Shah v Sanjiv

[2014] NSWSC 1535

Supreme Court

New South Wales

Medium Neutral Citation:

Shah v Sanjiv [2014] NSWSC 1535

Hearing dates:

22 October 2014

Decision date:

22 October 2014

Jurisdiction:

Equity Division - Duty List

Before:

White J

Decision:

1.Summons dismissed.

2.Plaintiff pay the defendant's costs.

Catchwords:

REAL PROPERTY - application for appointment of trustees for sale - Conveyancing Act 1919 (NSW) s 66G; EQUITY - trusts and trustees - resulting trusts - presumption of advancement - where defendant wife sole registered proprietor of land purchased by plaintiff and defendant as married couple - where proceedings commenced by summons and did not seek declaration that plaintiff had any beneficial interest in property - where related proceedings currently before Family Court of Australia - application dismissed

Legislation Cited:

Conveyancing Act 1919 (NSW)
Family Law Act 1975 (Cth)
Conveyancing Act 1919 (NSW)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)
Civil Procedure Act 2005 (NSW)

Cases Cited:

Ross v Ross [2010] NSWCA 301
Calverley v Green (1984) 155 CLR 242
Napier v Public Trustee WA (1980) 32 ALR 153
Currie v Hamilton [1984] 1 NSWLR 687
Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 Shepherd v Doolan [2005] NSWSC 42
Neilson v Letch (No. 2) [2006] NSWCA 254
Pettitt v Pettitt [1970] AC 777
Gissing v Gissing [1971] AC 886
Green v Green (1989) 17 NSWLR 343
Young v Lalic [2006] NSWSC 18
Song v Shi [2011] NSWSC 1207

Category:

Principal judgment

Parties:

Sanjiv Shah (Plaintiff)
Rekha Sanjiv (Defendant)

Representation:

Counsel:
K Spencer, solicitor (Plaintiff)
A Murphy (Defendant)
Solicitors:
Spencer & Co Legal (Plaintiff)
Slater & Gordon (Defendant)

File Number(s):

2014/290741

Judgment

1. HIS HONOUR: This is an application pursuant to s 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees for sale of a property in Epping. The plaintiff and the defendant are husband and wife but the marriage has broken down. The property is registered in the sole name of the defendant.

1. The defendant has commenced proceedings in the Family Court of Australia for orders pursuant to s 79 of the Family Law Act1975 (Cth) adjusting the interests of the parties to the marriage in the matrimonial property, that is to say, the property of the parties or either of them. Amongst other orders sought in the application filed in the Family Court is an order that the defendant wife be declared the sole and absolute owner of the Epping property.

1. The plaintiff says that the matter has urgency. He (and it would appear the defendant wife) estimated that the property which was the matrimonial home had a value of about $1.6 million, but, at least in the plaintiff's view, that was a value attributable to the property prior to recent rezoning.

1. It appears that by about September 2014 an offer or offers were received for the purchase of the property from an intending developer or intending developers in the vicinity of $3.7 million to $3.85 million. The plaintiff is anxious that the property be sold at the best price that can now be obtained and is concerned that if the property is not sold a valuable opportunity will be lost to the financial detriment of both parties to the marriage to the order of $2 million or more.

1. Mr Spencer, solicitor, who appears on the application for the plaintiff, submits that if the property is not sold the parties face the prospect that it will be hemmed in by adjoining developments of multi-storey apartments which will reduce the value of the property below its value prior to the rezoning. He submits that it is inevitable that when the Family Court comes to make adjustive orders under s 79 of the Family Law Act the property in question will have to be sold. He also points to evidence that from time to time the defendant has expressed her intention that the property be sold.

1. On or shortly after 30 September 2014, Mr Spencer had a telephone conversation with Ms Sharon Payne, solicitor for the defendant, in which he advised Ms Payne that his client would not interfere with a sale of the property and settlement, but needed to protect his interests. Mr Spencer said that his client would give an undertaking to any purchaser that, on settlement, he would provide a discharge of caveat and said that if agreement could not be reached between the plaintiff and the defendant then the proceeds of sale should be held in trust pending court order. His evidence was that Ms Payne repeatedly insisted that the plaintiff withdraw his caveat prior to the defendant wife's exchanging contracts.

1. The conversation was immediately followed by an email from Mr Spencer to Ms Payne in which he confirmed Ms Payne's instructions that the defendant would not proceed to exchange contracts unless the full amount of the deposit was released to her and the plaintiff withdrew his caveat on title. He advised:

"I confirm my advice your client could still proceed to exchange today and have the deposit released to her and it would then be a matter between our respective clients particularly when it came to settlement and with the withdrawal of my client's caveat."

1. Mr Spencer confirmed Ms Payne's advice that the defendant was aware of the plaintiff's position, but maintained her position. He adverted to what he called "a very significant potential loss" and advised that he anticipated obtaining instructions to file an urgent summons seeking orders against the defendant for the appointment of a trustee for sale and for costs.

1. I was told by Mr Spencer that he attempted to make an application for such relief in the Family Court, but that the Registrar of the Court rejected the documents sought to be filed on the ground, as I understood the submission, that the application that had been filed by the defendant as applicant in the Family Court was not properly completed.

1. The summons was filed in this Court on 3 October 2014. It sought an order that the plaintiff be appointed trustee for sale of the property, or alternatively that a Mr Riad Tayeh be appointed as trustee for sale. The summons also sought an order that the proceeds of sale, including the deposit, be held in trust by the plaintiff's solicitors, Spencer and Co Legal, pending either agreement between the parties or further order.

1. Although no formal amendment to the summons has been made, the relief that is now sought is for the appointment of two chartered accountants, Mr David Solomon and Mr Riad Tayeh as trustees. Their consent to being so appointed has been tendered.

1. The application is brought pursuant to s 66G of the Conveyancing Act 1919 (NSW). Section 66G provides in substance that the court can appoint trustees for sale where any property other than chattels is held in co-ownership. "Co-ownership" is defined in s 66F(1) as meaning ownership, whether at law or in equity, in possession by two or more persons as joint tenants or as tenant in common.

1. The defendant is the sole registered proprietor of the land. That is to say, she is the sole legal owner.

1. There is only jurisdiction to appoint trustees for sale pursuant to s 66G in the circumstances of this case if the plaintiff is a co-owner in equity of the land. If that were the fact, the relief claimed would be to give effect to the trust, whether it be a resulting, implied or constructive trust on which the defendant would hold the land for him. Pursuant to r 6.3(e) of the Uniform Civil Procedure Rules, such a claim would seek relief in relation to such a trust and should be commenced by statement of claim.

1. This proceeding was commenced by summons. The summons does not seek any declaration that the plaintiff is a beneficial owner of the land, let alone a declaration that the defendant holds any particular share of the property on trust for the plaintiff.

1. In the course of submissions, Mr Spencer sought leave to amend the summons to seek a declaration that the plaintiff has a beneficial interest in the property.

1. I do not think that leave to amend should be given. Such a claim cannot be raised on the run. In any event, the evidence, all of which is in the form of affidavits upon which there has been no cross-examination, is insufficient to allow any conclusion to be drawn about the existence of such a beneficial interest, let alone as to the extent of such a beneficial interest on which the proceeds of sale would be held (see Ross v Ross [2010] NSWCA 301 at [35]).

1. The plaintiff deposes in substance that throughout the parties' marriage, he has been the major income earner, that the defendant ceased work in August 1994 after she fell pregnant with the parties' first child and was not in paid employment until around 2003 when she was employed as a bookkeeper by a service company through which the plaintiff conducted his practice as a doctor.

1. The property was purchased in around 2004. The plaintiff deposes that he and the defendant decided to acquire the property in her sole name. No reason for that is given. He deposes that the purchase was financed with a loan of $650,000 and that the purchase price was approximately $970,000. He deposes that he was a party to the loan but also, curiously, deposed to having guaranteed the loan. His evidence, given without any particularity, is that he contributed to the balance of the purchase price and made at least substantial contributions to the mortgage payments. He deposes that all assets belonging to both parties to the marriage were acquired as a result of income earned by him and by the defendant and by growth in investments made through those earnings.

1. Mr Spencer submitted that in these circumstances there was a presumption that the defendant held the property on a resulting trust for the plaintiff such that the parties' beneficial interests in the property were commensurate with the extent to which they contributed to the purchase. He referred in this respect to Calverley v Green (1984) 155 CLR 242, in particular, the judgment of Deane J at 269.

1. The difficulty with this submission is that there is an exception to the presumption of a resulting trust in cases where there is a presumption of advancement. In Napier v Public Trustee WA (1980) 32 ALR 153 Aitken J (with whom Gibbs, Mason, Murphy and Wilson JJ agreed) said (at 158):

"The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be. This proposition is subject to the exception that in the case of transfers to a wife or a child (including someone with respect to whom the transferor or purchaser stands in loco parentis) there is a presumption of advancement so that the beneficial as well as the legal interest will pass. Each of the presumptions may be rebutted by evidence."

1. As McLelland J (as his Honour then was) said in Currie v Hamilton [1984] 1 NSWLR 687 (at 690):

"One starts with the proposition that prima facie the beneficial ownership of real property is commensurate with the legal title. However, where two persons contribute in unequal proportions to the cost of acquisition of real property which is conveyed to them in equal shares, there is a rebuttable presumption of law that they take beneficial interests in proportion to their respective contributions. This presumption is rebutted if and to the extent that it appears that the person who made the greater contribution intended that the other should take a beneficial interest commensurate with the legal title. ... In some circumstances ... such an intention of advancement can be presumed."

(See also Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 per Campbell J (as his Honour then was) at [128]-[148] and Shepherd vDoolan [2005] NSWSC 42 at [20]-[26]. As the Court of Appeal said in Neilson v Letch (No. 2) [2006] NSWCA 254 at [25] and [26]:

"[25] Where two or more persons have contributed the purchase money in unequal shares and the property is purchased in joint names, there is, in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money (Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6 at 224 ALR 280, 80 ALJR 589 at [55]). Calverley held that the presumption of advancement does not apply to a de facto relationship.

[26] The resulting trust that is presumed in the circumstanced [sic] referred to in the previous paragraph is itself capable of being displaced by evidence showing that the parties had a common intention to share an equal interest in the property and/or that the party making the disproportionate contribution intended that the parties would have an equal interest in the property notwithstanding. As an American judge (Lamm J) stated in Mackowik v Kansas City St J & C B R Co 94 SW 256, 262 (1906) :

'Presumptions ... may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts.'"

1. A party in the position of the plaintiff in this case might also be entitled to claim a beneficial interest in the matrimonial property on the principles of a common intention constructive trust. (See for example Pettitt v Pettitt [1970] AC 777 at 804, 810, and 816-817; Gissing v Gissing [1971] AC 886 at 900, 902, 905 to 909; Green v Green (1989) 17 NSWLR 343; and Shepherd v Doolan at [30]-[46].) That would depend upon there being evidence as to the parties' intention that the party without legal title have some beneficial interest in the property and evidence of that person's having acted to his or her detriment in reliance on an assumption that he or she had such a beneficial interest.

1. There is no evidence about the parties' intentions as to who should have a beneficial interest in the property in this case. It was not an issue raised in the summons and if it were to be an issue, it was an issue that needed to be raised in a statement of claim.

1. Section 66G does not confer jurisdiction on the court to appoint trustees for sale unless the property is in co-ownership. Hence it would be necessary for the court to make a finding as to the beneficial ownership of the property if the jurisdiction under s 66G could be invoked.

1. Neither the form of the originating process nor the evidence produced in support of it permits the making of any such finding.

1. Even if it were open to proceed under s 66G it would not be appropriate in the circumstances of this case to do so. There are pending proceedings in the Family Court in which the defendant seeks orders under s 79 of the Family Law Act.

1. Although this court could exercise cross-vested jurisdiction under the Family Law Act pursuant to the Jurisdiction of Courts(Cross-Vesting) Act1987 (Cth) (Young v Lalic [2006] NSWSC 18 at [32]-[50]), there would need to be some very good ground for it to do so. As Brereton J said in Song v Shi [2011] NSWSC 1207 at [7], the Family Court of Australia or the Federal Magistrate's Court (now the Federal Circuit Court) are ordinarily the courts in which matrimonial causes should be instituted. In this case the plaintiff did not submit that I should exercise any cross-vested jurisdiction under the Family Law Act.

1. The Family Court has power under ss 79 and 80(e) of the Family Law Act to make orders for the appointment of trustees for sale. The substantive relief that the plaintiff seeks in this court could be granted in the Family Court as it is the court which is seized of jurisdiction of the defendant's application for orders under s 79. It is the court better placed to decide whether the appointment of trustees for sale of the property would be in the interests of both parties to the marriage as the plaintiff submits, or whether for any reasons that the defendant might advance, such as those referred to by her in her affidavit to the effect that she seeks to retain the property, the court should not force a sale.

1. For these reasons I order that the summons be dismissed. No question of transfer of these proceedings to the Family Court therefore arises.

[Parties address on costs.]

1. The defendant seeks an order for indemnity costs and seeks an order that those costs be assessed in a gross sum of $21,623. In support of that application, the defendant tenders a tax invoice from Slater and Gordon Lawyers in the amount of $21,623 described as being that firm's professional costs for acting for the defendant from 17 October 2014 to 17 October 2014 (sic). It appears on the face of the invoice, and I understand it not to be disputed, that the tax invoice relates not only to the costs of these proceedings but for costs in relation to work done in connection with the application to the Family Court.

1. That being so, it appears to me that the tax invoice has no probative value in assessing what would be the appropriate sum to fix as a gross sum pursuant to s 98 of the Civil Procedure Act 2005 (NSW).

1. I reject the tender.

1. In any event I am not satisfied that this is an appropriate matter for indemnity costs. Whilst the application faced what I think are insurmountable procedural difficulties, I do not think that there is any relevant delinquency in the plaintiff's bringing the application. In substance the application, even though brought in the wrong court and on the wrong basis, may have some considerable merit. However costs will follow the event.

1. I order that the plaintiff pay the defendant's costs.

Decision last updated: 04 November 2014