Szafran v Szafran

[2000] NSWSC 985

CITATION:	SZAFRAN V. SZAFRAN & ANOR. [2000] NSWSC 985
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	SC 1662/00
HEARING DATE(S):	9, 10, 11 October 2000
JUDGMENT DATE:	18 October 2000
PARTIES :	Aniela Szafran - plaintiff Alexander Szafran - 1st defendant Director of Land Titles & Registrar General - 2nd defendant
JUDGMENT OF:	Hodgson CJinEq at 1

COUNSEL :	Mr. J. Van Aalst for plaintiff Mr. G. Foster for 1st defendant Submitting appearance for 2nd defendant
SOLICITORS:	Herman & Morgan, Cabramatta for plaintiff E. Fredericks & Co., Lidcombe for 1st defendant K.C. Hall, Solicitor for Registrar General for 2nd defendant
CATCHWORDS:	PROCEDURE - PLEADING - AMENDMENT. Claim of fraud or voluntary transfer with no intention to pass beneficial interest - Fraud claim dismissed - Resolution of alternative claim requiring consideration of what was intention of transferor - Tentative finding of intention that could justify relief not sought - Whether amendment permitted.
CASES CITED:	Port of Melbourne Authority v. Anshun Pty. Ltd. (1981) 147 CLR 589.
DECISION:	See end of judgment

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

CORAM: HODGSON, CJ in Eq.

Wednesday 18th October 2000

NO. 1662 OF 2000
SZAFRAN V. SZAFRAN & ANOR.

JUDGMENT

1   On 11th June 1999, when she was ill in hospital, the plaintiff executed a transfer of her home at Yagoona to her son the first defendant. This transfer was registered on 9th July 1999. In these proceedings, the plaintiff claims that the transfer was fraudulently obtained, and she seeks orders having the effect of returning ownership of this property to her. In the alternative, the plaintiff claims similar relief on the basis that the transfer was made without consideration and without any intention of the plaintiff to cause the beneficial interest in the property to be vested in the first defendant. The plaintiff also claims relief in respect of $5,000.00 withdrawn by the first defendant from her bank account on 10th June 1999.

OUTLINE OF FACTS

2   The plaintiff was born in Poland in 1931. She came to Australia in 1950. She married in 1953. There were two children of that marriage, Barbara born in 1954 and Alexander (the first defendant) born in 1957. 3   The plaintiff and her husband became owners of the Yagoona house as joint tenants in 1964; and the plaintiff became sole owner of that house in 1972, upon the death of her husband. 4   In 1971, the plaintiff’s daughter left home, and since then has lived apart from the plaintiff. 5   In about 1975, the plaintiff met Jan Zawila, and some time later they formed a close relationship. In about 1985, Mr. Zawila moved into the plaintiff’s home, and he continued to live there until some time in the first half of 1999. 6   In about 1989, Mr. Zawila purchased a unit at Fairfield, which he rented to his niece. It was to that unit that Mr. Zawila moved during 1999, and he still lives there. 7   On 17th January 1984, the plaintiff made a will, in which she gave one-quarter of the value of her house to her daughter, and the residue of her estate to her son. She expressed a wish to be buried in her husband’s grave in the Roman Catholic section of Rookwood Cemetery. 8   In 1992, the first defendant married, and his son Michael was born in 1994. 9   In about July 1997, the first defendant was in communication with a solicitor Mr. Fredericks, of E. Fredericks & Co., in relation to a proposed transfer of one-half of the house from the plaintiff to him. The first defendant says that this was done on the instigation and instructions of the plaintiff; and the plaintiff denies this. In about October 1997, the plaintiff and Mr. Zawila went to a Legal Aid solicitor, who then contacted Mr. Fredericks and advised that the matter was not to proceed. 10   There is in evidence a document bearing date 31st May 1999, handwritten by the first defendant, signed by the plaintiff, and witnessed by neighbours of the plaintiff, Mr. and Mrs. Hickson. The document purports to be a will. In it, there is expressed a wish of the plaintiff to be buried in an identified grave in the Polish section of Rookwood Cemetery (apparently near a grave owned by Mr. Zawila). The document contains a gift to the plaintiff’s grandson of 1,000 Telstra shares, 300 Commonwealth Bank shares, and from the house, $25,000.00. It also contains a gift to the plaintiff’s daughter of $25,000.00 from the house. The residue of the estate is given to the first defendant. 11   According to the first defendant, this document was written out over a couple of hours at the plaintiff’s home, to which he had gone from work after being telephoned by the plaintiff and being told that the plaintiff had leukemia. According to the plaintiff, this document was brought to her already written out. 12   The plaintiff was taken to Bankstown Hospital by Mr. Zawila on 1st June 1999. The diagnosis of leukemia was subsequently confirmed. The plaintiff was transferred to Liverpool Hospital on 3rd June 1999. 13   Meanwhile, the first defendant had taken the handwritten will to Mr. Morgan, solicitor, of Hermann & Morgan, these being solicitors who had acted for Mr. Zawila in the past and who are acting for the plaintiff in these proceedings. The first defendant asked Mr. Morgan to prepare a will giving effect to the provisions of the handwritten will, and in accordance with some further discussions which they had. Mr. Morgan went ahead and prepared a will. The document prepared by Mr. Morgan differs from the handwritten will in that it does not provide for a gift of $25,000.00 to the grandson, and in that it provides that if the first defendant should pre-decease the plaintiff, the whole estate should go to the grandson. So far as appears from the evidence, it would seem that the former difference is an error, and it would seem also that the latter provision also involves an error in doing away with the $25,000.00 gift to the daughter in the event of the first defendant pre-deceasing the plaintiff. 14   This typed will was executed by the deceased at Liverpool Hospital on 4th June 1999, and was also witnessed by Mr. and Mrs. Hickson. 15   On 10th June 1999, the first defendant brought to the hospital a withdrawal slip for the plaintiff’s St. George savings account, and the plaintiff signed this slip for a withdrawal of $5,000.00. The first defendant then went to the bank, obtained the $5,000.00, and apparently paid it to the solicitors E. Fredericks & Co. 16   According to the plaintiff, the purpose of signing the withdrawal form was for the first defendant to obtain money for a headstone for her. According to the first defendant, it was to cover approximately one-half of the cost of the transfer from the plaintiff to the first defendant of the Yagoona house, including stamp duty in the vicinity of $7,500.00. 17   On 11th June 1999, Mr. Weston, an employed solicitor of E. Fredericks & Co., came to the hospital, bringing a power of attorney and transfer to be signed. Both documents were signed by the plaintiff in the presence of the first defendant and Mr. Weston. The transfer was witnessed by a doctor at the hospital. 18   The plaintiff says that she believed that these were documents to assist in the first defendant obtaining $5,000.00 from her bank account, and that she was not told and did not know that the documents were a power of attorney and a transfer. The first defendant says that he had the documents prepared by Mr. Fredericks at the plaintiff’s request, and the first defendant and Mr. Weston gave evidence that Mr. Weston told the plaintiff what the documents were and that the plaintiff said she understood. 19   After the solicitor left the hospital, the plaintiff wrote out a document, which is in evidence as Exhibit DX4, and which is apparently dated 11th June 1999, in the following terms:

I am Aniela Szafran of 47 Caldwell Pde. Yagona.

This is last statement & wishes and thruth maybe known about Jan Zawillea. He was very ill in his drinking alcohol. I took him to my place to look after him and help him get better. I look after him for 2 months until he recovery. Than he ask me if he can stay which extindid for 13 years. Only money he ever gave me was half for electricity and food. He never spend any money on my house. Than he rented his flat in Fairfied to his niece, and never gave me halfe the money. he never paid any rent from his money to ... for 13 years. My daughter was never close to me, and never help me any way. She have diferent life style with her friends on drugs. Hasen’t working for 12 years. This is the rison I give her minimum amount of money. My son helps me all the time and we are very ... He is hard working family man. This is the rea... I give most of my estate to Alexander Sza...

Signed. Aniela Szafran

20   There is in evidence also a tape recording of the plaintiff speaking very similar words. 21   The plaintiff says this document was copied from a document brought to the hospital by the first defendant, at his insistence, and then read out by her also at his insistence, not knowing that it was being recorded. The first defendant says that the document was written out by the plaintiff at her own initiative and in her own words, and then read out by her into a tape recorder. 22   There are also in evidence other handwritten notes made by the plaintiff while she was in hospital, to some of which I will refer later. 23   On 4th July 1999, the first defendant and his family vacated the flat which they had been renting in Canley Vale and moved into the Yagoona house. On 7th July, the plaintiff was discharged from hospital, and for a time lived in the house with the first defendant and his family. 24   However, in late July she went with Mr. Zawila to Mr. Morgan, and then told the plaintiff that she wanted her house back. This gave rise to disputes between the plaintiff and the first defendant, and on 21st January 2000 the first defendant and his family left the house.

ISSUES

25   I have briefly adverted during the outline of facts to factual issues between the parties. In relation to the 1997 matters, the plaintiff’s case is that the first defendant raised concerns about Mr. Zawila claiming the house, and on his own initiative consulted Mr. Fredericks and put pressure on the plaintiff to transfer half the house to him; and that the plaintiff herself had no concern about Mr. Zawila making a claim on the house and no reason for any such concern. The first defendant says that the plaintiff raised a concern about Mr. Zawila and a wish to deal with that matter by transferring half the house to him; and that in her discussions about this matter, she was very careful to keep them from Mr. Zawila. According to the first defendant, Mr. Zawila found out about the proposal when a valuer telephoned the plaintiff at her home, and it was at Mr. Zawila’s instigation that the plaintiff went to the legal aid solicitor. 26   In relation to the events of June 1999, the plaintiff’s case is that again the first defendant raised concerns about Mr. Zawila, but still she had no concern about the matter and no reason for concern. In any event, she says that she knew nothing of the transfer document. Not only was she not told what it was, but she was led to believe it related to the withdrawal of $5,000.00, she did not read the documents, and in fact the documents were folded so that she could not have read them. Also, she says that because of her illness and eye problems, she was not capable of reading the documents. 27   As noted earlier, it is also put for the plaintiff that if I do not accept her factual case, I should find that the plaintiff had no intention of transferring a beneficial interest in the property to the first defendant. However, there is no case pleaded of either undue influence or unconscionable conduct or any agreement or trust, aside from such trust for the plaintiff absolutely as might arise if the transfer was made with no intention to convey any beneficial interest.

SUBMISSIONS

28   Mr. Van Aalst for the plaintiff submitted that, although there may be some problems with some of the plaintiff’s evidence, I should accept that she had no intention to mislead the Court. The real issue in the case was what was the plaintiff’s intention in signing the transfer document. The plaintiff’s evidence was that she believed she was giving authority to her son to obtain money for her headstone. It was plain that the plaintiff then believed she was dying, and was most concerned with arrangements about her burial. 29   The handwritten will also made it clear that she was concerned about her burial: one of the principal differences from the 1984 will was that she was not to be buried in a grave with her late husband, but rather in a grave near to Mr. Zawila’s grave. It was plain from that alone, Mr. Van Aalst submitted, that the plaintiff was not concerned about Mr. Zawila making a claim on her house. Mr. Van Aalst referred to a note made by the plaintiff at the hospital, bearing the words “Printing only on half stone you have to tell him. That another half stone for another person”. Mr. Van Aalst submitted that plainly “him” and “another person” was referring to Mr. Zawila, so that at this time also (apparently on or shortly after 11th June 1999, this being written on the back of a dinner menu of that date) the plaintiff was still very kindly disposed towards Mr. Zawila. 30   Mr. Van Aalst next submitted that the probability of the plaintiff then and there disposing of substantially the totality of her property was very slight indeed. She had no credible motive to do so. The only credible motivation for this to have happened was her son’s self-interest. 31   Mr. Van Aalst submitted that the son’s evidence disclosed an obsessive but entirely unjustified concern about Mr. Zawila. Mr. Zawila’s evidence emphatically denied any intention to make a claim and any ground for such a claim. There was no occasion for the plaintiff to transfer the property, when she had already, by signing two wills, made provision for what was to happen upon her death. She was obviously concerned about having a tombstone, and the suggestion in the son’s evidence that the plaintiff did not wish the $5,000.00 to be applied for a tombstone but rather suggested that the son should sell his business to pay for a tombstone, was bizarre. If, contrary to the plaintiff’s evidence, I were to find that the plaintiff knew that she was signing a transfer, Mr. Van Aalst submitted that the only plausible intention was to placate the first defendant, not to dispose beneficially of her property. Mr. Van Aalst said that the tape recording did not assist the first defendant: if it had been intended by the plaintiff as a justification for the transfer, the total silence in the written and taped message about any transfer of the house would be extraordinary. 32   I need not recount Mr. Foster’s factual submissions. He also submitted that there was no evidence that the plaintiff intended to retain a beneficial interest in the property. 33   By leave, both Counsel referred me after the hearing to cases relevant to the question of intention, and particularly whether it was necessary that the first defendant should be aware of the plaintiff’s intention. Mr. Van Aalst referred to Muschinski v. Dodds (1986) 160 CLR 583 at 613, and Giumelli v. Giumelli (1999) 73 ALJR 547 at 558-560. Mr. Foster referred to Westdeutsche Bank v. Islington LBC (1996) AC 669 at 707f, HCK China Investments Limited v. Solar Honest Limited (1999) 165 ALR 680 at 726f, and Re Vandervells Trust No.2 (1974) 1 Ch. 269 at 288f.

DECISION

34   I regret that I must conclude that the plaintiff has given plainly false evidence. It is not necessary for me to find that she has done so deliberately, but if it was not deliberate, the evidence is in my opinion so far from the truth that it would have to arise from extraordinary confusion and/or deficiency of memory. In saying all this, I make due allowance for the plaintiff’s illness in June 1999 and now. The material which leads me to this conclusion is as follows. 35   Firstly, in my opinion the evidence which she gave in cross-examination about Mr. Zawila’s niece or her husband going into Mr. Zawila’s room, both from its content and the manner in which it was given, gave the strong impression of being made up on the spot. 36   Next, the plaintiff’s evidence that the handwritten will document was brought to her already written is in my opinion plainly false. 37   Next, there is the plaintiff’s denial in her affidavit of giving detailed instructions in hospital, and her initial denial in oral evidence that she made the note “Alex solicitor - can you move to mother house”, written on the back of a lunch menu for 8th June 1999. In my opinion, that initial denial was because the plaintiff believed that note was damaging to her case, and her subsequent admission was because the plaintiff realised that she could not maintain a denial that that document was written by her. I would add that, in my opinion, that note and the notes generally confirmed the first defendant’s evidence that his mother was the instigator of his activities around this time, including his dealings in relation to the property, rather than being passive, as the plaintiff suggests, except in relation to the matter of the tombstone. 38   Next, there is the plaintiff’s initial denial that she gave the first defendant $100.00 to pay for her will, and later admission upon being shown a document referring to $25.00 change. 39   Next, there is her denial that she knew a tape recording was being made. In my opinion, if all the plaintiff was doing was reading out a document at the urging of the first defendant, without knowing that it was being recorded, it would make no sense that the tape should begin, as it does, with the word “hello”. Mr. Foster also submitted that, at the end of the tape, the plaintiff is heard in Polish to say something to the effect of “turn off the tape”. I have not been able to confirm whether or not this is so, but it would make no difference to my conclusion. 40   Next, there is the plaintiff’s assertion that she believed that the two documents signed before Mr. Weston were to help her son withdraw $5,000.00, when she had already signed a withdrawal form for that amount the previous day. 41   Next, in my opinion it is highly improbable that the $5,000.00 was for the plaintiff’s headstone. Money was not urgently needed for a headstone, the evidence suggests that the headstone would cost in the vicinity of $2,000.00 to $3,000.00, whereas if a transfer was to be urgently prepared, money would be required urgently. 42   Next, it is highly improbable that, if the first defendant was intending to defraud the plaintiff, he would make what he was doing known to two separate solicitors, including Mr. Zawila’s solicitor Mr. Morgan: the first defendant gave evidence of a conversation with Mr. Morgan concerning among other things protecting his mother’s estate from Mr. Zawila and the property being transferred to him, and that conversation is not denied by Mr. Morgan. Furthermore, I see no reason to question Mr. Weston’s evidence as to what happened at the hospital, which in turn would make it impossible to accept the plaintiff’s evidence that she had no idea that the documents included a transfer, that she was not told that one of the documents was a transfer, and that the documents were folded in such a way that she could not read them. 43   Finally, there is the assertion in the plaintiff’s original affidavit that, when she was discharged from hospital, she “found” that the first defendant had moved into the Yagoona house. That was plainly intended to convey that she had not known this before leaving hospital, a suggestion which is plainly false, inter alia because the plaintiff’s note referred to in paragraph 35. 44   I am unable also to rely on Mr. Zawila’s evidence. He gave evidence of conversations involving the plaintiff and the first defendant about signing documents to get money from the bank account for a headstone. According to Mr. Zawila the first defendant said “I will get a solicitor to come and get a paper signed so I can get the money”. According to Mr. Zawila, two days later, he asked the plaintiff “Did you sign the paper”, and she said “Yes I signed twice”. In my opinion, it is plain that the first defendant would not have responded to a request to get money to get a headstone as asserted by Mr. Zawila, when in fact what he did in relation to the withdrawal of money was to bring a withdrawal slip from the plaintiff’s house, and have her sign it. Furthermore, in my opinion it is plain that the plaintiff did not confuse signing the documents in front of the solicitor with the withdrawal which she had signed the previous day. 45   I also have considerable doubts about rent receipts produced by Mr. Zawila and a rent book produced by the plaintiff. These documents to do not carry conviction as genuine contemporary documents, although I am unable to make any finding as to when and how they were produced. A note written by the plaintiff while she was in hospital suggests that they had come into existence prior to that time. 46   The credibility of the first defendant was attacked on the ground that there was just no basis for his story about Mr. Zawila. It was submitted that the plaintiff could not have been concerned about this, because she wanted to be buried near Mr. Zawila, and not near her husband, and because there was just no valid reason to think that Mr. Zawila wished to make a claim or had a ground for a claim. The first defendant referred in his evidence to a telephone call from the plaintiff on 6th June 1999 about a big argument between the plaintiff and Mr. Zawila; yet he also said that, before this, he was discussing with Mr. Morgan how to protect the estate from Mr. Zawila. 47   In my opinion, the plaintiff’s relationship with Mr. Zawila was something of a love/hate relationship. In my opinion, the plaintiff herself was concerned that Mr. Zawila might make a claim on the house. I accept the substance of the first defendant’s evidence about the events of 1997. There is a note written by the plaintiff, on the back of the breakfast menu for 10th June 1999 in the following terms: “Alex - in some case I have reciept for 2 years he paid me rent that he is not defacto, only renting room.” I accept that this is expressing a concern of the plaintiff, not merely responding to some concern expressed by the first defendant. In all the circumstances, I do not find the first defendant’s evidence about the plaintiff suggesting he sell his business as being improbable: the business was a supplement to income earned by the plaintiff’s full-time employment, and the transfer of the house to the plaintiff would reduce his financial problems. 48   The plaintiff’s daughter Barbara gave evidence which conflicted with the first defendant’s evidence about the terms of a telephone conversation. In my opinion, the conflict is immaterial and does not reflect on the credit of either of those witnesses. The first defendant’s wife also gave evidence, but essentially on immaterial matters. I have no reason to disbelieve her evidence. 49   It follows that in my opinion, the transfer was prepared at the request of the plaintiff, and the plaintiff knew what she was signing when she signed it, and intended to give effect to the transaction contained in the transfer document. 50   I turn to the question of relief based on the intention of the plaintiff. 51   Treating the transfer in this case as voluntary, the plaintiff has the benefit of a presumption of resulting trust. As I understand it, that means there is a presumption that the intention of both parties was that the legal interest only should be transferred, and the beneficial interest remain with the plaintiff. In the case of a transfer from a mother to a son, the presumption is not a strong one, as it might be in the case of a transfer to a stranger. 52   In this case, however, there is evidence about the plaintiff’s intention. Because I do not accept the plaintiff’s evidence, her evidence is of no assistance. However, I accept that the plaintiff’s purpose in making the transfer was to prevent or make more difficult a claim to the property by Mr. Zawila. Another factor relevant to the intention of both parties is that the cost of effecting the transfer, of a little less than $10,000.00, was to be provided as to one-half by the first defendant; and that is a circumstance counting strongly against an intention that no beneficial interest pass. 53   The issue raised by the pleadings is whether the plaintiff’s intention was to retain the whole beneficial interest: I am satisfied that this was not the plaintiff’s intention, and that it was not believed by the first defendant to be the plaintiff’s intention. However, in coming to that conclusion, I find that I have to ask the question “What was the plaintiff’s intention?”; and in answering that question, and giving reasons for it, I find that I have to express views on matters that were not the subject of pleadings or submissions. Nevertheless, since I find this necessary in order to answer a question which is squarely raised on the pleadings, I will proceed to do so. These views involve the plaintiff not intending an outright unconditional gift. No relief has been sought on that basis, and without amendment, I would not grant relief on that basis. Furthermore, the matter has not been the subject of submissions. In those circumstances, the views that I am now about to express must be taken as tentative, because if an application is made to amend, and if that application is granted, then I may need to reconsider these matters on the basis of further submissions, and possibly further evidence. 54   In my opinion, in signing the transfer, the plaintiff did not give consideration to all the implications, so what I have to do is to reach a view as to what was in the plaintiff’s mind, and to fit that as best I can to the relevant legal categories. In my opinion, the plaintiff’s intention was to further the scheme of the handwritten will, and to make it more difficult for Mr. Zawila and her daughter to disturb that scheme. If that was the plaintiff’s intention, it is inconsistent with an absolute outright beneficial gift: the plaintiff would be left with no property out of which the gifts of $25,000.00 to the daughter and grandson would be paid. On the other hand, her intention was not to make no change to the beneficial ownership of the property: that would give no protection from Mr. Zawila or the daughter; and in my opinion, to bring about a situation where the plaintiff could simply undo the whole transaction and change her will and disinherit the first defendant is inconsistent with a transaction for which the first defendant was being required to put up nearly $5,000.00 of his own money. In my opinion, the plaintiff believed she was to die shortly, but she did intend to live in the house with her son and his family until her death. 55   Accordingly, on the material before me, if it were an issue, I would find that the plaintiff’s intention, known to the son, was to pass a beneficial interest but subject to the following: firstly, that the plaintiff should be able to live in the house as long as she was able to; and secondly, that on her death the first defendant would give effect to the wishes in her handwritten will, by providing $25,000.00 to the plaintiff’s daughter and $25,000.00 to the plaintiff’s grandson, from the proceeds of sale of the house if that was necessary. It would be a matter for argument whether or not this would give rise to a trust. 56   Accordingly, I would propose to dismiss the existing claims. I think I should also order that the plaintiff pay the defendants’ costs of the proceedings to date; although it is hard to imagine circumstances in which there would be any point, much less moral justification, for the first defendant to seek to enforce such an order. However, if I were to dismiss the proceedings outright, the Anshun doctrine could prevent the plaintiff seeking any relief on the basis of the intention which I have mentioned. Accordingly, I may be prepared to hear submissions as to an amendment to claim a trust along the lines I have indicated, which could involve the taking of further evidence and/or submissions. 57 However, the last thing that one would wish in this case would be the incurring of more legal costs. My present tentative view is that, if the first defendant is prepared to undertake that, subject to the plaintiff paying outgoings on the house from now on, the plaintiff should be entitled to live in the house as her own house for as long as she is able, and to undertake that, to the extent that gifts of $25,000.00 to the plaintiff’s daughter and grandson cannot be paid from the plaintiff’s estate, and subject to the plaintiff not requesting otherwise, the first defendant would pay those amounts upon the plaintiff’s death, I would dismiss any application to amend and re-open. 58 I note that whether or not that happens, it would still be open to the plaintiff’s daughter, upon the death of the plaintiff, to make a Family Provision Act claim, and that if this occurs within times contemplated by the Family Provision Act, there could be an application to have the house treated as notional property. I would note that, in the light of the evidence given by Mr. Zawila, it seems unlikely that he would make a claim, and it also seems that any claim by him would be unlikely to succeed. However, these are not matters which I can consider further in these proceedings. 59 I propose to provide these reasons to the parties, and arrange for a mention a few days later. The first defendant should be in a position to indicate whether he is prepared to give the undertakings I have outlined. I will then consider any application that might be made by the plaintiff to amend and re-open.

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Last Modified: 10/27/2000