Re Richflow Pty Ltd (in liq)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 01796

IN THE MATTER of RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886)

BETWEEN:

JONATHON COLBRAN in his capacity as liquidator of RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886) & ANOR (according to the attached Schedule)	Plaintiffs
v
NAZIF DARDOVSKI & ORS (according to the attached Schedule)	Defendants

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	22–24 May 2023 and 14 August 2023
DATE OF JUDGMENT:	10 October 2024
CASE MAY BE CITED AS:	Re Richflow Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2024] VSC 618

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CORPORATIONS — Winding up — Corporations Act 2001 (Cth) — Company in liquidation registered proprietor of large semi-rural property — Adult children of deceased former director claim beneficial ownership of property — Shareholder of company and step-mother of children disputes claim — Whether property held by company on resulting trust and/or pursuant to declaration of trust — Section 90-15 (Schedule 2, Insolvency Practice Schedule (Corporations)) — Application by liquidator for directions from Court as to beneficial ownership of property.

TRUSTS — Resulting trust — Principles — Purchase of property in 1987 where limited contemporaneous documentation — Adult son and daughter allege payment of purchase price of property acquired in name of company owned and controlled by father and step-mother — Whether presumption of resulting trust — Whether presumption rebutted — Meaning and calculation of ‘purchase price’.

TRUSTS — Express trust — Requirements — Written declaration of trust — Whether properly executed by company — Where recital to declaration inaccurate — Whether trust valid and enforceable — Whether clear intention to create a trust — Whether trust a sham — Party alleging existence of sham also a necessary participant.

EQUITY — Purported gift of beneficial interest in property held under alleged trust — Whether donor has done all that is necessary to achieve assignment of equitable property.

EVIDENCE — Whether s 272(1) of Duties Act 2000 (Vic) (‘Duties Act’) precludes admissibility of written declaration of trust if insufficiently stamped — Instrument predates current legislation — Applicability of s 20 of predecessor Stamps Act 1958 (Vic) — Direction under s 272(2)(a) of Duties Act to admit into evidence later declarations confirming gift of beneficial interests under trust.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Kohn	Dimos Lawyers
For the Third and Fifth Defendants	Mr R Hay KC Mr N Paterson	Jem Lawyers Pty Ltd
For the Sixth Defendant	Mr N Jones	DSA Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background and dramatis personae............................................................................................... 1

Procedural history.............................................................................................................................. 7

Material relied upon by parties..................................................................................................... 13

Questions for determination.......................................................................................................... 14

Jurisdictional basis for proceeding............................................................................................... 16

Approach to assessing evidence.................................................................................................... 17

Witnesses and credibility of witnesses........................................................................................ 18

Resulting trust claim by Feim and Julie...................................................................................... 22

Legal principles concerning resulting trusts........................................................................... 22
Evidence concerning resulting trust claim.............................................................................. 26
Julie’s evidence in chief..................................................................................................... 27
Julie’s evidence under cross-examination...................................................................... 30
Fezije’s evidence in chief.................................................................................................. 35
Fezije‘s evidence under cross-examination................................................................... 36
Evidence of Livio Cellante............................................................................................... 37
Jelena’s evidence in chief.................................................................................................. 38
Jelena’s evidence under cross-examination................................................................... 40

Whether property held on resulting trust for Feim and Julie?............................................. 43
Date of contract of sale...................................................................................................... 43
Terms of contract of sale including number of payments........................................... 44
Payment of deposit............................................................................................................ 47
Payment of first instalment.............................................................................................. 48
Payment of second instalment......................................................................................... 52
Payment of third instalment............................................................................................ 53
Intention at time of payment and other matters........................................................... 55

Conclusion on resulting trust claim......................................................................................... 59

Declaration of trust claim by Feim............................................................................................... 60

Legal principles concerning declaration of trust claim......................................................... 60
Requirements for an express trust.................................................................................. 60
Sham trusts......................................................................................................................... 64

Admissibility of declaration of trust, declarations of confirmation and beneficiary direction 68
Content of declaration of trust and declarations of confirmation....................................... 73
Evidence concerning declaration of trust claim..................................................................... 74
Julie’s evidence in chief..................................................................................................... 74
Julie’s evidence under cross-examination...................................................................... 79
Fezije’s evidence in chief.................................................................................................. 81
Fezije’s evidence under cross-examination................................................................... 83
Mr Forbes-Nicholson’s evidence in chief....................................................................... 84
Mr Forbes-Nicholson’s evidence under cross-examination........................................ 87
Jelena’s evidence in chief.................................................................................................. 90
Jelena’s evidence under cross-examination................................................................... 93

Whether declaration of trust in favour of children of Naim (and ultimately Feim)?....... 97
Was declaration of trust properly executed by Richflow and signed by Naim and Jelena?.................................................................................................................................. 97
Whether clear intention to create a trust?...................................................................... 99
Whether declaration of trust a sham?........................................................................... 109
Effect of deregistration of Richflow on declaration of trust...................................... 114
Interaction between resulting trust and declaration of trust.................................... 115

Effect of forms of gift and declarations of confirmation..................................................... 116
Legal principles concerning voluntary assignment of equitable interests.............. 116
Effect of forms of gift....................................................................................................... 118
Effect of declarations of confirmation.......................................................................... 118

Conclusion on declaration of trust claim............................................................................... 122

Answers to primary questions..................................................................................................... 122

Conclusion....................................................................................................................................... 124

HIS HONOUR:

Introduction

This proceeding concerns the ownership of a large semi-rural property located at 1665 Mount Cottrell Road, Mount Cottrell, Victoria (‘property’).[1] The registered proprietor of the property is Richflow Pty Ltd (in liq) (‘Richflow’ or ‘company’). The first plaintiff, the liquidator of the company (‘liquidator’), seeks directions from the Court regarding the beneficial ownership of the property. The critical question is whether the property is beneficially owned by the company (and ultimately its shareholders, including the sixth defendant) or whether it is held by the company on trust for the third and/or fifth defendants. However, the matter is far from straightforward. Key events occurred more than 35 years ago and the company was deregistered for approximately 20 years. Important documents cannot be located, people have passed away or become incapacitated, and the memories of witnesses have faded over time.
[1]The property is more specifically described in Certificate of Title Volume 9512 Folio 367.

For the reasons that follow, I have determined the property was partly held by Richflow on resulting trust as to 27.5% on behalf of the fifth defendant (Julie Dardovski) who paid a portion of its purchase price.[2] However, the entirety of the property is now held by Richflow on trust for the third defendant (Feim Dardovski) in accordance with a declaration of trust executed by the company on 31 January 1995 and pursuant to later declarations of confirmation made by the trust beneficiaries (including the fifth defendant) in July 2010 gifting their beneficial interests in the property to the third defendant.

Background and dramatis personae

[2]I have found Julie Dardovski contributed $40,000 towards a total purchase price of $145,224 ($140,000 contract price plus stamp duty and registration costs).

The dramatis personae in this matter are as follows:

Name	Relationship
Members of the Dardovski family
*First generation*
Naim Dardovski	Deceased 16 July 1997 Husband of Jelena Former director of Richflow (from 9 November 1988 to 31 May 1996)
Jelena Dardovski (also known Jelena as Dardovska) (Sixth defendant)	Widow of Naim Step-mother to five step-children Former director of Richflow (from 9 November 1988 to 31 May 1996 and from 2 August 2017 to 5 March 2018) Former secretary of Richflow (from 9 November 1988 to 31 May 1996) Shareholder of Richflow (500 of 1000 ordinary shares)
Feride Dardovski (also known as Feride Dardovska)	Deceased December 1965 Naim’s first wife, biological mother to Nazif, Nevrus, Feim, Sehiha and Julie
Lidia Leban	Naim’s ex-partner, mother to Richard
*Second generation – Naim’s children and their spouses*
Nazif Dardovski (now known as Nick Besimi) (First defendant)	Naim’s son. Jelena’s step-son
Nevrus (also known as Neville) Dardovski (Second defendant)	Deceased January 2019 Naim’s son. Jelena’s stepson
Feim (John) Dardovski (Third defendant)	Naim’s son. Jelena’s step-son
Sehiha Salievski (also known as Seniha Senos Aslan) (Fourth defendant)	Naim’s daughter. Jelena’s step-daughter
Julie Dardovski (also known as Julie Dardovska and formally known as Julie Bunjaku) (Fifth defendant)	Naim’s daughter. Jelena’s step daughter Former director of Richflow (from 3 February 1995 to 31 May 1996)
Fezije Dardovski	Feim’s wife Litigation guardian of, and holder of enduring power of attorney for, Feim
Naser Bunjaku	Deceased 26 May 1987. Julie’s husband. Jelena’s son-in-law.
Richard Leban	Deceased Naim’s son
*Third generation – grandchildren, cousins and their spouses*
Skender Besimi	Nick’s son Jelena’s step-grandson Director of Richflow (from 5 October 2017) Shareholder of Richflow (500 of 1000 ordinary shares)
Ethan Pierce	Nick’s son
Adthe Bunjaku	Naser and Julie’s son
Bukurije (Brooke) Medinov/Dardovski	Feim and Fezije’s daughter
Erjan Medinov	Feim and Fezije’s son-in-law
Selim Dardovski	Fezije’s step-son. Former director of Richflow (from 24 January 2020 to 15 April 2020)
Persons not members of Dardovski family
John Ethil Willis	Resident at the property
Southern Brooks	Former director of Richflow (from 17 April 2019 to 24 January 2020) Former shareholder of Richflow
Livio Cellante	Former director of Chelmaness Pty Ltd, the development company which sold the property to Richflow
Anthony Forbes-Nicholson	Lawyer who formerly acted for Feim, Julie, Naim, Jelena and Richflow

For ease of reference, and without any intended disrespect, I will refer to the members of the Dardovski family mentioned above by their first names.

It is necessary to set out a number of matters by way of background.

Naim, Feride and their children immigrated to Australia in 1965 and settled in Melbourne. However, Feride died tragically that same year. Naim and Jelena married in 1976 or 1977 (there is conflicting evidence as to precisely when).

On 10 June 1987, Naim received two letters from Paul Markopoulos & Company, Barristers and Solicitors (‘Paul Markopoulos & Company’), concerning the purchase of a property, comprising approximately 40.49 hectares, described as ‘Rock Bank’ and ‘Lot 3 Mount Cottrell Road’ (‘June 1987 solicitor’s correspondence’). The correspondence suggests the relevant contract was entered into on 7 June 1987 and was a ‘terms [c]ontract’ for a total purchase price of $140,000, although the instalments are not specified. Unfortunately, there is no contract of sale concerning the property (‘contract of sale’) in evidence before the Court. However, for reasons which I will explain more fully, I am satisfied the June 1987 solicitor’s correspondence relates to the property in question.

More than a year later, on 25 October 1988, Richflow was incorporated. Naim and Jelena were appointed its directors on 9 November 1988.

At some point (the precise date is a matter of contention) between late 1988 to around 1990, Feim and Fezije permanently moved to the property.

On 2 February 1989, Richflow granted a mortgage to RMBL Investments Pty Ltd (‘RMBL’) over the property for consideration of $80,000. The mortgage was registered on 9 March 1989. On 17 February 1989, a certificate of transfer of land was executed by the vendor of the property, Chelmaness Pty Ltd (‘Chelmaness‘), transferring the property to Richflow for $140,000. The company became the registered proprietor of the property on 9 March 1989. The company granted a further mortgage over the property on 7 June 1990 to Hathson Investment Company Pty Ltd (‘Hathson Investment’) for the consideration of $875,000.

At some stage between 1994 to 1996 (again, there is some dispute as to the precise date), Jelena moved to the property and commenced residing there.

On 31 January 1995, a document styled ‘Declaration of Trust’ was purportedly executed by Richflow, declaring it held the property on trust for Nazif, Nevrus, Feim, Sehiha and Julie (‘declaration of trust’). This is a contentious document which has been the subject of considerable evidence and submissions by the parties. On 24 October 1995, Wilson Potter Nicholson solicitors sent a letter to Naim and Jelena referencing their previous instructions and enclosing a ‘Form of Gift’ under which Nazif, Nevrus, Feim, Sehiha and Julie might gift to each other the interest they purportedly held in the property (‘form(s) of gift’). Julie has given evidence that she signed the form of gift and, together with Feim, procured signatures from the other siblings to the form of gift documents by which they gifted their putative interests in the property to Feim. However, the signed copies of the form of gift documents before the Court are undated and do not appear to have been duly executed by the respective grantor, donee and witnesses.[3]
[3]These signed form of gifts were not included in the court book but can be found at exhibit ‘JD-12’ to the affidavit of Julie Dardovski sworn 25 August 2021.

As noted in the table above, on 31 May 1996, Naim, Jelena and Julie ceased acting as directors of the company. Then, on 1 October 1996, Naim and Jelena were declared bankrupt following the filing of a creditor’s petition by the Australian Taxation Office. They each submitted a statement of affairs to their trustee in bankruptcy dated 20 December 1996 in materially identical terms.

The company was deregistered on 24 June 1997 for failing to pay Australian Securities and Investments Commission (‘ASIC’) annual review fees. Naim passed away shortly thereafter on 16 July 1997.

At a point in time between 2000 and 2004 (there is conflicting evidence as to the precise date), Jelena permanently moved out of the property.

Between 14 and 16 July 2010, each of Nazif, Nevrus, Feim, Sehiha and Julie purportedly made a declaration gifting their respective interests in the property to Feim (‘declaration(s) of confirmation’). The declarations of confirmation referenced earlier documents supposedly executed in October 1995 which were ‘intended to evidence’ the declarant’s decision to gift their interest in the property to Feim. I take this to be a reference to the form of gift documents discussed above.

Around April 2011, Feim suffered a massive heart attack which resulted in him experiencing serious cognitive and functional problems. Consequently, his wife Fezije was appointed as his attorney pursuant to an enduring power of attorney dated 24 June 2011.

On 16 June 2016, Western Water compulsorily acquired part of the property and the compensatory sum of $225,000 was paid to ASIC on the basis the company itself was deregistered. A few weeks later, on 5 July 2016, Julie lodged a caveat over the property on the grounds of an implied, resulting or constructive trust. Feim and Fezije also later registered caveats on the property on 26 February 2018 and 1 March 2019, respectively, although these were on the grounds of adverse possession by exclusive occupation.

On 19 June 2017, Jelena filed an application in this Court seeking the reinstatement of Richflow. Orders were made by the Court on 28 July 2017 reinstating the registration of the company. Jelena was then reappointed as director of the company on 2 August 2017. She executed an ASIC ‘refund authority’ on 11 August 2017 to be paid the $225,000 in compensation for the earlier compulsory acquisition. Skender Besimi was appointed as a director of the company on 5 October 2017 and, on 5 March 2018, Jelena ceased being a director.

On 3 August 2018, the State Revenue Office (‘SRO’) issued a letter to the company demanding payment of $60,409.35 in respect of outstanding land tax and interest. The letter warned that failure to make payment could result in winding up proceedings. On 1 August 2019, the Commissioner of State Revenue filed an application in this Court to have the company wound up in insolvency on the basis it had failed to comply with a statutory demand. At a hearing on 4 September 2019, I wound the company up and appointed David Mutton as liquidator.

On 17 September 2019, lawyers purporting to act on behalf of Richflow (after its liquidation) sent a letter to the occupiers of the property demanding they vacate it immediately. On 2 October 2019, Jelena completed and signed a Report on Company Activities and Property dated 2 October 2019 (‘Jelena’s ROCAP’ or ‘ROCAP’) purportedly as director of the company, although Skender was in fact the director at that time. In the ROCAP, Jelena stated the company owned the property and placed its value at $10 million. Around the same time the liquidator procured a ‘kerbside appraisal’ on the property which disclosed the property had an estimated realisable value of between $3 million to $3.3 million. On 17 October 2019, the liquidators of Richflow caused a formal notice to vacate the property to be issued to its occupiers. The occupiers were afforded the opportunity to put forward reasonable grounds of dispute within 15 business days. In response, Feim (by his attorney Fezije) executed a document titled ‘Direction by Beneficiary to Trustee’, addressed to the liquidator and dated 30 March 2021, which referenced the declaration of trust and declaration of gift and sought the transfer of the property into his name (‘beneficiary direction’).

On 3 July 2020, Richflow lodged a caveat over the property as its registered proprietor ‘being entitled to possession of the certificate of title…and to prevent improper dealings’.

On 27 May 2021, around the time of the commencement of this proceeding, the company purported to pass a resolution signed by Jelena and Skender as members acknowledging Skender’s resignation as director of Richflow and Jelena’s re-appointment as a director. However, the change is not reflected in the most recent historical company extract before the Court and the company remains under the control of the liquidator.

Procedural history

The proceeding had a long and convoluted history before eventually going to trial. The plaintiffs filed their originating process on 28 May 2021 seeking, among other things, directions from the Court under ss 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations) (‘IPS’) (which is Sch 2 to the Corporations Act 2001 (Cth) (‘Act’)) and the inherent jurisdiction of the Court concerning the ownership of the property (the company’s sole asset). In particular, the liquidator seeks a direction as to whether he is justified in treating the property as being wholly held on trust by Richflow for the benefit of Feim, Julie, Nick, Nevrus and Sehiha. Ancillary orders and directions are also sought regarding the realisation of the property and the distribution of the proceeds of sale, the appointment of the liquidator as receiver and manager over any trust property and for the payment of the liquidator’s remuneration and costs. The hearing of those issues has been deferred until after the Court determines who is the beneficial owner of the property.

At the first return of the originating process on 25 June 2021, the Court made orders adding Jelena as a defendant to the proceeding and requiring the defendants to file and serve affidavit material on the question of any alleged contribution to the purchase price of the property. The matter was also referred to judicial mediation.

However, at a mention on 22 July 2021, the Court was informed that Nevrus had passed away. The Court later invited a representative of Nevrus’ deceased estate to participate in the judicial mediation, despite no appearance having been filed. Nick appeared at the mention with the assistance of his son, Ethan Pierce, who was granted leave by the Court to act as a McKenzie friend to assist Nick in preparing any affidavit material. The Court also received and noted correspondence on behalf of Sehiha confirming she did not intend to file any evidence or otherwise participate in the proceeding, including the judicial mediation.

At a directions hearing on 3 September 2021, the Court made a pro bono referral for Nick to obtain legal assistance from the Victorian Bar Pro Bono Scheme in respect of the judicial mediation ordered by the Court.

On 1 March 2022, the Court ordered by consent that pursuant to r 9.06(c) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’), Jonathon Colbran be substituted for David Mutton as the first liquidator plaintiff in the proceeding. This followed Mr Mutton’s resignation as liquidator of all companies to which he was appointed liquidator (including Richflow) and an application pursuant to s 473A of the Act to enable the change of liquidators.[4]
[4]See Re ACN 167 984 045 Pty Ltd (in liq) [2021] VSC 652 (Gardiner AsJ).

Following an unsuccessful judicial mediation on 29 November 2021, the matter returned for directions on 16 December 2021. The Court made an order that any defendant claiming any interest, or making a submission regarding any interest in the property file and serve on other parties, points of claim specifying the grounds on which the claim is made. As a natural contradictor to any such claim, Jelena was ordered to file and serve points of defence. The matter was fixed for trial to commence on 19 July 2022.

By points of claim dated 28 February 2022, Feim and Julie make a claim on the property. They allege Richflow holds the property on a resulting trust for them by reason of their alleged payment of the property’s purchase price. Further, or in the alternative, they allege Richflow holds the property in favour of Nick, Nevrus, Feim, Sehiha and Julie by reason of the declaration of trust. Feim also contends Nick, Nevrus, Sehiha and Julie later gifted their interest in the property to him in accordance with the declarations of confirmation. In the event either of the trust claims failed, Feim also made a claim for adverse possession of the property by reason of his alleged continuous, sole and exclusive occupation of it since 1997 or, alternatively, 2004. However, the adverse possession claim was ultimately abandoned during the trial.

In points of claim and defence dated 15 March 2022, Jelena denies the allegations made by Feim and Julie and seeks a declaration that Richflow is the beneficial owner of the property and is entitled to its possession. On this analysis, Jelena and her fellow shareholder Skender would be entitled to any surplus following realisation of the property by the plaintiffs and the payment of the liquidator’s remuneration and costs.

When the matter came back for pre-trial directions on 29 April 2022, it was dealt with on the papers by consent. Among other things, the Court made orders excusing Nick, Nevrus and Sehiha from the proceeding as they had elected not to file any points of claim or make any submissions regarding an interest in the property pursuant to the 16 December 2021 orders. By further order, Nick, Nevrus and Sehiha were therefore not permitted to file any points of claim document, affidavit, submission, or other document in the proceeding claiming any interest in the property without the Court’s leave. Timetabling orders were then made to prepare the matter for trial as between the remaining parties.

On 17 May 2022, the Court granted Jelena’s former solicitors, TBA Law, leave to cease acting for her pursuant to r 20.03(3) of the Rules. Following the granting of that leave, the matter was listed for mention on 24 May 2022 to ensure compliance with the pre-trial timetable. However, the Court was informed at that mention, and at a subsequent mention on 14 June 2022, that Jelena had not formally retained new solicitors and required additional time to do so. In light of this, it was appropriate to vacate the existing trial dates, and relist the trial for late October 2022. Consequential orders were made at the hearing extending the time for the relevant pre-trial steps. However, there were continued delays in Jelena obtaining legal representation.

At a mention on 31 August 2022, the Court was informed that Jelena had been unable to raise sufficient funds to engage lawyers and would, accordingly, be unrepresented at trial. Counsel for the liquidator, Mr Kohn, suggested the liquidator may consider funding the representation of Jelena as a contradictor or ask the Court to make a pro bono referral to enable her to perform such a role. The Court then vacated the trial of the matter for a second time and relisted it to commence on 14 February 2023, on a three-day estimate.

At a further mention of the matter on 30 September 2022, Jelena appeared with the assistance of Mr Stephen Thorp, a consultant. Mr Thorp indicated finance had been secured by Jelena and she would shortly be in a position to retain solicitors formally. On the basis of that assurance, a new pre-trial timetable was set and the February 2023 trial dates confirmed. Jelena then retained Tisher Liner FC Law to act on her behalf and a notice of solicitor commencing to act was filed with the Court on 6 December 2022.

However, on 21 December 2022, the Court received an email from Nicholsons Lawyers and Consultants, the solicitors on the record for Feim and Julie, indicating the firm was expecting to receive instructions to cease acting based on an alleged conflict of interest. Given the pending February 2023 trial dates, leave to cease acting was required under r 20.03(3)(b) of the Rules. The Court was subsequently provided with an affidavit by Mr Anthony Forbes-Nicholson dated 22 December 2022 in support of an application for leave to cease acting. In his affidavit, Mr Forbes-Nicholson deposed to having previously acted for Jelena, Naim, Richflow, and other members of the Dardovski family, including in respect of matters relevant to the proceeding. The next day, the Court received email correspondence from Tisher Liner FC Law alleging a clear conflict of interest arose in circumstances where Mr Forbes-Nicholson continued to act for Feim and Julie in the proceeding against the interests of Jelena. In the circumstances, the Court considered it appropriate that Nicholsons Lawyers and Consultants be granted leave to cease acting and listed the matter for urgent mention on 23 January 2023, given the pending trial. On 16 January 2023, Jem Lawyers filed a notice of change of solicitor for Feim and Julie. Accordingly, on 23 January 2023, the Court made orders extending the time for compliance with certain remaining pre-trial steps.

However, difficulties with the parties’ legal representation continued. Twelve days before the commencement of the trial in mid-February 2023, Tisher Liner FC Law sought leave to cease acting for Jelena under r 20.03(3)(b) of the Rules. On the basis the solicitor–client relationship was no longer viable, the Court granted leave for Tisher Liner FC Law to cease acting for Jelena on 3 February 2023.

Pursuant to the Court’s orders of 23 January 2023, the parties attended a second judicial mediation on 7 February 2023, which was unsuccessful. Jelena attended the mediation unrepresented, but was assisted by Mr Thorp. The matter was then brought back for mention on 10 February 2023 at the request of the plaintiffs’ solicitors. Jelena appeared with the assistance of Mr Thorp who informed the Court that Jelena was again seeking new solicitors to act for her at the trial of the proceeding. Jelena ultimately engaged DSA Law as new solicitors on 20 February 2023. Given the timing of this engagement and the complexity of the proceeding, it was regrettably necessary to vacate the trial for the third time and relist it for 22, 23 and 24 May 2023. Consequential orders were made by consent on 9 March 2023, extending the time for the completion of various pre-trial steps.

By affidavits sworn by Fezije on 7 February and 16 March 2023, Fezije applied under ord 80 of the Rules to be appointed as Feim’s litigation guardian. No other party raised any formal objection to the application. On the available evidence, I was satisfied Feim lacked the capacity to manage his affairs, including instructing his lawyers in the proceeding. I was otherwise satisfied the appointment of Fezije as Feim’s litigation guardian was appropriate. In particular:

(a) a recent medical report prepared by Feim’s general practitioner, Dr Jude Gurusinghe, confirmed that following his 2011 heart attack, Feim suffered from an acquired brain injury, which ‘result[s] in diffuse cognitive impairments with prominent reductions in attention and memory’. His prognosis was described as ‘poor’ on the basis that his cognitive capacity will not improve;

(b) the appointment formalised an arrangement already in place in accordance with the power of attorney given to Fezije on 24 June 2011;

(c) Fezije has no interest in the proceeding adverse to Feim; and

(d) the appointment was otherwise appropriate given the complexity of the issues involved in the proceeding and the identity, number and interests of the other parties.

Accordingly, I made orders on 2 May 2023 for the appointment of Fezije as litigation guardian. Due to his condition, Feim was unable to give evidence at trial.

By orders dated 11 June 2021 and supplementary orders dated 22 May 2023 (to reflect the claims brought by Feim and Julie), Connock J referred the proceeding to an Associate Justice for hearing and determination pursuant to r 77.05 of the Rules and, if required, also under r 16.1(3) of the Supreme Court (Corporations) Rules 2013 (Vic) (then in force).

Following a final pre-trial mention of the matter on 17 May 2023, the matter proceeded to trial. The trial was heard over four days, with parties giving opening submissions and evidence on 22, 23 and 24 May 2023, and closing submissions on 14 August 2023. On 6 June 2023, following the parties’ evidence and before closing submissions, the matter was again referred to judicial mediation (with the consent of the parties); but the mediation was unsuccessful.

Over the course of the trial, the following five witnesses were called to give oral evidence and were cross-examined by counsel: Julie; Fezije; Mr Anthony Forbes-Nicholson; Mr Livio Cellante; and Jelena. Before each witness was called, objections to aspects of their affidavit evidence were dealt with. Prior to the commencement of the trial, the parties were required to produce a joint table of objections to evidence and the Court made provisional rulings on those objections. The parties were then invited to make short submissions concerning the objections and the provisional rulings at the trial. The court book, which contained all of the affidavits upon which the parties relied, was subsequently updated so as to strike out any part of the affidavit evidence ruled inadmissible by the Court, and the updated versions of the affidavits were subsequently adopted by the witnesses.[5]
[5]A supplementary court book was also provided during the course of the trial containing a limited number of historical documents.

Although Nick and Sehiha both filed affidavits in the proceeding,[6] their affidavits were not relied upon by any party. Further, neither Nick, Sehiha, nor the deceased estate of Nevrus made any claim in the proceeding. The liquidator did not give any oral evidence and the plaintiffs rely upon the affidavit of David Mutton dated 28 May 2021 and the affidavit of Jonathon Colbran dated 15 February 2022. No expert witnesses were called, including on the authenticity of any critical document before the Court.
[6]Nick’s affidavit was sworn 14 August 2021 and Sehiha’s affidavit was affirmed 16 September 2021.

Material relied upon by parties

Feim and Julie rely on the following material in the proceeding:

(a) the affidavits of Julie Dardovski sworn 25 August 2021, 10 February 2023 and 4 May 2023 (‘Julie’s first affidavit’, ‘Julie’s second affidavit’ and ‘Julie’s third affidavit’, respectively);

(b) the affidavits of Fezije Dardovski sworn 27 August 2021, 7 February 2023, 16 March 2023, and 4 May 2023 (‘Fezije’s first affidavit’, ‘Fezije’s second affidavit’, ‘Fezije’s supplementary affidavit’ and ‘Fezije’s third affidavit’ respectively);

(c) the affidavit of David Mutton affirmed 27 May 2021 (‘Mutton affidavit’);

(d) the affidavit of Livio Cellante sworn 29 November 2022 (‘Cellante affidavit’);

(e) the affidavits of Anthony Peter Forbes-Nicholson sworn 15 December 2022 and 3 February 2023 (‘first Nicholson affidavit’ and ‘second Nicholson affidavit’, respectively);

(f) the affidavits of Thanh Nguyen affirmed 7 February 2023 and 19 May 2023; and

(g) outlines of submissions dated 18 May 2023, 21 May 2023 and 13 June 2023.

Jelena relies on her affidavits sworn on 23 August 2021 and 11 April 2023 (‘first Jelena affidavit’ and ‘second Jelena affidavit’, respectively), together with outlines of submissions dated 18 May 2023 and 13 June 2023.

The liquidator places reliance on the Mutton affidavit and the affidavit of Jonathon Colbran affirmed on 14 February 2022, along with outlines of submissions dated 18 May 2023 and 13 June 2023.

Pursuant to the Court’s orders, the parties also jointly prepared a statement of agreed facts and a neutrally worded chronology.

Questions for determination

The proceeding raises a number of complex and interrelated questions for determination. Following the hearing of the parties’ evidence, Feim abandoned his claim for adverse possession over the property. Additionally, as earlier noted, there are a number of ancillary issues which are deferred for consideration and determination at a later time. The following primary questions now fall for consideration:

(a) does Richflow hold the whole or part of the property on resulting trust for Feim and Julie by reason of their alleged payment of the property’s purchase price?;

(b) in answering (a), is the declaration of trust made on 31 January 1995 relevant?;

(c) if yes to (a), is that interest held by Feim and Julie equally or in accordance with their respective contributions?;

(d) in 1995, was there a declaration of trust by Richflow concerning the property in favour of the children of Naim Dardovski (being Nick, Nevrus, Feim, Sehiha, and Julie) by reason of the declaration of trust document?;

(e) question (d) above subsumes the following subsidiary questions:

(i) is the declaration of trust admissible?;

(ii) was the declaration of trust properly executed by the company and is it a valid and enforceable document?;

(iii) for the purpose of (e)(ii), did Naim and Jelena affix their signature to the document?;

(iv) for the purpose of (e)(ii), does it matter whether or not some or all of the named beneficiaries contributed some or all of the purchase money for the property?;

(v) for the purpose of (e)(ii), was there a clear intention to create a trust?

(vi) was the declaration of trust a sham and, if so, what is the legal consequence?; and

(f) if yes to (d), in 2010 did all or any of Naim’s children referred to above gift any of the interest they had in the property to Feim?

(together, ‘the primary questions’).

The following questions are to be resolved following this judgment:

(a) is Richflow entitled, as against any person to whom the property is conveyed, to:

(vii) a contribution for payments made or which must be made by Richflow in respect of the property?;

(viii) a charge or lien over the property to secure the obligations referred to in (i)?;

(b) is the liquidator entitled to a lien over the property for his remuneration and costs?; and

(c) should the property be transferred to Feim or sold by the liquidator?

(together, ‘the deferred questions’).
Jurisdictional basis for proceeding

As already noted, the liquidator seeks directions from the Court about the ownership of the property pursuant to ss 90-15 and 90-20 of the IPS and the inherent jurisdiction of the Court. Section 90-15 of the IPS provides:

(1)The Court may make such orders as it thinks fit in relation to the external administration of a company.

…
(3)Without limiting subsection (1), those orders may include any one or more of the following:
(a)an order determining any question arising in the external administration of the company…

Section 90-20 of the IPS specifies who may apply for an order under s 90-15. Those persons relevantly include an officer of the company. It follows that the liquidator has standing under s 90-20.

Section 90-15 is broad in its scope and contemplates not only the exercise of judicial discretion, but also the determination of substantive rights.[7] In GDK Projects Pty Ltd, in the matter of Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq),[8] Farrell J remarked that the power in s 90-15(1) is, ‘in its terms, unconstrained’.[9]
[7]See Re Polat Enterprises Pty Ltd (in liq) [2020] VSC 485 [31] (Hetyey AsJ). See also Michael Murray and Jason Harris, Keay’s Insolvency: Personal and Corporate Law and Practice (Lawbook, 11th ed, 2022) [10.335].
[8][2018] FCA 541 (Farrell J).
[9]Ibid, [33].

In discussing the scope of the court’s jurisdiction to give directions under the now repealed analogues of ss 447D(1) and 479 of the Act, Goldberg J observed in Re Ansett Australia Ltd[10] that:

…[T]he prevailing principle adopted by the courts, when asked by liquidators and administrators to give directions, is to refrain from doing so where the direction sought relates to the making and implementation of a business or commercial decision, either committed specifically to the liquidator or administrator or well within his or her discretion, in circumstances where there is no particular legal issue raised for consideration or attack on the propriety or reasonableness of the decision in respect of which the directions are sought. There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, the decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised.[11]

[10](2002) 40 ACSR 433 (Goldberg J).

[11]Ibid, 451 [65]. See also Re MF Global Australia Ltd (in liq) [2012] NSWSC 994, [7] (Black J).

Having regard to the issues for determination in this case, there are clearly legal questions of substance which arise and in respect of which the liquidator requires guidance. I consider that the Court’s jurisdiction under s 90-15 to make the relevant directions is engaged. Alternatively, the Court has power to do so in accordance with its inherent jurisdiction. No party contends otherwise.

Approach to assessing evidence

In determining the issues arising in this case, the Court is confronted with competing testimony from witnesses concerning their recollection of events occurring many years ago.

As Leeming JA observed in Gautam v Health Care Complaints Commission,[12] ‘[u]sually, the resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation’.[13] In a similar vein, in 3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd,[14] M Osborne J said:[15]

The…appropriate course in evaluating competing evidence is ‘to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence’, and make ‘inferences drawn from the documentary evidence and known or probable facts’.

[12][2021] NSWCA 85.

[13]Ibid, [25] (Leeming JA). See also Amorosi v Robinson [2024] VSC 466 [58] (Moore J) (‘Amorosi v Robinson’).

[14][2023] VSC 21 (M Osborne J). See also Amorosi v Robinson, [58].

[15]Ibid, [144] (citations omitted).

I note in this regard that there is no direct objective evidence concerning a number of aspects of the property’s acquisition, including the date of the contract of sale and its terms, and whether certain payments were made. In Siegwerk Australia Pty Ltd (in liquidation) v Nuplex Industries (Aust) Pty Ltd,[16] a case concerning questions of causation and breach of contract, Beach J explained the proper approach to be taken in making inferential findings in a circumstantial case:[17]

It is not sufficient that the circumstances give rise to conflicting inferences of an equal degree of probability or plausibility or that the choice between them can only be made by conjecture (Coastwide Fabrication & Erection Pty Ltd v Honeysett [2009] NSWCA 134 at [60] per McDougall J, Ipp and Young JJA agreeing). I accept though that the process of inference may involve an intuitive element that is not susceptible to detailed support or explanation (at [64] per McDougall J).
There is a distinction between inference and conjecture even if the reasoning process occurs on a continuum in which there is no bright line division (Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262 at 275 [84] to [88] per Spigelman CJ). A conjecture, even though plausible, is no more than a guess, whereas an inference is a deduction from the evidence. If the deduction is reasonable, the inference may rise to legal proof (Jones v Great Western Railway Co (1930) 144 LT 194 at 202). But there must be objective facts from which the inference could be drawn, otherwise what is left is mere speculation or conjecture (Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 at 169 and 170 per Lord Wright).
Generally, the proper inference to be drawn on the balance of probabilities depends upon a practical and reasonable assessment of the evidence as a whole (BGC Residential Pty Ltd v Fairwater Pty Ltd [2012] WASCA 268 at [51] and [54] per Pullin JA).

[16][2016] FCA 158 (Beach J) (‘Siegwerk v Nuplex’).

[17]Ibid, [86]-[88].

I intend to apply the above principles in scrutinising the competing testimony of the witnesses in the case and drawing any necessary inferences from the available evidence.

Witnesses and credibility of witnesses

I will address questions of credibility of witnesses and conflicts of evidence progressively in my analysis of the issues below. However, by way of overview, it is appropriate to record my impressions about the creditworthiness of the witnesses.

Julie initially gave evidence at trial in a straightforward and businesslike manner. Whilst some of Julie’s evidence was supported by objective documentary evidence (for example, in relation to the terms of the contract of sale and the payment of the first instalment under it), her evidence regarding other matters was not (for example, in relation to the source of funds to make the second instalment on the purchase price). There were also aspects of her evidence that were unsatisfactory. For example, her evidence regarding the payment of a deposit on the purchase of the property was inconsistent and confusing. She initially maintained Feim had sourced the funds for the deposit from Sehiha but then changed her evidence to conform with her prior evidence given in a Federal Court public examination that she and Feim had jointly borrowed the money from their sister. Her evidence regarding the source of funds for the second deposit was also at odds with prior evidence given in the public examination.

Julie conceded she has a poor memory at times but said there were things she remembers very well. That is partly understandable because a number of events the subject of the proceeding occurred more than 35 years ago. Given her evidence was at times unreliable, I have approached Julie’s evidence cautiously, weighing it against objective contemporaneous documents and other oral and affidavit evidence. On the question of the payment of the first instalment of the deposit for the purchase of the property, Julie’s evidence was given in a forthright manner and appeared truthful. More importantly, it was independently corroborated by contemporaneous documentation. Although her evidence regarding the first instalment was ostensibly at variance with her evidence given in the Federal Court public examination, her explanation for that inconsistency was plausible and her oral testimony about that issue was internally consistent with her affidavit evidence given in the proceeding.

While I found that Fezije’s evidence was truthful to a degree, it could not be wholly relied upon. Her credibility was particularly brought into question when giving evidence in support of the ultimately abandoned adverse possession claim as she omitted to disclose the salient fact that Feim had been in prison for a number of years during which time he was also said to have resided at the property. She also gave contradictory and unsatisfactory evidence about payment of expenses by her and Feim in respect of the property. In the case of the payments, some of her evidence was uncorroborated by the documentation upon which she relied. It may be that Fezije’s evidence about the extent of payments by Feim and Fezije in respect of the property was overstated or inflated. In determining certain contested issues, such as the circumstances and source of the payment of the deposit and second and third instalments on the purchase of the property, it was necessary to scrutinise closely Fezije’s evidence in light of the documentary record and the objective surrounding material.

I found Jelena to be a wholly unreliable witness. I would not believe any disputed assertion by Jelena unless it was independently corroborated by objective documentary evidence. By way of example, she gave the following unsatisfactory evidence:

(a) Jelena initially insisted the property was purchased by Richflow in February 1989, but belatedly conceded under cross-examination that the property was in fact purchased in June 1987. She volunteered her memory was fallible because of her age. I find her memory of events around this time to be unreliable;

(b) Jelena’s initial evidence that she and Naim arranged for the construction of a three-bedroom house on the property in 1989 was either a significant embellishment on her part or a major defect in her memory. She ultimately conceded she could not remember whether she and Naim had commenced the construction of a three-bedroom house in 1989 and then suggested she and Naim had paid to extend an existing dwelling on the property for the use of Feim and Fezije;

(c) her evidence that the purchase of the property was partly funded by a cash payment of $60,000 from profits of the Builders Arms Hotel was implausible and unsupported by any documentary evidence;

(d) she was adamant in her affidavit evidence that she had never signed the declaration of trust as a director of Richflow. She also emphatically denied signing the document when examined under oath during public examinations conducted in September 2020 in the Federal Court of Australia in relation to the affairs of the company. In her first affidavit filed in this proceeding she deposed to first seeing the declaration of trust during the public examination process. Somewhat inconsistently, in her second affidavit she said she first saw the declaration of trust in 2021. However, at trial, she gave supplementary oral evidence conceding that while the signature appeared to be hers, she did not recognise the declaration of trust and had not seen it before the commencement of the Court proceeding, or the trial itself (it was unclear which). Eventually, Jelena conceded under cross-examination that she had in fact signed the declaration of trust at the time of its execution in January 1995. However, she then gave entirely new evidence that she was told to sign the declaration by her husband and to not ask any questions. Her evidence on the topic was inconsistent and unreliable. No explanation was offered for why she had changed her evidence so materially; and

(e) she similarly denied in her affidavits having previously seen a letter sent to the Department of Social Security in June 1995 concerning an application by Naim and Jelena for an age pension and which attached a copy of the declaration of trust. However, she ultimately accepted under cross-examination that she had in fact seen the letter in 1995.

Mr Cellante was a disinterested witness who gave clear, direct and credible evidence concerning the nature of contracts entered into by the vendor company at the time of the purchase of the property. I consider him to be a witness of truth.

At trial, Mr Forbes-Nicholson presented as a witness of truth and answered questions in a direct manner. Whilst a significant part of his evidence was informed by his interpretation of contemporaneous documents and his usual practice as a solicitor, I have no reason to doubt the veracity of his evidence. When he could not recall specific matters, he did not hesitate in saying so. I do not consider that his history in acting for members of the Dardovski family, including most recently for Feim and Julie, in any way coloured his evidence. Nor was that put to him in cross-examination.

Resulting trust claim by Feim and Julie

I turn now to the legal principles and evidence concerning the resulting trust claim brought by Feim and Julie.

Legal principles concerning resulting trusts

A ‘purchase money resulting trust’ may arise in circumstances where a legal estate in property held in the name of another is taken to ‘result’ to the person who advances all or part of the purchase money for the property.[18] This occurs because the law presumes a person who purchases property in the name of another does not intend to gift the beneficial interest in that property to the other person.[19]
[18]Bosanac v Federal Commissioner of Taxation (2022) 405 ALR 424, [12] (Kiefel CJ and Gleeson J) (‘Bosanac’), citing Dyer v Dyer (1788) 2 Cox 92, 93.
[19]DKL v LYK [2019] SASC 100, [230] (Doyle J).

In Vlahos Pty Ltd v Vlahos (‘Vlahos v Vlahos’),[20] a decision of the Victorian Supreme Court of Appeal, Kyrou JA comprehensively summarised the principles concerning purchase money resulting trusts. His Honour explained as follows:^[21]
[20](2017) 16 ASTLR 360 (‘Vlahos v Vlahos’).
[21]Ibid, 377–9 [53]–[63] (Kyrou JA; Tate JA agreeing at 364 [1]; McLeish JA agreeing at 393 [134]) (citations omitted).

Where A purchases property in the name of B, or in the name of A and B, and B does not financially contribute to the purchase price, there is a presumption that A is beneficially entitled to the interest in the property held by B.
Where two or more parties make equal financial contributions to the purchase price, but the property is conveyed into the name of one party only, there is a presumption that the parties take a beneficial interest in the property as tenants in common in equal shares.
Where two or more parties make unequal financial contributions to the purchase price, but the property is conveyed into the name of only one of them, or in all their names, there is a presumption that the parties take a beneficial interest in the property as tenants in common in shares that are proportionate to their respective financial contributions to the purchase price.
Payment of stamp duty and registration fees can be treated as a financial contribution to the purchase price for this purpose.
The onus of establishing the payment(s) giving rise to a presumption of resulting trust lies on the party who is asserting the existence of the trust.
When a presumption of resulting trust arises, it performs a similar function to the civil onus of proof by requiring the person against whom the presumption applies to adduce evidence, or to point to other evidence in the case, that rebuts the presumption.
Where the party claiming the benefit of the presumption of resulting trust contributed the entire purchase price, the presumption can be rebutted by evidence that the party had a contrary intention at the time the contribution was made, such as evidence of a gift or a loan.
Where two or more parties financially contribute to the purchase price and the legal title does not reflect their respective contributions, the presumption of resulting trust can be rebutted by evidence that, at the time the contributions were made, the parties had a common intention that the beneficial interests are to be the same as the legal interests. Ordinarily, whether a common intention existed at that time is not to be determined by reference to the subjective, uncommunicated intentions of the parties. Rather, it is to be inferred by reference to the parties’ words and conduct and the prevailing context at that time, including the relationship that then existed between the parties. Evidence of subsequent statements or conduct, as distinct from those which are contemporaneous with the relevant transaction, will only be admissible as admissions against interest.
The strength of any presumption of resulting trust will vary from case to case, as will the weight of evidence required to rebut the presumption.
In some circumstances, a countervailing presumption of advancement will operate. That presumption arises in favour of the person in whose name the property is purchased, where the relationship between that person and the purchaser or contributor is such that the latter has a ‘natural obligation to provide’ for the former, such as in a case of a father and child. It will be presumed in such a case that the purchaser or contributor intended to give the other a beneficial interest unless the presumption is rebutted.
If a presumption of resulting trust arises and the relationship between the parties does not give rise to a presumption of advancement, the former presumption will give rise to a trust unless there is evidence that the person who financially contributed to the purchase price had a contrary intention at the time the contribution was made.

In Zekry v Zekry,[22] the Court of Appeal adopted Kyrou JA’s summary of the law in Vlahos v Vlahos.[23] More recently, in Bosanac v Federal Commissioner of Taxation,[24] Kiefel CJ and Gleeson J confirmed:[25]

The presumption [of a resulting trust] can be rebutted by evidence from which it may be inferred that there was no intention on the part of the person providing the purchase money to have an interest in land (or other property) held on trust for him or her. The presumption cannot prevail over the actual intention of the party paying the purchase price as established by the overall evidence, and where more than one person pays the purchase price, as here, regard is necessarily had to evidence of each of their intentions.

[22][2020] VSCA 336 (‘Zekry v Zekry’).

[23]Ibid, [85] (Tate, Kyrou and Niall JJA).

[24](2022) 405 ALR 424.

[25]Ibid, 51 [13] (Kiefel CJ and Gleeson J) (citation omitted).

Their Honours further explained that ‘the question of intention is entirely one of fact, and concerns the intention manifested by the person or persons who contributed funds towards the purchase of the property.’[26]
[26]Ibid, 56 [32] (Kiefel CJ and Gleeson J).

Justice Gageler (as his Honour then was) held in a similar vein:[27]

The presumption of a resulting trust is a presumption of fact, functionally akin to a civil onus of proof. The presumption will yield to an actual intention to the contrary found on the balance of probabilities as an inference drawn from the totality of the evidence. The weight to be given to the fact of a contribution having been made to the purchase price in drawing an inference as to actual intention will vary according to the totality of the circumstances of the case.

[27]Ibid, 64 [64] (Gageler J).

Importantly, only evidence of actual intention before, at, or immediately after, the acquisition of the property is probative as to whether the presumption has been rebutted.[28]
[28]Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, 364-366 (Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ) (‘Grimsley’); Calverley v Green (1984) 155 CLR 242, 251-2 (Gibbs CJ); 262 (Mason and Brennan JJ) (‘Calverley’); Muschinski v Dodds (1985) 160 CLR 583, 589- 590 (Gibbs CJ) (‘Muschinski’); Zekry v Zekry, [85] (Tate, Kyrou and Niall JJA). See also G E Dal Pont, Equity and Trusts in Australia (Lawbook, 8^th ed, 2023) [26.100] (‘Equity and Trusts in Australia’).

Where a presumption of a resulting trust arises (and is not displaced), the beneficial interests of contributors can later be altered by a subsequent agreement,[29] or be displaced or superseded by an interest arising under a constructive trust.[30]
[29]Calverley, 262-3 (Mason and Brennan JJ). See also Equity and Trusts in Australia, [26.100].
[30]Calverley, 262-3 (Mason and Brennan JJ); Shepherd v Doolan & Ors [2005] NSWSC 42, [23] (White J) (‘Shepherd v Doolan’); Sivritas v Sivritas (2008) 23 VR 349, 373 [127] (Kyrou J) (‘Sivritas’).

The question arises (as it does here) as to what constitutes a contribution to the purchase price in establishing the presumption of a resulting trust. The answer is as follows.

First, a person’s beneficial interest under a resulting trust is solely determined by their direct financial contribution to the purchase price at the time the property is purchased and the trust is created.[31] Put simply, the purchase price is what is paid to directly acquire the property.[32]
[31]Sivritas, 372 [124].
[32]Calverley, 257 (Mason and Brennan JJ).

Secondly, instalment payments under a mortgage do not constitute a contribution towards the purchase price, but instead go towards securing the release of the charge created over the property purchased.[33] That said, taking out a loan (such as by way of mortgage) to fund the purchase price may constitute a direct contribution to the purchase price.[34] Similarly, paying down an existing mortgage secured against the property acquired may be taken into account as a direct contribution.[35]
[33]Calverley, 257-8 (Mason and Brennan JJ); Sivritas, 372 [125]; Zekry v Zekry [85] (Tate, Kyrou and Niall JJA).
[34]Calverley, 251-2 (Gibbs CJ), 257-8 (Mason and Brennan JJ), 267-8 (Deane J); Silvester v Sands [2004] WASC 266, [43] (EM Heenan J) (‘Silvester v Sands’); Sivritas, 372 [125].
[35]Bloch v Bloch (1981) 180 CLR 390, 402 (Brennan J); Calverley, 263 (Mason and Brennan JJ).

Thirdly, authority suggests that capital costs of acquisition in the nature of stamp duty and registration fees will count as contributions to the purchase price, because those costs are necessarily incurred in the acquisition of the property.[36] Put differently, it is not possible to acquire the legal interest in a property without paying such fees. However, the position appears to be different in respect of legal fees and bank fees. As Kyrou J (as his Honour then was) cogently explained in Sivritas v Sivritas (‘Sivritas’):[37]

…only costs necessarily incurred prior to and as a condition of obtaining registration of the interest which is to be held on trust should be included in the purchase price. On this basis, stamp duty and registration fees would be included but legal fees and bank fees would not be.[38] Although legal fees and bank fees are normally incurred in the purchase of property, they are not always incurred, and where they are incurred, their amounts may vary significantly depending on the purchaser’s circumstances and, more importantly, they may be incurred as debts that are paid after the registration of the interest which is to be held on trust.
[emphasis added]

[36]See Currie v Hamilton [1984] 1 NSWLR 687, 691 (McLelland J) (‘Currie v Hamilton’); Atilgan v Atilgan [1999] NSWSC 324, [111] (Austin J); Ryan v Dries [2002] NSWCA 3, [25], [52]-[53] (Hodgson JA) (‘Ryan v Dries’); Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060, [144] (Campbell J); Silvester v Sands, [40]-[41]; Martech Energy Systems Pty Ltd (in liq) v Bell [2005] VSC 198, [8] (Hollingworth J); Dinsdale v Arthur [2006] NSWSC 809, [11] (Brereton J); Brennan v Duncan [2006] NSWSC 674, [9] (White J). Cf Little v Little (1988) 15 NSWLR 43, 44-46 (Bryson J).

[37](2008) 23 VR 349, 372-3 [126] (Kyrou J).

[38]Citing Calverley, 257 (Mason and Brennan JJ).

In the later Court of Appeal judgment in Vlahos v Vlahos, his Honour considered that payment of stamp duty and registration fees can be treated as a financial contribution to the purchase price (citing his earlier analysis in Sivritas), but made no mention of legal and bank fees.[39] Whilst Kyrou J’s comments in Sivritas are strictly obiter,[40] I respectfully agree with his Honour’s analysis. It is apparent that legal and bank fees are not directly incurred in acquiring a property because payment of such fees is not a condition of obtaining registration of the property in the name of the purchaser. However, even assuming legal and bank fees may be taken into account in quantifying a purchase price on the basis that it is the cost to the purchaser rather than the benefit to the vendor that is important,[41] an absence of evidence of those fees would not affect the calculation of the purchase price.[42]
[39]Vlahos v Vlahos, [56] (Kyrou JA).
[40]His Honour did not need to reach a concluded view on the matter because he ultimately found the existence of a constructive trust rather than a resulting trust in that case.
[41]See Currie v Hamilton, 691; Ryan v Dries, [52]-[53] (Hodgson JA).
[42]See Fan v Han [2016] NSWSC 1488, [76] (White J).

Lastly, money subsequently expended on the maintenance or improvement of the property will not constitute part of the purchase price or alter the beneficial interests of contributors under a resulting trust already in existence.[43]
[43]Sivritas, 373 [127] citing Currie v Hamilton, 693; Shepherd v Doolan, [23] (White J).

Evidence concerning resulting trust claim

As regards the purchase of the property, Feim and Julie essentially contend that:

(a) the contract of sale of the property (which has not been located) provided that the property would be purchased for $140,000, with a deposit of $20,000 and the balance in three instalments of $40,000, with possession to be taken immediately;

(b) Feim borrowed $20,000 to pay the deposit of $14,000 and meet legal costs;

(c) Julie paid the first instalment of $40,000 on or about 7 December 1987 from a loan obtained by her. She later repaid that loan following the sale of a property located at 50 Fehon St, Yarraville, Victoria (‘Fehon Street’);

(d) Julie also paid the second instalment of $40,000 by taking out a second loan;

(e) Feim paid the final instalment of $40,000 on or about 30 November 1988 from the proceeds of the sale of a property located at 36 Leslie Street, St Albans which was owned by him and Fezije (‘Leslie Street’); and

(f) because Julie and Feim paid the entire purchase price, Richflow took the property as bare trustee for them by way of resulting trust. This follows in the absence of consideration from Richflow or some contrary intention expressed by Julie and Feim.

Julie’s evidence in chief

At trial, Julie adopted her affidavits as her evidence in chief but also gave supplementary oral evidence about the layout and features of the property. Her evidence in relation to the alleged resulting trust is as follows.

Julie deposes in her first affidavit that in or around 1985, she and her husband Naser purchased a mixed business located at 73 Anderson Street, Yarraville (’Yarraville business’). The vendors of the business, Mr Gorgi Stojcevski and Ms Marija Stojcevski, also originally owned two properties in Fehon Street, Yarraville. Also in 1985, Naim purchase the freehold and business in the Builders Arms Hotel located in Gertrude Street, Fitzroy.

On 26 May 1987, Naser died suddenly. Julie made arrangements to have staff operate the Yarraville business while she commenced full-time work at the Builders Arms Hotel. In her third affidavit, Julie gave evidence that she worked at the Builders Arms Hotel with Feim every day during 1987 until mid to late 1988. However, she says she was not paid for her work and was informed by Feim and Nevrus that they were not paid either. When she discussed this with her father, he said there was not enough money and too much debt to allow for payment for her services. Julie then reached an agreement with the original vendors to sell them back the Yarraville business in return for title to Fehon Street. There was a contract executed on 15 December 1987 for the sale of the business (referred to in the contract as ‘Bunjakus Foods’) and its stock (‘Yarraville business sale contract’) for an amount which Julie says corresponded to the value of Fehon Street. The settlement of the Yarraville business sale contract was to occur on 7 January 1988. Julie says Fehon Street was transferred to her as part of the transaction and the transfer was registered (later) in 1988.[44]
[44]This is borne out by a settlement statement accompanying the Burns Philip loan documentation which includes reference to the transfer of title from ‘Stojcevski’ to Julie immediately prior to the settlement of the later sale of Fehon Street by Julie in 1988 and the repayment of the Burns Philip loan.

Before Naser’s death, he and Julie were interested in purchasing a farm property and had been looking at various locations. In accordance with tradition and her family values, she mentioned this to Naim who resisted the idea. In 1987, when their financial situation permitted it, she, Naser and her brother Feim became more serious about the idea of finding a farm property to purchase. Julie and Feim inspected a number of properties around Mount Cotterell, including the property in question. She considered that the property had a good slope and view of a lake. The property was otherwise an empty block, littered with rocks and weeds and had fencing in poor condition. It was around the time she inspected the property that Naser suddenly passed away. Julie considered purchasing the property to be a good way to honour his memory.

Prior to executing the contract, Julie informed Naim of the intended purchase. Naim apparently became angry he had not been involved in the process. To appease Naim, it was suggested he could be named as purchaser with the right of nomination but the property could be used by the whole family. Whilst the contract of sale cannot be located, having regard to the June 1987 solicitor’s correspondence, Julie considers that the contract of sale was dated 7 June 1987 and involved a settlement period of 18 months, with three payments of $40,000 to be made at regular intervals. Possession was to be taken at the time the contract was signed.

Julie’s evidence was that Feim arranged to borrow around $20,000 for the deposit of $14,000 and related legal costs. She says she knows Feim borrowed the money because he told her he had done so. She also deposes she paid the first two instalments under the contract of sale.

In her third affidavit, Julie recounts her father telling her and Feim that he expected them to make the instalment payments on the property. He also specifically reminded her to make the first instalment. To make the first instalment, which she believes fell due on 7 December 1987, she borrowed $40,000 through the Burns Philp Trustee Company (‘Burns Philp’) as facilitated by Paul Markopoulos & Company. She located loan documentation which records that on 7 December 1987 she arranged to borrow a ‘$50,000 adjustable advance’ and received loan proceeds of $40,000 on that date (‘Burns Philp loan documentation’). She says the loan from Burns Philp was then discharged in July 1988 following the settlement of the sale of her property at Fehon Street, which is confirmed by a settlement statement.

Julie’s evidence was that she derived the funds to make the second instalment by taking out an unsecured loan of $40,000 from an organisation called Custom Credit. However, she has been unable to locate any document in relation to that loan and does not recall how she or Feim repaid it.

Julie recalls it was Feim who paid the final instalment in December 1988 by selling Leslie Street. She recalls that following this final payment, settlement of the property occurred in December 1988, or shortly afterwards, although the title to the property was not transferred until March 1989. She believes this occurred because her father had wished to defer the payment of stamp duty. Julie says that in the period between signing the contract for the property and its settlement, there were active efforts by herself, Feim and Fezije to engage a builder to construct a 110m² home for use by them and the extended family. Julie understood Feim would live with his family on the property. However, immediately prior to arranging for a building permit, Julie and her brother discovered that Naim had taken out a mortgage over the property. She and Feim were upset with their father. Naim considered he had the right to use the property as he saw fit as the family decision-maker. In any case, Naim informed them that he had obtained legal advice and had consequently put the property into a trust structure with Richflow as the trustee to keep the property safe from any risks that may arise from the Builders Arms Hotel.

Although the initial plans to build a large house on the property did not come to fruition, Julie gave evidence in her first affidavit and at trial that following the purchase of the property, Feim erected a tin shed on the property, which he used to operate a mechanical repair business. Feim also acquired a small timber bungalow in 1988 and moved it onto the property. The bungalow was improved so Feim and his family could move to the property after the sale of Leslie Street. Julie gave evidence that Feim and Fezije have lived in the renovated bungalow since 1988. In addition, Feim also improved the fencing, removed rocks, planted trees, and constructed a driveway. Various cars, car parts and building materials were stored by Feim in a large garage at the front of the property. Julie explained that an eight-car garage is located next to the bungalow. She also said that in 1996, she, Feim and her other siblings pooled their resources to purchase another dwelling, which was relocated to the property and used by their father and Jelena. Ten years later, Julie’s niece and her husband transported a cottage to the property.

She deposes that her father purchased the Rifle Club Hotel in Williamstown in 1990 and the sale settled on about 6 September 1990, with a loan provided by Hathson Investment. Mortgages were taken out over the titles to: the property; 61 William Street, St Albans (‘William Street’) (where Naim and Jelena lived); a property owned by Nevrus; and the Builders Arms Hotel to secure the loan. Naim and Jelena moved into the Rifle Club Hotel after it was purchased. Nazif (Nick) and Nevrus were then brought in to be partners in the ownership of the hotel.

Julie’s evidence under cross-examination

Under cross-examination, Julie confirmed she lived at the property in 1990 and again in 1996. Although she has not lived there since 1996, she visits Feim and Fezije regularly. When the property was acquired, it was Julie’s intention that it could be used by all family members, including her father and Jelena. That remained her intention, until the onset of this litigation.

Reference was made in cross-examination to Naim’s last will and testament made on 18 January 1989 (‘Naim’s will’). In his will, Naim made the following statement:

I DIRECT that my other children JULIE DARDOVSKI (BUNJAKU), NEVRUS DARDOVSKI, and SENIHA DARDOVSKA (SALIEVSKA), their spouses and their issue shall have no share or entitlement under the Will in my estate whatsoever AND for that purpose I say that JULIE DARDOVSKA (BUNJAKU) was married at the age of sixteen and has since then lived a separate life from myself and has not been involved in any business or other financial activity with the family and has not assisted in the building of any of my assets which I bequeath by this Will but she is financially independent (and refused to be involved in the Family business of Hotel and Farm activities).

Julie maintained the statements about her in Naim’s will were false.

Julie was taken by Jelena’s counsel to the June 1987 solicitor’s correspondence in connection with the purchase of the property. The first letter comprising the correspondence is addressed to Naim and refers to a conference with the solicitor Paul Markopoulos on 9 June 1987. Julie accepted that despite the fact that she and Feim claim to have wholly paid for the purchase of the property, neither she nor Feim attended the conference referred to in the letter and were not the recipients of any correspondence from the solicitor. She did not insist on her name being placed on the contract of sale and was content for the property to be placed into her father’s name as he was the head of the family. She recalls having first sighted the contract of sale three or four days after she had gone to see the property when the contract was delivered to her father’s house by a real estate agent. Her evidence as to the terms of the contract was based on her recollection of having seen it at that time. She was also familiar with the terms from a prior discussion with the agent when she had inspected the property. She confirmed under cross-examination that the contract required a 10% deposit and instalments every six months ‘around the $40,000 mark’.[45]
[45]Transcript of Proceedings, Re Richflow Pty Ltd (in liq) (Supreme Court of Victoria, S ECI 2021 01796, Hetyey AsJ, 22–24 May 2023 and 14 August 2023), 148 (‘transcript of proceedings’ or ‘transcript’).

However, when cross-examined about the deposit for the purchase of the property, Julie’s evidence became inconsistent and confusing. Julie initially said that Feim had borrowed $20,000 from Sehiha, $14,000 of which was used as the deposit. She was then taken to the following transcript excerpt of her evidence given during public examinations conducted in September 2020 in the Federal Court of Australia concerning the affairs of the company (‘Federal Court public examination’):[46]

And did you make the deposit payment? – I – privilege. I made the deposit payment.
How much was it? – The – we – privilege. We borrowed $20,000. That was part of the deposit we paid to [Cellante].

[46]Court book of Proceedings, Re Richflow Pty Ltd (in liq) (Supreme Court of Victoria, S ECI 2021 01796), 1160 (‘court book’).

Jelena’s counsel then asked her to reconcile this with the evidence she gave at trial:[47]

So there, you’re saying that you made the payment of the deposit whereas you’ve just given evidence that your brother made the payment?---No. My brother and me would have done that together.
…
So there you say, ‘[w]e borrowed’ whereas in your [first] affidavit at paragraph 16, you said that Feim borrowed. So who was it? Did Feim borrow $20,000 or did you and Feim borrow $20,000 together?---Me and Feim borrowed $20,000. My brother went to my sister’s to pick it up.

[47]Transcript, 178-9.

Julie was also cross-examined in relation to the first instalment payment towards the purchase of the property. She gave evidence that she utilised the services of Mr Markopoulos, the family lawyer, to procure a $40,000 loan for her to pay the first instalment. She was taken to the Burns Philp loan documentation which shows a loan advance of $50,000, $40,000 of which was described as ‘loan proceeds’. The enclosed loan schedule also records a number of payments made to third parties, namely $2,393.30 in respect of a ‘Stantcher Settlement’ and $800 as a payment to Maria Dedovkaj’. Julie openly admitted she could not recall the purpose of those payments. She also accepted the Burns Philp loan documentation does not refer to the property itself and that she had produced no documentation to establish that the $40,000 was actually applied towards the purchase of the property. However, Julie was adamant that the only loan she took out in 1987 was for the purchase of the property and she repaid it following the sale of her property at Fehon Street. When Julie was asked where she obtained the Burns Philp loan documentation, after some consideration, she suggested she located it in ‘the shed’, which I take to be the shed on the property.

Finally, Feim and Julie submit that, if the necessary intention to deceive and the other requirements for a sham are present, Jelena should not be permitted to take advantage of her own wrong.[154] A classic explanation of the maxim that no person should take advantage of their own wrong was set out by Bramwell B in Hooper v Lane:[155]

…it means that no one shall gain a right by his own wrong; and not that if he has a right, he shall lose it, or the power of exercising it, by a wrong done in connection with it.[156]

[154]Citing the New South Wales Court of Appeal in Ruthol Pty Ltd v Tricon (Aust) Pty Ltd (2005) 12 BPR 23, 923 [19]-[23] and the authorities referred to there.

[155](1859) 6 HL Cas 443.

[156]Ibid, 460–1 (Bramwell B).

A helpful example of the maxim’s application given by Giles JA in Ruthol Pty Ltd v Tricon[157] is that ‘a party in breach of contract may be precluded from relying on a contractual entitlement arising from the breach, but will not be precluded from relying on a contractual entitlement which does not arise from the breach’.[158]
[157](2005) 12 BPR 23,923.
[158]Ibid, [22] (Giles JA; Santow JA and Hunt AJA agreeing).

There is some force to Feim and Julie’s submission. If the declaration of trust was a sham, as a director of Richflow, Jelena would necessarily have been party to, or otherwise participated in the sham. It is also likely she would have benefited from the sham by obtaining the age pension and defeating her creditors. If the Court were to accede to her argument that the declaration of trust is a sham, she would be gaining a benefit as a shareholder of the company by obtaining a declaration that the company is the beneficial owner of the property and entitled to its possession (as she seeks in her points of claim and defence). It is noteworthy that in none of the cases referred to by the parties was the person who claimed the existence of a sham also party to or involved in the sham. Had I found the existence of a sham (to be clear, I have not), I would be disinclined to grant Jelena the relief she seeks because she would be taking advantage of her own wrong as a perpetrator of, or participant in, the sham.

Effect of deregistration of Richflow on declaration of trust

As already explained, Richflow was deregistered for the period 24 June 1997 to 28 July 2017 – a period of more than 20 years. By force of s 601AD(1) of the Act, the company ceased to exist on its deregistration. However, I accept Feim and Julie’s submission that the company’s deregistration did not lead to the destruction of the trust. A trust will not fail for want of a trustee.[159]
[159]See Jacobs' Law of Trusts, [1-05].

Pursuant to s 601AD(1A) of the Act, because the property was held on trust by Richflow immediately prior to its deregistration, the property vested in the Commonwealth. In accordance with s 601AH(5) of the legislation, upon the reinstatement of Richflow’s registration, the property revested in it, again as trustee.

Interaction between resulting trust and declaration of trust

In her written opening submissions, Jelena says the resulting trust claim and the declaration of trust claim are inconsistent with each other. She says that if a resulting trust existed, then the declaration of trust could not have been validly declared as the property would have been already held on trust for Feim and Julie (however, as I have found, there was only a resulting trust in Julie’s favour).

While Feim and Julie initially made the resulting trust claim their primary claim and advanced the declaration of trust claim in the alternative, they modified their stance in closing submissions. Senior counsel explained that to the extent there was any doubt about whether the full purchase price of the property was paid by Feim and Julie, it would not matter because Feim would be entitled to the entire beneficial ownership of the property by virtue of the declaration of trust and declaration of confirmation. However, if the resulting trust claim failed in its entirety, the declaration of trust claim would still be effective. In this way, the resulting trust claim and the declaration of trust claim operate in tandem.

Feim and Julie also submit that ‘if…there was no or only a partial resulting trust in favour of Julie [and/or] Feim, then, and only to the extent that there was no resulting trust, could Richflow deal with a beneficial interest in the [p]roperty by declaring a trust over it.’ I consider this analysis to be correct. The subject of the declaration of trust did not include Julie’s pre-existing beneficial interest in the property held on resulting trust by the company. Further, because all five of Naim’s children were named as beneficiaries under the declaration of trust, it was not the case that the declaration of trust simply acknowledged a resulting trust which already existed. It had its own legal consequences.

Further, in the event I am wrong about the existence of the resulting trust in favour of Julie, Richflow would nevertheless have held the whole of the beneficial ownership of the property on trust for Nazif (Nick), Nevrus, Feim, Sehiha and Julie pursuant to the declaration of trust. As explained further below, the beneficial ownership of the property was then later changed by operation of the declarations of confirmation.

Effect of forms of gift and declarations of confirmation

Having confirmed the validity of the declaration of trust, it is then necessary to consider whether each of Julie, Nick, Nevrus and Sehiha gifted their beneficial interest in the property to Feim by a later instrument, specifically the declarations of trust.

Legal principles concerning voluntary assignment of equitable interests

As the liquidator rightly identifies, so long as the relevant rules of equity are satisfied, there is no conceptual difficulty with the gifting of a beneficial interest in property held on trust.

In Corin v Patton,[160] Mason CJ and McHugh J explained the test for the recognition in equity of the voluntary assignment (or gift) of legal property, including interests in Torrens land:

Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it necessary for him to have done to effect a transfer of legal title, then equity will recognize the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. "Necessary" used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part.[161]

[160](1990) 169 CLR 540.

[161]Ibid, 559 (Mason CJ and McHugh J).

Justice Deane came to a similar conclusion in that case about the stage at which a gift of real property will be complete and effective in equity:

That test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title.[162]

[162]Ibid, 582 (Deane J).

Although this case raises a question of the purported voluntary assignment (or gift) of equitable property, being existing beneficial interests under a trust, the above test may be applied by way of analogy. However, what is ‘necessary’ to achieve the assignment of equitable property will differ to what is necessary when assigning legal property. It is important to consider the intention of the donor concerning how and when their gift is to be effected and it is necessary to identify the form of dealing used to achieve the assignment to assess whether the assignment is effective.[163] Justice Dixon explained the position in Comptroller of Stamps (Vic) v Howard-Smith:[164]

A voluntary disposition of an equitable interest may take one of at least three forms. It may consist of an expression or indication of intention on the part of the donor that he shall hold the equitable interest vested in him upon trust for the persons intended to benefit. In that case he retains the title to the equitable interest, but constitutes himself trustee thereof, and, by his declaration, imposes upon himself an obligation to hold it for the benefit of others, namely the donees.
In the second place, the disposition may consist of a sufficient expression of an immediate intention to make over to the persons intended to benefit the equitable interest vested in the donor, or some less interest carved out of it. In that case communication to the trustee or person in whom the legal title to the property is vested is not required in order effectually to assign the equitable property. Notice to the trustee may be important to bind him to respect the assignment and in order to preserve priorities. But it is not a condition precedent to the operation of the expression of intention as an assignment. Nor does it appear necessary that the intention to pass the equitable property shall be communicated to the assignee. What is necessary is that there shall be an expression of intention then and there to set over the equitable interest, and, perhaps, it should be communicated to someone who does not receive the communication under confidence or in the capacity only of an agent for the donor.
In the third place, the intending donor for whom property is held upon trust may give to his trustee a direction requiring him thenceforth to hold the property upon trust for the intended donee.
…Accordingly, a voluntary disposition of an equitable interest may be effected by the communication to the trustee of a direction, intended to be binding on him, thenceforward to hold the trust property upon trust for the donee. But it must be a direction, and not a mere authority revocable until acted upon.[165]

[163]Michael Evans, Bradley Jones and Theresa Power, Equity and Trusts (LexisNexis Butterworths, 4^th ed, 2016) [7.4].

[164](1936) 54 CLR 614.

[165]Ibid, 621-2 (Dixon J).

There is also the requirement of writing. Section 53(1)(c) of the Property Law Act states that ‘a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing or by will’. In the case of a direct assignment of an equitable interest, aside from the requirement that it be expressed in writing, no other formalities are necessary to make an immediate disposition.[166]
[166]Norman v Federal Commissioner of Taxation (1963) 109 CLR 9, 30 (Windeyer J).

Although equity will not perfect an imperfect gift or aid a volunteer, at the same time, it will ‘not strive officiously to defeat a gift’.[167] After all, equity looks to the intent rather than the form.
[167]T Choithram International SA v Pagarani [2001] 1 WLR 1, 11 (Lord Browne-Wilkinson).

Effect of forms of gift

Julie’s evidence was that, with her father’s consent, she approached Mr Forbes-Nicholson to ‘re-arrange the interests’ created by the declaration of trust. Mr Forbes-Nicholson confirmed he was instructed to prepare the form of gift, the purpose of which was to enable Naim’s children to gift to each other the interest that they held in the property. After Mr Forbes-Nicholson provided the forms of gift to Naim and Jelena, Julie says they were signed by her and each of her brothers and her sister.

Feim and Julie accept the forms of gift were not properly completed and executed by the relevant persons. It is not contended they were legally effective. However, the forms of gift were incorporated by reference into the declarations of confirmation.

Effect of declarations of confirmation

It is Julie’s evidence that after consulting Mr Forbes-Nicholson in 2010, he prepared the declarations of confirmation to be executed by each of Julie, Nick, Nevrus and Sehiha to confirm that Feim was the owner of the property. The operative part of each of the declarations of confirmation states that the relevant form of gift signed in 1995 was ‘intended to evidence [the donor’s] decision to gift whatever interest [they] had in the [p]roperty to … Feim…’. Further, each declaration is said to be provided for ‘the purposes of confirming the gift [they] made in October, 1995 and to confirm that [donor has] no interest in the [p]roperty.’

Julie says she arranged for Sehiha and Nazif (Nick) to sign the document. She also recalls taking the document to Nevrus to sign at his home in the presence of Nevrus’ wife who also witnessed it. She then gave all the signed declarations of confirmation to Mr Forbes-Nicholson in mid July 2010. Sehiha’s declaration bears the date of 14 July 2010; Julie’s and Nick’s declarations are dated 15 July 2010; and Nevrus’ declaration is dated 16 July 2010. Julie’s evidence in this regard was not the subject of any challenge under cross examination.

There is no evidence on behalf of Nevrus (who passed away in 2019) to contradict that he signed his copy of the declaration of confirmation. However, both Nick and Sehiha filed affidavits in the proceeding which, among other things, address the declarations of confirmation.[168]
[168]Nick’s affidavit was sworn 14 August 2021 and Sehiha’s affidavit was affirmed 16 September 2021.

Importantly, although tendered as part of the court book, the affidavits of Nick and Sehiha were not read into evidence. No party ultimately relied on the affidavits of Nick or Sehiha or sought to cross-examine them. In the case of Sehiha, the Court was informed she declined to attend to give evidence.[169] Feim and Julie specifically objected to Nick’s affidavit being relied upon without the opportunity to cross-examine him.[170] Neither Nick, Sehiha, nor the deceased estate of Nevrus made any claim in the proceeding. Further, on 29 April 2022, the Court made orders excusing those parties from the proceeding as they had elected not to file any points of claim or make any submissions regarding any interest in the property pursuant to the Court’s orders of 16 December 2021. I therefore consider that the affidavits of Nick and Sehiha are not in evidence and I am not required to consider their contents.
[169]Transcript, 217.
[170]Ibid, 15.

Insofar as Jelena’s evidence about Nick’s use of his name is concerned, Jelena does not explain the basis for that evidence. For example, she does not say she had witnessed particular occasions where Nick had signed with the name Nick Besimi or ‘Nick Besemi’. In any event, I consider it is unlikely Jelena is able to speak from her own knowledge of the practice of her step-son in signing documents. Julie’s evidence that Nick, Nevrus and Sehiha signed the declarations of confirmation was unimpeached under cross-examination and I am inclined to accept it.

I find then that the declarations of confirmation were signed by each of Julie, Nazif, Nevrus and Sehiha on the respective dates recorded on those instruments. Regardless of whether the declarations of confirmation were intended to confirm an earlier gift of a beneficial interest by the forms of gift, or were only effective when the declarations of confirmation were purportedly signed in 2010, I accept Feim and Julie’s submission that the declarations of confirmation evidence a disposition of equitable interests in the property, signed by the holders of those interests, in compliance with s 53(1)(c) of the Property Law Act.

In my view, the declarations of confirmation constitute a sufficient expression by each of Julie, Nick, Nevrus and Sehiha of an immediate intention to ‘make over’ or gift to Feim their respective equitable interests in the property referred to in the declaration of trust. Communication to a trustee (noting that the property had then vested in the Commonwealth) of the dispositions by Julie, Nick, Nevrus and Sehiha was not a requirement for the effective assignment of their equitable property to Feim. While not a condition precedent for an effective disposition, there is also sufficient evidence that the declarations of confirmation came to the attention of Feim, as donee. The declarations were also communicated and delivered to Mr Forbes-Nicholson who gave evidence that he retained them in his firm’s deed register. As donors of equitable property, Julie, Nick, Nevrus and Sehiha did everything necessary to effect a transfer of their equitable interests. Equity will therefore recognise their gifts to Feim.

I accept Feim and Julie’s contention that each of the declarations of confirmation operated as a deed poll in favour of Feim, who is sufficiently identified as the beneficiary of the gifts, and is able to be enforced by him.[171] As a deed poll, once executed and delivered, each of the declarations of confirmation were irrevocable as they did not expressly reserve a power of revocation.[172]
[171]Nicholas Seddon, Seddon on Deeds (The Federation Press, 2ed, 2022) [1.7], [6.10] citing Netglory Pty Ltd v Caratti [2013] WASC 364, [79] (Edelman J, citing Jones v Bartlett (2000) 205 CLR 166, [141] (Gummow and Hayne JJ); Tipperary Developments Pty Ltd v Western Australia (2009) 38 WAR 488, [253] (McLure JA); Re A & K Holdings Pty Ltd [1964] VR 257).
[172]Burns Philip Hardware Pty Ltd v Howard Chia Pty Ltd (1986) 8 NSWLR 621, 639-640 (Young J); Smeaton Grange Holdings Pty Ltd v Chief Commissioner of State Revenue [2016] NSWSC 1594, [50]-[51], [56]-[57] (White J).

In the specific case of Julie, I consider the declaration of confirmation had the effect of her gifting to Feim ‘whatever interest [she had] in the [p]roperty [emphasis added]’, including the 27.5 per cent beneficial interest already held by Richflow on resulting trust for her. Further, by confirming her gift to Feim, she definitively stated she has ‘no interest in the property’. In other words, she abandoned any interest she had in the property, in favour of Feim.

As pointed out by the liquidator, Julie has given confusing evidence about her status as beneficial owner of the property. That evidence can be summarised as follows:

(a) in the public examination, she said she had an interest in the property notwithstanding the declaration of confirmation;

(b) when asked under cross-examination about the caveat she lodged against the property on 5 July 2016 on the grounds of an implied, resulting or constructive trust, she maintained that ‘[she] will always have an interest in [the] property [because she] bought it and paid for it’ and that it didn’t matter who she gave that interest to; and

(c) she said under cross-examination that the purpose of the declarations of confirmation, was ‘[t]o give it to Feim’, but nevertheless maintained she still had an interest in the property and regarded herself as an owner of the property.

Despite the conflicting evidence about Julie’s understanding of, and intention concerning, the declaration of confirmation, it has always been her case in her points of claim and legal submissions that the effect of the declaration of confirmation was to confirm that she intended any interest she had in the property to be gifted to her brother Feim and that she relinquished any such interest in his favour. As I have found, the subject of the trust created by the declaration of trust did not include Julie’s pre-existing beneficial interest in the property held on resulting trust by the company. Julie fully and irrevocably disposed of her beneficial interest in the property, including her beneficial interest held on resulting trust by the company (until its deregistration), when she executed the declaration of confirmation on 15 July 2010, as witnessed by Mr Forbes-Nicholson. She is bound by its operation.

Conclusion on declaration of trust claim

In light of the above matters, Richflow now holds the entire property on trust for Feim. Feim’s beneficial interest in the property arises pursuant to: (a) the declaration of trust, which is a valid and enforceable instrument and not a sham; and (b) the later declarations of confirmation, by which Feim’s siblings (including Julie) irrevocably gifted their respective beneficial interests in the property to him.

Answers to primary questions

In view of the above reasons, the answers to the primary questions in this case are as follows:

Question (a) - does Richflow hold the whole or part of the property on resulting trust for Feim and Julie by reason of their alleged payment of the property’s purchase price?
Answer: Richflow held 27.5 per cent of the property on resulting trust for Julie. However, Julie gifted her beneficial interest to Feim pursuant to a later declaration of confirmation in July 2010.

(b) - in answering (a), is the declaration of trust made on 31 January 1995 relevant?

Answer: No.

(c) - if yes to (a), is that interest held by Feim and Julie equally or in accordance with their respective contributions?;

Answer: Julie’s 27.5 per cent interest represented a contribution by her of $40,000 (paid on or about 7 December 1987) to the total purchase price of the property of $145,224 (inclusive of stamp duty and registration fees). There is insufficient evidence that Feim contributed to the purchase of the property.

Question (d) - in 1995, was there a declaration of trust by Richflow concerning the property in favour of the children of Naim Dardovski (being Nick, Nevrus, Feim, Sehiha, and Julie) by reason of the declaration of trust document?

Answer: Yes. However, the trust was established subject to Julie’s pre-existing interest held by Richflow on resulting trust. Even if the Court is wrong in finding a resulting trust in favour of Julie, Richflow held the entire property beneficially for each of Nick, Nevrus, Feim, Sehiha and Julie in accordance with the declaration of trust.

(e) question (d) above subsumes the following subsidiary questions:

(i) is the declaration of trust admissible?

Answer: Yes.

(ii) was the declaration of trust properly executed by the company and is it a valid and enforceable document?

Answer: Yes.

(iii) for the purpose of (e)(ii), did Naim and Jelena affix their signature to the document?

Answer: Yes.

(iv) for the purpose of (e)(ii), does it matter whether or not some or all of the named beneficiaries contributed some or all of the purchase money for the property?

Answer: No.

(v) for the purpose of (e)(ii), was there a clear intention to create a trust?

Answer: Yes.

(vi) was the declaration of trust a sham and, if so, what is the legal consequence?

Answer: No, there was no sham.

Question (f) - if yes to (d), in 2010 did all or any of Naim’s children referred to above gift any of the interest they had in the property to Feim?

Answer: Yes. Pursuant to the declarations of confirmation, each of Julie, Nick, Nevrus and Sehiha irrevocably gifted their interest in the property to Feim. In the case of Julie, this included her pre-existing interest held under resulting trust by Richflow.

Conclusion

I will ask the parties to confer on the preparation of orders to give effect to these reasons and to propose a timetable for the resolution of the deferred questions. In the event the parties cannot agree on a form of order within 14 days of the publication of these reasons, the matter will be listed for further hearing.

---

SCHEDULE OF PARTIES

S ECI 2021 01796
BETWEEN:
DAVID MARK MUTTON in his capacity as liquidator of RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886)	First Plaintiff
RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886)	Second Plaintiff
- v -
NAZIF DARDOVSKI	First Defendant
NEVRUS DARDOVSKI	Second Defendant
FEIM DARDOVSKI by his litigation guardian FEZIJE DARDOVSKI	Third Defendant
SEHIHA SELIEVSKI	Fourth Defendant
JULIE DARDOVSKI	Fifth Defendant
JELENA DARDOVSKI	Sixth Defendant

ANNEXURE A

[2024] VSC 618

10 October 2024