Richard Maisano v Filomena Maisano
[2019] VCC 787
•3 June 2019
| THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-18-00822
| RICHARD MAISANO | Plaintiff |
| v | |
| FILOMENA MAISANO | Defendant |
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JUDGE:HIS HONOUR JUDGE COSGRAVE
WHERE HELD: Melbourne
DATE OF HEARING: 19, 20, 21, 25, and 26 February 2019
DATE OF JUDGMENT: 3 June 2019
CASE MAY BE CITED AS: Richard Maisano v Filomena Maisano
MEDIUM NEUTRAL CITATION: [2019] VCC 787
REASONS FOR JUDGMENT
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Subject:EQUITY – TRUSTS – LACHES – BANKRUPTCY
Catchwords: TRUSTS – constructive trust – family home – whether there was joint endeavour or relationship – pooling of income – inability to quantify financial contributions – limitation of actions – when constructive trust arose – lack of evidence to support pleaded assertions
TRUSTS – resulting trust – contribution to purchase price – failure to establish direct financial contribution – lack of evidence to support pleaded assertions
LACHES – delay – prejudice – fading of memory – when constructive trust arose – requirement that joint relationship failed without attributable blame
BANKRUPTCY – requirement to disclose interest – failure to disclose interest within 20 year period – whether bankrupt acted with intent to defraud creditors – requirement of actual fraud – lack of guilty intent
Legislation Cited: Bankruptcy Act 1966 (Cth); Limitation of Actions Act 1958 (Vic); Transfer of Land Act1958 (Vic)
Cases Cited:Austin v Hornby [2011] NSWSC 1059; Baumgartner v Baumgartner (1987) 164 CLR 137; Bloch v Bloch & Anor [1981] 180 CLR 390; Calverley v Green [1984] CLR 242; Cornelius v Barewa Oil & Mining (NL) (in liq) (1982) 42 ALR 83; Cressy v Johnson [2009] VSC 52; Elias v Elias [1977] 29 FLR 393; Ex parte Mercer (1886) 17 QBD 290; Gleeson v Gleeson [2014] FCCA 482; Griffin v Pantzer [2004] FCAFC 113; Hill v Love (2018) 53 VR 459; McNab v Graham [2017] VSCA 352; Muschinski v Dodds (1985) 160 CLR 583; Nelson v Nelson (1995) 184 CLR; Re Aarons (1880) 6 VLR (IP & M) 56; Roe v Bradshaw (1886) LR 1 Ex 106; R v Bolus (1870) 23 LT 339; Sivritas v Sivritas [2008] VSC 374; TheFederal Grocery Co v Noble (1896) 22 VLR 318; Watson v Foxman (1995) 49 NSWLR 315; West v Mead (2003) 13 BPR 24,431.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Ferrari | Ryus Dangerfield Exley |
| For the Defendant | Mr R Moore | Aptum Legal |
HIS HONOUR:
Summary
1 The main issue in this case is whether the plaintiff, Richard Maisano (“Richard”), has any relevant interest in the property at 108 Halsey Road, Airport West (“the Airport West property”), being the land in Certificate of Title Volume Number 10228 Folio 357, and the property at 106 Sterling Drive, East Keilor (“the East Keilor property”), being the land in Certificate of Title Volume 08855 Folio 437. Richard claims a constructive trust in relation to part of the Airport West property[1] on the principles found in Baumgartner v Baumgartner.[2] Richard claims a resulting trust in respect of the East Keilor property because he contributed to the purchase price of the property.
[1]Plaintiff’s further amended statement of claim, paragraph 4.
[2](1987) 164 CLR 137.
2 Without intending any disrespect, I will refer to the various parties and witnesses by their first names. Given that they are from the same family, it should make the judgment clearer.
Background
3 This is an unfortunate dispute between family members. Richard was born in September 1957, and is the eldest of seven siblings. The defendant is his mother, Filomena.
4 Richard’s father, Domenico, immigrated to Australia in 1971. He did this to join his brother and take advantage of the opportunity which Australia offered his family. At the time of immigration, the family lived in Bianco, a small village on the east coast of Calabria. Domenico worked as an arborist. The family also had some land a couple of kilometres from their village where they grew vegetables and raised some livestock.
5 In late 1972, Filomena and the children left Italy to join Domenico. They arrived in Melbourne in January 1973. Upon arrival, the family moved into the Airport West property which Domenico’s brother owned.
6 In February 1973, Richard and his younger brother, Frank, began school at Niddrie High. Later that year, Richard ceased going to school and began work at Etna Catering. He says that, initially, his wage was about $35 per week. In early 1974, Richard’s wage increased. In addition, he worked as a waiter on Saturday nights and earned further income.
7 On 24 July 1973, Domenico and Filomena became registered proprietors of the Airport West property. On the same day, they registered a mortgage over the property in favour of the State Savings Bank of Victoria (“the SSB”).
8 Around mid to late 1974, Richard commenced work at Carosello’s pizza business, where his wage was $65 per week.
9 On about 10 March 1975, Domenico and Filomena discharged the mortgage in favour of SSB over the Airport West property.
10 In early 1977, Domenico and Filomena purchased the East Keilor property, and on 27 April 1977, became registered proprietors of that property. Again, on the same day, they registered a mortgage over the property in favour of the SSB.
11 On 4 September 1994, Domenico died.
12 On 30 September 1994, Filomena became registered as the surviving proprietor of the East Keilor property.
13 On 1 March 1995, Filomena became registered as the surviving proprietor of the Airport West property.
14 In November 2017, Filomena offered the Airport West property for sale by auction.
15 On about 29 November 2017, Filomena sold the Airport West property for $912,500.
16 On 21 December 2017, Richard’s solicitors lodged caveat number AQ576907V over the Airport West property.
17 On 25 January 2018, Filomena applied to the Registrar of Titles pursuant to section 89A of the Transfer of Land Act1958 (Vic) to remove Richard’s caveat over the Airport West property.
18 In August 2018, Richard and Filomena agreed that Richard would withdraw his caveat over the Airport West property and that Filomena would place part of the proceeds of sale in trust pending the resolution of this proceeding. As a result of the agreement reached between the parties, Richard sent a withdrawal of caveat to the Registrar of Titles on about 21 August 2018.
19 Richard claims a constructive trust in respect of the Airport West property on the basis that he contributed to the family’s pool of earnings. He contends that those pooled earnings assisted his parents to provide financial support for the family and enabled Domenico and Filomena to make the necessary payments on the SSB mortgage which they took out in order to finance the acquisition of the Airport West property.
20 Richard contends that his contributions to the family’s pooled earnings were for the purposes of the joint endeavour or relationship with his mother and father. He argues that the purpose of that endeavour or relationship was to secure accommodation for themselves and Richard’s siblings.[3] Richard maintains that his contributions helped Domenico and Filomena discharge the SSB mortgage less than two years after entering into it.
[3]Plaintiff’s Written Outline of Submissions at paragraph 6.
21 Richard contends that by placing the Airport West property on the market in November 2017, Filomena asserted she was the sole beneficial owner of that property and that Richard had no relevant interest in the property. He submits that the proposed auction and the related failure to acknowledge his contributions in respect of the property signalled the failure of the relationship between him and his parents. In those circumstances, Richard contends that Filomena’s actions amount to unconscionable conduct sufficient to warrant the intervention of equity and the imposition of a constructive trust over the property for his benefit.
22 Richard’s primary claim in respect of the East Keilor property is for a declaration that Filomena holds that property on a resulting trust for Richard as a consequence of his contributions to the purchase of the East Keilor property. Richard maintains that he contributed to the funds necessary to purchase the property, although he was not registered as a joint proprietor of the East Keilor property when the purchase transaction settled. Richard argues that the relationship with his parents does not give rise to a presumption of advancement.
23 As an alternative claim, Richard contends that he is entitled to a constructive trust over the East Keilor property to the extent that his contribution to the family’s pool of income allowed Domenico and Filomena to purchase and make mortgage payments in relation to the property.
Credit
24 In circumstances where there is a lack of contemporaneous documents, the major events in issue occurred over 40 years ago, and one of the critical witnesses, Domenico, is dead, the oral evidence and the credibility of the witnesses is very important.
25 Because of the significant role that witness credibility played in this matter, I will first consider the credibility of each witness.
Richard
26 I have major concerns about the evidence given by Richard. Important aspects of his evidence were inconsistent and unclear.
27 The inconsistency was most apparent in his evidence about what happened with the money he earned after he began working in 1973. It seemed to be undisputed that in and after 1978, Richard made no contribution to the family’s financial resources because it was around this time that he permanently left the family home to live with his girlfriend (whom he later married).
28 In his pleading, Richard alleged that from about June 1973 to 1978, he contributed a portion of his wages or salary to his parents to assist in supporting them and the family. Richard alleged that, at Filomena’s direction, he made his contributions in cash as follows:
· approximately $40 per week from about June 1973 to about October 1973 from employment with Etna Catering;
· approximately $46 per week from about October 1973 to October 1974;
· approximately $75 per week from about November 1974 to about 1978 from his employment with Carosello’s pizza business.
29 In his evidence-in-chief, Richard said more than once that he gave the entirety of his pay to his mother by handing over to her the unopened pay packet. When he first began to work, Richard said that he received $35 per week at Etna Catering. In addition, he made about $15 working as a waiter on Saturday nights. He claimed that he gave all his income to his parents. Richard said he remained at Etna Catering for about six months. He complained at Christmas about his wages and obtained an increase around January/February 1974 to $45 per week, plus his weekend work. So, at this time, he said that he was earning about $65 per week “all up”. He said his weekend work began in early 1974. Shortly after, he said his weekly income at the time was $45 from the pastry chef work and $15 from acting as a waiter.
30 After a short stay at Home Kitchen in Moonee Ponds, Richard then moved to Carosello’s pizza restaurant in mid to late 1974, where he was paid $65 per week. Richard identified no other workplace before he opened his clothing shop in Toorak in 1978.
31 At this point, I note that Richard’s evidence about his earnings was not satisfactory because:
· if he earned only $35 per week from June 1973 to October 1973, how did he pay his parents $40 per week as alleged in the amended statement of claim?
· if he earned only $35 per week from June 1973 to October 1973, how did he pay his parents $46 per week from October 1973 to October 1974?
· if his total earnings from 1974 were $65 per week and he paid everything to his mother, why did he pay her (according to his pleading) only $46 per week?
· if after he gained the pay rise in early 1974 to $45 per week plus his earnings as a waiter of $15 per Saturday night, how could he be earning about $65 “all up” at this time?
32 In cross-examination, Richard said he was paid $35 per week at Etna Catering between June/July and Christmas 1973, and then $60 per week at Etna Catering. After about two weeks at Home Kitchen, Richard said he began at Carosello’s pizza business in mid to late 1974 on a wage of $60 per week. Richard said he was positive about his starting pay – it was very important to him.
33 The defendant’s counsel drew Richard’s attention to paragraph 13 of the amended statement of claim. Richard agreed that he gave instructions to his solicitors about the events in the claim, including the amounts he was earning at various times. Richard also acknowledged that the most recent version of the claim was filed in December 2018, not very long before trial.
34 In that context, counsel noted the inconsistency between the statement in paragraph 13 of the pleading, where it said that the plaintiff made contributions to his parents “to make payments of instalment of interest and principal on the State Bank loan” and his oral evidence that he did not know what his mother did with the money after he gave it to her. When challenged, Richard maintained that his contributions were used principally for this stated purpose.
35 Also in cross-examination, Richard said that the extra $12 to $15 per week he earned as a waiter began not in January/February 1974, as he had said earlier in his evidence, but from around June 1973 when he commenced work.
36 Having had his attention drawn to conflicting statements about the amount he gave to his parents around mid-1973 and Christmas 1973 – Richard referred to varying sums of $35, $40 and $50 – Richard agreed that the statement in paragraph 13 of the pleading to the effect that he paid approximately $40 a week to his parents from June 1973 to October 1973 was “obviously” wrong.
37 In further evidence, the defendant’s counsel drew Richard’s attention to the discrepancy between the claim of paying his parents $75 a week from about October 1974 to March 1975, and his evidence that he earned $65 per week at Carosello’s pizza restaurant. Although he made no mention of it in his evidence-in-chief, Richard sought to explain the position by saying his starting wage at Carosello’s pizza restaurant was $65 but, after he complained, it increased to $75 per week. Richard attributed the omission to being “all confused”.
38 Another troubling aspect of the cross-examination was Richard’s statement that he did not give all his pay to his mother but kept some for himself. This was his explanation for having pocket money or small change available to buy an ice-cream or a drink. It was only after seeking to avoid answering counsel’s questions that Richard finally acknowledged that he kept some of his wages for himself. Again, his initial explanation for having money in his pocket was that his mother gave him back $10 or some other amount from his pay for this purpose. Ultimately, he agreed that some weeks he kept some money from his pay packet in his pocket. This was in stark contrast with his earlier testimony (repeated on more than one occasion) that he insisted that he gave all his wages to his mother.
39 At trial, Richard made reference to the written notes prepared to record the phone conferences which took place between the siblings in 2003. In July 2003, there was discussion about the Airport West property and what to do with it – could it be fixed up and rented out, and at what cost? At the time, Richard suggested that the house was “too far gone” to fix up. Restoration would be expensive. He said that he had spoken to a builder who believed the block was large enough to accommodate three units. Richard offered to take care of the construction plans and the rest of the organisational work if they went ahead with this option. He said that the siblings would have to contribute $5,000 each in order to obtain a loan and begin construction.
40 This proposal was significant in the context and created the likelihood of major financial and other consequences for the other siblings.
41 Having regard to the claims which Richard now makes, I find it odd that, on his own evidence, Richard did not make a point of informing his siblings at this time that he claimed an entitlement to a greater share of the Airport West property than each of them. It seems strange to suggest that each sibling should contribute an equal amount to commence this construction option without telling them that he claimed more than an equal share in the value of the property. It is especially odd in circumstances where, according to Frank, after Domenico and Filomena died, the estate was to be divided equally between the children. Richard’s failure to say anything at the time suggests to me that his claim in respect of the Airport West property is not genuine and well founded.
42 In substance and demeanour, Richard was an unimpressive witness. On the important topic of his wage contribution to his mother and the family more generally, his evidence was inconsistent, contradictory, and imprecise. His evidence was vague and speculative. All too often, he appeared to be guessing or reconstructing his evidence rather than testifying about what he actually remembered. His evidence did not support the pleaded case and matters which should have been the subject of evidence were not. Without corroboration, I would not accept his evidence on any matters of controversy. He was not a credible witness.
Luciana
43 Luciana Maisano, Richard’s wife, gave evidence at the trial. She spoke mainly about the beginning of her relationship with Richard. I accept without reservation her evidence that she first met Richard in 1977 before going out with him and then cohabiting with him in 1978. To the extent that this evidence clashes with the recollections of Filomena and Francesca, I prefer the evidence of Luciana.
Filomena
44 Filomena was a difficult witness to deal with in court and a challenging person to assess. Because her command of English is very limited, she gave evidence through an interpreter. She is 84 years old. She grew up in a small town in Calabria of about 500 people and only completed first grade at school.
45 During the course of giving evidence, Filomena displayed a remarkable propensity to misunderstand the question asked and to provide answers which were irrelevant, confusing, or both. I reminded her (through the interpreter) on a number of occasions to attend to the specific question asked and to answer only that question.
46 In assessing Filomena’s credit, I have to decide whether Filomena was intentionally difficult or whether there were other factors at work. Sometimes it was obvious that she struggled to understand a question or line of inquiry. It was not clear whether this was due to her age and cognitive problems, minimal education, and the novel (and probably intimidating) context of court proceedings, or a combination of one or more of these factors. Regardless of the specific cause, I am satisfied that Filomena mostly attempted to tell the truth as she saw it. But she was an old, confused lady who seemed a little overwhelmed by events. I can well understand why her children were concerned when she went to Italy alone to deal with issues affecting property held by the family in Calabria.
47 Apart from the general problem of providing direct answers to questions, Filomena’s evidence was inconsistent in some respects.
48 A significant issue in this case is whether Richard made a financial contribution toward the purchase price of the East Keilor property and, if so, the amount of any contribution. When Filomena was initially asked about the withdrawal of $9,000 from Richard’s account, she said that her husband took the money because Richard had to go to Italy and that the money was for clothing. On another occasion, she stated the $9,000 went toward Richard’s trip to Italy. Later, she was less certain about the purpose for the $9,000 withdrawal, saying she gave it to her husband, and that he did with it what he needed or wanted to do.
49 The plaintiff’s counsel cross-examined Filomena about two separate withdrawals in the amount of $1,000 from both Richard and Frank’s accounts in October 1975. Initially, Filomena stated this money was given to her husband. When prompted further, she stated that her husband would give the money to the children. A third variation was that Richard needed clothing and shoes. When plaintiff’s counsel pointed out the inconsistency in her answers and asked if she was changing her evidence, Filomena responded “Yeah. I would give it to my husband and, you know, he would say ‘buy what you need’.” Questioned whether she did not know what the withdrawals were for, Filomena ultimately conceded that she could not remember what the withdrawals were for.
50 Another point of contention between the parties was the time at which Richard moved out of home. This issue was not clarified in any way by Filomena’s testimony. Filomena first stated that Richard left the family home to live elsewhere in 1977. Later, she was adamant that Richard left the family home in 1974 to stay with his girlfriend.
51 The inconsistencies in Filomena’s evidence were further displayed in her answers to questions regarding the length of time she worked for her employer, Leisure Fit. Filomena initially stated she worked for Leisure Fit for twenty years. Upon further questioning, it became clear that she had worked for Leisure Fit for less than five years.
52 Some answers Filomena gave about Richard were critical of him or his conduct. On occasion, she answered questions about him quickly and without any, or any significant, reflection. She presented in those moments as a mother who was hurt and disappointed by her son. While she was sometimes quite voluble, speaking loudly and making theatrical gestures, the greater part of the time she seemed an elderly lady who failed, or at least struggled, to understand all the matters being canvassed in court. Depending upon the context and the particular issue, I might be prepared to accept her evidence. However, generally, because of her demeanour and the confusion and lack of clarity which affected much of her testimony, I would normally be reluctant to accept her evidence on major contested points without corroboration.
Francesca
53 Francesca Szeremet is the eldest daughter in the Maisano family and was 12 years old when she moved to Australia. She gave evidence in a direct and forthright manner, displaying some emotional intensity on occasion.
54 Parts of her evidence were unhelpful to Richard. For example, when she gave evidence about Richard being unwilling to go to school in 1973, she was emphatic that he did not want to go and that he would sleep in and not make lunch for the younger children. She said that after a while, she made the lunches so that the siblings had something to eat at school. On the one hand, she spoke as if she resented his laziness or selfishness in not looking after his younger brothers and sisters. On the other hand, the circumstances could well have been more memorable for her due to the direct impact which it had on her role in the family. She gave the most specific evidence about when Richard left school, namely term 3 of 1973.
55 For reasons which were not clear, Francesca seemed unwilling to readily agree that she and her siblings had an interest in the fate of the properties which her parents owned in Italy and Melbourne. Her cross-examination included questions about the phone meetings which the children had in the period around July to September 2003. At the time, Filomena was in Italy. She either disposed of, or was in the process of disposing of, property which she and/or her late husband owned there. The children expressed concern that their mother was not competent to properly address the situation: she sold some property at an under value; she was struggling with the intricacies of the Italian bureaucracy; and she was not being well served by the lawyers whom she had engaged. I did not see any specific reason why Francesca was concerned about acknowledging the children were anxious about getting proper value for the family assets in Italy. It was apparent from the discussion notes of the children’s phone conferences that several of the children expressly commented that the most important issue was to assist their mother and to act in such a way as to promote her wellbeing.
56 Apart from this area, Francesca was an impressive witness. She listened to the question asked and tried to answer it. I consider that large parts of her evidence in cross-examination were of little relevance. However, she still sought to deal with the questions posed to her. Overall, I found Francesca to be a credible witness and would be generally disposed to accepting her evidence on contested issues of fact.
Frank
57 Frank Maisano was a credible witness who appeared to listen carefully to questions before answering directly and without evasion. One exception related to the suggestion in the minutes of the sibling meetings in 2003 that he would try to get Filomena home from Italy by telling her (falsely) that the Airport West home had burnt down. Frank denied suggesting that approach in order to persuade Filomena to return to Australia soon before she could engage in any further dealings with the Italian property.
58 Frank showed no particular ill feeling or prejudice against his brother. On occasion, he gave evidence which supported Richard’s version of events – for example, that Richard worked as a young boy at La Scogliera and the Hotel Vittoria near Bianco.
59 Overall, Frank presented as a fair-minded and generally reliable witness whose evidence I could accept.
Preliminary issues
60 During the course of the hearing, there were a number of contested factual matters which related directly or indirectly to credit and the primary matters in dispute.
Did Filomena direct Richard to leave school?
61 In my view, the weight of the evidence favours a finding that Richard left school in 1973 due to his own choice rather than a direction from Filomena or Domenico. Filomena insisted that she wanted Richard to attend school. Neither she nor Domenico had much education and I infer one reason for immigrating to Australia was to provide better opportunities for their children. Especially when it was necessary to learn a new language and adapt to the culture of a foreign country, it made sense that Filomena and Domenico would want the children to attend school and at least become proficient in English. Filomena was upset by Richard’s behaviour in leaving school. It was not what she wanted.
62 Frank and Francesca both agreed that it was Richard’s decision to leave school. Frank said he heard his parents telling Richard to stay in school and learn English and something about Australia. He said Richard spoke to him as the brother nearest in age about not wanting to stay at school but wanting to leave, do better things and make money.
63 As noted above, Francesca said Richard did not want to go to school but he would sleep in and just not get up. She said that she never heard her parents telling him to leave school. Rather, she recalled her mother pleading with him to go there because he had to know enough English to get somewhere in life and a decent job.
64 I prefer the evidence of Frank and Francesca and find that Richard left school of his own choice and not as a result of any direction or demand by either parent.
Did Filomena direct Richard to contribute his wages to supporting the family?
65 Filomena said she did not ask Richard to contribute any of his wages to support the family. Further, she disputed that Richard ever contributed any money to the family of his own accord.
66 Francesca said she never heard either parent asking or telling Richard to hand over his pay to them. According to her, Richard wasted the little money he had trying to look good with smart jeans and nice shoes. Francesca never saw him giving any money to Filomena.
67 Frank said he could not recall ever seeing Richard give his pay packet to Filomena. Nor did Richard ever say to Frank that he was giving money to Filomena. According to Frank, Richard never said anything to him to the effect that Filomena was asking him for his wages.
68 Frank said that when he began work after leaving school, probably at the end of 1974, he used to take cash out of his pay packet and give the balance to his mother. She opened an account at the ANZ Bank for him and made all the deposits and withdrawals on the account. Frank said that Richard was a fine dresser when he was young. After he left school and began work, he spent money on clothes.
69 Richard’s girlfriend from around early 1978, Luciana, agreed that he was always well dressed when going out with her and he had the money to pay for their outings.
70 Given the above evidence, I do not believe Richard’s account that he gave the whole (or even the bulk) of his wages to his mother either for the benefit of the family or to pay the SSB mortgage. The reasons for my conclusion on this point reflect my opinion as to Richard’s credit, the evidence of the other witnesses on the issue, and the family’s financial circumstances. I have already addressed at some length the first two matters.
71 The family’s financial position in mid to late 1973 was far from dire. After arriving here in Melbourne, Filomena soon got a job so that both she and Domenico were employed. There was evidence that Filomena earned around $225 per week and that amount increased in later years to about $250. Filomena also worked overtime. Francesca spoke of her mother sometimes working late at night to qualify for bonuses.
72 Richard said that his father was a hard worker. Around the time Richard and his siblings arrived in Australia, Domenico was working at the abattoir in Newmarket and also had a second job of an evening as a casting person at a nearby factory. Richard thought that the second job did not last very long. He believed that the business closed down due to industrial action. There was trouble with pickets and it affected Domenico’s ability to get work. There were conflicting figures about Domenico’s wage at the abattoir. Richard said that he earned about $110 - $115 per week, whereas Frank said that it was about $200. Richard, Filomena, Frank, and Francesca all agreed that Domenico worked overtime too.
73 Apart from his wages, Domenico received a pension from Italy from about February 1974. In addition, Richard also said that Domenico received a lump sum payment from Italy in early 1977. There were no details about the precise details or magnitude of the payment.
74 Even though I accept that because the family lived in suburban Melbourne, it had to spend more on food and groceries than it did in Italy – it no longer had access to the fruit, vegetables, chickens and meat from the farm property – the family was not impoverished. The parents bought the Airport West property soon after arriving in Melbourne and while all the children were at school. I infer that Domenico and Filomena decided they could buy the property and meet the mortgage payments based on their combined incomes. They paid off the mortgage over the Airport West property in less than two years and then, about six years after arriving in Australia, bought a second property for around $58,000. Both Frank and Francesca denied that money was tight in the family in about 1973. Filomena was confusing: she denied money was tight but said there was little money. I do not accept that the family needed Richard’s wages to survive in Melbourne or to pay the SSB mortgage over the Airport West property.
Did Richard contribute to a pool of earnings controlled by Domenico and Filomena?
75 Richard contends that it is clear he contributed to the pool of family funds. His contention about his contribution to the family’s financial resources was based in part on counsel’s analysis of the repayment of the SSB mortgage over the Airport West property. Richard’s final submissions purported to show that over the life of the mortgage, Domenico and Filomena made extra payments in addition to those required in order to repay the debt quickly. Richard argued that Domenico’s receipt of a pension from Italy in 1974 did not account for all of the extra contributions. The inference which Richard contended for was that his wages must have been used to complete the prompt discharge of the mortgage.
76 There was a dispute between Richard and Filomena about the circumstances in which Richard’s bank account was opened. Richard claimed to have opened the account at the ANZ Moonee Ponds branch near his work. Filomena said that she opened the account. However, both parties agreed that after the account was opened, it was Filomena and not Richard who had custody of the bank book and made the deposits and withdrawals from the account.[4]
[4]One matter which was not pursued in final address but nonetheless puzzled me was Richard’s evidence that, about three months after he began work, aged 15 or possibly 16, he opened a bank account on his own at the ANZ bank in Moonee Ponds. I would have thought that the bank needed a parent to be involved in this process because, at the time, Richard was a minor. After Richard showed the bank book to his mother, he said that she retained it and later visited the bank to have her name placed on the account too.
77 I accept that, logically, Richard’s contention about contributing to the early repayment of the SSB mortgage is plausible. However, it is not the only possible explanation. For example, there is uncertainty about the wages earned by Domenico and Filomena. The wages of Domenico in particular could have been much closer to Filomena’s than Richard recollects. Also, the extent of the pension payments which Domenico received after February 1974 are unclear. There are months where the bank has placed its stamp in the pension booklet, but no amount is written in. From the notations appearing for other two month periods in the pension booklet, the pension amounts vary from $962 to $308. In the period between February 1974 and December 1978, there are ten months stamped but not registering any deposit. In addition, over the same period, there are 20 months with no deposit or stamp. Also, as noted, the magnitude of Domenico’s lump sum payment is unknown.
78 Given the inconsistencies and uncertainties in Richard’s evidence, it is safe to say that, even if some of his wages directly or indirectly contributed to the reduction and ultimate elimination of the SSB mortgage over the Airport West property, the court cannot draw any conclusion about the financial value of that contribution. In the circumstances, the court could not determine the proportional relationship between the extent of any alleged contribution by Richard and the value of the Airport West property. This creates a problem for Richard.
Did Domenico represent to Richard that his financial contribution to the family entitled him to a proportionate interest in the Airport West property?
79 Richard contends that he attended an inspection of the East Keilor property in 1977 with his parents and the estate agent. He says that at that time, his father said that he wanted to buy the property but could not do so unless Richard gave him money to put a deposit on the property. Richard said he told his father that he had already helped pay off Airport West and he wanted to buy a car. His father said “when you sell it, what is yours is yours”. Richard understood this to mean that if he contributed to and paid for something, it was rightfully his. This submission is noteworthy for several reasons.
80 First, Richard is relying upon something allegedly said in early 1977 to justify him having a relevant financial interest in a property bought in about April 1971. I struggle to see how Richard could have relied upon something said in 1977 to act in a way which would have granted him an interest in a property bought six years earlier. The final submissions filed upon Richard’s behalf appear to acknowledge this difficulty (at paragraph 61).
81 Secondly, especially with oral representations, it is important that the complainant give clear evidence about the detail of the alleged conversation. I am mindful of the comments made by McLelland CJ in Eq in Watson v Foxman,[5] where he said:[6]
“Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”
[5](1995) 49 NSWLR 315.
[6]Ibid, 318-9.
82 The evidence in this case was not at all clear. This could be due to a number of factors: what was allegedly said could have been inherently unclear and uncertain; Richard’s memory and presentation of the evidence could have been vague and uncertain. This might be due to the events in question taking place about 40-45 years ago.
83 The need for clarity in connection with allegations about oral statements is heightened where the court can only hear from one of the participants to the conversation. The death of Domenico in 1994 has made the situation more difficult because the court is unable to hear directly from him. As noted elsewhere, Richard asserts, and Filomena denies, that she was present at the inspection of the East Keilor property when Domenico made the alleged comments.[7]
[7]In paragraph 16 of the Further Amended Statement of Claim, Richard alleged that on various occasions between 24 July 1973 and 1994, Filomena was present when Domenico represented to him that Richard would be entitled to a share of the proceeds of sale of the Airport West property in proportion to his contribution. Apart from the occasion of an inspection at the East Keilor property, Richard did not put the detail of the other occasions to Filomena.
84 Here, even if I accept Richard’s evidence about what was said, the actual words allegedly used by Domenico are ambiguous and open to interpretation. It cannot be said that the alleged comments must mean that Domenico was representing that Richard should have an interest in the Airport West property proportionate to his contribution to the purchase price and/or the extent of his contribution to the discharge of the SSB mortgage over the property.
Issues
85 The parties’ legal representatives created a joint statement of the issues in which they identified 20 matters, some of which included sub-categories. While the judgment will address many of the issues raised, it will not do so by simply following the document produced by the parties. To do this would tend to fragment the case to an excessive degree. Rather, I will examine the critical issues regarding each of the two properties in dispute and consider the factual and legal basis for Richard’s claims to an interest in those properties.
86 There is no dispute of note about many of the background facts in this case. This is apparent from paragraphs 3 to 17 of the judgment.
87 The main issues in this case are:
(a) is the plaintiff entitled by way of constructive trust to a 32% interest in the proceeds of sale of the Airport West property?
(b) does the defendant hold the East Keilor property on a resulting trust under which the plaintiff has a 15.37% interest in the property as tenant in common?
(c) alternatively, is the plaintiff entitled by way of constructive trust to a 15.37% interest in the East Keilor property?
(d) is the plaintiff precluded from bringing or maintaining any of his claims due to limitations, delay or laches?
(e) is the plaintiff precluded from bringing or maintaining any of his claims due to alleged illegality and contravention of the Bankruptcy Act?
88 An important matter to bear firmly in mind in this case is that Richard, as the plaintiff, has the burden of proof to establish his case on the balance of probabilities. Even if I were not fully convinced by the evidence given in support of the defendant to accept her case, the law nonetheless requires that, unless Richard satisfactorily discharges his evidentiary burden, he cannot obtain judgment.
Legal principles
89 The relevant legal principles for constructive trusts are reasonably well known.
Constructive trust
90 The principles governing the imposition by equity of a constructive trust in circumstances involving the failure of a joint relationship can be traced to the judgment of Deane J in Muschinski v Dodds.[8] His Honour’s reasoning was later adopted by a majority of the High Court in Baumgartner.[9]
[8](1985) 160 CLR 583.
[9](1987) 164 CLR 137.
91 Deane J described the constructive trust in the following terms:[10]
“A remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.”
[10]Muschinski v Dodds (1985) 160 CLR 583, 614.
92 His Honour described the general circumstances in which a court would intervene to assist a plaintiff:[11]
“The principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so….”
[11]Ibid, 620.
93 In Muschinski,[12] an unmarried couple purchased land in their joint names. The plaintiff paid the purchase price for the land from her own funds. The defendant agreed to renovate the cottage on the land and to purchase a prefabricated house to be located on the land. The relationship between the plaintiff and defendant failed before the defendant had honoured his agreement to contribute by renovating the cottage and obtaining the prefabricated house. The High Court, by majority, held that the parties held their legal interests on trust whereby, after payment of any joint debts incurred in the improvement of the property, they were to repay to each other their respective contributions and to hold the balance of the proceeds of the sale of the property in equal shares for each other.
[12]Ibid.
94 In Baumgartner,[13] the plaintiff and defendant lived together in a de facto relationship. They commenced living in a unit owned by the defendant. Early in their relationship, the parties pooled their joint incomes in order to pay their living expenses. From those combined resources, the defendant was able, on several occasions, to make additional payments in relation to the mortgage secured over his unit. Later, the parties purchased a house in the name of the defendant. The purchase was funded partly by the net proceeds of the sale of the defendant’s unit and partly by a mortgage taken out in the name of the defendant. The parties lived at the house for three years. During that time, they continued to pool their resources for the payment of ongoing expenses including the repayment of the mortgage. After the parties separated, the defendant asserted that he was the sole owner of the property.
[13](1987) 164 CLR 137.
95 The High Court held that it would impose a constructive trust in order to prevent unconscionable conduct by the defendant in relying upon his legal estate in the property to the exclusion of the plaintiff. In reaching that conclusion, the court referred to, and expressly followed, the passage from the judgment of Deane J in Muschinski quoted above.
96 It is well accepted that the law does not impose a constructive trust in accordance with idiosyncratic notions of what is just and fair. Rather, the existence of a constructive trust, and its content, will only be recognised to the extent necessary to prevent conduct regarded as unconscionable by reference to equitable principles, upon the failure of a relationship between two parties. As Deane J said in Muschinski:[14]
“One is not left at large to indulge random notions of what is fair and just as a matter of abstract morality. Notions of what is fair and just are relevant but only in the confined context of determining whether conduct should, by reference to legitimate processes of legal reasoning, be characterized as unconscionable for the purposes of a specific principle of equity whose rationale and operation is to prevent wrongful and undue advantage being taken by one party of a benefit derived at the expense of the other party in the special circumstances of the unforeseen and premature collapse of a joint relationship or endeavour.”
[14](1985) 160 CLR 583, 621.
97 Having reviewed the High Court authorities and later applications of those authorities in various Court of Appeal decisions in South Australia, New South Wales and Western Australia, Kaye J concluded in Cressy v Johnson (No 3)[15] that in order to found a constructive trust of the kind discussed by the High Court in Muschinski and Baumgartner, the contribution made by the relevant party must go further than enhance the material wellbeing of the parties to the relationship. It must contribute to the acquisition, maintenance or improvement of the property in respect of which the trust is claimed. Hence, in order to be entitled to an interest under a constructive trust, the plaintiff must establish that the contribution upon which he or she relies was not simply directed to advancing the welfare of the defendant and of the family unit of which he was then a part. Rather, the contribution of the plaintiff on which the constructive trust is to be based, must have been directed to the acquisition and maintenance of the assets in respect of which the plaintiff claims an interest under the constructive trust.
[15][2009] VSC 52.
98 Sifris J adopted a similar view in Hill v Love.[16] His Honour said that regard must be had to the contributions made to specific assets over which an equitable interest is claimed. He said that the contributions need not necessarily have been made directly to the acquisition or improvement of the property in issue, but they must be linked, albeit indirectly, to the acquisition, maintenance and improvement of the property. It is not sufficient that one person has merely benefited from the contributions of another or that the contribution has enhanced the material wellbeing of parties to the relationship.[17]
[16](2018) 53 VR 459.
[17]Ibid at [127].
99 In his final submissions, Richard referred to the decision of Campbell J in West v Mead.[18] At paragraph 29 of the submissions, Richard said that in order to establish the conditions for finding a Baumgartner type constructive trust, the plaintiff had to prove the following matters:
[18](2003) 13 BPR 24, 431 at [58]-[64].
(a) a joint relationship or endeavour exists;
(b) an asset has been acquired in the course of and for the purposes of the joint relationship or endeavour;
(c) expenditure has been shared for the common benefit within the joint relationship or endeavour;
(d) the joint relationship or endeavour has failed;
(e) there was no agreement between the parties as to the distribution of assets upon the failure of the joint relationship or endeavour; and
(f) in the circumstances, it would be unconscionable for the party who, after the relationship has ended, holds a disproportionate share of the assets which were built up during the relationship to keep those assets.
100 I note in passing that subparagraph (e) on one view appears to be inconsistent with the case which Richard is propounding. I understood his position to be that his father said (and his mother agreed, at least implicitly by her silence, if not explicitly by her words), that when the property was sold, Richard should receive a share which reflected the proportion his contribution bore to the value of the property. If that is correct, then Richard’s case is that there was an agreement about how the property should be divided.
101 A couple of observations by Campbell J are relevant to this aspect of the case. They summarise in short form the rationale for the remedy sought and matters the court should attend to:[19]
“… a plaintiff needs to establish there is indeed a joint endeavour between the parties, in which expenditure is shared for the common benefit. It is also necessary to identify what the scope of that joint endeavour is. … Further, for any couple, the scope of the joint endeavour they are engaged in might change from time to time. If, within the scope of a joint endeavour … an asset is acquired, as a result of contributions both parties have made, and for a purpose of the ongoing joint endeavour of the parties, this gives rise to the presumption that the beneficial interest ought be shared equally. That presumption can be displaced if one party is able to show that the contributions, both financial and non-financial, to that asset should be regarded as unequal.
…
Part of the justification for imposing the Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available for the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and assets acquired from it, would be used for their ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up”
[19]Ibid.
102 For present purposes, the important points which I take from the authorities are:
· there is a joint relationship or endeavour;
· A contributes money or other property on the basis of, and for the purposes of, the joint relationship or endeavour with B and C;
· the substratum of a joint relationship or endeavour is removed without attributable blame;
· without the intervention of equity, B and/or C will retain or enjoy the benefit of A’s money or other property in circumstances where that was not intended and it would be unconscionable to permit this outcome;
· A’s contribution must do more than enhance the material well-being of A, B, and C. The contribution must be directed to the acquisition and/or maintenance of the asset the subject of the constructive trust claim.
Is the plaintiff entitled by way of constructive trust to a 32% interest in the proceeds of sale of the Airport West property?
103 I now consider the critical elements of the claim to the constructive trust on the Airport West property.
Was there a joint relationship or endeavour?
104 In her final submissions, Filomena contended with some validity that Richard failed to plead and prove that there was a joint endeavour or relationship; that during the course of that joint endeavour or relationship, he made contributions to the acquisition maintenance, or improvement of the Airport West property; that there has been an unforeseen collapse of the joint relationship or endeavour; that it would be unconscionable in the circumstances for the defendant to assert or obtain the benefit of the whole of the legal interest in that property.
105 The first component is the joint relationship or endeavour. The current scenario is different from the usual scenario involving a constructive trust where a couple’s relationship breaks down and a dispute ensues about the financial consequences.
106 It is unhelpful that here, Richard has not identified what exactly the joint endeavour or relationship was. Possibly, it was to purchase a property which would house the family. However, I am not satisfied that the evidence adduced by Richard, such as it was, established an agreement or joint plan between himself and his parents to buy property for that purpose. Especially in circumstances where his parents bought the Airport West property early in 1973 while Richard was at school, the case is simply not made out.
107 Even if it were made out, Richard has not proven with the necessary specificity what amount he contributed to the joint enterprise. An essential element of a Baumgartner[20] claim is the pooling of financial and/or other resources. Particularly where one’s claim is based solely upon financial contributions, it is necessary to identify and quantify the relevant contributions. As Ward J observed in Austin v Hornby,[21] “it can only be unconscionable if they [the contributions] can be quantified in some objective way”.[22]
[20](1987) 164 CLR 137.
[21][2011] NSWSC 1059.
[22]Ibid, at [192].
108 In arguing for a 32% interest in the Airport West property, Richard contended that he contributed approximately $4,300 to the pool of money used to benefit the family over the life of the SSB loan. This was more than the contribution from Domenico’s Italian pension of $2,686.68. Richard argued that the $4,300 represented 32% of the total money paid in relation to the Airport West property, taking into account interest and insurance paid. At the same time, in his submissions, Richard recognised that:
· he was only able to give general evidence about his earnings and the amount he contributed to Domenico and Filomena;[23]
[23]Plaintiff’s Written Outline of Submissions at paragraph 70.
· he was unable to provide a detailed accounting of his contributions to the pool;[24]
· his earnings were less than the amount pleaded in his claim.[25]
[24]Plaintiff’s Written Outline of Submissions at paragraph 71.
[25]Plaintiff’s Written Outline of Submissions at paragraph 74.
109 Another issue which Richard faces is whether he can show a contribution directed to the acquisition and maintenance of the Airport West property the subject of the claim. There is ambiguity surrounding whether the contributions alleged by Richard were designed specifically for this purpose or whether they were more general in nature, intending to provide for, and advance, the welfare or material wellbeing of the family of which he was a member. As I observed, Richard’s parents bought the property while he was still at school and before he began work. Even if he later made a contribution to the pool of earnings, it was not to acquire the property. But a contribution which later improves and adds value to the property can be taken into account for the purposes of a constructive trust.[26] However, it still requires accurate quantification – which is not available in this case.
[26]Sivritas v Sivritas [2008] VSC 374, at [132].
110 In his evidence, Richard referred to concrete paving and a garage featuring at the Airport West property around 1975 when the house was almost paid off. Because Richard’s submissions placed no reliance on these matters in the context of the constructive trust, I say no more about them.
Resulting trust
111 The legal principles about resulting trusts are found in cases such as Calverley v Green,[27] Bloch v Bloch & Anor,[28] and subsequent applications of these authorities. Kyrou J (as he then was) set out a useful summary of the position in Sivritas v Sivritas[29] as follows:[30]
[27][1984] CLR 242.
[28][1981] 180 CLR 390.
[29][2008] VSC 374.
[30]Ibid at [118]-[127].
“In the context of a “purchase money resulting trust” case, a presumption of resulting trust arises in favour of a person where that person purchases property in the name of another or in the joint names of both. Where more than one person contributes the purchase price and there are unequal contributions, but the property is conveyed into the name of only one of those people, there is a presumption of resulting trust as equitable tenants in common in shares proportionate to the parties’ respective contributions. The onus of establishing the payment(s) giving rise to a presumption of resulting trust lies on the person who is asserting the existence of a resulting trust.
When a presumption of resulting trust arises, it performs a similar function to the civil onus of proof. A presumption of resulting trust can be rebutted by evidence of contrary intention. Where a presumption of resulting trust as equitable tenants in common arises following unequal contributions to a purchase price, that presumption can be rebutted by evidence of a shared intention or agreement to the contrary. The presumption can be rebutted by, among other things, evidence of intention to make a gift of the property.
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.
A contrary intention can be expressed before or at the time of the transaction, or so immediately after the time of the transaction that it forms part of the transaction. Evidence of subsequent acts will only be admissible as admissions against interest.
A person’s intention can be found or inferred from his or her contemporaneous words and conduct. From a consideration of a person’s words and conduct, certain inferences may be drawn, having regard to the surrounding circumstances and context in which they were uttered or performed.
In certain circumstances, because of the relationship between the purchaser and the person in whose name the property is purchased (such as parent and child), a countervailing “presumption of advancement” arises.
A person’s beneficial interest under a resulting trust is solely determined by his or her direct financial contribution to the purchase price at the time the property is purchased and the trust was created. That is, each person’s beneficial interest will be in the proportion of his or her direct financial contribution to the purchase price.
Conclusion
184 In circumstances where:
(a) I do not regard Richard as a reliable and credible witness on important contested matters;
(b) in any event, Richard failed to prove the background context which would have made it unconscionable for Filomena to retain the legal and equitable ownership of the Airport West and East Keilor properties without recognizing Richard’s alleged contribution to the acquisition and/or maintenance of those properties whether in money or some other form; and
(c) Richard failed to establish with specificity any financial contribution he made to the purchase of the East Keilor property and hence, failed to make good the resulting trust he claimed over that property,
I dismiss Richard’s claim.
185 I will hear the parties on the form of final order and costs.
186 Accordingly, I propose to dismiss the claim. I direct that the parties produce minutes of order giving effect to these reasons by 4:00pm on 5 June 2019. If there is a dispute about the proposed orders, each party is to file and serve by 4:00pm on 6 June 2019 a written submission setting out the orders it seeks and the reasons therefor. Each party can then file and serve reply submissions by 4:00pm on 7 June 2019. Unless a party specifically requests it, or the Court considers it appropriate, there shall be no further oral hearing with respect to this matter.
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