Roda & Roda & Ors

[2011] FamCA 77

FAMILY COURT OF AUSTRALIA

RODA & RODA AND ORS [2011] FamCA 77

FAMILY LAW – PROPERTY – Declaration – Joint tenancy

APPLICANT: Ms Roda

FIRST RESPONDENT: Mr Roda

SECOND RESPONDENT: K Roda

THIRD RESPONDENT: Y Roda

FOURTH RESPONDENT: S Roda

FILE NUMBER: SYC 2084 of 2007

DATE DELIVERED: 21 February 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Cohen

HEARING DATE: 14 September 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Dr Birch SC
and Ms Bateman

SOLICITOR FOR THE APPLICANT: Brazel Moore Lawyers

COUNSEL FOR THE RESPONDENT: Mr Gersbach

SOLICITOR FOR THE RESPONDENT: Taperell Rutledge Lawyers

COUNSEL FOR THE SECOND, THIRD AND FOURTH RESPONDENT: Mr Allen

COUNSEL FOR THE SECOND, THIRD AND FOURTH RESPONDENT: Wisewoulds Lawyers

Orders

1. It is hereby declared that the husband as the registered joint tenant with his mother, deceased, of real property at and known as G, in the State of Victoria being the whole of the land contained in the Certificate of Title volume … folio … pursuant to the Transfer of Land Act 1958 (Vic) holds such land by survivorship in trust for himself as to a one half interest as tenant in common and for the estate of his mother, deceased, as to a one half interest as tenant in common pursuant to the deed executed by the husband on 19 August 2005 and entitled Nominee Trust Deed in Respect of Land marked Exhibit “F” a copy of which is annexed hereto.

2. It is hereby declared that he husband is not by any document agreement or deed he has executed or otherwise bound to sell his interest in the said land in the event that he wishes to sell that land to any specific person or for any predetermined price.

3. Costs are reserved to the judge who finally decides the s 79 proceedings between the husband and the wife.

IT IS NOTED that publication of this judgment under the pseudonym Roda & Roda and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:

MS RODA

Applicant

And

MR RODA

Respondent

And

K RODA

Second Respondent

And

Y RODA

Third Respondent

And

S RODA

Fourth Respondent

REASONS FOR JUDGMENT

1. The principal matter for determination involves the limited issue of whether the husband is the sole legal and beneficial owner of commercial land known at G in Victoria, or holds it for the benefit of the executor or administrator of the estate of the late Mrs Roda Senior, his mother, in one half share as a tenant in common.

2. There is another issue which the parties accepted at the hearing that I should deal with. It is whether, as against the wife, the husband’s interest in the property is worth $275,000 because of an agreement he made with his mother on 10 February 1996 and/or an agreement he supposedly made with his father, K Roda, the second respondent on 4 June 2005 to sell it for the same amount. I do not know the actual value of this property. It will, if necessary, be decided in the final hearing, but I was told from the bar table by senior counsel for the wife that the land is worth more than two million dollars. Counsel for the husband and for the other respondents did not demur and later agreed that this is the case.

3. The husband and wife first met in October 1996 and married in 1999. These dates have little significance. Because many of the relevant events took place before them, it cannot be said that what occurred beforehand was actually influenced by the relationship between the husband and wife. They separated under the one roof on 16 August 2006 and in March 2007 the wife initiated proceedings in this Court. These dates are more significant. It is possible that events which occurred in 2005 were affected by the forseeability of the marital breakdown. The wife asserts that by June 2005 this prospect was predictable.

4. The husband is a professional who was born in 1958. His father, the second respondent, is an investor who inherited a sales business from his father. In 1982, when the husband was twenty-four years old, he commenced working as a trainee. Thereafter, he provided his financial records to the second respondent, who would prepare and file tax returns on behalf of the husband. The husband left for overseas in 1990 and before doing so appointed the second respondent as his attorney so he could continue to manage the husband’s financial affairs. By this time he had savings of more than $100,000.  He lent this money to his sister so she could purchase a farm for herself and her husband. His father arranged this loan. Interest was payable. His father administered the agreement.

5. Between 1990 and 1992 the husband worked overseas and attended to his tax obligation in relation to his overseas earnings. He had an income from interest in Australia and his father attended to his tax obligations here. From 1992 to 2000, he spent some time in Australia but much of his time overseas. He left it to his father to attend to his financial affairs. On moving to the Central Coast of NSW in 2000, he commenced to look after his own financial affairs and tax, either directly or through a firm of accountants. The husband had not been involved in and had little knowledge of his parents’, especially his father’s, business and financial dealings.

6. In 1995 the husband’s father was the owner of a sales business at G in Victoria. He conducted his sales business there. A neighbouring property came up for sale. This property, G property, its land title identification being CT volume … folio …, is the land subject of these proceedings. The husband’s father purchased that property without speaking to the husband about it. The husband learnt much later that the purchase had been registered in his and his mother’s names as ‘joint proprietors’; that is, joint tenants of the property. The land cost $552,000. Of this, $300,000 came from a loan the husband’s father arranged in the husband’s and his mother’s names. The husband later learnt that the balance of the funds came as to one half from moneys from bank accounts in the husband’s name which were administered by his father and as to the other half from funds provided by the father from his own funds and, possibly, from funds in the husband’s mother’s name.

7. The husband’s father later told him that he could have purchased the land himself but did not do so because he wished to avoid land tax. He originally intended to purchase in the husband’s mother’s name but then realised that money in the husband’s accounts was available so he thought to use it.  The husband did not, so far as he can recall, sign the contract to purchase the land but believes his father may have signed it on his behalf as his attorney.

8. In 1996, when the husband was living in Perth, he visited his parents in Melbourne. His father requested him to sign an agreement with his mother that his father had drafted. It is an agreement dated 10 February 1996 between the husband and his mother that if either wishes to sell his or her interest in the land they will sell it to the other party to the agreement for $275,000.

9. The husband argues that this agreement severed the joint tenancy because it is implicit in it that the very essence of a joint tenancy, survivorship, is refuted by the agreement which recognises the rights of each party to it to sell his or her interest separately from the interest of the other party.

10. It is further argued that, by the agreement, the parties stated, as they did, that they owned the land “in equal shares” and that this statement amounts to an implicit severance of the joint tenancy because it is an expression of the fact which they accepted, that they had “equality of interests”. Reliance is placed on Rentoul v Rentoul [1944] VLR 205, a very brief decision of Gavan Duffy J. relating to interpretation of a testamentary gift where a testator left land to testators “equally as joint tenants”. His Honour held that the reference in the gift to the equality of the beneficiaries’ ownership prevailed over the use of the term “joint tenants” in determining the testator’s intention and the gift was to the beneficiaries as tenants in common. Here, the ownership has been registered as a joint tenancy rather than as a tenancy in common. In that situation, I do not regard a reference in the agreement to equal shares in isolation as proving a severence of the joint tenancy. When the parties to the agreement signed it in 1996 neither they nor the husband’s father realised the husband and his mother were registered as joint tenants. There is no evidence that the husband or his mother gave any thought to the nature of their ownership. I do not accept that any intent to sever the jointure could be attributed to them in that situation.

11. Next, it is said that by placing conditions on the manner of disposal of interests, which by the time of such disposal must be separated, implicitly severs the jointure. I do not agree. I cannot accept that the parties to the agreement did not simply contemplate and assume continuance of whatever form of proprietorship then existed until sale which is consistent with the agreement. That would not sever the jointure and is probably what occurred. I am not satisfied the agreement to place terms and conditions on disposal of separate interests in future severed the joint tenancy. Such an agreement is consistent with no intention at the time of the agreement to alter the interest each proprietor held.

12. It is then argued that the agreement has resulted in abandonment of the formalities of a joint tenancy and therefore results in severance at common law. There are three ways of severing the jointure. The first is by disposal of an interest. This did not occur here. The second is by mutual agreement. There is clearly no agreement to sever. No thought of severance could have entered the minds of the parties to the agreement because they did not know of the jointure. In any event, the agreement would apply if the tenancy was severed in future. There is no agreement to sever and the agreement did not sever. Finally, severance is brought about if the owners mutually treat their interests as being a tenancy in common. Again I am not satisfied they have. The agreement treated the ownership only as though it may be a tenancy in common in future.

13. Considering all three matters together still satisfies me that the agreement merely unknowingly but implicitly allowed for the possibility of severance in future. I am not satisfied that it actually amounted to a severance of the joint tenancy.      

14. There is no evidence that the husband ever wished or wishes to sell the land and, as his mother died in September 2000 and there is no indication she wished to sell the land before her death and there is nothing in the agreement which might bind her to make the agreement binding on her executors or administrators and nothing in the agreement which otherwise might bind them, as well as nothing which would bind the husband to sell to his mother’s executors, administrators or heirs, in my opinion this agreement is no longer effective. It died with the husband’s mother.

15. The former owners of the land continued in occupation.  Their rent was used to meet the loan repayments and to pay rates and taxes. The rent was received by the husband and his mother in an equal partnership business operated by the husband’s father.

16. The husband’s share of the rent which remained after the loan repayments had been made, together with the interest the husband was entitled to from the loan he made to his sister, were put into the partnership as the husband’s share of its expenses when needed. At times, the partnership did not have the funds for capital outgoings and the husband’s contribution was lent to him by his father who kept records of the husband’s indebtedness to him.

17. The husband met the wife in late 1996 after the system had been created by his father. They did not commence to live together until 1998 and separated in August 2006.

18. In 1999 the tenants vacated the property. It has not since been let and is apparently unused. The death of the husband’s mother adversely affected the husband’s father, who the husband claims became withdrawn and ceased to pay attention to business and financial affairs as he had previously. The husband’s mother’s will made the husband’s father her executor and sole beneficiary, but he has not yet been granted probate. In the period since the land became untenanted, the husband’s father has been using his own funds to meet the mortgage payments. Not only was he not too withdrawn to make the mortgage payments, when the husband visited his father for his 80^th birthday in June 2005 his father asked him to sign two agreements which he had drafted.

19. One such document, Exhibit “C”, purports to be an agreement, dated 4^th June 2005, between the husband and his father which acknowledges the debt of the husband to his father of $57,400 and gives his father a right to be paid interest if it is unpaid after notice to pay has been given.

20. The point is taken by counsel for the wife that it is an instrument which would effect a dutiable transaction in regard to land in Victoria. There is no evidence that duty has been paid on it. It is clear it has not. He submits it is inadmissible in evidence unless and until there is compliance with the terms of s 272 of the Duties Act 2000 (Vic.)

21. I do not regard his point as having any force to exclude the document. The Evidence Act 1995 (Clth) is not intended to be a code. It does not make failure to pay state duty on an instrument a basis for making that instrument inadmissible in a federal court. At its highest in favour of inadmissibility; s 138 of the Evidence Act, evidence obtained as a consequence of an impropriety or contravention of a law of a state is not to be admitted unless the desirability of admitting the evidence outweighs the undesirability of admitting evidence obtained as it was. I am by no means satisfied this document was obtained as a consequence of impropriety or as a consequence of contravention of Victorian law. It is a contract which appears to have been obtained legally. If it is dutiable, no duty has been paid. I do not regard s 138 as being applicable to it. If it is dutiable, s 272(2) of the Duties Act 2000 (Vic) makes it admissible if, subsequent to its admission, the name and address of the person liable to pay the duty and the instrument itself are produced to the Commissioner in accordance with arrangements approved by the Court, provided the person tendering the instrument is not the person liable to pay the duty. If the person tendering the instrument is the person liable to pay the duty, the provision is virtually identical. There is no reason why I could not make an order for production of the document to the Commissioner so he can assess and impose duty on it if it is dutiable. He can determine who is liable to pay the duty as between the husband and his father. That would be an arrangement approved by the Court. I shall do so if I conclude the documents is valid and could be dutiable. The document is admitted into evidence on that basis

22. I must say that its relevance in the proceedings before me is limited to its tendency to prove that it was the husband who purchased the land rather than his father. The agreement itself refers exclusively to loans and does not purport to alter any interest in land. I am not satisfied it is a transaction or effects a transaction in regards to land. I am not satisfied it is dutiable.

23. Another agreement, Exhibit “B”, of the same date to which objection on the same grounds was taken on behalf of the wife is also admissible. It, too, is on its face a contract between the husband and his father. So far as I can understand it, it is not a valid one. It purports to bind the husband and his father as executor of the husband’s mother’s estate on behalf of her estate in relation to the partnership between the husband and his mother. The husband’s father was and is not the executor of the estate because he had not then and still has not obtained probate. This action of the husband’s father does not amount to the action of an executor de son tort because there has actually been no intermeddling in the estate by it. The supposed agreement is merely a void attempt to bind the husband for the benefit of the estate. Such an attempt might bind the husband’s father for some purposes, but does not bind the husband at the behest of or for the benefit of the estate. Nor does it bind him in favour of his father. His father has provided no consideration and the document is not a deed. It is void for other reasons too. It is based on five erroneous assumptions. One is that the husband’s father is the executor of the estate, another is that the original proprietorship was held as tenants in common. Another is that the estate had on interest in the land at the time the agreement was made. One assumption is that the husband was not the proprietor of all the land and another is that the partnership survived the death of one of the partners and that there was land on which it was based which could be operated in partnership because it was owned by the purported partners. I find the purported contract, Exhibit “B”, to be void ab initio, of no effect and therefore not dutiable.

24. The argument on behalf of the husband that this purported agreement will be retroactively effective because the husband’s mother’s estate will, on the grant of probate, vest in the executor, falls down because I do not and in my opinion cannot assume the husband’s father will obtain probate of a will which nominates him as executor. After all, the husband’s mother died in September 2000 and by the time of hearing he had not obtained probate of the will which he relies on, a copy of which is Exhibit “F”. Nor do I accept that, if he does obtain probate, the purported agreement made when he was not the executor and therefore void ab initio would be validated by the grant of probate. The Administration and Probate Act 1958 (Vic), by section 13(1), vests property of the testator in the executor from the date of the testators death, it does not validate void instruments retrospectively.

25. Not long after the purported agreements of 4 June 2005 were signed by the husband, his father informed him that he had discovered the registration of the ownership of the relevant property was in the husband’s name and his mother’s name as joint tenants rather than, as he had thought, tenants in common and that this was a mistake. This highlights the fact that there could be no severence of the jointure if the parties to that agreement had no appreciation that their ownership was by way of joint tenancy because they could have no intention to sever it.

26. It cannot be said that they gave any thought to the form of their ownership so they could not be regarded as severing the jointure by treating their ownership as a tenancy in common. They simply gave the relevant matters no thought. The husband’s father did not discover that the holding had been by way of joint tenancy until after his wife’s death and therefore until after the husband became the sole proprietor of the land by survivorship. Any purported dealing with the land by or on behalf of the husband’s mother’s estate, if the husband’s father could otherwise bind the husband and/or the estate, was too late because on the husband’s mother’s death the estate did not succeed to her share.

27. On 19 August 2005, the husband signed what is entitled Nominee Trust Deed in Respect of Land, Exhibit “F”, as the only party to it. In it the trustee husband declared that at the time of becoming the registered proprietors of the land it was the intention of himself and his mother that they would become its owners as tenants in common of a half share each, that they were registered as joint tenants and as his mother passed away in September 2000 he became entitled to be registered as sole proprietor of the property pursuant to his right of survivorship. He declares that at all times he held the property as a tenant in common in equal shares with his mother. This, to me, quite clearly further refutes argument by the husband that any prior agreement between his mother and his father and himself severed the jointure. It is dubious that the husband and his mother, even through his father, ever intended to create a tenancy in common, but I do not think that dubious claim avoids the deed at this state of the parties’ dispute. 

1. The deed itself purports to declare that the jointure was severed at the date of registration of the joint tenancy on 15 September 1995. If it was not, the husband declares he holds one half share as a tenant in common on trust for his mother’s estate.

2. The wife argues that the joint tenancy, as a registered interest, cannot be severed retrospectively if a unilateral declaration without also registering the instrument to effect the severance. This argument would also apply to the argument by the husband that the February 1996 or June 2005 agreements effected a severance.

3. The High Court of Australia held in Corin v Patton (1990) 169 CLR 540, that an unilateral declaration of intention or other unilateral act inconsistent with the continuation of a joint tenancy of land registered under the Torrens system if the transfer is not registered does not sever the joint tenancy. It follows that there could not be retrospective severance. Of course, there could not be retrospective severence by any act in 2005 because there was then, as a result of the husband’s mother’s death in 2000, no joint tenancy to sever. Any purported severence would have to have been agreed to by the joint tenants if it was to be severed before the husband’s mother died whether it purported to be retrospective or not.

4. Section 40 of the Transfer of Land Act 1958 (Vic) provides that no instrument is effective to transfer an interest in land already under the operation of the Act until it is registered. The declaration of trust of August 2005 is capable of being registered.

5. At the time of the declaration of trust the husband was the beneficial owner of the land due to the joint tenancy and the death of the joint tenant. By his declaration of trust on 19 August 2005, he effectively made a gift in Equity of half of his interest in the land to his mother’s estate. This gift is valid for the purpose of s 79 of the Family Law Act unless set aside pursuant to s 79A of the Act. Of course, the transactions which were purportedly made on 4 June 2005 to the extent that they are effective are also open to be set aside pursuant to s 79A. The wife might also succeed in obtaining an order restraining the husband from perfecting the gift at law by registering it.

6. I should declare that the husband, as the registered joint tenant with his mother who died in September 2000 of the relevant land, holds it in trust for himself as to a one half interest as tenant in common and the estate of his mother, deceased, as to a one half interest as tenant in common pursuant to the deed executed by the husband on 19 August 2005 entitled Nominee Trust Deed in Respect of Land marked Exhibit “F” in the proceedings. I should further declare that the husband is not, by any document he has executed nor is he otherwise, bound to sell his interest in the land to any person or for any preset price.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen delivered on 21 February 2011.

Associate:     

Date:              21 February 2011