and Mrs Radas attended at Mr and Mrs Mazija’s house and they were presented with “a piece of paper with writing on it”. Importantly, he says he did not read it (Mr Radas’ affidavit of 12 February 2015 at [9]).
In his affidavit of 3 August 2015 (at [19] – [22]), Mr Radas gave evidence that in 2008, he and Mrs Radas again attended at the home of Mr and Mrs Mazija. His evidence is that “they” (in context, Mr and Mrs Mazija), wanted them to come over and witness a “replacement” document because the “original document” had been lost.
Mr Radas repeated his evidence in his second affidavit made on 3 August 2015 (at [9]), that he did not read the document that he says was made in 1988 (the original written agreement). Mr Radas gave no evidence that he knew from his own observation that the document he signed in 2008 was a “replacement” or “a copy” of the document in 1988. His evidence is that Mrs Mazija told him it was a copy of the document signed in 1988 (Mr Radas’ affidavit of 3 August 2015 at [20]).
There is no evidence from Mr Radas that he read the document he signed in 2008 (the reproduced written agreement). He relied on Mrs Mazija’s statement to him to say that the document at annexure “A” to his affidavit of 12 February 2015 was a “copy” of the document he signed in 2008 (the reproduced written agreement). In turn, he also says this is a “copy” of the document signed in 1988 (the original written agreement). A document which he says, on his own evidence, he did not read.
The Trustee also specifically raised the matter of the making of two affidavits each by Mr and Mrs Radas which give evidence of the events of 1988 and 2008.
The “first” of each of their affidavits (Mrs Radas’ affidavit of 15 December 2014 and Mr Radas’ affidavit of 12 February 2015), gave evidence of the signing of the original written agreement in 1988. Nothing was said about the events of 2008. The “second” of each of their affidavits (Mrs Radas’ affidavit of 23 June 2015 and Mr Radas’ affidavit of 3 August 2015), then raised the matter of the “reproduction” or “copy” they signed in 2008 (the reproduced written agreement).
Their “first” affidavits both annexed the document they say was made in 1988, which they witnessed. Mr Radas referred to it as the document dated “25 June 1998” (Mr Radas’ affidavit of 12 February 2015 at [10]). But given what is annexed to his second affidavit of 3 August 2015 (and his evidence in that affidavit) and the evidence of Mrs Radas, this is a mistaken reference to “1988”.
I pause to note that Mr Radas also in his affidavit (of 12 February 2015) stated that (at [11]):
“At the time of signing the document there was no typing or reference to New South Wales duty. The signatures which appear as witnesses on the annexure are those of myself and my husband.”
Plainly, the reference should have been to his “wife”.
There was no explanation proffered to the Court as to the need for Mr and Mrs Radas to provide two affidavits each, of relevant events relating to the document they say they witnessed in 1988. There was no explanation as to why the “reproduction” in 2008 was not referred to in their first affidavits.
The Trustee submitted that the second affidavits were “necessary” to seek to explain obvious difficulties with the document that was annexed to their first affidavits, but for reasons set out above, could not have been a “copy” (or “photocopy”) of any actual document signed in 1988.
In that context, the version of the 2008 document in evidence before the Court, that does not contain Mr Mazija’s signature, and obtained from Mr Mazija’s solicitors (RE3), when compared with the version that does contain his signature, provides, in light of the other difficulties with Mr and Mrs Radas’ (and for that matter Mr Mazija’s) evidence, the basis to find that the document drafted in 2008 was prepared in 2008 by Mrs Mazija as part of her action to remove the Property from her available assets to pay her debts.
In all therefore, I find that there was no written agreement in 1988 to transfer Mrs Mazija’s share of the Property to Mr Mazija. Nor was there any oral agreement to that effect in 1988.
On the evidence, the transfer, that is, the disposition of Mrs Mazija’s share in the Property, took place on 3 May 2008. The transfer was lodged with the land title office of NSW in June 2008.
Mrs Mazija’s bankruptcy commenced on 30 September 2011 (see Mr Prentice’s affidavit at [1]). Therefore, the transfer of the Property was made less than five years before the act of bankruptcy. There is no satisfactory evidence that the transfer was made for consideration. Therefore, in light of s.120(1) of the Bankruptcy Act, this means that the transfer is void against the Trustee (with reference to both s.120(1)(a) and (b) of the Bankruptcy Act).
Nor do the exemptions set out in s.120(2) of the Bankruptcy Act apply to the circumstances of this case.
As to s.120(3) of the Bankruptcy Act, this also, in the circumstances, is not available to assist Mr Mazija. The transfer from Mrs Mazija to Mr Mazija was a transfer to a “related entity” (as that term is defined in s.5 of the Bankruptcy Act). The transfer took place less than four years before the commencement of the bankruptcy (s.120(3)(a)(i) of the Bankruptcy Act), and there is no evidence that Mrs Mazija was solvent (s.120(3)(a)(ii) of the Bankruptcy Act).
As set out above, as at 18 February 2008, Mrs Mazija would have known she was liable for costs arising from the unsuccessful proceedings in the NSW District Court (see above at [10]). She was further advised by the relevant insurer of the claim for costs in the amount of $110,000 on 8 May 2008 (see Mr Prentice’s affidavit at [8] and pages 65 to 66 of exhibit “MP1”).
The transfer document for the 2008 transfer of the Property was prepared on 3 May 2008 and lodged for stamping on 3 June 2008 (see Mr Prentice’s affidavit at [9]).
In the circumstances, I agree with the Trustee that due to the temporal coincidence of these events, being the costs claim against Mrs Mazija and the 2008 transfer of the Property, with the bankruptcy of Mrs Mazija, and the circumstances regarding the “reproduction” or “copy” of the document in 2008 said to be of a document made in 1988, it is reasonable to find that the transfer was effected to defeat the creditor’s claims in relation to Mrs Mazija’s estate. It is therefore void as against the Trustee and therefore void pursuant to s.121 of the Bankruptcy Act.
In his application to the Court, Mr Mazija asked that the Notice be set aside pursuant to s.139ZQ of the Bankruptcy Act.
The Trustee submitted that given “technicalities with the 137ZQ notice” the Court should set it aside. [Given that assertion, and in the circumstances, it is not necessary to further explore these “technicalities”.]
The Trustee submitted however, that if the Court found that the transfer was void against the Trustee pursuant to s.120 of the Bankruptcy Act, then the Court should consider making the declarations and orders sought by the trustee in his cross-claim (see above at [3]).
Conclusion
Given what is set out above, it is appropriate to make the declaration at [1] of the cross-claim (“the Declaration”). The application to the Court made by Mr Mazija should otherwise be dismissed.
In submissions before the Court, the parties appeared to agree that if the Court were minded to make the Declaration above, then any consequent orders for the sale of the Property should be stayed to see if the parties could agree to some strategy that would not involve the sale of the Property.
In this light, it is appropriate to hear from the parties as to any appropriate form of orders to give effect to any such agreement. I will also hear the parties on costs.
I certify that the preceding one hundred and seventy-eight (178) paragraphs are a true copy of the reasons for judgment of Judge Nicholls
Associate:
Date: 7 September 2018
Schedule 1
| Affidavit/Document | Part | Objection | Disposition |
| Affidavit of Maxwell William Prentice made on 14 November 2014 | [8] and exhibit MPI at pp.65 - 66 | Assertion | Evidence allowed |
| [9], third sentence | Assertion without basis stated | The word “matrimonial” not read | |
| [10] | Opinion, relevance | First two sentences to be read subject to a direction pursuant to s.136 of the Evidence Act 1996 (Cth) (“the EA”) | |
| [12] | Relevance | Evidence not pressed | |
| [13], last sentence | Relevance | To be read subject to a direction pursuant to s.136 of the EA | |
| Affidavit of Milan Mazija made on 23 June 2015 | [2] | Hearsay | To be read subject to a direction pursuant to s.136 of the EA |
| [8], as to the words attributed to Alison | Hearsay | To be read subject to a direction pursuant to s.136 of the EA | |
| [9] and [14], as to the words attributed to Mrs Mazija | Hearsay | To be read subject to a direction pursuant to s.136 of the EA | |
| [16], second sentence | Relevance of the deponent’s belief | Evidence not pressed | |
| [19], second sentence | Form | Objection not pressed | |
| Affidavit of Milan Mazija made on 19 August 2014 | [4], second and third sentences | Form, submission | To be read as a submission |
| [6] – [8] | Form, submission, legal conclusion | To be read as a submission | |
| [9], second sentence | Form, relevance | Evidence allowed | |
| [10], fourth and fifth sentences | Form, submission | To be read as a submission | |
| Affidavit of Ivan Radas made on 3 August 2015 | Whole | Deponent not available for cross examination | Evidence allowed |
| Affidavit of Maria Radas made on 23 June 2015 | [9], [10], [18], [20], [23], [28], as to the words attributed to Mrs Mazija | Hearsay | To be read subject to a direction pursuant to s.136 of the EA |
| Centrelink Report (tab 9 of the folder containing documents obtained under subpoena) | N/A | Unable to determine whether it is a business record | Evidence allowed |
| Centrelink Archive Document (tab 10 of the folder containing documents obtained under subpoena) | N/A | Unable to determine whether it is a business record | Evidence allowed |
| Centrelink Archive Document (tab 11 of the folder containing documents obtained under subpoena) | N/A | Unable to determine whether it is a business record | Evidence allowed |
| Affidavit of Ivan Radas of 12 February 2015 | N/A | s.101A of the EA (see above at [7]) | Evidence allowed |
| Australian Communications and Media Authority document | N/A | s.102 of the EA | Evidence allowed |
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