Pupo v Pupo; Pupo v Pupo - [2015] NSWSC 1633

Supreme Court

New South Wales

Medium Neutral Citation: Pupo v Pupo; Pupo v Pupo [2015] NSWSC 1633
Hearing dates: 7 April 2015; 6, 7, 8, 12 October 2015
Date of orders: 06 November 2015
Decision date: 06 November 2015
Jurisdiction: Equity
Before: Hallen J
Decision:
In proceedings 2014/264225:

1.    Order that the whole of the Statement of Claim be dismissed.
2.    The parties are to make submissions on what costs orders should be made in the proceedings.
3. Direct that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10), and Practice Note No SC Gen 18 (Para 26).

In proceedings 2014/228570:
1.    Order that the whole of the proceedings be dismissed.
2.    Order that the Plaintiffs’ costs as agreed, in the sum of $4,000, be paid out of the proceeds of sale of the Leichhardt property.
3.    Note the agreement of the parties in Paragraphs 3, 4, 5, 6, 7 and 8 of Short Minutes of Order dated 12 October 2015 signed by the legal representative of each of the parties.
4. Direct that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10), and Practice Note No SC Gen 18 (Para 26).
Catchwords:
EQUITY – Trusts – Whether resulting or constructive trust – First plaintiff, the father of the Defendants alleged to have provided part of purchase price of property in name of three of his sons

EQUITY – Whether equitable lien securing alleged contributions

Court not satisfied that any contribution to purchase price made by first Plaintiff – Even if contribution made, court not satisfied of the amount of the contribution
PROPERTY (RELATIONSHIPS) ACT – Claims for adjustments of property pursuant to Property (Relationships) Act 1984 (NSW) – Only one property the subject of claim – Whether parties living together in a close personal relationship – Parents and son – Parents and son and daughter in law – Whether living together – Respective contributions of parties – Where Plaintiffs’ financial and non-financial contributions unremarkable – Where Plaintiffs obtain countervailing benefits from relationship, financial and otherwise, including occupation of part of the subject property registered without payment of rent or occupation fee – Holistic value judgment – Not just and equitable to make any adjustment order
Legislation Cited: Conveyancing Act 1919 (NSW)
Evidence Act 1995 (NSW)
Fair Trading Act 1987 (NSW)
Property (Relationships) Act 1984 (NSW)
Real Property Act 1900 (NSW)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Ballard v Multiplex [2012] NSWSC 426
Bibby Financial Services Australia Pty Limited v Sharma [2014] NSWCA 37
Blatch v Archer (1744) 1 Cowp 63; 98 ER 969
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599
Harbour Port Consulting v NSW Maritime [2011] NSWSC 813
Harkness v Harkness [2011] NSWSC 1421
Howlett v Neilson [2005] NSWCA 149
Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550
Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben’s of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep)
Nominal Defendant v Smith [2015] NSWCA 339
Nguyen v Cosmopolitan Homes [2008] NSWCA 246
Onassis v Vergottis [1968] 2 Lloyd’s Rep 403
P and S Pupo (t/as Pupo Builders and Decorators v Builders Licensing Board [1996] NSWCA 416
Pennimpede v Pennimpede [2009] NSWSC 85
Pennimpede v Pennimpede [2010] NSWCA 121
Pupo v Builders Licensing Board [1996] NSWCA 440
Seltsam Pty Ltd v McNeill [2006] NSWSCA 158
Trosse v Howard [2009] NSWCA 346
Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56
Watson v Foxman (1995) 49 NSWLR 315
Texts Cited: P McClellan, “Who Is Telling the Truth? Psychology, Common Sense and the Law” (2006) 80 ALJ 655
Category: Principal judgment
Parties:
Ferdinando Pupo (first Plaintiff in 2014/228570)
Rosemaria Pupo (second Plaintiff in 2014/228570)
Giuseppe Pupo (Defendant in 2014/228570)
Saverio Pupo (first Plaintiff in 2014/264225)
Rosetta Pupo (second Plaintiff in 2014/264225)
Sammy Ferdinando Pupo (first Defendant in 2014/264225)
Rosemaria Pupo (second Defendant in 2014/264225)
Giuseppe Pupo (third Defendant in 2014/264225)
Representation:
Counsel:
Mr G Carolan (Plaintiffs in 2014/228570; first and second Defendants in 2014/264225)
Mr R Brender (Defendant in 2014/228570; third Defendant in 2014/264225)
Mr G Gemmell (Plaintiffs in 2014/264225)
Solicitors:
Kazi Portolesi Lawyers (Plaintiffs in 2014/228570; first and second Defendants in 2014/264225)
Bransgroves Lawyers (Defendant in 2014/228570; third Defendant in 2014/264225)
Pelosi & Associates (Plaintiffs in 2014/264225)

File Number(s): 2014/228570; 2014/264225

Judgment

Introduction

HIS HONOUR: These reasons relate to two different proceedings, which I shall describe, hereafter, as “the trust proceedings” and “the s 66G proceedings”, only the former of which requires determination, as the parties in the latter proceedings have reached agreement on what is to occur in relation to sale of the real estate the subject of dispute.
Both proceedings involve only members of the Pupo family, and as is obvious from the existence, and continuation to judgment, of the litigation, the family is deeply divided. (Throughout these reasons, I shall refer to the family members, where necessary, after introduction, by the name he, or she, is known within the family. This is for convenience and to avoid confusion, and I hope it will not be thought discourteous.)
It is, undoubtedly, regrettable that the relationships between family members have broken down. However, in this case, I am not required to, and shall not, make any judgment on the state of interpersonal relationships between the various members of the family. Nor am I required to, and shall not, make any finding as to the causes, or consequences to the family, of the breakdown of those relationships. Nor is it necessary to attribute any blame, to one, or more, of the family members for the matters proceeding to a contested hearing. The only proper course available to the court is to decide the case on its merits.
I should mention that although the matter commenced on 7 April 2015, I was unable to continue with the hearing because I was unwell on the 2 days following. On the first day of the hearing, however, all of the affidavits were read, objections dealt with, and the cross-examination of the first Plaintiff commenced, but was not concluded.
The hearing resumed on 6 October 2015, for 4 more days (as it was clear that it would not conclude in 2 days, the original estimate of the hearing being 3 days). It can be seen from the length of the hearing that it was a keenly contested action.

The Claims

In the trust proceedings, which were commenced in September 2014, Saverio Pupo and Rosetta Pupo are the first and second Plaintiffs. They are the parents of the first and third Defendants, Sammy Ferdinando Pupo (“Sam”) and Giuseppe Pupo, and the parents-in-law of the second Defendant, Rosemaria Pupo (“Rosa”), who is the wife of the first Defendant. There are two other sons of the Plaintiffs, namely Francesco (“Frank”), and Antonio, but each has played no part, other than as a witness called by one party, or the other, in the proceedings. The only other family member who will be referred to in this forensic family drama is Francesco Pupo, who is Saverio’s brother, and the uncle of Sam, Giuseppe, Frank and Antonio. He, also, played no part, other than as a witness called by Sam and Rosa, in the trust proceedings. Importantly, no claim was made by Saverio, for example, that Francesco had been, wrongly, paid more than his proper share of the proceeds of sale of the real estate when it was sold in 1990.
All of the family members were cross-examined. Based upon the evidence, it will be seen that Saverio, Rosetta, Giuseppe and Antonio appear to be in one camp, whilst the other family members to whom reference has been made are in the other.
The three Defendants in the trust proceedings are the current registered proprietors in unequal shares, of the land situated at, and known as, xxx Day Street, Leichhardt (“the Leichhardt property”). Sam and Rosa are registered as joint tenants of a two third share, and Giuseppe is registered as proprietor of a one third share, as tenant in common, with them: Ex. 3D1/1.
Importantly, Frank who was one of the registered proprietors between about 1990 and 2000, but who sold his one third interest to Sam and Rosa, in circumstances to which I shall come, was not named as a party to the proceedings by Saverio and no claim is made against him.
In broad summary, Saverio seeks a declaration that the Defendants hold part of their interest in the Leichhardt property on constructive trust or, alternatively, on a resulting trust, for him. He seeks an order that the Defendants pay to him an amount equivalent to his equitable interest therein. Alternatively, he asserts an equitable lien, as an unpaid vendor, over the Leichhardt property. There is no claim by Saverio and Rosetta based on proprietary estoppel.
In the trust proceedings, in addition, Saverio and Rosetta seek orders, pursuant to s 20(1) of the Property (Relationships) Act 1984 (NSW), on the basis of what they say were their contributions to the acquisition, conservation, or improvement, of the Leichhardt property, and to the welfare of Sam, Rosa and their children. They also seek their costs of the whole of the proceedings.
Sam and Rosa deny that Saverio is entitled to any of the equitable relief sought. They deny that they lived in a domestic relationship (“a close personal relationship”) with Saverio and Rosetta, so as to entitle them to the relief claimed under the Property (Relationships) Act. Furthermore, Sam and Rosa assert that they were not living together with Saverio and Rosetta, which is a requirement that must be satisfied for the purposes of section 5(1)(b) of the Act. They submitted that since their marriage, they have lived independent, and separate, lives from Saverio and Rosetta albeit that they all live in the home on the Leichhardt property, which property “is effectively configured as a duplex or as two home units. Each has a separate secure entry, separate kitchen and bathroom facilities”.
Sam and Rosa also submit that neither provided the other with domestic support and personal care.
When I raised the question of the costs of the trust proceedings, during submissions, counsel all agreed that they wished to argue the question of how the burden of costs should be borne at the time I delivered the reasons for judgment. Counsel for Sam and Rosa stated that there may be a document that would be relevant to the issue of costs. I shall say nothing about costs until they have had the opportunity to hear the orders I shall make and to make submissions on costs, if that becomes necessary.
In the s 66G proceedings, which were commenced in August 2014, relief is sought under s 66G of the Conveyancing Act 1919 (NSW). Sam and Rosa are the Plaintiffs, and Giuseppe is the Defendant. At the commencement of the hearing, the court was asked “not to make any orders… until after [the court delivered] reasons in the proceedings that are to be heard because when we know what shares everyone has there may be some ability to reach an agreement. In principle, there is no argument that the [Leichhardt] property will be sold one way or the other but we may not need formal 66G orders potentially”: T1.48-T2.03.
On the second day of the hearing (6 October 2015), the court was also informed that the parties “just want an opportunity to potentially avoid a trustee by having some agreement once we know the outcome of the trust case”: T71.37-T71.38.
On the final day of the hearing, the parties provided the court with signed Short Minutes of Order which will enable me to dismiss the s 66G proceedings, and to make an order that Sam’s and Rosa’s costs, assessed and agreed at $4,000, should be paid out of the proceeds of sale of the Leichhardt property. Also, I shall note the agreement of the parties as to how the sale of the Leichhardt property is to occur, and when sold, how the net proceeds of sale are to be distributed. (Obviously, the percentage interest of Sam, Rosa and Giuseppe, and if appropriate, Saverio, will be determined by the result of the trust proceedings.)
This is not to say that the s 66G proceedings are without relevance. Some of the affidavits filed in those proceedings were read as part of the case of one party, or the other, in the trust proceedings. (I made an order, by consent of the parties, on the first day of the hearing, that the evidence in one proceedings be evidence in the other: T11.01-T11.04.)
I pause to mention, before proceeding with a narrative of the facts, that there is evidence that the contents of the Statement of Claim, the affidavit verifying, as well as the contents of each of his, and her, affidavits, respectively, were translated for both Saverio and Rosetta, prior to each swearing to the truth of its contents. As well, the oral evidence of each was translated from the Italian language into the English language on the first day of the hearing, by Ms A Angelone, an interpreter accredited by the National Accreditation Authority for Translators and Interpreters Ltd, and on the second day, by Mr M Santi, also an interpreter accredited by the National Accreditation Authority for Translators and Interpreters Ltd. (I shall return to this topic later in these reasons.)

Narrative of Facts

There are a number of facts that are not in dispute, or not seriously in dispute. Where possible, and for reasons to which I shall come, I have identified the copy of the contemporaneous documents that have assisted in determining certain events. The narrative represents the Court’s findings in relation to these background facts.
Saverio was born in Italy in May 1936. Rosetta was born in Italy in April 1943. They were married in January 1962 and remain married to each other. They migrated to Australia in about 1967.
Francesco was born in Italy in about 1942. He migrated to Australia in July 1966.
Giuseppe was born, in Italy, in April 1963; Frank was born, in Italy, in April 1966; Sam was born, in Australia, in April 1970; and Antonio was born, in Australia, in May 1976. At the time of the relevant events relating to the sale of the Leichhardt property in 1990, Giuseppe was 27 years old, Frank was 24, Sam was 20, and Antonio was 14.
In about September 1972, Saverio and Francesco purchased the Leichhardt property as tenants in common in equal shares. At the time of its purchase, there was no building constructed on the land, the building previously constructed having been destroyed by fire. Over the next few years, Saverio and Francesco, together, built a two-storey, 5 bedroom, home on the Leichhardt property, and in about 1975, Saverio, Rosetta, their four children, with Francesco, all moved in.
Giuseppe described the home built on the land as being “configured such that there are two separate home units inside – one upstairs and the other downstairs”, described as the “the upstairs area” and “the downstairs area”. It was never formally subdivided. Each area has its own lockable front door. The two areas share a common entrance from the street, a foyer and a stairwell, but each is otherwise secure and separate from the other. (This accords with Sam’s and Rosa’s description of it in the submissions filed on their behalf.)
Initially, Francesco lived, primarily, in the downstairs area, (although when that occurred and for how long is unclear) whilst Saverio, Rosetta and their children, lived in the upstairs area.
Although there is no mortgage shown as having been registered on the title to the Leichhardt property at the time of its purchase, Francesco and Saverio acknowledged that they had borrowed money to enable its purchase, which borrowing was secured by mortgage. They contributed equally to the purchase price, and, at least until about the late 1970’s, to the repayment of the mortgage debt.
From about 1972, Saverio and Francesco owned, and operated, a building business. There was some dispute about when the business ceased its operations but I am satisfied that it was in about 1977, and not in 1990, as was asserted in Saverio’s affidavit. (In this regard, I note that in Paragraph 15 of the Statement of Claim, it was asserted that “[f]rom about 1977 the business ceased to operate but throughout the 1980’s [Saverio and Francesco] were involved in litigation and other matters relating to the business”, whereas in Paragraph 14 of his first affidavit, Saverio asserts that they owned and operated a building business “from about 1970 until about 1990”. In his affidavit in reply, he stated that “we did shut down the business in about 1977”.
Rosetta did not work outside the home. However, it would appear, from Rosa’s evidence, that, from at least about 2002, she was a registered family day care educator and she operated a family day care business from the Leichhardt property. She was able to take care of 5 children, under the age of 5 years, for five days a week. (Sam gave evidence that he could recollect that Rosetta “worked looking after children at our house” but the period during which she did so was not disclosed.)
Their four children lived in the Leichhardt property, with Saverio and Rosetta, until about the mid-1990’s. Sam and Antonio have continued to live there, albeit that Sam lived in the upstairs area, and Antonio has lived in the downstairs area with Saverio and Rosetta.
Before 1990, none of the children paid any rent, or otherwise contributed, financially, to the outgoings on the Leichhardt property.
Following the closure of the building business, Saverio only “had casual work”, one or two days a week, initially as a plasterer, and then as a labourer doing demolition work and cleaning bricks. He suffered a number of injuries working as a labourer and as a result, was placed on “light duties”, had time off work and received compensation benefits. For most of the period between about 1977 and 1990, however, he was in receipt of unemployment benefits.
Following the closure of the building business, Francesco returned to regular work, with the employer for which he had worked between about 1966 and 1970. He continued with that employer until 1986, when he went to work elsewhere. Whilst he was working, he suffered a work injury in about 1987. He then received workers compensation payments.
Although there was a dispute about when he moved out of the Leichhardt property, I am satisfied that Francesco moved out in about 1988 and also that he did not ever return to live there. In this regard, I prefer his evidence to the evidence of Saverio and Giuseppe, each of whom asserts that Francesco returned, on occasions, to the Leichhardt property. (Rosetta said nothing in her affidavits about when Francesco moved out of the Leichhardt property.)
Also, I note that Antonio, who was called in the Plaintiffs’ case, accepted that Francesco had left the Leichhardt property in 1988, and that he had not been a party to the conversations to which reference will be made: T126.01-T126.11.
When Francesco moved from the Leichhardt property, he went to live in Kemps Creek, a suburb of Sydney. Between about the middle of 1988 and 1990, Francesco did not speak to Saverio, or to any members of Saverio’s family. (In this regard, for reasons to which I shall come, again, I prefer Francesco’s evidence to that of any other witness who suggests the contrary.)
A copy of the Certificate of Title in relation to the Leichhardt property does not reveal any encumbrances before one, being a registered mortgage, dated 12 May 1986 (a copy of which is Ex. 1D6), in which Saverio and Francesco are named as the mortgagors, and Siber Children’s Wear Pty Limited is named as the mortgagee. The amount borrowed, as disclosed in the Mortgage, was $65,000. The term of the mortgage was 3 years.

Also in evidence, is a copy of three registered caveats, in each of which Istituto Nazionale Di Credito per Il Lavoro Italiano All’Estero (“ICLE”) is shown as the caveator. In the first caveat (to which I shall refer as “Caveat X794”), which is dated 18 August 1988 (Ex. 1D7), which was registered on 24 August 1988, the estate or interest claimed is “as equitable mortgagee of the fee simple in the said land” by virtue of an agreement in writing dated 16 June 1988, “[t]he proprietors have agreed to grant to the Caveator a mortgage of the fee simple in the land in consideration of a loan or other financial accommodation granted, or to be granted, by the Caveator to, or at the request of, the proprietors”. The second caveat (to which I shall refer as “Caveat Y020”), which was registered on 30 November 1988, is, essentially in the same terms as the first, but is dated 23 November 1988 (Ex. 1D10), and refers to an agreement in writing dated 17 November 1988. The third caveat (to which I shall refer as “Caveat Y244”), which was registered on 20 March 1989, is, essentially, in the same terms as the first, but is dated 3 March 1989 (Ex. 1D12), and refers to an agreement in writing dated 24 February 1989. The Lodging Party identified in the caveat was Gordon & Johnstone Solicitors. The solicitor who signed the Statutory Declaration on the Caveat was Mr K L Brazier.
On the third day of the hearing, counsel for Giuseppe tendered a copy of a fourth caveat (to which I shall refer as “Caveat X129”), dated 29 September 1987 (Ex. 3D2), which was registered on 8 October 1987. The Caveator is identified as ICLE, and the estate or interest claimed is “as equitable mortgagee of the interest in the said land of Francesco Pupo pursuant to agreement in writing between him and the Caveator dated 16th September, 1987”.
The written agreement identified in each of the caveats lodged on behalf of ICLE is not in evidence.
There were three copy Withdrawals of Caveat tendered. One was dated 10 November 1988 (Ex. 1D9), and another was dated 3 March 1989 (Ex. 1D11), both of which were registered on 20 March 1989, pursuant to which the caveats referred to above were withdrawn. The first identifies Caveat X129 and Caveat X794 (and another caveat not in evidence) as the caveats to be withdrawn, whilst the second identifies Caveat Y020 as the caveat to be withdrawn.
The third Withdrawal of Caveat (a copy of which was Annexure “E” to Saverio’s first affidavit), which was registered on 17 August 1990, identifies Caveat Y244 as the caveat to be withdrawn. The solicitor who signed the document is identified as Mr K L Brazier (although the firm Gordon & Johnstone is not identified on the Withdrawal of Caveat). The caveator is identified as “Istituto Nazionale di Credito per Il Lavoro Italiano All’Estero (ICLE)”.
(I digress to identify the contents of an affidavit sworn by Mr B Kazi, the solicitor with the carriage of the matter on behalf of Sam and Rosa, which was read on the second day of the hearing, in which he stated that ICLE had been deregistered on 29 December 1992. Annexed to the affidavit was a copy letter, dated 29 September 2014, addressed to the firm of solicitors which had lodged caveat Y244, and the response from that firm, being a letter dated 30 September 2014, which stated that “[a]ny files from 1989 have long since been destroyed”. (Otherwise, the copy letter in response referred to matters stated in the caveat and the withdrawal of the caveat on 12 August 1990.)
Also annexed to Mr Kazi’s affidavit, was a copy of a subpoena, addressed to, and served upon, the Commonwealth Bank, which prompted the response (in a copy letter dated 2 March 2015) that “[w]e have conducted a search of the bank records and have been unable to locate any documents and statements for account number xxx103 in the names of Giuseppe Pupo and Francesco Pupo and Ferdinando [Sam] Pupo”.)
Returning, then, to the narrative, there is also a copy of a registered Mortgage dated 10 November 1988 (Ex. 1D8), which was registered on 20 March 1989, in which Saverio and Francesco are named as the mortgagors, and Permanent Trustee Australia Limited on behalf of Howard Finance Mortgage Trust, is named as the mortgagee. The amount borrowed, as disclosed on this Mortgage, was $130,000. The term of the Mortgage was 2 years.
The Mortgage secured the loan amount over the whole of the Leichhardt property and both Saverio and Francesco were liable to repay the mortgage debt: T3.03-T3.12.
Although I shall return to Saverio’s evidence about this topic, Saverio and Rosetta asserted in the Statement of Claim (Paragraph 16), that in about 1990, Saverio and Francesco “were facing financial difficulties due to, inter alia, litigation relating to their business” and that Saverio “was concerned that the [Leichhardt] property would be repossessed by the bank”.
(Whilst there is an issue raised by Sam and Rosa about the cause of the financial difficulties, and also whether Francesco was burdened by those financial difficulties, Sam does not dispute (in Paragraph 5(a) of his Defence) that Saverio “in or about 1990 was concerned that the [Leichhardt] property would be repossessed by the mortgagee”.) (Rosa, unsurprisingly, bearing in mind the date of her introduction to the Pupo family, asserted in her defence that she did not know and was unable to admit the contents of Paragraph 16 of the Statement of Claim (Paragraph 1 of her Defence).)
Saverio gave evidence (at T43.42-T43.45) that “I got that money to pay other mortgages for the mortgage that I paid. I had a mortgage and then that mortgage would run out, and then I would get money to pay that mortgage and then I would pick another mortgage”.
The financial difficulties being faced by Saverio must have been obvious, whatever their cause, because it is not disputed that discussions took place between Saverio and his sons, and between a person said to be representing Saverio (Pasquale Polistena) and Francesco, about how a forced sale of the Leichhardt property might be avoided.
There is evidence that, in about 1989, Frank gave Saverio $15,000 to pay arrears of mortgage instalments and to prevent the execution of a writ of possession.
By way of further example of these financial difficulties, in September 1989, Saverio required $9,500 to repay “arrears of interest and balance to October payments” due to the mortgagee. Sam, Giuseppe and Frank raised the money to give to Saverio. Frank gave evidence that each paid an equal amount. There is a copy receipt for this amount in evidence.
(Although Saverio, at one stage, disputed the evidence that these two amounts were paid (T98.11-T98.25) in order to prevent the sale of the Leichhardt property, I am satisfied that both amounts were given to him as asserted by Sam and Frank. My conclusion, in relation to the first amount is confirmed by Rosetta’s evidence that Saverio said that he had received $15,000 from Frank “to pay some creditors”: T115.47-T115.50.)
On 12 July 1990, by a Contract for the sale of the Leichhardt property (a copy of which Contract is not in evidence), Saverio and Francesco, agreed to sell the Leichhardt property to Sam, Giuseppe and Frank, as tenants in common in equal shares. The Transfer, a copy of which is in evidence (Ex. 3D1/2), reveals that the sale price was $291,000.
Although there was some dispute by counsel for Saverio and Rosetta about whether one firm of solicitors acted for both Saverio and Francesco on the sale of the Leichhardt property, I am satisfied that Emery Berg & Co, Lawyers, and in particular, Mr N Sarajinsky, a solicitor then at the firm, acted for them both, rather than just acting for Francesco (as seemed to be asserted by counsel for Saverio). I am so satisfied because, firstly, Saverio appeared to accept that he was represented by Mr Sarajinsky (whilst not recollecting his name); secondly, the signature of each of Saverio, and of Francesco, which appears on the copy Transfer of the Leichhardt property, was witnessed by Mr Sarajinsky; thirdly, because Ex. 1D14, which includes a copy of the Original Trust Ledger of the firm, is headed “Pupo S - Mtg xxx Day St”; and finally, because the copy Trust Ledger discloses credits into, and payments made out of, the Trust Account, which are unlikely to have occurred without instructions having been given.
Indeed, Mr Sarajinsky appears to have been the attesting witness to Francesco’s signature on the Deed dated 16 July 1990, to which reference will be made, and is identified as the solicitor who signed the Statutory Declaration in the caveat lodged on Francesco’s behalf to which reference will also be made. Emery Berg & Co is identified as the firm of solicitors that lodged the caveat, and the firm’s address is shown on the caveat as the “Address in New South Wales for services of notices on Caveator”.
A copy document, dated 14 June 1990, sent from Realty Leichhardt Pty Ltd, Real Estate and Business Agents, Auctioneers, Insurance and Finance Consultants, to Saverio and Rosetta, reveals that the Leichhardt property “is worth between $275,000 and $300,000” (Ex. 3D1/3).
(There is also evidence in Ex. 1D4, that a valuation fee of $280 was incurred by the solicitors for Sam, Giuseppe and Frank to a firm of valuers, which firm had carried out a valuation “for stamp duty purposes”. A copy of the valuation was not in evidence.)
A copy letter, dated 12 July 1990 (Ex. 1D2), from Messrs Leslie Caplan & Grunstein, the firm of solicitors which acted for Sam, Giuseppe and Frank, addressed to them, confirmed the formal exchange of Contracts; that the stamp duty payable on the Contract was $8,765.50, and on the Mortgage was $225.50; and also made a request for a bank cheque, in the amount of $8,901, payable to the Department of Finance within 10 days.
The copy “Customer’s Record of Bank Cheque”, which forms part of Ex. 1D4, reveals that the total amount of stamp duty, being $8,901, was paid on 24 July 1990, by bank cheque drawn directly in favour of the Department of Finance. The copy letter, dated 1 August 1990, addressed to Sam, Giuseppe and Frank, from their solicitors, confirms that it was paid by them directly.
There was a copy of a written Direction, dated 26 July 1990 (Ex. 1D3), to Messrs Leslie Caplan & Grunstein, signed by Sam, Giuseppe and Frank, that confirms there were insufficient funds available from the sale, for arrears of council and water rates to be paid; that there was to be no adjustment of council and water rates at settlement; and that “we will make arrangements between ourselves as to payment of such outstanding rates”.
The Discharge of Mortgage, subsequently registered on title to the Leichhardt property in August 1990, reveals that the amount received by the mortgagee “in full satisfaction and discharge of the mortgage” was $165,878.58 (Ex. 3D15).
The copy Trust account ledger of Emery Berg & Co, which forms part of Ex. 1D14, discloses receipt of the amount of $29,100 (being the deposit) on 12 July 1990; the investment of that amount with ANZ Trustee & Executors on 19 July 1990; and the receipt of $29,213.34 from ANZ Trustee & Executors on 30 July 1990. (It was accepted that the amount received was the amount of the deposit and interest.)
The balance of the purchase price of the Leichhardt property appears to have been funded as follows. Sam, Giuseppe and Frank borrowed $190,000 from the Commonwealth Savings Bank. The repayment of the loan was to be $2,620 per month for 25 years (based on a then current rate of 16.25 per cent per annum). A loan establishment fee of $1,220 applied to the approval (Ex. 3D14).
In addition, Francesco lent $70,000 to Sam, Giuseppe and Frank. Initially, the term of the loan was 2 years, repayable at any time without penalty, with “interest to be levied after twelve (12) months from the date of settlement at 16.5% by monthly instalments (to be increased to 17.5% in the event of late payment”), and to be secured by unregistered second mortgage. However, by Deed, dated 16 July 1990 between them, the terms of the loan were varied, so that the loan was repayable at any time within 5 years, without penalty, with no interest to be charged by the lender to the borrowers during the currency of the loan, and to be secured by unregistered second mortgage supported by caveat over the Leichhardt property (Ex. 3D1/9-10).
(Saverio was not a party to the Deed entered into between Francesco, Sam, Giuseppe and Frank.)
These matters are confirmed in a settlement letter dated 1 August 1990 from their solicitors to Sam, Giuseppe and Frank. The letter also reveals that a cash amount of $1,900 had been received into the solicitors’ trust account. Attached to the letter was a Memorandum of Costs and Disbursements, disclosing legal costs of $2,037 “BUT SAY $1,800” and disbursements totalling $981.80, of which $500 had been paid. The balance due was said to be $2,281.80: Ex. 1D4.
A subsequent letter from their solicitors, dated 14 August 1990, confirmed that an additional amount of $990 was received from Sam, Giuseppe and Frank, and that interest of $56.67, being their share of the interest earned on the deposit, had been received, and credited, to the account, leaving a balance due of $1,235.13: Ex. 1D5.
In a letter dated 10 August 1990, from Emery Berg & Co, to Sam, Giuseppe and Frank, they were informed that “steps are now being taken for the Caveat to be registered”.
In fact, the caveat was registered on 3 September 1990. The estate or interest claimed was “[a]n interest as Second Mortgagee under a Mortgage securing the payment of an amount of $70,000”. It bears the signatures of Sam, Giuseppe and Frank as the registered proprietors who consented to the caveat by Francesco.
There is a significant dispute about how the proceeds of sale were distributed. There is no doubt that $165,878.58 was paid to the registered mortgagee, that $26,514.31 was paid to I Finance Corporation Limited, and that $70,000 was notionally distributed to Francesco who lent it back, leaving a balance of $28,607.11 said to be unaccounted for. It will be necessary to return to this topic later in these reasons.
By letter dated 16 December 1993, sent by Carneys, Solicitors and Attorneys, which firm then acted for Francesco, to Frank, a demand was made for one third of $70,000 (being $23,333). The letter stated that, upon payment of that sum, Francesco would be prepared to release only Frank “from all rights and obligations pursuant to the subject mortgage. Our client, however, reserves his rights as against the other two mortgagors”: Ex. 3D1/11-12.
Messrs Carneys, subsequently, sent a letter, dated 12 January 1994, to Messrs Leslie Caplan & Grunstein, which firm remained acting for Sam, Giuseppe and Frank, enclosing a copy of the various 1990 documents entered into, reference to which documents has been made. The letter concluded with the suggestion that “perhaps we have some informal meeting after you have perused these documents and obtain instructions… with a view to settling this matter without recourse to litigation”.
In early March 1994, it appears that a further demand to repay the amount of the loan. By letter dated 8 March 1994, sent by the solicitors for Sam, Giuseppe and Frank, to Francesco’s solicitors, it was asserted that the loan repayable to him, was not repayable prior to July 1995, and an offer was made to repay $30,170, in full settlement of the claim.
Francesco’s solicitors replied to the letter dated 8 March 1994 by letter dated 16 March 1994. In this letter, a copy of which is Ex. A, Francesco acknowledged that Sam, in fact, had repaid his one third share of the amount borrowed, namely $23,330. (Other evidence reveals that Sam lent Francesco money to pay for associated legal proceedings to which this letter referred.) A demand was made for repayment of the balance of $46,670 which was said to be due from Giuseppe and Frank.
There were subsequent negotiations about the amount to be repaid to Francesco by Giuseppe and Frank. On 29 April 1994, the amount of $36,670 was repaid to Francesco, in full repayment of his loan. Bank records reveal that Frank paid this amount to Francesco out of a bank account in the names of Rosetta and Frank. (There is a dispute as to whose money had been deposited into this account but, mercifully, it is unnecessary to determine this dispute.)
In return, Sam, Giuseppe and Frank received a Deed of Release, executed by Francesco, and a Withdrawal of Caveat, together with the unregistered Mortgage documents executed in July 1990. The Withdrawal of the Caveat was dated 29 April 1994.
Saverio gave evidence that the last court case relating to the building business, in which he and Francesco were involved, was one in the Court of Appeal in 1995: T40.21-T40.27. It appears that the case to which he was referring was heard in September 1996, and the reasons for judgment bear the medium neutral citation P and S Pupo (t/as Pupo Builders and Decorators v Builders Licensing Board [1996] NSWCA 416. (The appeal was one from the District Court, in respect of a judgment given by McCredie DCJ on 18 March 1992.)
(Later in these reasons, I shall refer to a prior proceeding, in the Court of Appeal, dealt with in May 1996, in which an adjournment of the hearing of the appeal, ultimately heard in September 1996, was sought and granted. The medium neutral citation of those proceedings is Pupo v Builders Licensing Board [1996] NSWCA 440.)
In January 2000, Sam and Giuseppe lodged an Application for dual occupancy with Leichhardt Council. They engaged experts to assess the Leichhardt property and determine whether dual occupancy would be permitted. The application was unsuccessful.
Sam met Rosa in 1994. They married in December 1999. By Transfer dated 15 August 2000 (Ex. 3D1/14), Frank sold his interest in the Leichhardt property to Rosa and Sam, for $200,000 (it being then agreed that the total value of the Leichhardt property was about $600,000), although the Transfer also identifies Giuseppe as one of the purchasers. On the same day, another Transfer (Ex. 3D1/15) identified the interests of Sam and Rosa as joint tenants as to a two third interest, and Giuseppe as to a one third interest as tenant in common with them. Thereafter, title to the Leichhardt property has been held in this way.
Rosa gave evidence that she and Sam had savings of about $40,000 at about this time. It appears that from the proceeds of sale paid by Sam and Rosa, Frank’s one third share of the mortgage debt to the Commonwealth Savings Bank was repaid. The mortgage debt, as at 1 August 2000, was about $105,342. Three substantial amounts are shown as having been credited to the Home Loan (mortgage) account in early August 2000, namely, $35,491.30 on 1 August 2000, $10,000 on 2 August 2000, and $59,408 on 15 August 2000.
The purchase of Frank’s interest in the Leichhardt property was funded by Sam and Rosa borrowing $210,000 from the Commonwealth Bank. Giuseppe guaranteed the loan that the Bank made to them: Ex. 3D1/20-32.
Frank gave evidence that Giuseppe’s share of the mortgage debt was repaid by Rosetta paying two amounts, namely $15,491.30 on 31 July 2000, and then, on 1 August 2000, an amount of $20,000 (making up the amount of $35,491 to which reference has been made). Giuseppe says that he has repaid the amounts to Rosetta. It is unnecessary to determine which version is correct as there is no dispute that the whole of the mortgage debt owing by Sam, Giuseppe and Frank and registered on title to the Leichhardt property was repaid in 2000, and because there is no claim by Rosetta against Giuseppe seeking any repayment.
With Giuseppe’s consent, the loan to Sam and Rosa was increased to $220,000 in about November 2002.
The debt secured by the Mortgage, which is owed by Sam and Rosa, as at October 2014, was about $81,000. Not unnaturally, they have always made the repayments on the amounts borrowed themselves, with no contribution from any family member. There is no evidence of the amount of the current mortgage debt.

Following the sale of the Leichhardt property, in 1990, to Sam, Giuseppe and Frank, Saverio, Rosetta and Antonio moved into the downstairs area and Sam, Frank, and Giuseppe stayed upstairs. In 1995, Frank moved out. In August 1995, Giuseppe married Catherine. In June 1996, they, too, moved out of the Leichhardt property. Sam continued to live alone in the upstairs area.
Saverio, Rosetta and Antonio have continued to occupy the downstairs area of the home built on the Leichhardt property. There is a separate kitchen and bathroom as well as 2 bedrooms in this downstairs area which they occupy.
Following their marriage, Sam and Rosa lived in the upstairs area. That area consists of three small bedrooms, a kitchen and one bathroom. They have separate telephone lines and internet. For some time, they have had a separate key to enter the upstairs area.
Sam and Rosa have two children, Danielle, who was born in January 2002, and Marcus, who was born in October 2005. Sam and Rosa agree that between 2004 and 2007, Rosetta looked after Danielle on Mondays, for about 8 hours. Rosetta does not appear to have looked after Marcus at any specific times, although it was accepted that she did look after both of the children, from time to time, when asked to do so. On occasions, when Sam was unable to collect the children from school, he would ask Rosetta to collect them.
Sam, Rosa and their children would have dinner, about once a week, in the downstairs area of the Leichhardt property with Saverio, Rosetta and Antonio. Otherwise, they did not share meals together. It appears from the evidence, overall, that, otherwise, Sam, Rosa and their children, have lived, for the most part, separately and independently, of Saverio, Rosetta and Antonio.
Sam and Rosa hold no joint property with Saverio and/or Rosetta.
Since they have been living in the upstairs area of the Leichhardt property, Sam and Rosa have carried out repairs and renovations to it, which renovations have cost a total amount of about $34,700. One of the expenses included in the expenditure was for a hot water system ($2,500) which was, in fact, about half of its cost. (The total cost was $5,273.) The parties agreed that Rosetta had paid the other half of the cost of the hot water system: T236.04-T236.24.
There was a dispute between the parties about the use of a communal laundry, but it is not necessary to resolve that dispute other than by noting that part of the renovations carried out by Sam and Rosa have included a change to incorporate a laundry in the bathroom in the upstairs of the Leichhardt property.
Sam and Rosa pay two thirds of the Council rates and Rosetta pays one third. They also pay one half of the water rates and electricity bills, whilst Rosetta pays the other half. Sam and Rosa have paid for the house and contents insurance since they purchased Frank’s interest in the Leichhardt property. (There was no schedule produced by any of the parties identifying the amounts that have been paid.)
Sam gave evidence that as at July 2014, the Leichhardt property had a market value of between $1,475,000 and $1,525,000. A more recent “kerbside” assessment, suggests that the current market value is between $1.8 million and $2.0 million (Ex. B).
By undated letter from Giuseppe, which appears to have been received by the Commonwealth Bank, Springwood Branch, on 28 February 2014, he stated that he “would like to cease guaranteeing [the] loan [in the name of Sam and Rosa] as of today” and requested that information be given to “myself and the other parties of this loan of the procedure involved in ending this guarantee”. He also confirmed that “any redraw facility on this loan should cease immediately”.

The Credibility and Reliability of the Witnesses

This is a case that is particularly fact sensitive. Findings of fact and assessment of the credibility of the witnesses and the reliability of the evidence are extremely important. It is necessary to form an assessment of whether to accept a witness as a witness of truth, as there are many facts, as well as a number of important conversations, that are the subject of dispute.
Of course, as has been observed, many of the events occurred over 25 years ago, some about 15 years ago, and only a few, more recently, with the result that the memory of witnesses will have faded. As has been demonstrated, there is some contemporaneous documentation, the authenticity of which is not disputed. Other documents, which may have proved useful, have not been able to be produced due to the passage of time that has passed since the documents would have been created.
As was observed by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315, at 318-319:

“Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances … Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and 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. All this is a matter of ordinary human experience.”

In that case, his Honour was talking of a cause of action founded on s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act1987 (NSW): see the discussion by McDougall J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813, at [10]-[18]. However, as McLelland CJ in Eq also pointed out, the views apply to all types of litigation.
The present case reveals the importance, also, of what Bryson AJ wrote in Pennimpede v Pennimpede [2009] NSWSC 85, at [29]:

“Considerations of these kinds pose serious difficulties of proof for a party relying upon spoken words as a foundation of a cause of action in the absence of some reliable contemporaneous record or other satisfactory corroboration. In this case there is no contemporaneous document which supports the claim that the true arrangement was only a loan on mortgage, not a purchase, and there is no satisfactory corroboration. McLelland CJ in Eq’s observations apply with only slight changes to the present case. A great deal of what I was told related to conversations which were alleged to have occurred well over 10 years before I heard the evidence. Most of what I was told about the conversations seemed to me to be little more than impressions, accompanied by plausible details which were very unlikely to be based and were not based on actual memory. These impressions came to me through a filter (perhaps an osmotic barrier) of years of conflict, argument and strong feeling.”

Although the decision was subject to an appeal (see, Pennimpede v Pennimpede [2010] NSWCA 121), the appeal was dismissed, and there was no suggestion that what Bryson AJ had said about difficulties of proof was wrong.
The circumstances of this case, as has been noted, make what was written by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben’s of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep), at 122-123 (in a passage cited with approval by the High Court when it upheld his Honour’s decision: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599, at [15]), appropriate to remember:

“[Given the lapse of time] between the events and conversations raised in evidence and the hearing of the evidence before me, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In circumstances where the events took place so long ago, it must be an exceptional witness whose undocumented testimony can be unreservedly relied on. The witnesses in this case unfortunately did not come within that exceptional class. The discussions referred to in evidence were capable of bearing quite opposed meanings depending on subtle differences of nuance and emphasis, and a proper appreciation of the significance of those matters must necessarily be considerably diminished over such a long period of time.”

I also remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]:

“When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2).”

I have also found useful what Lord Pearce wrote, in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403, at 431:

“Credibility involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.”

I should also mention an article by the former the Chief Judge at Common Law, P McClellan entitled “Who Is Telling the Truth? Psychology, Common Sense and the Law” (2006) 80 ALJ 655, in which he wrote, at 665, quoting a passage from the “Guidelines Relating to Recovered Memories” (2000) of the Australian Psychological Society:

“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.”

Justice McClellan’s observations were recently described by Leeming JA, in Nominal Defendant v Smith [2015] NSWCA 339, at [82], as uncontroversial and “supported not merely by one’s ordinary experience but also by a body of psychological evidence”.
Section 140 of the Evidence Act 1995 (NSW) should also be considered. It provides:

“(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence, and
(b) the nature of the subject-matter of the proceeding, and
(c) the gravity of the matters alleged.”

Ordinarily, the more serious the consequences of what is contested in litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion. However, as has recently been reaffirmed by the Court of Appeal in Bibby Financial Services Australia Pty Limited v Sharma [2014] NSWCA 37, at [205], s 140(2) provides for no new principle but simply reflects the principles stated in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, that there should be clear and cogent proof of serious allegations.
In Nguyen v Cosmopolitan Homes [2008] NSWCA 246, speaking with the concurrence of McColl and Bell JJA, McDougall J expressed the view, at [44]- [52], that proof on the balance of probabilities required a feeling of actual persuasion; that the event in question was more likely than not to have occurred; with “a probability in excess of 50%”. His Honour repeated that view in Ballard v Multiplex [2012] NSWSC 426, at [126].
I have also remembered the general principle, stated by Lord Mansfield CJ in Blatch v Archer (1744) 1 Cowp 63; 98 ER 969, at 970, that evidence is to be weighed “according to the proof which it was in the power of one side to have produced, and in the power of the other side to have contradicted”. This has particular significance in considering the submissions made by counsel for Saverio regarding the knowledge of Sam, Giuseppe and Frank on how, and to whom, the proceeds of sale were disbursed.
I should also mention that there is nothing, in writing, evidencing what is said to have been the agreement reached between Saverio and his three sons. Accordingly, the evidence of conversations said to have taken place inevitably suffers from lack of immediacy and from subjectivity compared with the available contemporaneous documentation which deals with other events. (I have not forgotten, also, that the competing witnesses are family members. It is, in those circumstances, unexceptionable that any agreement said to have been made between Saverio and his three sons, Sam, Giuseppe and Frank, was not in writing. However, this must be looked at in the context of other circumstances, including events involving Francesco and the evidence of Saverio as to what he was told by a solicitor, Mr Papallo.)
Finally, Saverio and Rosetta gave evidence through an interpreter. On occasions, the evidence given by Francesco was difficult to understand because of language difficulties. I have reminded myself that it is often not only difficult, but sometimes may be dangerous, for a Court, dependent on interpretation of evidence of witnesses whose first language is not English, to make clear findings on credibility.
In this case, however, I am able to do so, having reviewed the evidence, which confirmed a number of my impressions made at the time of the hearing. I have had regard, amongst other things, to whether the evidence given is inherently plausible or implausible; whether it is consistent; and whether, in a material way, it is, or is not, conformable to other evidence in the case including the available contemporaneous documents; and whether it is contradicted by other evidence which is undisputed or indisputable.
I have endeavoured to consider the evidence, not only in its context, but in the context of the total evidentiary fabric of the case. Common sense and experience in life is also applied. My conclusions cannot be clouded by sympathy.
With these considerations in mind, I turn to the evidence of each of the witnesses.
I was not overly impressed with the evidence of Saverio. Overall, I formed the view that he was an unreliable witness.
Their counsel described Saverio and Rosetta as “simple folk, lacking in sophistication”. Whilst that might be an apt description of Rosetta (and I make no finding on whether it is or not), I am sure that the description does not apply to Saverio. In this regard, it is to be remembered that he and Francesco conducted a building business for about 7 years; and as will be read shortly, that in the 1980’s and 1990’s he conducted, on his own behalf, proceedings in a tribunal and in the Court of Appeal in New South Wales, in both of which he was successful. (Whilst ultimately unsuccessful in the Court of Appeal, in the substantive appeal, he was represented by junior counsel.)
I am satisfied that, at the hearing, Saverio understood far more of the English language than had been suggested by the requirement for an interpreter, a matter I raised with his counsel on the first day of the hearing, at T53.31-T53.47:

“HIS HONOUR: Gentlemen, I’m going to take an adjournment. Mr Gemmell, it’s quite clear to me that your client understands more than he’s letting on. You either tell him, despite the fact that he’s in cross examination he obviously isn’t going to listen to me, because I’ve told him more than once that he has to wait for Mr Carolan to finish the question and the interpreter, who is doing a sterling job under obvious difficulties, he is answering in English, it’s quite clear to me from my observations of him and please tell me if this is wrong he was able to read para 20 despite his denial of the ability to read para 20, he certainly gave me the impression that he was reading it, so I’m going to take a five minute adjournment, Mr Gemmell, and I think you need to have a firm word with the first plaintiff that it is not doing his case any good at all to continue in this way.
Everything in this case so far as what he alleges the arrangements were depends upon my acceptance of him as a witness of truth. Mr Carolan, do you have any objection to me taking this course? I’m just trying to say it’s quite clear to me, Mr Carolan, we are not going to finish before Thursday.”

No objection by counsel for Sam and Rosa is identified in the Transcript.
In addition, Saverio appeared to be able to read English: T52.20-T52.40.
When his cross-examination continued on the second day of the hearing, which was some months later than the first day, the matter that I had raised became even more obvious. Counsel for Sam and Rosa asked questions regarding Saverio’s employment record during the 1980’s. Saverio stated that he had some casual work and that for some time he had been in receipt of unemployment benefits. There was then tendered reasons for judgment of proceedings in the Administrative Appeals Tribunal in March 1988 (Ex. 1D13), in which proceedings Saverio, who had appeared without legal representation (T83.42-T83.45), had successfully sought a review of a decision to cancel his unemployment benefit “upon the ground that the applicant was not making sufficient efforts to obtain suitable employment”. It was not suggested that he had appeared at the time with an interpreter.

I have earlier referred to the Court of Appeal decision in which Saverio and Francesco were involved. Prior to the hearing in the Court of Appeal, there was an application for an adjournment of the appeal. In the reasons for judgment, although there is no specific reference to Saverio as the person who had appeared, I am satisfied, bearing in mind Saverio’s evidence, that Francesco did not have anything to do with defending the litigation, that it was Saverio who “applied for an adjournment. He began to address the Court himself in support of his application without the assistance of an interpreter”. However, his Honour also noted that “if [Mr Pupo] were compelled to proceed with the appeal today he would have to do so through an interpreter, without an appeal book and further, unable himself to read the appeal book, if he had one”. (I note that these matters were raised in proceedings that were heard almost 20 years before the hearing of these proceedings.)
In addition, there are examples of Saverio answering questions asked in cross-examination before counsel had concluded the question and before the interpreter had had an opportunity to translate the question into Italian: T83.20-T813.26; T98.20-T98.25; T99.29-T99.36; T105.23-T105.30; and T106.12-T106.13.
Otherwise, and perhaps, unsurprisingly, Saverio did not appear to have a particularly good recollection of the conversations. I say, unsurprisingly, because the conversations took place about 25 years ago, they involved his children, who were, at that time, relatively young, and in circumstances in which the course proposed was for the benefit of the immediate family, because it would enable the family home, in which all of the children had lived for virtually all of their lives, and in which their parents also lived, to be retained.
To the extent that Saverio makes such an assertion, I am quite unable to accept that there was any agreement between Saverio and Francesco that each would receive $70,000 out of the proceeds of sale of the Leichhardt property. (It is difficult to know whether such an agreement is being asserted because in the Statement of Claim what is asserted is that he and Francesco “were told by [Saverio’s] Solicitor that they should each receive approximately $70,000 for their respective shares in the property” (Paragraph 19) (my emphasis) and that “Francesco… informed [Saverio]… that he wanted to be paid money for the sale of his share of the house ($70,000)…”) In this regard, Saverio’s recollection of any conversations with Mr Papallo is far from precise.
I tend to the view that it might have been hoped that there would be sufficient to achieve a distribution of that amount to each of Saverio and Francesco. In this regard, Saverio, at the time, probably, was able to tell Mr Papallo, a solicitor, that the sale price was $291,000 and that $130,000 or thereabouts, had been borrowed and secured by registered mortgage. The difference ($161,000), taking into account costs and expenses of sale, might have led to the statement that about $70,000 should be left for each of the registered proprietors.
At the time that Saverio spoke with Mr Papallo, the total amount of the debts to be repaid, on the evidence of Saverio, does not appear to have been known. That the total of the debts would be less than $151,000 is highly unlikely, particularly bearing in mind the events of 1988 and 1989, and the borrowings that had been made during this period. That the total amount to be repaid under the mortgage, was shown to be a little more than $165,000, a short time later, suggests that it was unlikely that the total amount of the debts would be less than $151,000 at the time of the conversation with the solicitor.
Saverio did, however, give evidence that Mr Papallo “recommended that I take money the same way as the brother did”: T95.34-T95.35; T110.03-T110.04. However, this recommendation was made at a time when the precise debts were not known.
(It is worth mentioning at this point, that, on the last day of the hearing, counsel for Saverio and Rosetta sought leave to re-open the case to file in court, and read, an affidavit sworn 11 October 2015, of their solicitor, Mr J Restuccia. Without objection, I granted leave to do so. The contents of the affidavit revealed that an email had been sent to Mr Papallo on 29 September 2015 confirming an earlier telephone conversation in which Mr Papallo had told Mr Restuccia that his firm had “no records pertaining to” and that he had “no recollection” of the conference with Saverio and Francesco prior to the sale of the Leichhardt property. Mr Papallo, in a letter, a copy of which was annexed to the affidavit, that “we have searched our files and all documents that are still in our possession and we have not been able to find any file or document in regard to your client, Saverio Pupo, in the sale of [the Leichhardt property]”. He also confirmed in the letter that “we have no recollection of this matter at all”.)
Also, for reasons to which I shall come, I prefer the evidence of Francesco to the evidence of Saverio, generally, and on this topic, namely that there was no discussion, in Francesco’s presence, about what part, if any, of the proceeds of sale, Saverio was to receive. I accept that the only discussion with Francesco related to what amount he, Francesco, would receive to enable the sale of the Leichhardt property to Sam, Giuseppe and Frank, to be achieved.
(Although there were some submissions made about Francesco being paid more than that to which he was entitled from the proceeds of sale, it is to be remembered that had Saverio not agreed to pay him, and if Francesco had not agreed to the loan to Sam, Giuseppe and Frank, the likelihood was that the Leichhardt property would have had to be sold, with the result that Saverio and his family would no longer have a home. In addition, bearing in mind the rates of interest at, or about, this time, as evidenced by the original terms of the Deed between Francesco and Sam, Giuseppe and Frank, the grant of an interest free loan was a significant gesture by Francesco.)
Accepting Francesco’s evidence regarding the sale of the Leichhardt property, it does seem a remarkable coincidence that the amount that he was told he would receive out of the proceeds of sale was the precise amount that Sam, Giuseppe and Frank required to enable the completion of the sale, the other amounts being borrowed ($190,000) or raised by them (about $31,000): T167.50-T169.20.
I raised the question of the coincidence with counsel during submissions. Counsel for Saverio and Rosetta made submissions that satisfy me that it was only a coincidence and nothing more: T273.09-T273.46. (Each of the other counsel accepted that it was a coincidence also, so I shall say nothing more about it.)
On the other hand, if the total amount of the debts was known to Saverio, then that total was not disclosed to Francesco. Also, it seems that the total of the debts was not disclosed to Sam, Giuseppe and Frank, although they did come to know about the amount due to ICLE prior to the sale being completed.
Nor do I accept Saverio’s evidence that he told Sam, Giuseppe and Frank that he would “keep my money in the property and Mum and I will continue to live in the property” and that they said “[w]e are happy with that Dad. You and mum can live here for the rest of your lives”. Importantly, each of Sam and Frank denies such a conversation, and I prefer his evidence to the evidence of Saverio, generally, and in this regard.
Even if the conversation occurred, at its highest it might have been a hope that there would be some of the proceeds of sale left to which Saverio would be entitled to receive. But it is clear that Saverio, even then, did not know precisely, how much had to be repaid out of the proceeds of sale to ensure the discharge of the registered Mortgage, the withdrawal of the caveat registered on title, and in respect of any other debts that needed to be paid.
Even accepting that a conversation regarding the family members living in the Leichhardt property occurred, that does not establish the interest that Saverio claims.
Furthermore, had such a conversation occurred, it is likely that, despite the family relationship, some attention would have been paid by all of the family members to the amount that Saverio was “keeping” in the Leichhardt property. One might have expected the topic to be discussed with Mr Sarajinsky.
More importantly, one might think that Mr Sarajinsky would have been able to calculate the amount, if any, that Saverio was entitled to receive out of the proceeds of sale after the payment of all secured, and other, debts and the amount of $70,000 to be paid to Francesco. As Saverio’s solicitor, and one who appears to have been careful to ensure that Francesco’s loan to Sam, Giuseppe and Frank, was properly documented and relevantly protected by caveat, he is likely to have been equally careful to ensure that any amount payable to Saverio, which he did not receive, and which created an interest in the Leichhardt property, was properly documented, and relevantly protected, in a similar, or at least in some, way.
Not only is there no evidence of any conversation with Mr Sarajinsky, there is no record of the amount, if any, that would be available after repayment of the secured, and other, debts and the amount of $70,000 to be paid to Francesco. All that one has, by way of a contemporaneous document, is the written Direction given to their solicitors by Sam, Giuseppe and Frank, to which reference has been made.
Another aspect of Saverio’s evidence is demonstrably wrong. He asserted that he had taken out the loan the subject of the registered Mortgage dated 10 November 1988, securing the debt to Permanent Trustee Australia Limited, in order to repay “all” of his debts and that he was left “with one mortgage” (T46.43-T46.48; T57.45-T57.48; T60.21-T60.29; T63.08-T63.31). However, other evidence (Ex. 1D12) reveals that there was a subsequent “loan or other financial accommodation granted or to be granted” identified in Caveat Y244 (and an agreement in writing dated 24 February 1989), which Saverio was unable to explain. In addition, there is also evidence that Emery Berg & Co paid at least one other reasonably large amount ($26,514.31 to I Finance Corporation Limited) out of the deposit paid into its trust account on 30 July 1990.
It was submitted by counsel for Saverio that the court could not be satisfied that the amount paid to I Finance Corporation Limited was a debt that was required to be paid out of the proceeds of sale. In written submissions, counsel noted that Ex. 1D14 (the Trust Account Ledger) referred to payments out, one of which is for $234 and the “Item” referred to is “Gordon & Johnstone”. The date of the payment is 30 July 1990. The entry immediately above that entry is also dated 30 July 1990, and the “Item” referred to is “I Finance Corp Ltd”.
Somewhat inconsistently, it was submitted that:

“Given that Gordon & Johnstone were paid sequentially to I Finance Corp and that Gordon & Johnstone acted for ICLE, the Court could reasonably find that I Finnace [sic] Corp & ICLE are the same entity and that there is no evidence of any other significant creditor at the time of settlement.”

This submission does not take into account Saverio’s evidence, on the second day of the hearing. It was put to Saverio that his signature on the Transfer had been witnessed by Mr Sarajinsky, to which he responded (T89.25-T89.45):

“This is to do with the court case that I had with a finance company that lent me money… and the solicitor handling this was a Polish solicitor in York Street.”

He also described Mr Sarajinsky as “the solicitor dealing with the finance company”: T93.36-T93.40. He could not remember the name of the finance company but identified it as “the finance company who [sic] was charging me double rate of interest”: T89.42-T89.46. He did not identify ICLE as the finance company to which he was referring.
Saverio added, at T94.01-T94.05:

“I never gave any instruction to the solicitor Sarajinsky… for any dealing with the house. He was a solicitor for dealing with the finance company.”

Saverio’s evidence, if accepted, does suggest that ICLE, the caveator, and I Finance Corporation Limited, to whom Mr Sarajinsky paid an amount out of the firm’s trust account, were not one and the same creditor, as was submitted, and that there was likely to have been two debts (other than the debt secured by mortgage), one secured on the Leichhardt property by caveat, and one to do with, as Saverio put it, “the finance company which lent me money”.
Furthermore, the entries in Ex. 1D14 are equally consistent with an amount being paid to I Finance Corporation Limited, and an amount being paid to Gordon & Johnstone for the costs of the Withdrawal of Caveat Y244.
Furthermore, the Withdrawal of Caveat clearly refers to ICLE and not I Finance Corporation Limited. Had they been the one entity, it is likely that the reference in the Trust Account Ledger would not have been to I Finance Corporation Limited but to ICLE.
In the circumstances, I am unable to accept the submission of counsel for Saverio on this topic.
The evidence to which I have referred is also inconsistent with Saverio’s affidavit evidence in reply that “my family did not have any significant financial problems until about 1988 or 1989”: Paragraph 1(c) of his affidavit sworn 3 December 2014.
Saverio’s evidence that Mr Sarajinsky was only acting in relation to the finance company is also inconsistent with the information contained in the firm’s Trust Account Ledger, as well as with the documents relating to the loan to Sam, Giuseppe and Frank, which demonstrates, clearly, that Emery Berg & Co, and Mr Sarajinsky of that firm, was acting for Saverio and Francesco on the sale of the Leichhardt property.
A further difficulty in accepting Saverio’s evidence, where in dispute or otherwise unsupported by contemporaneous documentary evidence, is that he said that he could not even remember the sale price of the Leichhardt property: T55.30-T55.41. (He would not even accept the proposition that the sale price was $291,000: T56.02-T56.07.) He asserted, also, that he could not remember what amounts had to be repaid out of the proceeds of sale, maintaining that there was, then, only one debt: T94.07-T94.12.
Finally, to demonstrate the difficulties of memory that Saverio asserted he had, the following cross-examination is instructive, at T95.48-T97.48:

“Q. How much do you say was left over after the finance company had been paid, after the bank had been paid, Perpetual mortgage
A. INTERPRETER: I don’t remember what it was whether it was 200 or 150, I don’t remember.
Q. Can you just concentrate on my question for a moment? Let me ask it in a number of tranches. The sale price was $291,000, correct?
A. INTERPRETER: No I don’t remember.
Q. Well that was the amount that was agreed and put into the contract, wasn’t it?
A. INTERPRETER: I don’t remember.
Q. The debt to Permanent Trustee company was $165,878.
A. INTERPRETER: What I could’ve done then is to sell the house for $300,000 but I didn’t do it because it would have meant putting the children on the, on the street.
HIS HONOUR
Q. At the moment you’re just being asked about some things. Would you have a look at the document that I’m about to show you please? I’m showing annexure C being the copy of the transfer of the property. Would you have a look at that document? You’ve been shown that document before.
A. INTERPRETER: This has been signed by myself and my brother. What is written there I cannot deny it.
Q. Yes, would you have a look at about a fifth of the way down, you’ll see the figure of $291,000. Do you see the figure of $291,000?
A. INTERPRETER: I do not remember.
Q. Please listen to my question. Do you see it there?
A. WITNESS: Yeah, yeah, yeah.
Q. That refers to the sale price of the property at Leichhardt.
A. INTERPRETER: I can see that it is there, what can I say? But I do not remember.
Q. Would you turn over the page please and look at annexure D? This is a document that relates to the amount paid to the company shown and it is the amount of $165,878.58?
A. INTERPRETER: 165,878--
Q. 58. That was the amount that was said to be owing to the mortgagee, the company shown there?
A. INTERPRETER: Yes, that amount about 160, 150.
HIS HONOUR: Yes, Mr Carolan. Thank you, I’ll take those documents back.
INTERPRETER: Yes, that was the amount attached but then what they write, whatever as they write, they can write whatever they like.
Q. The note of the sale proceeds an amount of $26,514.31 was paid to I Finance Corp Limited?
A. INTERPRETER: That was my brother who had the problem, they put my name on it but I never, I didn’t get the money, didn’t - and I didn’t say to give the money.
Q. Where is that in your affidavit?
A. INTERPRETER: This is the truth, that’s what I’m saying. I didn’t get money, I don’t know what they did.
Q. An amount of money was paid to Montepaschi(?) ICLE?
A. INTERPRETER: When, when I got to 165 I paid all the debts that I had including Montepaschi.
Q. When you were paid the 165 you weren’t paid 165 by anybody, were you?
A. INTERPRETER: The 165 were borrowed so that I could pay the other debts that I had.
Q. You borrowed 130, didn’t you?
A. INTERPRETER: I don’t remember that but the money that I borrowed from the company I borrowed so that I could pay all the debts and be left debt free.
Q. Mr Pupo, you’ve had some time to think about this between the time we were last in Court and today. How much do you say you weren’t paid out of the $291,000?
A. INTERPRETER: I never got any money.
A. WITNESS: Never.
Q. How much do you say you were entitled to be paid?
A. INTERPRETER: Same, same as my brother, as much as my brother got.
A. WITNESS: The same.
Q. There was no evidence from you of any agreement with your sons about that though, was there?
A. INTERPRETER: My evidence is that my brother got a caveat on the house but I didn’t want to take one because I didn’t want to put my, the children on the streets.
Q. Mr Pupo, there is nothing in your affidavit about any of that, is there?
A. INTERPRETER: I’ve always said that, I’ve - I said that all along.
Q. What I want to suggest to you is that by the time that various financiers had been paid out and the cost and disbursements of conveyance had been paid there was nothing left for you, was there?
A. INTERPRETER: That’s not true, my children always said you live here and your money’s here.
A. WITNESS: This is the truth.”

I note, also, that when Saverio was asked whether Francesco had lent $70,000, being the amount that he agreed he would accept for his share of the Leichhardt property, Saverio answered “I don’t know what he did”: T56.22-T56.24. He did not say, on this occasion, that he did not remember. It is difficult to believe that Saverio did not know that Francesco was lending his share of the proceeds of sale to Sam, Giuseppe and Frank to enable the purchase to proceed to completion as they could not raise more than $190,000.
Nor could Saverio remember how much money, if any, had been repaid to ICLE. He denied that it was $24,121.42 and asserted that the debts to ICLE had been repaid when he had borrowed the money which was subject of the mortgage: T60.23-T60.29.
At the conclusion of Saverio’s evidence, I was not satisfied of the reliability of his recollection of some of the events that had occurred. I am unable to find that the conversations alleged by him as to “keeping” money in the Leichhardt property were proved, on the balance of probabilities, to have occurred.
In my view, the evidence, overall, makes clear that there was no surplus money available from $190,000, being the amount borrowed by Sam, Giuseppe and Frank from the Commonwealth Bank, and that the whole of the available part of the purchase price was used to pay other debts. In addition, Ex. 1D14 makes clear that the amount of the deposit, and the interest accrued, was wholly disbursed as well for debts and expenses.

Furthermore, had there been such a discussion, it would have been the perfect opportunity for all of the family members to calculate the value of that interest, in order to determine the true value of Frank’s share. That they did not do this is clear from Giuseppe’s evidence to which I have already referred.
If Saverio did, indeed, have a 20 per cent interest in the Leichhardt property, as was asserted by Giuseppe, the share of each son would have been reduced by about 6.66 per cent, or, taking account of its agreed value of $600,000 at that time, by about $40,000. Rosa specifically denied that she and Sam paid Frank $160,000, as did Frank.
Alternatively, that Sam and Rosa would have been prepared to pay an additional amount of $40,000 to purchase Frank’s interest in the Leichhardt property seems somewhat unlikely, and if they paid $200,000, which I accept they did, Saverio would not have been receiving the benefit because the value of that proportionate interest was being paid to Frank.
Rosa was also cross-examined about the continued occupation of the Leichhardt property by Saverio, Rosetta and Antonio. Whilst she was somewhat defensive, I regard her evidence as truthful on this topic also. She denied that any agreement had been made that they would continue to live in the downstairs area because Saverio had an interest in the Leichhardt property.
Where her evidence conflicts with that of Saverio, Rosetta or Giuseppe, I prefer her evidence.
Rosa explained that following her marriage, she was “happy in my space”, which she regarded as “ample”, and that she had not made any enquiries about the reasons why Saverio, Rosetta and Antonio were living in the downstairs area. She said, “I was 24 years old, so I didn’t make any enquiries”.
She also said, candidly, that she had no interest in whether Giuseppe was, or was not, receiving any rent from Rosetta, as she did not regard it as her business.
In relation to Rosa’s evidence as to what she would have done if she had been told of any interest that Saverio had, I remember what was said in Seltsam Pty Ltd v McNeill [2006] NSWSCA 158, per Bryson JA, with whom Handley and Tobias JJA agreed, at [115]-[123], that evidence by a witness of what he, or she, would have done, if some aspect of the past had occurred differently to the way it in fact occurred, is admissible, though its weight should be carefully assessed because “[o]bservations on the limited value, and self-serving and hindsight nature of evidence of this kind have considerable force…” (at [121]). Even so, I accept her evidence, which evidence I consider to be inherently credible.
Whilst Rosa, not unnaturally, was a little emotional, she was prepared to make concessions about her relationship with Rosetta, and she conceded that Rosetta had assisted her, on occasions, in looking after the children. I accept her evidence that Rosetta did, on occasions, look after Danielle and Marcus when she had time to do so. As described, it was an ad hoc arrangement.
Rosa also accepted that, on occasions, Sam might have called on Rosetta to collect one, or both, children from school, if he was running late. She said collecting them from school was part of his parental duty.

Determination of Trust Claim

In relation to the amount that had been “left in” the Leichhardt property, counsel for Saverio submitted in writing that:

“Of the $96,021.42, Francesco… instead of being paid his share of the net proceeds of sale enters into the arrangement with [Sam, Giuseppe and Frank]… On this basis Saverio’s share of the net proceeds of sale is $48,010.71. If the Court finds that the difference ($24,121.42) between $190,000 and the Howard Finance mortgage ($165,878.58) was paid to or applied for the benefit of [Francesco] and Saverio, then the net proceeds of sale would have been $71,900.00. Francesco… instead of being paid his share of the net proceeds of sale enters into the arrangement with [Sam, Giuseppe and Frank]… On this basis Saverio’s share of the net proceeds of sale is $35,950.00.”

However, at the hearing, counsel acknowledged that if the court found that the agreement between Francesco and Giuseppe, Sam and Frank, did not bind Saverio, then the amount left in the property is $28,607.11 as at July 1990. That equates to about 9.8 per cent of the gross value of the Leichhardt property at the time of its sale to Sam, Giuseppe and Frank ($291,000).
How the proceeds of sale were disbursed was not a matter for Sam, Giuseppe and Frank. It was a matter for Saverio and Francesco as the vendors. In this regard, Francesco would have little interest in how the balance of the proceeds of sale was disbursed since his share of the proceeds of sale was established ($70,000), and he was lending that amount to the purchasers. Accordingly it was for Saverio to establish on the balance of probabilities how much had been “left” in the Leichhardt property.
Considering all of the evidence, Saverio has not satisfied me that he was entitled to any amount from the proceeds of sale of the Leichhardt property at the time of its sale to Sam, Giuseppe and Frank. To the contrary, it seems more likely that all of the available funds that were borrowed, or paid, by Sam, Giuseppe and Frank, towards the purchase price, were used to repay the debts owed which were incurred after Francesco stopped making mortgage repayments in or about 1988.
In my view, the amount borrowed from the Commonwealth Bank was used to discharge the mortgage and pay the amount owed to ICLE to obtain a discharge of the caveat, and the amount paid from the deposit by the solicitors was paid to another creditor. No other inference is available from the whole of the evidence.
Although it was submitted that the amount identified as the payment to I Finance Corporation Limited was not established to be a loan due by either Saverio and/or Francesco, I am satisfied that it was a debt owed by one or both of them, and a debt to which Saverio had referred in his evidence, as the loan from the finance company.
I am also satisfied that the amount that was to be repaid to Francesco from the proceeds of sale was agreed by Saverio to be $70,000. In effect, Francesco then lent Sam, Giuseppe and Frank, this amount, with the result that only $221,000 was required to be raised by them to complete the purchase. As all agreed, they were unable to borrow more than $190,000.
In addition, they paid the deposit of $29,100 which was shown as a deposit in the trust account ledger. Taken with the other amounts to which I have referred that they paid, I am satisfied that the proceeds of sale were not used to pay the stamp duty on the contract or mortgage duty and various other debts.
Since I am not satisfied that Saverio has established that he had contributed any amount to the purchase price, from his share of the proceeds of sale of the Leichhardt property, he cannot succeed on his claim for the imposition of a resulting or constructive trust. It is, therefore, unnecessary to discuss the law that applies in respect of that aspect of the trust proceedings. That part of the trust proceedings must be dismissed.
For the same reasons, I am unable to accept the submission that the court should declare that Saverio is entitled to, and holds, an equitable lien over that part of the property of which Sam and Giuseppe are the registered proprietors.
It is worthwhile mentioning that none of the pleadings, so far as they relate to events in 2000, and the transfer of Frank’s interest in the Leichhardt property to Rosa, refer to s 42 of the Real Property Act1900 (NSW), or to general principles relating to indefeasibility of title or to the exceptions to indefeasibility although there is a general denial, in Sam’s and Rosa’s defence to the entitlement to relief claimed.

Determination of Property (Relationships) Act Claim

It is, next, necessary to say something about the claim by Saverio and Rosetta for relief under the Property (Relationships) Act. It is the jurisdiction created by the Act that gives rise to their claim for relief.
“Property” is defined in section 3(1) of the Property (Relationships) Act, unless the context or subject matter otherwise indicates or requires, as follows:

“Property, in relation to parties to a domestic relationship or either of them, includes real and personal property and any estate or interest (whether a present, future or contingent estate or interest) in real or personal property, and money, and any debt, and any cause of action for damages (including damages for personal injury), and any other chose in action, and any right with respect to property.”

Section 5 of the Property (Relationships) Act relevantly provides:

“(1) For the purposes of this Act, a domestic relationship is:
…
(b) a close personal relationship (other than a marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.
(2) For the purposes of subsection (1) (b), a close personal relationship is taken not to exist between two persons where one of them provides the other with domestic support and personal care:
(a) for fee or reward, or
(b) on behalf of another person or an organisation (including a government or government agency, a body corporate or a charitable or benevolent organisation).”

An “adult person” is a person of, or above, the age of 18 years: s 3(1) of the Property (Relationships) Act.
Section 5A, relevantly, provides:

“(1) For the purposes of sections 4 and 5, persons are related by family if:
(a) one is the parent, or another ancestor, of the other, or
(b) one is the child, or another descendant, of the other, or
(c) they have a parent in common.”

Clearly Sam, Saverio and Rosetta are related by family, whilst Rosa is not related by family within the meaning of the definition.
Section 5 as stated, requires that the two adult persons in question be living together.
In Harkness v Harkness [2011] NSWSC 1421, I discussed, at [41]-[44], the concept of “living together” as follows:

“The phrase, ‘living together’ is not defined by the Act. Given that the two adults may be members of the same family, concepts relating to ‘a couple’ are not relevant. Thus, the existence of a romantic, or sexual, relationship, a practical union of lives and property, and the public aspects are not necessary criteria.
Without attempting to define the term more precisely than the legislature has done; remembering that it is necessary to consider the evidence as a whole, not under isolated headings; that the question must be decided on an individual case basis, without circumscribing any particular factor; that the circumstances of human affairs are varied; and bearing in mind the authorities referred to, it seems to me that the notion or concept of ‘living together’, has the following elements that require evaluation:
(a) Co-habitation, although not necessarily fulltime; however, there must be sufficient shared residence, which invites a consideration of such factors as whether the persons said to be living together had a common residential address; where they usually slept at night (for example, when not absent temporarily for holidays, employment or for other reasons); and where they usually kept their clothing, domestic and personal effects; regardless of the number of days or nights spent, perhaps, at another place;
(b) Physical proximity in the same residence, in the sense of simultaneous physical presence;
(c) Some personal association with each other;
(d) The sharing of facilities of day-to-day living on a regular and recurrent basis, often described as sharing a household, including but not limited to, the performance of domestic tasks;
(e) Deciding household questions together and, whilst a social and economic partnership of the parties is not required, there should be a sharing of the burden of maintaining a household;
(f) Regarding the place, or places, in which the two adults live as ‘their home’;
(g) There being no present intention of definite or early removal; a continuity of association with the place; remaining for an undetermined period, not infrequently, but not necessarily combined with design to stay permanently.
Whilst each element suggested does not import any concept of proportion of time, each should exist over a long enough period, to amount to ‘living together’.
The test whether the notion or concept of living together is satisfied is an objective one. It involves assessing the nature and extent of the claimed common residence as well as other aspects of the relationship.”

Section 5 also requires that there be the provision, by one or each of those adults to the other, of both domestic support and personal care. In Harkness v Harkness, I also discussed the concepts of “domestic support and personal care”, neither of which terms are definitions, but qualifying conditions that must also be satisfied before the relationship will fall within the definition in the Act. I wrote, at [46]-[49]:

“The second requirement is itself cumulative. The expressions, also, are not defined. However, the adult persons must be living together at the same time as one, or each, provides to, and/or receives, domestic support and personal care from, the other. (It is clear that the indicia of domestic care and personal support need only be given by one of the adult persons to the other.)
However, neither domestic support nor personal care, provided alone, suffices. Both must be provided.
The word ‘domestic’ carries connotations of matters relating to a household. The Macquarie Dictionary definition includes ‘having to do with the home, the household, or household affairs’.
Some of the primary meanings of ‘personal’ include ‘of, or pertaining to, concerning or affecting the individual person or self; one's own; of or pertaining to one's person or body or figure; bodily’. In broad terms it requires one person caring, in a personal way, for the needs of another such as assistance with mobility, personal hygiene, physical comfort and emotional support: Hayes v Marquis at [168]. However, the notion of ‘personal care’ should not be confined to matters relating to physicality: Hayes v Marquis at [87]. The Second Reading Speech (Legislative Assembly, (Hansard) 26 May 1999, p 535) contemplated that personal care services may encompass ensuring the physical and emotional comfort of one or both parties for the other.”

There is no dispute that prior to his marriage to Rosa, in 1999, Sam was living with Saverio and Rosetta in the Leichhardt property and that he was living in the upstairs area, whilst they were living in the downstairs area. The period of the domestic relationship asserted by Saverio and Rosetta in the Statement of Claim in relation to Sam alone, however, is alleged to have commenced in 1993.
Whilst there is no suggestion that the configuration of the home built on the Leichhardt property altered, I think it is likely, during the period between 1993 and the date of Sam’s marriage to Rosa, that the home was treated as one home, with the inhabitants moving freely between the upstairs and the downstairs area. Accordingly, during this period of time, I am satisfied that Saverio, Rosetta and Sam lived together in the home built on the Leichhardt property.
There is also no dispute that during this period, Rosetta, in particular, provided Sam with domestic support and personal care. Sam admitted that Rosetta cooked for him, washed for him, cleaned the house, and did other tasks around the house for his benefit and for his siblings (whilst they lived there). He also admitted that she provided him with emotional support before and after he was married: T193-194.
However, s 20(1) of the Property (Relationships) Act provides that the court must have regard to (a) the financial and non-financial contributions made directly or indirectly by, or on behalf of, the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and (b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family.
Thus, I must weigh up Sam’s contributions also to Saverio and Rosetta in the period 1993 to 2000, in order to determine whether it is just and equitable to adjust Sam’s interest in the Leichhardt property.
Although it is usual in a claim for adjustment of property interests under s 20 of the Property (Relationships) Act to establish the assets of the parties at the commencement of the relationship; the assets acquired during the relationship and by whom; the assets of the parties at the end of the relationship; and contributions of each party to the acquisition, improvement and conservation of the separate or joint property (Howlett v Neilson [2005] NSWCA 149), little in the way of evidence of these basic matters was available. Presumably, this was because Saverio and Rosetta only sought an adjustment of Sam’s (and Rosa’s) interest in the Leichhardt property.
There was no suggestion of a pooling of assets, or income, or the sharing of general living expenses, at any time, during either of the two periods in relation to which the claims by Saverio and Rosetta were made. Apart from the contribution to the purchase price of the Leichhardt property (only one third of which, if available, would be relevant to this part of the claim), Saverio and Rosetta did not assert that he, or she, had made any contributions which, either directly or indirectly, enabled Sam, or Sam and Rosa, to acquire any assets or any financial resources.
In this regard, I have earlier noted that I am unable to be satisfied of any financial contribution to the acquisition of the Leichhardt property by Saverio. There is no suggestion of any direct financial contribution to its acquisition by Rosetta. There is no suggestion of any contribution by either Saverio or Rosetta to the conservation or improvement of the Leichhardt property during the period 1993 to 2000. To the contrary, the evidence is that only a proportion of the council rates (reduced to one third, at Giuseppe’s suggestion made about 4 years ago), was paid by Rosetta, whilst all of the other outgoings on the Leichhardt property during this period were borne by Sam, Giuseppe and Frank equally.
Even after Sam’s marriage to Rosa, the only financial contribution was to the payment of a proportion of the rates. Rosa gave evidence that, generally, she and Sam would pay their share of the rates by credit card and that Rosetta would pay the balance of the rates at the Council separately, although at times, she and Sam would pay the full amount and Rosetta would give them cash for the one third share: T257.40-T258.06.
In relation to the other contributions, including those made in the capacity of homemaker, or parent, made by either of Saverio or Rosetta to the welfare of Sam or to the welfare of their family, constituted by the parties, during this period, there is no suggestion that Sam was not a loving and dutiful son to his parents, or that he did not contribute to their welfare. During this period, Sam, as a son, is likely to have provided to each of his parents, some support and care. Although this was not explicitly put, I can infer that it occurred in light of the evidence of all members of the family that it was a close and loving family.
Even if he provided no such support and care, during this period, Saverio and Rosetta were living in a property of which Sam was a one third owner (in the period between 1993 and 2000) and with Rosa, a two third owner thereafter. They were not paying anything to him, or to him and Rosa, after 2000, for their occupation, with Antonio, of the Leichhardt property.

(I should note that counsel for Saverio and Rosetta made no submissions on the nature of the adjustment that ought to be made to Sam’s interest in the Leichhardt property by reference to the contributions made by them to him during the period 1993 to 1999.)
In all the circumstances, I am satisfied that the contributions by Saverio and Rosetta, when taken with the contributions by Sam, do not require any adjustment to be made to Sam’s interest in the Leichhardt property as a result of the contributions of the former to the latter. On balance, bearing in mind the holistic nature of the court’s consideration in evaluating contributions, I do not think it would be just and equitable to adjust Sam’s interest in the Leichhardt property for any contribution made by one to the other during the period 1993 to 2000.
Turning to the period after Sam’s marriage to Rosa, I am not satisfied that Saverio and Rosetta were “living with” Sam and Rosa in the Leichhardt property. It seems clear that after their marriage in 1999, separation of living arrangements was achieved. I have earlier referred to Rosetta’s and Rosa’s evidence which suggests that the two different areas were treated as quite separate and that each did not come and go from the area occupied by the other. There was no dispute that the downstairs area, in which Saverio, Rosetta and Antonio lived, consisted of two bedrooms, a kitchen, a study and a bathroom.
If my conclusion is correct on this, then Saverio and Rosetta’s claim for this period must fail.
But even if I were wrong, once again, I must weigh the contributions by each of the parties to the other. Rosetta did not suggest that her relationship with Sam changed after his marriage to Rosa, and she gave clear evidence about the closeness of her relationship with Rosa.
Again, Saverio and Rosetta’s only contribution financially during this period was to one half of the council rates (reduced to one third at Giuseppe’s suggestion made about 4 years ago), and the payment of about $2,635 for one half of the cost of a hot water system. On the other hand, Sam and Rosa, after 2000, were the registered proprietors of two thirds of the Leichhardt property and there is no suggestion that Saverio and Rosetta paid them any occupation fee or rent. That is a period of over 15 years (since 2000) and over 25 years (since 1990). In addition, they were also bearing the burden of repayments of the borrowing to enable them to purchase Frank’s interest.
Sam and Rosa gave evidence that sometimes Rosetta would babysit for them and, if it was necessary, if Sam was unable to do so, that she would collect one, or both, children from school. Rosetta would also, on occasions, take washing off the line and, on occasions, cook meals. This type of conduct is not such, on its own, as to warrant an order adjusting the interests of Sam and Rosa in the Leichhardt property.
I note also, the obvious reality, stated by Sam in cross-examination, that to the extent that Rosetta spent time supervising Danielle and Marcus, that provided an opportunity for her, as a grandparent, to spend time with her grandchildren: T195.20-T195.34. Rosetta, herself, acknowledged that she did not expect any payment, and whilst this concession is not determinative, it does suggest that her contributions were as a mother and grandmother, no doubt, with countervailing benefits.
In relation to the period after Sam’s marriage to Rosa, counsel submitted that “the Court would… adjust the parties’ interest in relation to the Property such that Saverio and Rosetta receive a percentage of the net proceeds of sale of the Property in relation to the Property (Relationships) Act claim… [being] 5% of that part of the Property owned by each of Sam and [Rosa]”. In making the submission, he did not seek to identify any contributions made by Sam and/or Rosa, financially or otherwise, to Saverio and Rosetta, to which I have referred, or at all.
There was really no articulation of how it was that the contributions said to have been made by Rosetta and Saverio made any adjustment of property interests claimed just and equitable: Trosse v Howard [2009] NSWCA 346, per Hodgson JA (with whom Macfarlan JA agreed) at [22]-[23].
Determinations as to what orders should be made under s 20 are to be made solely on the grounds of the justice and equity of the case. In this regard, as has been written many times, the court is “not required to undertake a reductionist process analogous to the taking of partnership accounts by examining every alleged ‘contribution’ of the kinds described in the section with a view to putting a monetary value on each in order to reach an accounting balance one way or the other, then to be eliminated by the requisite financial adjustment; rather, the court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind”: Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, at [36].
Since I have not accepted the financial contribution to the purchase price asserted by Saverio, it is really only the non-financial contributions made by Rosetta and Saverio that could properly result in the adjustment of the property interests of Sam and Rosa in the Leichhardt property.
On balance, bearing in mind the whole of the evidence, and in the exercise of the court’s discretion, I am of the view that it would not be just and equitable to adjust Sam and Rosa’s interest in the Leichhardt property for any contribution made by Rosetta and Saverio (to the extent that there is evidence of his contribution) to them during this period. In my view, the non-financial contributions made by them to Sam and Rosa are unremarkable, and, in any event, must be considered in light of the countervailing contributions from the relationship, financial and otherwise, including, but not limited to, occupation of part of the subject property without payment of rent or occupation fee, made by Sam and Rosa as the registered proprietors of two thirds of the Leichhardt property since about 2000.
It follows that the claims for adjustment of property interests under the Property (Relationships) Act by Saverio and Rosetta must also be dismissed.
In the circumstances, I order that the whole of the Statement of Claim in the trust proceedings be dismissed.
I shall hear the parties on what costs orders should be made in the trust proceedings.
In relation to the s 66G proceedings, I make the following orders and notations:

(a) Order that the whole of the proceedings be dismissed.

(b) Order that the Plaintiffs’ costs as agreed in the sum of $4,000.00 be paid out of the proceeds of sale of the Leichhardt property.

(c) Note the agreement of the parties in Paragraphs 3, 4, 5, 6, 7 and 8 of Short Minutes of Order dated 12 October 2015 signed by the legal representative of each of the parties.

I also order, in both proceedings, that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10), and Practice Note No SC Gen 18 (Para 26).

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Decision last updated: 06 November 2015

Medium Neutral Citation:	Pupo v Pupo; Pupo v Pupo [2015] NSWSC 1633
Hearing dates:	7 April 2015; 6, 7, 8, 12 October 2015
Date of orders:	06 November 2015
Decision date:	06 November 2015
Jurisdiction:	Equity
Before:	Hallen J
Decision:	In proceedings 2014/264225: 1. Order that the whole of the Statement of Claim be dismissed. 2. The parties are to make submissions on what costs orders should be made in the proceedings. 3. Direct that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10), and Practice Note No SC Gen 18 (Para 26). In proceedings 2014/228570: 1. Order that the whole of the proceedings be dismissed. 2. Order that the Plaintiffs’ costs as agreed, in the sum of $4,000, be paid out of the proceeds of sale of the Leichhardt property. 3. Note the agreement of the parties in Paragraphs 3, 4, 5, 6, 7 and 8 of Short Minutes of Order dated 12 October 2015 signed by the legal representative of each of the parties. 4. Direct that the Exhibits be dealt with in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (rule 31.16A and rule 33.10), and Practice Note No SC Gen 18 (Para 26).
Catchwords:	EQUITY – Trusts – Whether resulting or constructive trust – First plaintiff, the father of the Defendants alleged to have provided part of purchase price of property in name of three of his sons EQUITY – Whether equitable lien securing alleged contributions Court not satisfied that any contribution to purchase price made by first Plaintiff – Even if contribution made, court not satisfied of the amount of the contribution PROPERTY (RELATIONSHIPS) ACT – Claims for adjustments of property pursuant to Property (Relationships) Act 1984 (NSW) – Only one property the subject of claim – Whether parties living together in a close personal relationship – Parents and son – Parents and son and daughter in law – Whether living together – Respective contributions of parties – Where Plaintiffs’ financial and non-financial contributions unremarkable – Where Plaintiffs obtain countervailing benefits from relationship, financial and otherwise, including occupation of part of the subject property registered without payment of rent or occupation fee – Holistic value judgment – Not just and equitable to make any adjustment order
Legislation Cited:	Conveyancing Act 1919 (NSW) Evidence Act 1995 (NSW) Fair Trading Act 1987 (NSW) Property (Relationships) Act 1984 (NSW) Real Property Act 1900 (NSW) Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Ballard v Multiplex [2012] NSWSC 426 Bibby Financial Services Australia Pty Limited v Sharma [2014] NSWCA 37 Blatch v Archer (1744) 1 Cowp 63; 98 ER 969 Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599 Harbour Port Consulting v NSW Maritime [2011] NSWSC 813 Harkness v Harkness [2011] NSWSC 1421 Howlett v Neilson [2005] NSWCA 149 Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550 Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben’s of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep) Nominal Defendant v Smith [2015] NSWCA 339 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 P and S Pupo (t/as Pupo Builders and Decorators v Builders Licensing Board [1996] NSWCA 416 Pennimpede v Pennimpede [2009] NSWSC 85 Pennimpede v Pennimpede [2010] NSWCA 121 Pupo v Builders Licensing Board [1996] NSWCA 440 Seltsam Pty Ltd v McNeill [2006] NSWSCA 158 Trosse v Howard [2009] NSWCA 346 Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56 Watson v Foxman (1995) 49 NSWLR 315
Texts Cited:	P McClellan, “Who Is Telling the Truth? Psychology, Common Sense and the Law” (2006) 80 ALJ 655
Category:	Principal judgment
Parties:	Ferdinando Pupo (first Plaintiff in 2014/228570) Rosemaria Pupo (second Plaintiff in 2014/228570) Giuseppe Pupo (Defendant in 2014/228570) Saverio Pupo (first Plaintiff in 2014/264225) Rosetta Pupo (second Plaintiff in 2014/264225) Sammy Ferdinando Pupo (first Defendant in 2014/264225) Rosemaria Pupo (second Defendant in 2014/264225) Giuseppe Pupo (third Defendant in 2014/264225)
Representation:	Counsel: Mr G Carolan (Plaintiffs in 2014/228570; first and second Defendants in 2014/264225) Mr R Brender (Defendant in 2014/228570; third Defendant in 2014/264225) Mr G Gemmell (Plaintiffs in 2014/264225) Solicitors: Kazi Portolesi Lawyers (Plaintiffs in 2014/228570; first and second Defendants in 2014/264225) Bransgroves Lawyers (Defendant in 2014/228570; third Defendant in 2014/264225) Pelosi & Associates (Plaintiffs in 2014/264225)
File Number(s):	2014/228570; 2014/264225