Stepanov and Stepanov and Anor

[2015] FamCA 1123

FAMILY COURT OF AUSTRALIA

STEPANOV & STEPANOV AND ANOR [2015] FamCA 1123

FAMILY LAW – PROPERTY – TRUST – Whether the respondent wife is the beneficial owner of the property – Where the property was purchased in the sole name of the wife but her parents contributed the whole of the purchase money – Where the presumption of advancement applies per Calverley v Green (1984) 155 CLR 242 – Where the respondents gave clear evidence as to conversations between them and the wife’s father around the time of the acquisition of the property – Where the husband gave inconsistent evidence which diminished his credibility as a witness – Where the Court finds that the presumption of advancement has been rebutted – Declaration that as and from the date of its acquisition the wife has held the property on trust for her mother.

Family Law Act 1975 (Cth)

Calverley v Green (1984) 155 CLR 242

APPLICANT: Mr Stepanov

1^st  RESPONDENT: Ms Stepanov

2^nd  RESPONDENT: Ms Ilic

FILE NUMBER: SYC 4003 of 2007

DATE DELIVERED: 14 December 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 8 October 2015

WRITTEN SUBMISSIONS: 29 October 2015, 2 and
10 November 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Spain

SOLICITOR FOR THE APPLICANT: Stojanovic Solicitors

SOLICITOR FOR THE 1^ST RESPONDENT: Mr Leamey of McKenzie Leamey Solicitors and Barristers

COUNSEL FOR THE 2^ND RESPONDENT: Mr Schonell SC

SOLICITOR FOR THE 2^ND RESPONDENT: P. Dobrich & Co.

Orders

1. A declaration that as and from the date of its acquisition Ms Stepanov held the property situate at and known as B Street, Suburb A in the State of New South Wales being the land contained in Folio Identifier .. on trust for Ms Ilic.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Stepanov & Stepanov and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4003 of 2007

Mr Stepanov

Applicant

And

Ms Stepanov

1^st Respondent

And

Ms Ilic

2^nd Respondent

REASONS FOR JUDGMENT

The proceedings

1. By Initiating Application filed on 23 September 2011 the husband, Mr  Stepanov, sought leave to commence proceedings for alteration of property interests out of time.  Such leave was granted and the husband filed an Amended Initiating Application on 15 February 2012.  The respondents to the application are the wife,  Ms Stepanov, and her mother,  Ms Ilic.

2. In December 1993, Ms Ilic and her late husband, Mr Ilic, purchased a property at B Street, Suburb A (“the B Street property”) in the name of the wife.  The purchase price was $350,000, all of which plus the acquisition costs were provided by Mr and Ms Ilic.

3. On 20 February 2013 the Supreme Court of New South Wales made a declaration that the wife held the B Street property upon trust for Ms Ilic.  On the same date, the court ordered that the wife do all things necessary to transfer the whole of her interest in the property to Ms Ilic.  On 8 October 2014 this declaration was set aside, after the property had been transferred to Ms Ilic in accordance with the orders of 20 February 2013.

4. In the present proceedings, a preliminary issue arose as to the beneficial ownership of the B Street property.  The respondents contended that Ms Ilic has been the beneficial owner of that property at all material times.  This contention was resisted by the applicant, who maintained that the wife is and has always been the beneficial owner.  I listed that question for hearing, as a discrete issue, on 8 and 9 October 2015.

Background

1. The second respondent, Ms Ilic, was born in 1933 and is presently 82 years of age.  Ms Ilic’s age and state of health were the principal reasons why I elected to list the issue of beneficial ownership of the B Street property as a threshold matter.

2. The husband was born in 1968 in Country C and is currently 47 years of age.  The wife was born in 1957 in Country C and is presently aged 58 years.  The wife migrated to Australia with her parents in the late 1960s and the husband came to this country in 1992.

3. The husband and the wife began a relationship in April/May 1992, when she was on a holiday in Country C.  The husband came to Australia on a tourist visa in June 1992 and then made application for refugee status.

4. In November/December 1992 the wife discovered that she was expecting the parties’ first child.  The husband then applied for a visa as the wife’s de facto spouse.  The parties’ son, Mr D, was born in 1993 and their daughter, Ms E, in 1995.  The parties married in 1997 and separated on 9 April 2006.  They were divorced on 28 June 2007.

5. In 1982 Mr and Ms Ilic purchased a house on the Central Coast in the names of themselves and the wife as joint tenants.  They financed the purchase in part by a mortgage in their three names.  Mr and Ms Ilic made the mortgage repayments.  The wife made no contribution to the purchase price of $60,000 nor to any mortgage repayments.  Ms Ilic deposed:

   7.Prior to our purchase of the property my husband and I had conversations with our daughter and I said words to the effect: 
   “We think it a good idea to put your name on the deeds just in case as then if anything happens to both of us, it will be yours.  But it will be our property until then.”  My daughter said words to the effect:  “Of course it is your property, it will always be yours.”

6. In approximately 1985 the wife moved to City F, Country C.  According to Ms Ilic, she and her husband decided to purchase an apartment in that city for the wife’s use while she lived there and which they would occupy on their retirement.  Ms Ilic deposed that they negotiated a purchase price equivalent to AUD$100,000, of which $30,000 was borrowed from the Westpac Bank.

7. Ms Ilic deposed further that her husband was on the point of travelling to City F to finalise this purchase when he was hit by a car and suffered serious injuries.  She recounted a conversation with the wife, who was then in City F, as follows:

   “Your father has had a bad accident and cannot travel to [City F] to buy the unit.  You will have to buy the unit in your name but it is still ours.  I will send you all the money for the purchase of the unit.  We can change ownership later if needed.”  My daughter said words to the effect:  “I’m sorry he is not coming over. The unit will always be yours as you and dad are paying for it.

8. The purchase of the City F property was completed in the name of the wife as sole proprietor.  She made no contribution to the purchase money or the acquisition costs.  Ms Ilic deposed that, in 2002, her husband negotiated a sale of the property to a buyer who lived in Sydney for a price equivalent to AUD$100,000.

9. The Central Coast property was sold for $125,000 in 1991.  All of the net sale proceeds were deposited into bank accounts of Mr and Ms Ilic.  The wife received no money from the sale of this property.

10. In 1985 Mr and Ms Ilic decided to purchase an investment home unit in Suburb A in the names of themselves and the wife.  Ms Ilic deposed that, prior to the purchase of the property G Street, Suburb A she and her husband had a conversation with the wife in the following terms:

    “This [Suburb A] unit can be in our three names, like the Central Coast house as then if anything happens to both of us, it can then be yours.”  My daughter said words to the effect:  “Whatever you think is best.  If you need me to sign anything I will as this unit will always be yours and not mine.”

11. The purchase price for this property was $63,000.  Mr and Ms Ilic provided the whole of the purchase money and paid the acquisition costs.  The property was leased and Mr and Ms Ilic retained all of the rental income.

12. After the husband arrived in Australia in mid-1992 he and the wife occupied the Suburb A apartment for several months on a rent-free basis.  The property was sold in April/May 1993 and the whole of the net proceeds were paid to

    
    

    Mr and Ms Ilic.

13. In October/November 1993 the property B Street, Suburb A was purchased in the sole name of the wife for $350,000.  The husband conceded that all of the purchase money and acquisition costs were provided by the wife’s parents.

14. Ms Ilic deposed to a conversation between herself , her late husband and the wife prior to the purchase of the B Street property in the following terms:

    21.Prior to the auction my late husband and I had a number of conversations with our daughter and I said words to her to the effect:  “I will be working when the auction for the house is being held and can’t attend.”  My husband said words to the effect:  “Since you can’t be there then we can buy the house in our daughter’s name, in the same way as we have previously with the [City F] unit.”  I said to my daughter words to the effect:  “We are going to buy the Property and you and your family to live in, but it will still be ours.  We have enough money now.  There is enough room for your father and I to live there and support you and the children.”  My daughter said words to the effect:  “You know that this will be a great support for me.  This is your house as you and dad are paying for it.  It will always be your house.”’

15. Ms Ilic deposed that, prior to the auction, the applicant said to her and her husband:

    I won’t be attending the auction.  I am not interested as this has nothing to do with me.  I am not paying anything for it.  It won’t be mine.

    The husband denied that he made this statement but, for reasons which appear below, I accept that he did so.

16. The uncontradicted evidence of Ms Ilic was that she and her husband paid the rates in respect of the B Street property and stayed there for three to five nights per week, to assist the wife with the care of the parties’ children.  She deposed that, on some occasions, she and her husband provided cash to the wife who then paid the rates.

17. Renovations to the B Street property were carried out prior to the husband and wife and their children taking up residence.  According to Ms Ilic and the wife, the husband insisted that a tradesman named Mr H be hired to carry out this work.  Ms Ilic maintained that his work was of an unacceptable standard and that he was sacked by her husband.

18. The husband alleged that he contributed to the cost of these renovations but gave conflicting evidence as to the supposed amounts.  In his affidavit he deposed:  “My contribution to the costs were about $25,000.”  Oddly, however, in his oral evidence he said:  “I disagree that my contribution was $25,000.”

19. Ms Ilic deposed to a conversation between herself and the husband and the wife, after the sacking of Mr H as follows:

    32.“We’ve run out of money.  The bank will not lend us any more.  Can you borrow some money for us to do this work to fix the house and we can make the repayments.  We can use the house as security.”  My daughter said words to the effect:  “Of course I will.  I will go to the bank and ask.”

    33.After going to the bank our daughter informed us in words to the effect:  “The bank will give me about $25,000, but only if [Mr Stepanov’s] name is there as well, to show income.”  I said words to the effect:  “But I don’t like that.  But if it’s the only way”.  [Mr Stepanov] also said to us words to the effect:  “Yes I will sign the papers, but it’s your loan.”

    The wife gave uncontradicted evidence that she and her parents made all of the repayments in respect of this loan.

20. Ms Ilic deposed that, from 1994, she “was concerned about [Mr Stepanov]”.  She contended that she had conversations with the wife, on a number of occasions, in the following terms:

    “I am worried about [Mr Stepanov] and my house here in [Suburb A].  You need to get him to sign to protect my house.”  My daughter said words to the effect:  “Yes I will try.”’

21. Ms Ilic deposed further:

    42. In 1997 when our daughter was about to marry the applicant, I was still concerned about [Mr Stepanov] and said to my daughter words to the effect:  “You need to see the solicitor to get [Mr Stepanov] to sign something.”  We spoke to our long time solicitor [Mr I] about this as I had concerns about the Applicant, and our daughter’s name being on the deeds.  He said words to us:  “I will make sure it is good for you and to protect you.  I will prepare some papers, as then he will have no claim on the house.”

22. The wife deposed that she requested that the husband sign a prenuptial agreement prior to the wedding of the parties in 1997.  The husband conceded that he refused to sign a prenuptial agreement.  The wife deposed that Mr I then prepared a mortgage document, which was signed by herself as mortgagor and her parents as mortgagees.  The principal sum was $350,000, which was the purchase price of the property.  A copy of the mortgage document, which is undated, was annexed to the wife’s affidavit of 25 September 2012.

23. Between 2005 and 2009 further renovations were carried out to the B Street property.  Ms Ilic maintained that she and her husband paid local tradesmen to carry out this work.  In her affidavit she provided their names and a description of the work undertaken by each of these people.

24. The husband alleged that he contributed to the cost of these renovations before he left the property in April 2006.  Again, he gave conflicting evidence as to the amounts which he allegedly spent on this work.  In his affidavit he deposed that he made available a sum of “about $15,000 from money I received from a workers compensation and redundancy payment.”  In his oral evidence he said, however:  “I contributed about $50,000, me personally not me and [the wife].  This money came from my wages and savings.”

25. The husband’s explanation for these inconsistencies was as follows:  “In my earlier affidavits I was very conservative.  I would rather under-estimate than over-estimate.”  I found this statement to be unconvincing and an improbable explanation for this conflicting evidence.

26. The husband also gave unconvincing evidence in relation to his lump sum payments.  In his oral evidence he said that he received a sum of $65,000 by way of workers compensation and redundancy payments.  In a document which he completed for Centrelink on 4 September 2006, however, he entered an amount of $20,000 under the heading “Previously received compensation payments” (Exhibit 7).

27. Ms Ilic gave uncontradicted evidence that she and her late husband attended the B Street property while the renovation works were being undertaken, both before and after the husband’s departure in 2006.  She deposed that this work continued until the death of her husband Mr Ilic in August 2009.

28. The husband challenged Ms Ilic’s evidence to the effect that she had possession of the Certificate of Title in relation to the B Street property at all times.  In her affidavit she deposed:

    28.After the settlement, the Transfer was registered and the Title Deed was delivered to myself and my late husband as this was our property.  Annexed hereto and marked “G” is a copy of the prior Title Deed Volume … Fol … which we received from the prior owner in December 1993 for the land.  We also received the new Title Deed F.I. … which my husband and I kept in a safe which only we knew the combination to.

29. In her oral evidence Ms Ilic said:

    I kept the Title Deed in my house at [Suburb J].  My daughter did not really hold the Deed for a time.  I slept in a room with the Title Deed.  The Certificate of Title was lost in 2012 no one knows how.  We kept the Title Deed in a safe, never in a box in the [Suburb J] property.  The safe was in the [Suburb J] property.

30. The wife said in re-examination:  “The Title Deed was always in the safe at my parents’ [Suburb J] house.  I did not hold the Title Deed.”  The husband said in his oral evidence: “I don’t remember ever seeing the Title Deed for [B Street].”

Consideration

1. In Calverley v Green (1984) 155 CLR 242 Gibbs CJ said (at 246):

   Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser.  However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially.  In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser.

2. Gibbs CJ said further (at 251):

   However, both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase:  see Charles Marshall Pty Limited v Grimsley (1956) 95 CLR 353 at pp 364-5. Where one person alone has provided the purchase money it is his or her intention alone that has to be ascertained. … Even if the parties had no common intention, the intentions of each may be proved, for the purpose of proving or negating that one intended to make a gift to the other.

3. In relation to the relevant time for determination of beneficial interests in property, Mason and Brennan JJ said (at 262):

   The Court of Appeal correctly took the time of the acquisition of the Baulkham Hills property as the material time for determining the beneficial interests of the parties.  The evidentiary material from which the court might have drawn an inference as to the intention of the parties included their acts and declarations before or at the time of purchase, or so immediately after it as to constitute a part of the transaction.

4. The wife is the daughter of Mr and Ms Ilic, thus the presumption of advancement would apply and the imputation would be that they intended to bestow upon her a beneficial interest in the B Street property.  That presumption, however, may be rebutted by evidence that Mr and Ms Ilic had no intention to give to the wife any beneficial interest in the property at the time of its purchase.

5. Ms Ilic gave clear evidence of her intentions at the time of the purchase of the B Street property in her affidavit of 17 September 2015.  I have referred above to her evidence of conversations between herself and her late husband and the wife, prior to purchase of the property.  In my view these conversations establish clearly that Mr and Ms Ilic had no intention to bestow upon the wife a beneficial interest in the property.

6. In my assessment Ms Ilic was unshaken in her evidence as to the conversations between herself, her husband and the wife prior to the purchase of the B Street property.  The husband was not present during the conversations to which Ms Ilic deposed at paragraph 21 of her affidavit and thus could give no evidence to the contrary.

7. The husband denied that he said prior to the auction “I won’t be attending the auction.  I am not interested as this has nothing to do with me.  I am not paying anything for it.  It won’t be mine”.  I accept however, on the balance of probabilities, that he did make this statement.  I have referred above to inconsistencies in the husband’s evidence concerning his alleged contribution to the cost of renovations to the B Street property.  This conflicting evidence left me with real doubts as to his credit.  By contrast Ms Ilic impressed me as a witness of truth, making allowance for her advanced age and the fact that she gave her oral evidence with the assistance of an interpreter.  Accordingly, wherever there is a conflict I prefer the evidence of Ms Ilic to that of the husband.

8. I am satisfied, and I find, that Mr and Ms Ilic had no intention to confer upon the wife a beneficial interest in the B Street property.  I am satisfied further, and I find, that the wife had no intention to take a beneficial interest in the property.

1. The purchase of the B Street property was the fourth occasion upon which Mr and Ms Ilic acquired real estate in circumstances where the wife was included as a co-owner or where she was the sole registered proprietor.  I accept the evidence of Ms Ilic to the effect that, on each of these four occasions, there were conversations between herself, her husband and the wife where they all made clear their intention that they (Mr and Ms Ilic) would retain beneficial ownership of the relevant property.

2. I consider that the conduct of Mr and Ms Ilic and the wife on the occasion of the purchase of the B Street property, was consistent with their behaviour in relation to each of the three previous transactions.  In my view, on each of these four occasions Mr and Ms Ilic demonstrated a clear intention that they would retain beneficial ownership of the relevant property.

3. In my view it is notable that the wife received no part of the sale proceeds of the Central Coast house or the Suburb A and City F apartments.  That fact reinforces my view that Mr and Ms Ilic never intended that she acquire a beneficial interest in those properties at the time of their acquisition.

4. Retention of the Certificate of Title in relation to the B Street property by Mr and Ms Ilic seems to me to be inconsistent with their having made a gift of the property to the wife.  As noted, the husband’s evidence was that he had never seen the Deed of Title.  Similarly, payment of rates in relation to the property appears to me to be inconsistent with the proposition that

   
   

   Mr and Ms Ilic intended to constitute the wife the beneficial owner of the property.

5. I accept the evidence of Ms Ilic in relation to engagement of tradesmen who carried out renovation work in 1994 and between 2005 and the husband’s departure from the property in April 2006.  It seems to me to be unlikely that Mr and Ms Ilic would have involved themselves so closely with this work if they had not intended to retain beneficial ownership of the property.  I accept that Mr and Ms Ilic engaged these tradesmen, with the exception of Mr H, and that they paid for most of the costs of their work.

6. All of these considerations persuade me, and I find, that the wife holds the B Street property on trust for Ms Ilic.  There will be a declaration to that effect.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on

14 December 2015.

Associate: 

Date:  14 December 2015