Ranaldi v Ranaldi

[2003] NSWSC 501

CITATION:	Ranaldi v Ranaldi [2003] NSWSC 501
HEARING DATE(S):	27 & 28 May 2003
JUDGMENT DATE:	12 June 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Davies AJ
DECISION:	Declaration as to the existence of a trust refused.
CATCHWORDS:	Trust - whether express trust - whether document intended to be binding between parties - no point of principle.
PARTIES :	Anna Ranaldi (Plaintiff) Mitri Robert Domenic Ranaldi (First Defendant) Rosario Ranaldi (Second Defendant)
FILE NUMBER(S):	SC 2644/02
COUNSEL:	P Glissan (Plaintiff) M Pesman (Second Defendant)
SOLICITORS:	Pelosi & Associates (Plaintiff) Stuart Fowler & Partners (First Defendant) - Submitting Appearance Schrader & Associates (Second Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Davies AJ

Thursday, 12 JUNE 2003

2644/02 Anna Ranaldi v Mitri Robert Domenic Ranaldi & anor

JUDGMENT

1 HIS HONOUR: In these proceedings the plaintiff, Anna Ranaldi, seeks a declaration that the first defendant, her son Mitri Robert Ranaldi, holds the property known as 16 Myrtle Street Leichhardt, in trust for her. She seeks an order that the second defendant, Robert’s wife Rosa Ranaldi, withdraw a caveat lodged against the title to the property. At the hearing, Mr P Glissan of counsel appeared for the plaintiff. Mr M Pesman of counsel appeared for Rosa. Robert entered a submitting appearance and took part in the proceedings only as a witness for the plaintiff.

2 The crucial issue is whether an express trust arose out of a document dated 5 January 1998 (“the trust document”), which reads as follows:-

“I Anna Ranaldi is Transferring title of Property of 16 Myrtle St LEICHHARDT to my son Mitri Robert Ranaldi on the understanding that he can build his house and when building is all finished it has been agreed that title will transfer back into my title name”.

3 The brief background facts are that in 1983 the plaintiff and her husband Peter purchased the property (“Myrtle Street”) in their joint names. The property was thereafter occupied by Robert and Rosa and by their three children. It appears that there were problems with the marriage and that, from 1992 onwards, Rosa received social security benefits as a sole parent. However, she and her children continued to live at Myrtle Street. The evidence suggests that, so far as the parents understood the position, Robert, Rosa and the children lived together as a family. Indeed, many of the plaintiff’s complaints about Rosa were that Rosa was spending Robert’s money on gambling. There is nothing in the plaintiff’s affidavit or oral evidence which has led me to think that she considered that, during the 1990s, Robert and Rosa were separated.

4 In 1994, the plaintiff and her husband purchased a property at Longview Road, Five Dock (“Longview”). It was purchased in Robert’s name although the parents received the rents and paid all outgoings.

5 At about the time of the purchase the parents had a conversation with Robert in which they informed him that he should consider rebuilding Myrtle Street and that they would purchase Longview in his name so that he could organise the finance and the building work. Subsequently, in June 1996, Robert sold Longview for $270,000 and put the funds into a separate bank account in his own name, intending such monies to be used for the rebuilding of Myrtle Street.

6 In 1996 the father, Peter, died. He left a handwritten will which in terms devised Myrtle Street to Robert and Rosa. That devise failed because the father’s interest in the land passed to the plaintiff under the joint tenancy.

7 During 1996-97, a building development application for Myrtle Street was pursued and, ultimately, approval was given for a redevelopment, the estimated cost of which was $350,000. As this sum exceeded the monies which Robert had in hand, additional finance was required. In addition, Robert’s chosen builder advised him that he would enter into a contract with Robert only if the property was in his name.

8 It is the evidence of the plaintiff and of Robert that, in order to enable the building works to proceed, they agreed that the property would be placed in Robert’s name whilst the building work was being carried out and that it would be retransferred into the plaintiff’s name on completion. They said that the trust document was executed on 5 January 1998 with that end in view.

9 On 18 January 1998, Myrtle Street was transferred from the plaintiff to Robert. The transfer expressed a consideration of $270,000 but no consideration was paid. The solicitor, Mr RE Izzard, obtained a valuation of $320,000 and stamp duty of approximately $10,000 was paid accordingly. Mr Izzard did not give evidence in the proceedings but his file was tendered. It is clear that his instructions were that the property was to be transferred from the plaintiff to Robert. There is nothing in his file which suggests a qualified transfer.

10 A building contract was entered into on 24 January 1998. The total price was $343,300. Those works were completed so far as the builder was concerned in October 1998. The plaintiff and Robert gave evidence that the building works are not yet finished but it seems that, insofar as the building works were incomplete at the time when the builder departed, the works required to be done were fairly minor. In any event, the builder finished work in October 1998 and received all but a very small part of the contract price.

11 Myrtle Street was not retransferred to the plaintiff. The plaintiff gave evidence that she forgot about the matter. Robert, in his evidence, laid emphasis upon the failure to complete the building works. The affidavits of both referred to the fact that the building works were not completed. Unstated were two other factors which would have inhibited a retransfer of the land, namely the substantial stamp duty that would have been payable on a retransfer, the property having substantially increased in value, and the fact that Robert had obtained finance, first from the Commonwealth Bank and then from Citibank. Both facilities had been secured on the property. The details of the Commonwealth Bank’s funding is not in evidence. However, the Citibank facility had a limit of $175,000 and has stood at about that figure for several years.

12 In 2001, Rosa left Myrtle Street. She lodged a caveat against the title and commenced proceedings in the Family Court of Australia claiming, inter alia, that she was entitled to share in the value of Myrtle Street. Robert’s solicitor in those proceedings advised him that proceedings in the nature of the present proceedings should be instituted. That advice was followed.

13 Neither the plaintiff nor Robert has credibility. The plaintiff is an excitable person of Italian extraction. She has a great love for Robert and a bitter dislike of Rosa. I am satisfied that her dislike of Rosa has coloured her evidence to a very significant extent. Her actual recollection of events is very limited. Her ability to recall events and to give an honest description of them has been inhibited by the emotion which she feels. I am satisfied that the plaintiff was assisted by Robert in the preparation of her evidence and that her affidavit evidence very much reflects Robert’s thinking rather than her own. One has only to compare the plaintiff’s affidavits and Robert’s affidavits to see their similarity. When pressed about aspects of her affidavits, the plaintiff conceded that she did not understand them.

14 Robert’s evidence was not credible. In the preparation of his affidavits, he must have had legal assistance, for the affidavits are better expressed than he would have expressed them. Nevertheless, many of the paragraphs of his affidavits are structured so as to conceal rather than disclose the truth. For example, paragraph 4 of his affidavit of 17 October 2002 reads:-

“Between 1992 and 2000, Rosa and I were separated.”

No one would understand from that sentence that, during the period mentioned, Robert, Rosa and their three children were living together in Myrtle Street and that Rosa had sufficient access to Robert’s money to lead to complaints by Robert to his mother that Rosa was spending his monies on gambling. Another example is one of the crucial paragraphs:
“On 5 January 1998, at Mum’s request, I signed a document in her handwriting, a true copy of which appears as annexure “E” in the Mum’s Affidavit.”

The document referred to is the trust document. No one reading paragraph 15 would understand that it was a document which Robert himself prepared and wrote out in his own hand.

15 Another example is paragraph 21 of the affidavit:

“Mum has informed me and I verily believe, that she has paid all mortgage loan repayments to Citibank Limited, and all outgoings on Myrtle Street since then. I have made none. To the best of my knowledge, Rosa has made none.”


Insofar as the facts can be established it appears that the only regular payments made with respect to the mortgage were monthly payments of interest which were paid by direction from Robert’s salary. Such payments as were made by the plaintiff were the subject of receipts issued by Robert. For example, there is a receipt of 21 December 2000 in respect of a sum of $2,400 recorded “loan for loan Repayment for Mortgage Citibank.” The monies which the plaintiff paid to Robert and which Robert passed on to Citibank were all recorded as loans. Moreover, the monies were not used to pay off any particular mortgage instalment. They simply went into the general running account which Robert maintained with Citibank. The account was a general account maintained by Robert, notwithstanding that it was secured on Myrtle Street.

16 A final example is paragraph 22 which reads:-

“Building commenced but has not been completed at Myrtle Street.”

That affidavit was sworn on 17 October 2002. No person reading paragraph 22 would understand that the building contractor finished work in October 1998 or that, insofar as there were matters left undone, they were of a minor nature.

17 In my opinion, Robert’s affidavit evidence was designed to mislead, to obscure the truth. His oral evidence was no better. In my opinion he lacks credibility.

18 Mr Glissan pointed out that Robert had not been cross-examined on all aspects of his affidavits and submitted that there were aspects which ought to be accepted because they were unchallenged. Mr Glissan submitted that I should accept Robert’s evidence that at the time of the transfer of the property he asked his solicitor, Mr Izzard, what would be the cost of transferring the property back into his mother’s name after the building work was completed. This evidence was said to be strong evidence supporting the authenticity and effectiveness of the trust document of 5 January 1998. After it was pointed out to Mr Glissan that Mr Izzard would have been an important witness, and that he had not been called, Mr Glissan tendered Mr Izzard’s file. This did not disclose any reference to a trust or to an arrangement to retransfer the property. Mr Izzard’s instructions were that the property was being transferred from the plaintiff to Robert. I reject Robert’s evidence on this point.

19 No purpose would be served by discussing the surrounding facts in any greater detail. I turn now to consider the trust document dated 5 January 1998. The principal factors in favour of the legal effectiveness of the trust document are:

(i) The building contractor did insist that the property be in Robert’s name before he would enter into a contract with Robert.
(ii) There is evidence that, after the death of the father in 1996, the plaintiff and Rosa were estranged and furthermore that the plaintiff was very concerned about Rosa’s gambling. Useful cross-examination on this subject was frustrated by the plaintiff’s tirades against Rosa. However, I feel confident in holding that, in 1998, the plaintiff did not like or trust Rosa.
(iii) The trust document was signed by both the plaintiff and by Robert, an indication tending to show that it had legal significance.
(iv) The trust document was, on the evidence of the plaintiff and Robert, handed to the plaintiff. I note, however, that this factor depends entirely upon acceptance of their evidence.

20 Relying upon these and other factors, Mr Glissan submitted that it was inconceivable that, in January 1998, the plaintiff would have wished to make a gift of property to Rosa. He submitted that the trust document set out the sensible arrangement which the plaintiff and Robert had made to overcome the problem arising from the builder’s requirement.

21 There are however, many factors which point to a contrary conclusion. They include:-

(a) Longview was purchased in 1994 so that it would be available to Robert for the purpose of raising finance to enable him to develop a better home on Myrtle Street. Robert sold Longview in 1996, thus precluding the possibility that he could use Longview as security. This step set in train the almost inevitable course that there would be a change in the ownership of Myrtle Street.
(b) The transfer from the plaintiff to Robert was expressed as a sale and duty was paid on the then value of the property. It is inconceivable that Mr Izzard would have permitted the transaction to proceed as it did if he had understood that the transaction was to the effect set out in the trust document.
(c) Had the plaintiff wished to have her interests protected by a document having legally binding effect, Mr Izzard would have been an appropriate person to consult. He was not consulted.
(d) The receipts for the monies which the plaintiff thereafter paid to Robert described the monies as loans to Robert.
(e) The property was not retransferred to the plaintiff notwithstanding that work under the building contract finished in October 1998.
(f) The arrangement set out in the trust document was impractical because of the stamp duty that would be payable on a retransfer and because of the fact that the property was to be used by Robert as security for the finance which he proposed to obtain. Robert said that the value of the property was $1.3 million at the time of the hearing, and he agreed that the stamp duty on a retransfer could amount to $60,000. As to finance, the sum owing is still approximately $175,000. The problem with the builder could have readily been overcome by joining the plaintiff in the building contract.
(g) The father’s will in 1996 had devised Myrtle Street to Robert and Rosa. Notwithstanding that the will did not take effect in this respect, it operated to convey his view of what should occur. It is probable that, from at least 1996, Robert had in mind that he would obtain title to Myrtle Street. The sale of Longview made any other course improbable.
(h) The first affidavits of the plaintiff and Robert misdescribed the trust document by describing it as a document in the plaintiff’s handwriting.
(i) The trust document shows considerable evidence of staining and tearing. The plaintiff in her evidence gave a bizarre story of burying the document in her back garden. Rocks were mentioned. However, the photostat copy of the document which was annexed to the plaintiff’s first affidavit did not show any signs of the discolouration or the tearing, signs which ought to have shown up on the photocopy. A possible inference is that, during the course of the proceedings, the trust document was tampered with with a view to enhancing its authenticity. The plaintiff’s solicitor was not called to explain how the document got into its current state whilst the photostat copy contained no picture of damage.

The plaintiff’s evidence related the discolouration to fear of Rosa. The plaintiff gave this evidence:
“Q. And the document has got some markings on it, some dirt and so on. Can you explain how that happened?
A. Yes, yes, because my daughter-in-law, she taking everything in home, only- - -

Q. I am not asking you about your daughter-in-law.

OBJECTION

Q. Look, Mrs Ranaldi, I want you to listen carefully to my questions and answer my questions. Now, my question is directed to the marks on the document, and the condition of the document. I am asking you do you know how those marks got on the document? I don’t want you to talk about you daughter-in-law.
A. I put it under the ground in the backyard.

Q. You put it under the ground?
A. Yes, because I frighten.

Q. Just explain in a little bit more detail precisely where you put the document?
A. I put it in the backyard, this one, rocks, and I put it under it, I think in a couple of days when we just signed and after I forget.”
(j) The trust document is headed “To Whom it may Concern”, a heading which suggests that the document was looked upon not as a document between the plaintiff and Robert but as a document which the plaintiff and Robert could present to other people. Robert prepared another document in his handwriting which was similarly headed. It referred to his having lived at 16 Myrtle Street for the last 16 years. Accordingly it may have been written about 1999. Robert had difficulty explaining the purpose of that document but I gather from his evidence and from its contents that it was intended to be used in relation to inquiries from Social Security. The expression “To Whom it may Concern” in the trust document is at least a straw in the wind pointing in the direction of the use of the document as against Rosa rather than as between the plaintiff and Robert. So also is the plaintiff’s evidence that the document was buried within days of its execution for fear of Rosa.

22 Taking all these matters into account, I am not satisfied that the trust document came into existence on the date which it bears. Moreover, whether or not it came into existence that date, I am not satisfied that it was ever intended to take effect as between the plaintiff and Robert. The document which had legal effect as between them was the transfer of Myrtle Street from the plaintiff to Robert. I consider it probable that the trust document was never intended to have any effect other than to frustrate Rosa’s claim to an interest in the property. I am satisfied that it was never intended that Myrtle Street would be retransferred to the plaintiff. For this reason, the declaration as to the existence of a trust must be refused.

23 I have discussed the issues in terms of an express trust. The evidence does not substantiate either a resulting or a constructive trust.

24 The plaintiff’s claim will be dismissed with costs.

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Last Modified: 06/24/2003