Stepanov and Stepanov & Anor
[2017] FamCAFC 256
•30 November 2017
FAMILY COURT OF AUSTRALIA
| STEPANOV & STEPANOV AND ANOR | [2017] FamCAFC 256 |
| FAMILY LAW – APPEAL – PROPERTY – Where there is no merit in any of the grounds of appeal – Where the trial judge did not err by taking into account irrelevant considerations or failing to take into account relevant considerations – Where many of the complaints were not raised at trial and it was not open to raise them on appeal – Where evidence relied on by the respondents at trial was not challenged or the subject of any submission and cannot be the subject of a complaint on appeal – Where it has not been established that the trial judge erred in the treatment of the evidence before the court – Where there was no challenge to the credit of the second respondent – Appeal dismissed. FAMILY LAW – COSTS – Where each of the respondents sought an order for costs in the event that the appeal was unsuccessful – Where any costs order should include the costs of the respondents reserved at the commencement of the hearing as a result of the appellant being given leave to amend the grounds of appeal and rely on a further summary of argument – Costs ordered as sought. |
| Family Law Act 1975 (Cth) |
| Calverley v Green (1984) 155 CLR 242 Charles Marshall Proprietary Limited v Grimsley (1956) 95 CLR 353 Metwally v University of Wollongong (1985) 60 ALR 68 Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278 |
| APPELLANT: | Mr Stepanov |
| FIRST RESPONDENT: | Ms Stepanov |
| SECOND RESPONDENT: | Ms Ilic |
| FILE NUMBER: | SYC | 4003 | of | 2007 |
| APPEAL NUMBER: | EA | 6 | of | 2016 |
| DATE DELIVERED: | 30 November 2017 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Strickland, Aldridge & Forrest JJ |
| HEARING DATE: | 10 February 2017 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 14 December 2015 |
| LOWER COURT MNC: | [2015] FamCA 1123 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Othen |
| SOLICITOR FOR THE APPELLANT: | Stojanovic Solicitors |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Leamey |
| SOLICITOR FOR THE FIRST RESPONDENT: | David Leamey Solicitor & Barrister |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE SECOND RESPONDENT: | P. Dobrich & Co |
Orders
The appeal be dismissed.
The appellant pay the costs of the first and the second respondent of and incidental to the appeal, including the costs thrown away as a result of the late amendment to the grounds of appeal and the late filing of a further summary of argument by the appellant, with such costs to be assessed in default of agreement.
Note: The form of the order is subject to the entry of the order in the Court’s records.
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).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 6 of 2016
File Number: SYC 4003 of 2007
| Mr Stepanov |
Appellant
And
| Ms Stepanov |
First Respondent
And
Ms Ilic
Second Respondent
REASONS FOR JUDGMENT
Introduction
By way of Notice of Appeal filed 7 January 2016, Mr Stepanov (“the appellant”) appeals against the order made by Stevenson J on 14 December 2015.
The order provides a declaration that, as and from the date of acquisition, Ms Stepanov (“the first respondent”) held the property located at B Street, Suburb A, New South Wales on trust for her mother, Ms Ilic (“the second respondent”).
The appeal is opposed by the first and second respondents.
Background
The appellant was born on in 1968 in Country C. The first respondent was born in 1957 in Country C.
The first respondent and her parents migrated to Australia between 1968 and 1969.
The appellant and the first respondent began a relationship in April/May 1992. The appellant came to Australia soon after in June 1992 and then made a successful application for refugee status.
The appellant and the first respondent have two children of their relationship, Mr D, born in 1993, and Ms E, born in 1995. The appellant successfully applied for a visa as the first respondent’s de facto spouse upon learning that the first respondent was expecting their first child.
The appellant and the first respondent married on 11 May 1997.
Between 1982 and 1993, the second respondent and her late husband purchased three properties, two of which were registered in the joint names of the second respondent, her late husband, and the first respondent, and one of which was registered in the sole name of the first respondent. In respect of each purchase, the second respondent and her late husband provided all of the purchase price and the acquisition costs, and in respect of any mortgage taken out, they made all of the mortgage repayments. The first respondent did not contribute to any of the purchase price, the acquisition costs or any mortgage repayments. One property was leased out and the second respondent and her late husband received all of the rental income. They also received all of the net sale proceeds upon the sale of those three properties.
The second respondent and her late husband purchased the property located at B Street, Suburb A (“the B Street property”) in 1993 in the sole name of the first respondent. The purchase price was $350,000, all of which, plus the acquisition costs, was provided by the second respondent and her late husband.
The appellant and the first respondent separated on 9 April 2006. They were divorced on 28 June 1997.
In proceedings instituted by the second respondent against the first respondent, without notice to the appellant, in the Supreme Court of New South Wales, that court declared on 20 February 2013 that the first respondent held the B Street property on trust for the second respondent. It was ordered by the Supreme Court on the same date that the first respondent do all things necessary to transfer the whole of her interest in the property to the second respondent. The court’s declaration was set aside on 8 October 2014 following the transfer of the property to the second respondent in accordance with those orders.
The question of the beneficial ownership of the B Street property arose as a preliminary issue in the property settlement proceedings before Stevenson J. The respondents contended that the second respondent has been the beneficial owner of the property at all times, whereas the appellant contended that the first respondent has always been the beneficial owner.
The Trial Judge’s Reasons for Judgment
Her Honour found that because the first respondent is the daughter of the second respondent and her late husband, “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” (at [38]).
However, as her Honour recognised, that presumption “may be rebutted by evidence that [the second respondent and her late husband] had no intention to give to [the first respondent] any beneficial interest in the property at the time of its purchase” (at [38]), and her Honour found that to be the case.
Her Honour concluded as follows:
39.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.
40.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.
41.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.
42.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.
43.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.
44.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.
45.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.
46.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.
47.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.
48.All of these considerations persuade me, and I find, that the wife holds the B Street property on trust for Mrs Ilic. There will be a declaration to that effect.
The Appeal
Ground 1
Her Honour erred in providing insufficient reasons for the orders the subject of this appeal.
As explained in the appellant’s written summary of argument, the complaint here is that “her Honour gave no reasons for failing to make the various findings of fact detailed [in the other grounds of appeal]”. Thus, it is convenient to address those other grounds of appeal first, and then return to this ground if necessary.
Ground 2
The learned trial judge erred at law when Her Honour had regard to subsequent acts and declarations by the Respondents in satisfying herself that the presumption of advancement had been rebutted.
This ground was doomed from the outset.
As can be seen from her Honour’s reasons set out above, her Honour made the critical finding at [42] after referring to and considering the evidence of the parties as to what was said and done before or at the time of purchase of the property. Certainly her Honour went on and referred to the evidence of subsequent acts and declarations which supported her Honour’s finding, but that evidence was not the primary basis for her Honour’s critical finding; it merely reinforced that finding.
In any event, as submitted by the second respondent, the evidence discussed by her Honour in [43] – [47] comprised at least in part, matters raised by the appellant at trial as being “contrary to the proposition discharging the presumption” and it was incumbent upon her Honour to address them (Appeal Transcript, 10 February 2017, page 27, lines 30 – 37).
It is also instructive to consider the specific facts that the appellant complains were erroneously taken into account by her Honour in making her finding as to the intention of the second respondent. They are set out in paragraph 17 of the appellant’s summary of argument dated 7 February 2017 and we will address each of them in turn.
The fact the parents paid the rates and supervised renovations.
We agree with the submission of the second respondent that the authorities, and particularly the High Court decision of Charles Marshall Proprietary Limited v Grimsley (1956) 95 CLR 353, at 365, as explained in Calverley v Green (1984) 155 CLR 242 per Deane J at 269, and Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278 at 300, allowed her Honour to take this fact into account because it formed part of the transaction.
The fact that parents (with the wife) assisted with payments on a loan for renovations.
As submitted by the second respondent, nowhere in her Honour’s reasons does she have regard to this fact in the context of determining intention.
The fact the parents dealt with other property in which the wife had a legal interest on title unrelated to the subject property in a manner consistent with the wife not having a beneficial interest in those other properties.
This is a prime example of her Honour addressing a matter raised by the appellant at trial as supportive of the presumption (see paragraphs [12] – [13] of the written submissions filed on behalf of the appellant at trial on 11 October 2015).
The fact the parents held the title deeds.
This is plainly part of the transaction and it is entirely consistent with the parents being the owners of the property.
There is no merit in this ground of appeal.
Ground 3
Her Honour was plainly wrong when Her Honour found that the presumption of advancement had been rebutted, in that Her Honour had regard to extraneous matters, disregarded cogent evidence against the claim for rebuttal, failed to make relevant findings despite admissions against interest, and gave undue weight to self-serving uncorroborated evidence of the Respondents’ conversations at the time of acquisition.
The first issue to address here is that of the mortgage entered into by the first respondent in favour of the parents in April 1997.
It is submitted by the appellant in paragraph 18 of his written summary of argument, that the fact the parents held the title deeds is “consistent with the parents being mortgagees of the property (which the wife and the parents admitted they were).” In other words, that was evidence that the parents did not own the property, and it is said that her Honour failed to have regard to this in determining whether the presumption was rebutted.
We make two comments about this submission. First, and to repeat, the holding of the title deeds is entirely consistent with ownership. Secondly, it is not open to “cherry pick” the fact that a mortgage was entered into without looking at the entire history, including the context behind the entering into the mortgage. As to that, the second respondent gave evidence of the circumstances surrounding the entering into of the mortgage, and importantly that evidence was not challenged (see the cross-examination of the second respondent at Transcript 8 October 2015, page 14), and no submission was made by counsel to her Honour about that matter. In short, the evidence was that it was done on the advice of their solicitor, in order to protect their interests, such that the property would remain theirs.
In paragraph 19 of the appellant’s written summary of argument, further evidence is identified which it is said “counted against the asserted intention” but was not taken into account by her Honour. We will address that evidence seriatim.
The admission that the parents loaned the money to acquire the property initially – no finding was made
This is not an accurate statement. There was no such admission by the second respondent, and it is her intention which is determinative. Certainly the first respondent deposed in her affidavit to there being a loan, but that says nothing about the intention of the second respondent.
Further, this was again not something to be found in the submissions of the appellant to the trial judge, and thus it is not open to be raised on appeal (Metwally v University of Wollongong (1985) 60 ALR 68).
The admission that when concerned about future claims by the Appellant upon marriage, the loan was formalised and secured by way of mortgage
Similarly, this is factually incorrect. No such admission was made by the second respondent, and no submission was made to the trial judge that there was. Thus, again, it cannot be raised on appeal.
The fact that the parents and the Wife conspired against the Husband and secretly obtained a declaration of trust decades after acquisition, and only when the Husband was given leave to commence a section 79 action out of time – no finding was made this was done secretly or that the Supreme Court proceedings had been conducted without notice to the Husband
We can do no more here than set out the submission of senior counsel for the second respondent, with which we agree, as follows:
19.3 – putting to one side the rather emotive language about conspiracies and deceptive conduct, true it was my client should have conducted herself differently in relation to the Supreme Court proceedings. But, rhetorically, so what? What flows from the proposition? There’s no factual issue that arises. The facts were clear. They weren’t in dispute. But what was her Honour to do? To what fact or matter did it go in relation to determining intention? Now, it’s said, “Well, you have to look at her conduct in secretly going to the Supreme Court as a matter impacting upon her credit in relation to a conversation that occurred many, many years before.”
Well, how does it impact upon her credit? It wasn’t articulated at trial about how it impacted upon her credit, and, with respect, it wasn’t articulated to your Honours as to how it impacted upon her credit. …
(Appeal Transcript 10 February 2017, page 29, lines 29 – 41)
The admission that the property was to be a home for the Appellant and the 1st Respondent Wife and their children, and this is what in fact occurred, in that the Appellant and the first Respondent moved in.
It is common ground that the appellant, the first respondent, and their children lived in this property, but as the second respondent submits, that does not take the argument anywhere. Again, no submission was put at trial about this, and in any event it is “cherry picking” the evidence once more.
Her Honour records the evidence as to the entire conversation at [18] as follows (quoting paragraph 21 of the affidavit of the second respondent filed on 17 September 2015):
18.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.”’
Plainly the intention was that although the family would live in the house, it would remain the property of the parents.
The admission that despite the stated intention of the parents to live at the property, in fact they only stayed over to assist with the care of the children.
It is impossible to discern what the relevance of this “submission” is. The fact that the parents did not live there full-time in accordance with their stated intention, does not say anything about ownership of the property.
Yet again, there was no submission made at trial about this, and as to the evidence, which is comprised in paragraphs 20 and 21 of the affidavit of the second respondent, that evidence was not challenged.
The 1st Respondent Wife and the Appellant were joint borrowers of a sum of between $25,000 - $30,000 to carry out renovations to the property secured against the Suburb A property.
The same issues arise here, namely it is difficult to discern what error is alleged to have been made by the trial judge. It cannot be that her Honour did not refer to this circumstance, because at [23] her Honour set out the conversation between the second respondent and the appellant deposed to by the second respondent. But again, this evidence was not the subject of challenge, and significantly there is no issue that the parents made all of the repayments off the loan.
In her first financial statement filed in the proceedings on 23 March 2012 the 1st Respondent wife deposed that the Suburb A Property was an asset owned 100% by her at a value of $1.5 million, and it was subject to a mortgage to her parents – no finding was made.
There is no dispute that this was what the first respondent deposed to in her financial statement, but it is an accurate statement; the first respondent did own the property, and it was subject to a mortgage, but as put by the second respondent, “that does not undermine the proposition that she always regarded it as being beneficially held by [the second respondent]” (Appeal Transcript 10 February 2017, page 30, lines 41 – 42).
In summary then, it has not been demonstrated that her Honour has erred in her treatment of the evidence before the court. The facts taken into account by her Honour were not challenged, and they were not the subject of submissions made to her Honour, and thus it is not open to attempt to suggest otherwise on appeal.
In paragraph 22 of the appellant’s written summary of argument, the complaint is made that her Honour should have been “cautious” in accepting the evidence of the conversations that took place in the lead up to and at the time of the purchase of the property, given that the appellant could not “properly challenge” any of those conversations because he was not present, and they could not be “independently corroborated”.
There is of course no requirement for corroboration, but certainly the trial judge needed to be satisfied of the veracity and reliability of that evidence, and plainly her Honour was. There was no challenge to the credit of the second respondent and her Honour found her to be a witness of truth. It is also not to the point to say that the appellant could not “properly challenge” the evidence of the conversations. As submitted by the second respondent, the appellant could have explored the conversations, the circumstances surrounding them, and in short, “tested recall” (Appeal Transcript 10 February 2017, page 13, line 6), but none of that was done.
The complaint also falls away when it is again emphasised that there was no submission at trial that her Honour should not have accepted the uncorroborated evidence of the conversations.
Finally, at paragraph 23 of the appellant’s written summary of argument, the submission is made that the evidence of the conversations is inconsistent with the evidence of the first respondent in paragraph 62 of her affidavit filed on 23 March 2012, that the money for the purchase of the property was lent to her by her parents at the time of acquisition, and with the evidence of a mortgage document being later entered into, such that it was not open to her Honour to place any weight on the evidence of the conversations.
Although paragraph 62 speaks for itself, the first respondent of course corrected that in her affidavit filed on 11 February 2013 in the Supreme Court of New South Wales, and in relation to the mortgage document we have referred already to the circumstances surrounding that and the reasons for entering into it. However, we also make two comments about this. First, there was no challenge to the evidence of the first respondent in this regard, and no submission about it made to her Honour, and secondly, and in any event, the evidence about a loan said nothing about the intention of the second respondent and her late husband when acquiring the property, whereas the conversations did.
There is no merit in this ground of appeal.
Ground 4
Her Honour erred in finding that the second respondent was a witness of truth.
The complaint here cannot succeed.
As emphasised by the second respondent in her written summary of argument filed on 15 July 2016:
…At no time during the course of the Second Respondent’s cross examination was she challenged or was it ever put to her that she was untruthful or attempting to mislead the Court. The [appellant] put no submission in his written submissions [to the trial judge] that the Second Respondent’s evidence was untruthful and should not be accepted.
Once again, not having been raised at trial, this argument cannot be maintained on appeal.
Having now addressed Grounds 2, 3 and 4 it is necessary to revisit Ground 1.
Given that we are not persuaded that her Honour erred in any of the ways claimed in Grounds 2, 3 and 4, and in particular we are satisfied that the findings made by her Honour were open on the evidence, Ground 1 has no merit. As is apparent, most, if not all of the matters identified in the grounds of appeal as being matters allegedly not taken into account by her Honour, were not the subject of any challenge or of any submissions made by the appellant at trial.
Conclusion
We have found that no ground of appeal has merit, and thus the appeal must be dismissed.
Costs
At the conclusion of the hearing we received submissions as to the costs of the appeal depending on the result.
In the event that the appeal was unsuccessful each of the respondents sought an order for costs. The appellant appropriately indicated that in that event there was nothing that could be put in opposition to an order being made, and thus we will make that order. We note that that will include the costs of the first and second respondents reserved at the commencement of the hearing as a result of leave being given to the appellant to make late amendments to the grounds of appeal and to rely on a further summary of argument.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Aldridge & Forrest JJ) delivered on 30 November 2017.
Associate:
Date: 30 November 2017
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