Sacks v Klein - [2011] VSC 451

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 7512 of 2009

WAYNE SACKS (As administrator of the Estate of Michael Klein, Deceased)	Plaintiff
v
DAVID KLEIN	Defendant

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JUDGE:	HARGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	14, 15, 16 and 17 June 2011
DATE OF JUDGMENT:	13 September 2011
CASE MAY BE CITED AS:	Sacks v Klein
MEDIUM NEUTRAL CITATION:	[2011] VSC 451

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PROPERTY – Agreement by two brothers to purchase property as joint tenants – Property purchased as an investment – Income and expenditure shared equally – Whether brothers purchased the property as joint undertaking for profit – Death of one brother – Whether property owned in equity as tenants in common – Transfer of Land Act 1958 (Vic), s 33(4) – Delehunt v Carmody (1986) 161 CLR 464.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr I G Waller SC Mr P S Noonan	Batten Sacks Harvey Bruce Lawyers
For the Defendant	Mr A T Schlicht	Russell Kennedy Lawyers

TABLE OF CONTENTS

Relevant legal principles: Equity favours tenancies in common.............................................. 7

Did the brothers purchase the flat as partners or participants in a joint undertaking?...... 10

Did the brothers purchase the flat with the intention of owning it ‘as joint tenants’?....... 12

Did the brothers nevertheless intend to divide their interests in the flat equally?............. 23

HIS HONOUR:

Michael and David Klein were brothers, born in Melbourne. In December 1994 when Michael was aged 29 years and David 30 years, they purchased a residential flat in East St Kilda as an investment. They were registered as joint proprietors of the flat.

At the time of the purchase, Michael and his newly-wed wife were living in Tel Aviv, Israel. David, who was recently separated from his first wife and in the process of divorce proceedings, lived in Melbourne.

On 26 December 2005, following a short illness, Michael died in Jerusalem, Israel. He left a widow, Danielle Klein, and four young sons. In these circumstances, as the surviving joint tenant, David claims that he became entitled to be registered as the sole proprietor of the flat. He lodged a survivorship application and was duly registered as sole proprietor. Further, at that time, the mortgage over the flat was repaid in full, with moneys advanced by the brothers’ father, Tom Klein. It is not clear if that advance was by way of gift or loan. Tom Klein has reserved his position on that issue; I infer until the result of this proceeding is known.

The plaintiff, Wayne Sacks, is a solicitor. He is the administrator of Michael’s estate. As Michael left no will, his sole heir is his wife Danielle.

In this proceeding, the plaintiff seeks a declaration that David holds the flat on trust for himself and the plaintiff as tenants in common in equal shares.

The trial was bitterly fought, with allegations that family members have concocted evidence to suit their respective cases. From the evidence as a whole,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sacks v Klein

Details

AGLC: Sacks v Klein [2011] VSC 451
Case: [2011] VSC 451
Decision Date: 13 September 2011

CaseChat Overview and Summary

Two brothers, Sacks and Klein, entered into an agreement to purchase a property as an investment. They shared the income and expenditure equally and intended to operate the property as a joint venture for profit. Following the death of Klein, the court was required to determine whether the property was held by the brothers as tenants in common in equity. The court considered whether the brothers had purchased the property as a joint undertaking for profit, as well as the relevant provisions of the Transfer of Land Act 1958 (Vic), s 33(4) and the case of Delehunt v Carmody (1986) 161 CLR 464.

The court examined the nature of the relationship between the brothers and the purpose of the purchase of the property. It found that the brothers had entered into an agreement to purchase the property as an investment and intended to operate it as a joint venture for profit. The court further found that the property was held by the brothers as tenants in common in equity, as they had not expressed an intention to hold the property as joint tenants. The court also noted that the relevant provisions of the Transfer of Land Act 1958 (Vic), s 33(4) and the case of Delehunt v Carmody (1986) 161 CLR 464 supported this conclusion.

As a result, the court held that the property was owned in equity as tenants in common. The court found that the estate of the deceased brother was entitled to a proportionate share of the property's value and that the surviving brother was not entitled to the entire property. The court made orders accordingly, directing that the estate of the deceased brother be paid a proportionate share of the proceeds from the sale of the property.

Orders