Sitnovski v Trpkoski
[1999] NSWSC 1247
•17 December 1999
CITATION: Sitnovski v Trpkoski [1999] NSWSC 1247 CURRENT JURISDICTION: Equity FILE NUMBER(S): 4827/97 HEARING DATE(S): 6 & 9 August, 24 September 1999 JUDGMENT DATE:
17 December 1999PARTIES :
Pece (Peter) Sitnovski & Sofia Sitnovski (P)
Nada Trpkoski - Aka Nancy Dimejohn (D)JUDGMENT OF: Austin J
COUNSEL : B DeBuse (P)
J S van Aalst (D)SOLICITORS: Marsdens (P)
Walker Gibbs & King (D)CATCHWORDS: EQUITY - trusts - constuctive and resulting trusts - mother, sister and brother acquire property as tenants in common in one-third shares - evidence did not show sister made a disproportionately low contribution to acquisition - no basis for denying that sister had beneficial as well as legal one-third interest ACTS CITED: Conveyancing Act 1919 (NSW), s 66G DECISION: Summons dismissed; defendant entitled to relief on cross-claim
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISIONAUSTIN J
FRIDAY 17 DECEMBER 1999
4827/97 - PECE (PETER) SITNOVSKI & 1 OR v NADA TRPKOSKI - AKA NANCY DIMEJON
JUDGMENT
1 HIS HONOUR: This is a family property dispute with respect to the beneficial ownership of 49 Angle Road, Leumeah (‘the Leumeah property’). Pece (Peter) Sitnovski, the first plaintiff, and his mother Sofia Sitnovski, the second plaintiff, claim a declaration by summons filed on 20 November 1997 that the defendant Nada Trpkoski, their sister and daughter respectively (also known as Nancy Dimejon), holds any interest she may have in the Leumeah property in trust for them jointly and that they alone are entitled to be the registered proprietors of the property. In the alternative they say that the defendant is estopped from asserting that she has any interest in the Leumeah property.
2 By her cross-claim filed on 24 April 1998 the defendant asserts that she is entitled to a one-third interest in the Leumeah property and seeks an order under s 66G of the Conveyancing Act 1919 (NSW) for the appointment of a trustee for sale.
3 The facts relevant to this unfortunate dispute begin in 1974, when the second plaintiff received $12,500 from the sale of a property at Arncliffe which she owned with her former husband. On 5 October 1976 the first and second plaintiffs purchased a home unit at 20/31 Villiers Street, Rockdale for $22,500, settlement occurring on 10 December 1976. The second plaintiff's $12,500 was applied towards the purchase price, and the balance was borrowed by the first and second plaintiffs on mortgage from the Commonwealth Bank, secured over the Rockdale unit. The first plaintiff made no cash contribution at the time of purchase, but he and his mother say that he contributed to the mortgage payments from his wages at various jobs (about which there is evidence), and I accept that this was likely. The vendors of the Rockdale unit were the defendant and her then husband, who sold it in order to move into a larger home.
4 The defendant's marriage ended and in 1979 she moved back into the Rockdale unit with the first and second plaintiffs. She brought her daughter, Adriana, born in 1972, with her. The defendant says she contributed two-thirds of her wages to the family finances during the period after she moved into the Rockdale unit. I shall return to this claim.
5 On 17 June 1979 the first plaintiff married Nikolina Nasarouski, and later that year the plaintiffs sold the Rockdale unit, settlement taking place on 20 February 1980. The Rockdale unit was sold for $43,750. The balance of the proceeds of sale after discharging the mortgage to the Commonwealth Bank was about $32,000, according to the first plaintiff. The proceeds of sale were deposited into a joint savings account of the first and second plaintiffs with the Commonwealth Bank, account number 43133 (the first account). The evidence shows that there were deposits of $27,050.94 and $2,762.50 into that account on 22 and 27 February 1980 respectively.
6 The plaintiffs, the defendant and Adriana then moved into a rented property at Mortdale. Shortly afterwards the first plaintiff’s marriage to Nikolina broke down, leading eventually to divorce proceedings.
7 In March 1980 the defendant received $16,046.88 from a property settlement with her former husband. On 27 March 1980 this money was paid into a second joint savings account with the Commonwealth Bank in the names of the first plaintiff and the defendant, account number 43333 (the second account).
8 Early in 1980 the plaintiffs and the defendant had discussions about the acquisition of a family home and possibly also an investment property. In about March 1980 the plaintiffs applied to the Commonwealth Bank for a housing loan, but their application was refused by letter dated 25 March 1980. The reason for refusal, according to that letter, was that ‘average balances held in accounts are below normal eligibility’. On 11 April 1980, $10,000 was withdrawn from the second account and deposited into the first account. The parties are completely in dispute as to the circumstances in which that transfer occurred, as I shall point out.
9 On 19 April 1980 (or perhaps 19 May 1980) a holding deposit was paid for the acquisition of a property at lot 9 Victoria Place, Thirlmere (‘Thirlmere property’). Contracts were exchanged for the Thirlmere property on 4 July 1980, and the purchase was settled on 29 August 1980. The purchasers and registered proprietors were the plaintiffs and the defendant as tenants in common in equal one-third shares. The purchase price was $11,200. $10,709 was withdrawn from the first account on 13 August 1980, and I infer that this withdrawal was for the purpose of providing purchase money for the acquisition of the Thirlmere property.
10 On about 6 June 1980 a holding deposit was paid for the acquisition of the Leumeah property. A further housing loan application was made to the Commonwealth Bank, this time by the plaintiffs and the defendant, and on 30 June 1980 the bank wrote to them indicating that a housing loan of $12,500 had been approved on the security of the Leumeah property. Contracts for the purchase of the Leumeah property were exchanged on 25 July 1980, and the purchase was settled on 5 September 1980. The Leumeah property was purchased for $43,000 with approximately $1,500 for stamp duty and costs. The purchasers and registered proprietors were the plaintiffs and the defendant as tenants in common in equal one-third shares.
11 The plaintiffs say they paid $32,000 towards the purchase price of the Leumeah property out of the proceeds of sale of the Rockdale unit, and that the balance of $12,500 was borrowed from the Commonwealth Bank. They say that although the defendant was a mortgagor to the bank, she did not contribute to the mortgage repayments and they never intended that she would acquire any interest in the Leumeah property. There is evidence that on 5 September 1980 $26,382 was withdrawn from the first account, and I infer that this was for purchase of the Leumeah property. I also infer that a deposit of approximately $4,300 was paid on exchange of contracts, though the evidence does not disclose the source of that payment. I shall return to the acquisition of the Leumeah property because there are substantial disputes as to the facts relating to it.
12 In November 1980 the first plaintiff was involved in a serious motor cycle accident and was in hospital for several months, and unwell for a substantial period afterwards.
13 On 24 September 1981 an application was filed for the dissolution of the first plaintiff's marriage to Nikolina. A decree nisi was pronounced on 11 November 1981, which became absolute on 12 December 1981. The plaintiff executed a s 87 deed on 30 April 1982, pursuant to the terms of which he paid Nikolina the sum of $6,000 by way of property settlement.
14 The Thirlmere property was sold in 1985 for net proceeds of sale of approximately $21,000, and the defendant received that amount. She says that she subsequently gave $7,000 to each plaintiff out of those proceeds. The plaintiffs deny this. The first plaintiff says he ‘signed over’ his one-third interest to the defendant. The defendant says they agreed that she could keep the proceeds of sale of the Thirlmere property if she would give the plaintiffs her share in the Leumeah property. She says that the first plaintiff changed his mind and she then paid out the plaintiffs’ shares.
15 In 1984 the first plaintiff borrowed $15,000 from the ANZ Bank to start up a business. Repayments were made by a company Alimtim Pty Limited, of which the first plaintiff is a director. The defendant made no contribution to the repayments but she consented to a mortgage over the Leumeah property which was granted as security for the loan.
16 Relations between the first plaintiff and the defendant broke down in about 1982. It appears that the trigger was a dispute between them about another bank account which was in his name in trustee for Adriana. He withdrew an amount (either $150 or $200) from that account to purchase car tyres, but says that he intended to pay it back. The defendant found out about the withdrawal and objected to it, and instructed a solicitor who wrote a letter of demand. She says that the first plaintiff assaulted her violently in the course of an argument about the bank account. He denies that the assault occurred. On balance, it appears to me likely there was an assault, since Adriana has given evidence recollecting it, and the fact is that the defendant ceased living with the plaintiffs at about that time. The defendant was spending some time with her boyfriend in that period, but it seems to me likely that she left because of her brother’s behaviour rather than to be with her boyfriend.
17 The relationship between the first plaintiff and the defendant has clearly not improved over the intervening years. She claims that he assaulted her again in 1987 and 1989, and he admits the assault on the last occasion, for which he was charged and convicted. He says that she did not claim any interest in the Leumeah property until 1997, when he and his mother wished to dispose of it, and seeks to raise the inference that she made her claim out of spite. But I accept her evidence that after the assaults she was concerned for her safety.
18 The second plaintiff appears to have sided with her son and against her daughter throughout the period of their antagonism, and clearly does so now. However, the evidence on this is not entirely clear. In 1987 the second plaintiff herself made an application for an apprehended violence order against her son. The first plaintiff's evidence is that the defendant coerced the second plaintiff to sign the papers for the application, but that seems to me to be very unlikely. In any event, the application was subsequently withdrawn.
19 I have indicated during my narration of the facts that there are some very material matters which are in dispute. The documentary evidence of the relevant events is thin and incomplete. The evidence includes some correspondence in respect of the acquisition of the Leumeah property, with the Commonwealth Bank and the solicitors who acted for the purchasers at the time, and also the passbooks for the two bank accounts. Also in evidence are documents with respect to the divorce proceedings between the first plaintiff and Nikolina, and documents relating to the defendant’s income during the period from 1979 to 1982. These various documents, considered together, do not give any clear picture of the events to which they relate, but they do serve to contradict parts of the accounts given by the parties in their oral evidence. In the result, they force me to conclude that parts of the oral evidence of the plaintiffs and the defendant are untrue.
20 As far as the plaintiffs are concerned, I must reject their testimony on the following crucial matters. First, the first plaintiff said that his mother kept control of the first account and that he made withdrawals from it only occasionally, with permission. The second plaintiff says that her daughter handed her the passbook for the second account after it was used up, and she subsequently forgot about it until she found it in her papers while preparing for the proceedings. I find the plaintiffs’ evidence implausible and I reject it. The account was jointly in their names. Observing the second plaintiff in the witness box, I concluded that she would be an unlikely controller of the family’s finances. Her English was poor. She said she did not know that the second account was a joint account. She denied that money was withdrawn from the first account to pay for the Thirlmere property. She could not remember how much was borrowed from the Commonwealth Bank to pay for the Leumeah property. I regard it as much more likely that as the male of the family he had a substantial and probably a determinative say with respect to the money in both the first and the second accounts. That is consistent with his influential position, again probably determinative, when it came to decisions about the acquisition of property. His evidence, confirmed by his mother’s, indicates that the decisions to acquire the Thirlmere and Leumeah properties were taken by him, whether or not (as is disputed) he inspected the properties with his sister.
21 Secondly, the first plaintiff’s evidence was that he did not know anything about the second account until his mother discovered it when preparing for the present proceedings, and he denies that his sister handed it over to him in 1980, or that he ever operated or was able to operate the account. Since that was a joint bank account in his and his sister's names, I find his evidence implausible and I reject it. The second account was put in evidence by the first plaintiff in his affidavit of 22 May 1998. It is plausible that the defendant, opening the account at the time of her divorce settlement when she was living with the plaintiffs, would make the account a joint one between her and the first plaintiff, who (as I have found) was the family’s financial controller. It is implausible that she would do so without giving him access to it or even telling him about it. It was faintly suggested in cross-examination that she did so because her entitlement to social security would be affected by having the account solely in her name, but there is no evidence to support the suggestion. I conclude that the first plaintiff knew about the second account from the beginning, and was able to operate it as a joint account holder.
22 The defendant says she gave him control of the passbook after the bank refused the plaintiffs’ loan application, and before the $10,000 was withdrawn from it. The plaintiffs deny this. On balance, I prefer her evidence to theirs on this point. The first plaintiff made major family decisions for the purchase of property, according to his mother’s evidence as well as the defendant’s, and was (as I have found) the controller of family finances. It is plausible that she would have given him control over money which she intended to be used for property acquisition, just as she gave him control over her daughter’s trust account.
23 The first plaintiff’s evidence about the transfer of the $10,000 from the second to the first account is unconvincing, and indeed it is very confused. At one point he said that the defendant intended to make a gift of that money to him and his mother because they had looked after Adriana. Nevertheless, he said that he put her name on the title to the Thirlmere land in case she ‘changed her mind’. He appeared to be saying that the Thirlmere property was to belong beneficially to his sister alone, and that she was free to ‘change her mind’ by claiming absolute beneficial ownership (as he said she eventually did by taking the proceeds of the sale of the Thirlmere property). But if it was intended that the Thirlmere property would belong beneficially to her alone, it is hard to see how the payment of $10,000 prior to its acquisition could be said to be a gift. In any event, I find it totally implausible that the defendant would have intended to dispose of the $10,000 in April 1980 by way of gift - as opposed to allowing her brother to use it for property acquisition for the family’s benefit, and to improve their chances of success with the bank loan application. I reach this conclusion because by that time she was a single mother with very limited earnings and no other significant assets and the $10,000 was the major part of her divorce settlement.
24 The most unsatisfactory part of the first plaintiff's evidence related to the beneficial ownership of the Leumeah property. He said that he and his mother and the defendant all intended, at the time of its acquisition, that the defendant would have no beneficial interest in that property and the owners would be the plaintiffs. Nevertheless, the registered proprietors became the plaintiffs and the defendant in equal one-third shares. He sought to explain this outcome in various ways in his written and oral evidence. In his affidavit of 9 March 1998, paragraph 25, he said:
‘My belief at the time [that is just prior to the purchase] was that if I had half the property under my name my ex-wife would have a potential claim over my half share whereas if I only had a third share in my name she only had a potential claim over that third. I never intended that my sister would actually have an interest in the Property; rather that by having her name on the title, my exposure to my ex-wife would be limited.’
25 On the face of it, this seems to be an admission of an intention to defraud the ex-wife, by concealing the first plaintiff's half share interest and representing through the registered title that the interest was only a one-third interest. When this was put to him in cross-examination, the first plaintiff gave a somewhat different explanation of what he claimed to be the common intention. He said that he was, to the knowledge of his mother and his sister, attempting to keep ‘his equity the same’. He referred to having a half share in the proceeds of sale of the Rockdale unit, in an amount of about $16,000. The implication seems to be that he intended that his proportionate interest would remain at the same financial level after the acquisition of the Leumeah property. But if this was his intention, it would have given him not much more than a one-third interest in the Leumeah property.
26 The plaintiffs say that they discussed their intention with the defendant, but she denies that any such conversation occurred. They say they saw a solicitor who told them to put the defendant’s name on the title, but their evidence about the solicitor’s advice is confused, and the solicitor did not give evidence. I find, on balance, that neither conversation occurred.
27 It appears to me that the first plaintiff was on the horns of a dilemma. Either his intention was to keep his proportionate interest in the Leumeah property down (limiting it to an interest representing his half share in the proceeds of sale of the Rockdale unit), in which case he cannot now claim a half interest in the Leumeah property; or his intention was to acquire a half interest in the Leumeah property, in which case that interest should have been disclosed and taken into account in the property settlement with his ex-wife. In fact he appears to have attempted to straddle two inconsistent positions. As far as his ex-wife was concerned, he admitted only to having a one-third interest in the Leumeah property. This can be seen in his affidavit in the Family Law proceedings, in which he said that the Leumeah property was acquired by himself, his mother and sister as tenants in common in equal shares, and in the s 87 deed, which recites that he is registered as tenant in common as to a one-third interest in the Leumeah property. To assert, as he does in the present proceedings, that he is entitled to a one half interest, but that he placed the legal title in three names as tenants in common in equal one-third shares in order to keep his equity the same, is either to deny the truth of his earlier evidence or to admit to an intention to defraud his ex-wife.
28 Taking all this into consideration, my view is that the first plaintiff is not to be trusted in any of his evidence, and that I should treat his evidence with suspicion unless it is corroborated by independent oral evidence or documents.
29 The second plaintiff gave evidence through an interpreter. Her evidence suffered from the same inconsistencies as the first plaintiff's. In my view her evidence was mostly derivative of his. I regard it as unreliable in the same way.
30 Regrettably, there are also some inconsistencies in the defendant's evidence. Her affidavit evidence about the first defendant’s employment history was wrong, as she conceded in cross-examination. When she swore her first affidavit on 20 April 1998 it appears that she did not have access to the deposit book for the second account. Photocopies of the relevant pages were provided only in the first plaintiff's affidavit of 22 May 1998. In her affidavit of 20 April 1998 she claimed that she signed withdrawal forms on the second account when asked by the plaintiffs to do so, but this seems unlikely given that the account was a joint account with the first plaintiff. She also claimed that she made a financial contribution to the plaintiffs between 1979 and 1982 of two-thirds of her net wages from permanent full time work with Pacific Private Hospital and then with the Department of Health. She said her gross income was $12,500 to $15,500 per year. In fact documentary evidence adduced by the plaintiff indicates that the defendant received a widow’s class A pension during the period from December 1979 to the end of 1982, and she admitted in cross-examination that she was unemployed in 1979 and until May 1980. She worked full time for six weeks from late May 1980 and thereafter part time until October that year. From October 1980 she deposited into the second account $160.20 per fortnight, which was probably her social security payment, although in her oral evidence she claimed that her social security payments went into a separate account of her own. I conclude that she did not receive the amount of money she alleges and did not make payments of the amounts which she claims to have paid to the plaintiffs. It appears to me likely that she made some contributions to family’s income throughout the time during which she was living with the plaintiffs with her daughter, but her level of earnings was relatively low and it is impossible to determine, on the evidence, the amount contributed.
31 During 1980 the plaintiffs and the defendant planned and executed the purchases of the Thirlmere and Leumeah properties. I cannot say, on the evidence, that the defendant’s contributions from her income were towards living expenses or towards the purchase money for either property. The most likely inference, which is supported by the defendant’s oral evidence and which I accept on balance, is that she contributed to a pool of income which was used partly for living expenses, partly towards the purchase money for the properties, and partly towards rent before the Leumeah property was acquired and towards mortgage repayments thereafter. It appears that one stage there was an intention, at least on the plaintiffs’ part, to use some of the family’s money to acquire property in their names alone, although the defendant would be allowed to live on the property. But after the bank rejected the plaintiffs’ loan application, all negotiations were conducted and transactions effected in the names of the plaintiffs and the defendant, reflecting the fact that there were contributions to the family savings by all three family members.
32 I prefer the defendant's evidence to the first plaintiff's with respect to the withdrawal and deposit of the $10,000, though her evidence is not entirely clear. For the reasons set out above, I have found that she did not make a gift of the money, but put the first plaintiff in control of it for the acquisition of property. It appears to me to be likely that she made the payment of $10,000, or (more likely) acquiesced in it being transferred by her brother, so as to assist the plaintiffs to obtain a housing loan from the Commonwealth Bank, who had rejected their application on the ground that the balance of the account was insufficient. The payment was not intended to be a gift to the plaintiffs. Nor, seems to me, was the payment intended to be the provision of the bulk of the purchase money for the Thirlmere property alone. Given that the Thirlmere and Leumeah properties were being acquired more or less contemporaneously, and that after the payment of $10,000 the defendant became co-purchaser of the Thirlmere property as tenant in common in respect of only a one-third share, it appears to me likely that her intention in making the payment was to acquire a one-third interest in both properties. It appears to me equally likely, for the reasons which I have given, that the plaintiffs' intention was that she would acquire a one-third interest in the properties. Their claim that she was to obtain the absolute beneficial ownership of the Thirlmere property and no beneficial interest in the Leumeah property is contrary to the way in which the properties were transferred on purchase and is not supported by any evidence external to the plaintiffs' evidence. Since the parties were not estranged at that time, the most likely construction of their financial arrangements at the time the $10,000 was transferred was that they intended that the properties be acquired out of the pool of family savings in equal one-third shares.
33 For the reasons given earlier, I have accepted the defendant’s evidence that as well as contributing the $10,000, she put the second account under the control of the first plaintiff and gave him access to the balance of proceeds of the account, although by agreement an amount of about $1,800 was withdrawn to acquire a car for her. I therefore infer that she contributed most of her property settlement in an amount of about $14,000 to the plaintiffs for the acquisition of the Leumeah and Thirlmere properties by the three of them as tenants in common in equal one-third shares.
34 I also accept that the defendant made payments to or for the benefit of her mother after the properties were acquired, which would have indirectly assisted the plaintiffs to make mortgage repayments on the Leumeah property. The defendant says she paid approximately $1,800-$2,400 during the period from 1982 to 1984. Given that I have rejected her quantification of her contribution to family finances in the period 1979 to 1982, I am not prepared to accept her estimate of the subsequent contribution. I therefore find that she made financial contributions to her mother during the period from 1982 to 1984 in an amount which cannot be determined on the existing evidence.
35 On the evidence before me I am unable to say whether, when the Thirlmere property was sold, the defendant retained the entire balance of proceeds of sale. It appears that the proceeds were received by her but she says that this was because of an arrangement with the plaintiffs that she could keep the proceeds of sale of the Thirlmere property if she transferred her interest in the Leumeah property to them. She says that her brother changed his mind about this and then she transferred approximately one-third of the proceeds, $7,000, to each of the plaintiffs. I cannot determine on the present evidence whether that is true. But since the sale of the Thirlmere property occurred well after the acquisition of the Leumeah property, any change of intention on the part of any party at that time would not affect my conclusion as to the parties' intention at the time of the acquisition of the Leumeah property.
36 The plaintiffs say that they made various improvements to the Leumeah property, for a total cost of $8,720.70. But there is no evidence for the expenditure other than the assertion in the first plaintiff’s affidavit, and no evidence of the intention of the parties or the surrounding circumstances when the alleged improvements were made. I am unable to conclude that the improvements were made, nor that if they were, they gave rise to any augmentation of the proportional beneficial interest of the plaintiffs.
37 In summary, the Leumeah property, which is the subject of the proceedings, was purchased by the plaintiffs and the defendant as tenants in common in equal one-third shares. My conclusion is that the evidence does not show any intention on the part of the plaintiffs at the time of acquisition that the Leumeah property would be held in any other than one-third shares. I reject the plaintiffs' evidence to the contrary. The evidence does not show that the defendant intended anything other than to acquire a one-third share in the Leumeah property. It does not show that the financial contributions to the acquisition were such that the defendant acquired her one-third interest on a resulting trust for the plaintiffs. The defendant’s direct and indirect contributions to the purchase of the two properties included the $10,000 transfer, part of the remainder of her $16,046.88 settlement, an unquantifiable contribution to family savings, and the mortgaging of her interest to provide security over the Leumeah property to the Commonwealth Bank, for its loan of $12,500 on settlement of the acquisition of that property.
38 There being no evidence pointing to any other outcome, it appears to me that the legal title to the Leumeah property carries with it the beneficial interest, and consequently the defendant is entitled to a one-third interest in the Leumeah property.
39 In the result the plaintiffs are not entitled to a declaration that the defendant holds her interest in the Leumeah property in trust for them, or that she is estopped from asserting her one-third interest in that property. The summons must, therefore, be dismissed. The defendant seeks the appointment of a trustee for sale under s 66G by her cross-claim and in the circumstances of this case my view is that she is entitled to that relief. I am prepared to make the orders which she seeks in paragraphs 1 - 4 of the cross-claim, but I intend to defer the making of the orders in case the parties are able to agree upon a mechanism for sale which might avoid the cost of the appointment of a trustee.
40 Since the defendant is successful on the summons and cross-claim, I am inclined to order that the plaintiffs pay the defendant's costs of the summons and cross-claim, but I shall give the parties an opportunity to make submissions on costs if they wish to do so.
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