Wei v Ho

[2005] NSWSC 676

CITATION:	Wei v Ho [2005] NSWSC 676
HEARING DATE(S):	4 to 7 July, 2005
JUDGMENT DATE :	8 July 2005
JURISDICTION:	Equity Division
JUDGMENT OF:	Palmer J
DECISION:	Judgment for Defendant.

CATCHWORDS:	TRUST - ORAL AGREEMENT - Whether Defendant acquired title to property pursuant to oral agreement with Plaintiff that the Plaintiff would provide the purchase price and the Defendant would enter the contract on behalf of the Plaintiff - question of fact.
PARTIES:	Stella Hsin Ju Wei - Plaintiff Margaret Mary Ho by her Tutor the Protective Commissioner - Defendant
FILE NUMBER(S):	SC 5874/03
COUNSEL:	R.S. Bell - Plaintiff B. De Buse - Defendant
SOLICITORS:	James Lee Solicitors - Plaintiff Craddock Murray & Neumann - Defendant

LOWER COURT JURISDICTION:

1    The Plaintiff and the Defendant have for many years engaged in tax fraud: in the conduct of their respective businesses they have failed to disclose substantial income. Further, they have each failed to keep proper records of transactions. They claim to have kept large sums of money in cash and to have entered into various substantial transactions by cash payments.

2    The Plaintiff and the Defendant ask the Court to decide a dispute about the manner in which they have employed money most of which appears to have been defrauded from the revenue. The Plaintiff’s case is that in November 1984 she paid $40,000 to the Defendant so that the Defendant could arrange on her behalf the purchase of a house, including a corner shop business, in Abercrombie Street, Chippendale. The Plaintiff says that she found out later that the house had been registered in the Defendant’s name. She says that she has paid the principal and interest on the loan which provided the balance of the purchase price and that she has paid all the rates, taxes and maintenance for the property since it was acquired. Accordingly, the Plaintiff claims that the Defendant holds the property on trust for her.

3    The Defendant denies that the Plaintiff gave her any money towards the purchase of the property, that the Plaintiff repaid the principal and interest on the mortgage, and that there was any agreement with the Plaintiff that the property would be purchased for her.

4    The Plaintiff has no records which directly substantiate her claim. Likewise, the Defendant is not able to produce any documents which substantiate directly the fact that she acquired the property from her own resources. The Defendant essentially relies on the fact that she is registered on the title to the property as the sole proprietor and that her name appears on documents such as rate notices and insurance policies as the owner of the property.

5    After listening to three days of evidence, mostly cross examination of the Plaintiff and the Defendant, I have come to the conclusion that I am unable to accept the evidence of either of them on any disputed matter unless it is independently supported by credible evidence or is inherently probable.

6    In the course of setting out the relevant facts of the case I will give but a few examples of the evidence of the parties which has led me to my conclusion as to their credit. I emphasise that the examples are relatively few because there are so many instances of evidence which I regard as unsatisfactory that in order to deal with each of them I would have to analyse the transcript of evidence virtually line by line. I do not consider this exercise to be necessary.

7    By way of introduction I will make some general remarks about my observations as to the demeanour of the parties.

8    The Plaintiff appears to be a mature, confident and assertive person who was not at all intimidated by the process of giving evidence. She has a very good command of English, although she speaks with a heavy accent and is often non-idiomatic in her expressions. She had no difficulty whatever in understanding questions in cross examination and in dealing adroitly and intelligently with them. The many confusions, contradictions and implausibilities in her evidence are certainly not the product of any difficulty with English.

9    The Defendant presents as a more anxious person although she too was confident and assertive in giving her evidence. She has been resident in Australia from childhood. She is a university graduate in accounting and in 1979 she became a certified practising accountant. She had a motor vehicle accident in 1979 which, she says, caused brain damage and for which she has since sought and received compensation in litigation spanning many years.

10    The Defendant is receiving a disability pension and her estate is now managed by the Protective Commissioner. However, in giving her evidence she has manifested no difficulty whatsoever in understanding the questions and in dealing confidently and fluently with them. As in the case of the Plaintiff, the many confusions and inconsistencies in the Defendant’s evidence are certainly not the product of difficulty with English or, to my observation, any impairment in her mental faculties. However, I do not discount the possibility that in the past she has been more affected by mental impairment than she now appears to be.

11    The Plaintiff bears the onus of proof in establishing the facts necessary to support her claim. Because I cannot accept her as a witness of truth and because her evidence on critical issues is neither inherently probable nor supported by independent credible evidence, I hold that she has not discharged the burden of proof upon her to establish the facts necessary to support her claim.

12    My reasons for this conclusion may be stated fairly shortly.

13    The Plaintiff had been a Catholic nun in Taiwan since 1969. She had come to Australia to work between 1979 and May 1982 and during that time she met the Defendant, who was a member of her church community. The Plaintiff decided to leave her Order and returned briefly to Taiwan in May 1982. In September 1982 she came back to Australia to live permanently. When she arrived she had only about $2,600 in cash.

14    In about October 1982, the Plaintiff began working in the Abercrombie Street shop. By a contract for sale of business dated 12 August 1982 the Defendant had agreed to purchase the mixed business conducted in the shop for $17,000. Pursuant to the purchase, the Defendant took a lease of the shop for a period of three years, with an option for a three year extension.

15    The Plaintiff says that in about October 1982 she made an agreement with the Defendant whereby the Defendant would purchase the business on behalf of the Plaintiff and the Plaintiff would repay the purchase price, a total of $20,000, by instalments of $100 per week. The Plaintiff says also that it was agreed that the Plaintiff would pay a further $100 per week to the lessor of the premises for the living space above the shop.

16    The Defendant denies that any such agreement was made. There is no written record of any such agreement.

17    On the Plaintiff’s evidence, she had virtually no money when she arrived in Australia in September 1982 and she had had no experience in running a shop. It is unlikely that in that circumstance she and the Defendant agreed in October that the Defendant would buy the shop business outright. Further, on the Plaintiff’s evidence, she did not make any agreement with the Defendant about the shop business until October, whereas the Defendant clearly had entered into a contract to purchase the business by 12 August.

18    The Defendant, in some extremely confused evidence during cross examination, says that she intended to buy the shop business for someone else but when the Plaintiff returned to Australia she made some arrangement with the Plaintiff about the Plaintiff working in the business so that the Plaintiff would have a roof over her head. I am unable to understand what the Defendant’s evidence as to this arrangement really amounted to.

19    On the other hand, however, I am unable to accept the Plaintiff’s evidence concerning the agreement. The Plaintiff’s evidence is not inherently probable and it is not supported by other credible evidence. I am unable to make any finding of fact as to what, if any, agreement or arrangement was made between the Plaintiff and the Defendant as to the Plaintiff’s operation of the shop business and as to what entitlement she had to its profits.

20    As I have noted, the Plaintiff began working in the shop in about October 1982. She filed a tax return for the year ended 30 June 1983 in which she set out a profit and loss statement showing her nett income from the shop business. There was obviously some agreement between the Plaintiff and the Defendant that the Plaintiff was entitled to keep some part of the profits of the business but, as I have just noted, I am unable to determine what were the terms of that agreement. The nett profit from the business disclosed in the Plaintiff’s 1983 tax return is a trifling sum. The Plaintiff says, however, that the profit and loss statement in her tax return is false and that her income from the shop was much larger. She says that she kept careful and accurate accounts of the shop business for her own purposes but she has not said in her evidence what was the correct income for trading which she derived between October 1982 and 30 June 1983. It is worthy of note that the Plaintiff disclosed that her tax returns were false not in her affidavit evidence but only under cross examination.

21    The Defendant participated in keeping accounts for the business at some times and to some extent. The evidence does not enable one to be any more precise in that finding. There are three different versions of the accounts for some periods of time. No one has attempted the exercise of showing what were the profits of the shop business at any particular time from 1982 to the present: the profitability of the business remains unknown.

22    That the Plaintiff is prepared systematically to make false statements concerning her financial position is emphasised by the fact that, on her own evidence in cross examination, she falsely claimed substantial tax deductions in respect of a shop business at Ingleburn which she conceded was not owned by her but was owned by the Defendant.

23    On 31 August 1983 the property was put to auction. The Defendant attended the auction and made an unsuccessful bid. The property was passed in.

24    In late 1984, the property was placed on the market for $86,000. The Plaintiff says that she agreed with the Defendant that the property would be purchased, the Plaintiff would provide $40,000 towards the purchase price, the balance being provided by a mortgage and the Defendant would arrange the transaction on behalf of the Plaintiff because of the Plaintiff’s difficulties with spoken English.

25    The Plaintiff says that a few days after this agreement the Defendant told her that it would be very hard for the Plaintiff to obtain finance for the purchase and that the Defendant would therefore “go ahead and have contracts exchanged for you”.

26    The Plaintiff says that in December 1984 she gave the Defendant a bank cheque for $40,000 for completion of the purchase of the property. She says that $30,000 of this amount came from her own money which she had earned from running the shop business, and $10,000 was borrowed from friends, Mr and Mrs Chung.

27    The Plaintiff has not been able to produce any bank records or any other document which shows that as at December 1984 she had $30,000 or anything like that sum. She has produced one bank savings account book which shows that at no time up to December 1984 did she have on deposit an amount exceeding $10,000. That bank account was not substantially depleted in late 1984 so that it could not be said that some money from that account had gone towards the purchase of the property.

28    The Plaintiff says, however, that she had $30,000 on an interest bearing deposit with the Commonwealth Bank. She has not been able to produce any record substantiating that assertion. She says that at some time in 2003 her records were taken from her briefcase. She does not say who took the papers; she does not accuse the Defendant of having taken them. She does not explain the circumstances in which the theft is said to have taken place. Her evidence as to the theft is entirely unsatisfactory and unconvincing. She has been able to produce many other records which, she says, support her case.

29    If the Plaintiff had $30,000 available by late 1984, she could only have derived it from what she had earned in running the shop business. As I have said, her tax return for that period is false on her own admission and she has not shown what her true income was at that time. Her assertion that after about fourteen months’ trading in the shop business she had available $30,000 in cash earned from that business is not supported by any other credible evidence; it is not evidently and inherently probable in the absence of any indication as to what were the profits of the business during that time.

30    The Plaintiff has called Mrs Chung, who says that in late 1984 she was asked by the Plaintiff to lend her $10,000 to help the Plaintiff “to buy the house where I live”. Mrs Chung made the loan but kept no records of repayments by the Plaintiff. Her recollection of when the loan was made was, understandably, very vague. I am unable to accept with any confidence that the loan was made in late 1984.

31    Further, Mrs Chung’s evidence as to what the Plaintiff told her about the purpose of the loan is hearsay. Assessment of the truth of the Plaintiff’s statement to Mrs Chung depends on an assessment of the truthfulness of the Plaintiff. I am unable to accept with any confidence what the Plaintiff may have said to Mrs Chung as reliable evidence of the Plaintiff’s true purpose in borrowing the money, nor am I able to accept the statement as reliable evidence that the Plaintiff actually applied the loan from Mrs Chung to the purpose which she stated to Mrs Chung.

32    As I have noted, the Defendant says that she paid for the property out of her own funds. The Defendant’s evidence is that when she was injured in the car accident in 1979, she spent some months away from work but then returned. However, she found that she was unable to continue in her work as an accountant. Thereafter, she engaged in a wholesale business of selling spectacle frames under the name “Meito Products”. She says that she also worked for a group of companies, Choys Eating Houses, in administration and in media relations for a salary of $30,000 per annum. She says also that she opened a small shop in Ingleburn.

33    Since 1979, however, the Defendant has filed no tax returns. She says that as a result of her accident she had difficulty in “filling in forms”. On her own evidence, however, since 1979 she was able to run two businesses, enter into the purchase of a shop business in the Chippendale property, enter into a contract for the purchase of the real estate and a mortgage to secure a loan over the property, keep accounts for the shop business, and work in administration and media relations. Further, she was able to provide to the Plaintiff in 1996 a careful written analysis of the financial implications of a proposed purchase by the Plaintiff of an investment unit for $165,000. That analysis included an assessment of the tax and provisional tax consequences of the proposal. Moreover, the Defendant’s brother-in-law was a tax accountant who prepared tax returns for the Plaintiff. The Defendant says that she did not think of asking her brother-in-law to prepare her tax returns also.

34    I do not accept the Defendant’s explanations as to why she did not file tax returns from 1979 onwards. I find that her explanations are untruthful and reflect adversely on her credit generally.

35    The Defendant has not produced any documentation which enables a precise, or even a fairly general, assessment of what her income has been since 1979.

36    The Defendant said in paragraph 35 of her affidavit of 15 September 2004 that she paid the deposit of $8,600 upon exchange of the contract for purchase of the property. She said that she did not recall how she paid those monies or the source of the funds, other than that the money was her own.

37    In paragraph 34 of the affidavit she said that she had opened an account with a building society from which the balance of the purchase of the property was paid with cash funds which she had. She said: “I cannot now say how that money was paid by cheque into my account, I may have obtained a cheque from my mother and given her cash or obtained a bank cheque”.

38    A building society bank book produced by the Defendant showed that her account with the building society had been opened on 30 November 1984 with a deposit of a cheque in the sum of $30,000. It seems clear that on 18 December 1984 $24,460.92 was withdrawn from this account to provide funds for settlement of the purchase of the property.

39    In her evidence in cross examination, the Defendant was clear and unequivocal as to how the sum of $30,000 had come to be deposited in her building society account. She said that she had at least $30,000 in cash which she kept in a shoe box. Because she did not have a cheque account, she took the cash to her mother, gave it to her and asked her for a cheque for $30,000 in exchange, which she then deposited into her building society account.

40    In an affidavit filed shortly before the trial commenced, the Defendant’s mother corroborated the Defendant’s evidence that $30,000 in cash had been given to her in exchange for a cheque. Why the Defendant had no clear recollection of this transaction when she came to swear her affidavit in September last year but was able to give a clear and definite account of it at the trial has not been explained. It is yet another unsatisfactory aspect of the Defendant’s evidence.

41    The Plaintiff and the Defendant each say that after completion of the purchase of the property in 1985 they spent considerable sums in renovating the house and that that expenditure is evidence corroborating their respective claims to proprietorship. All of the expenditure is said to have been in cash. Neither party is able to demonstrate the source of the cash.

42    The Plaintiff has been able to produce receipts and invoices for some items for the renovations in her name; the Defendant has been able to do likewise.

43    The Plaintiff has produced water and electricity rate notices and receipts in her name; however, payment of such expenses is equally consistent with the Plaintiff being a tenant or the owner of the property.

44    The Defendant clearly entered into policies of insurance of the property in her own name. However, the source of the funds for the payment of the premiums is not shown with any degree of clarity.

45    The Plaintiff and the Defendant have both lived in the property. The Plaintiff has lived there since 1982. The Defendant has not lived there during the whole of that time. There is a dispute as to exactly how long the Defendant has lived in the property, whether she had her own room or slept on a couch, and whether she conducted the business of Meito Products from one of the rooms in the property. I find it impossible to resolve that dispute because I do not believe either party, there is no other credible evidence which unequivocally supports either version, and there is no obvious inherent probability one way or the other.

46    What is clear, however, is that both parties have occupied the property together for a considerable time. Indeed, they still live there together, despite the evident hostility between them which has, on one occasion, led to a tussle over possession of a large amount of bank notes. Who owned the bank notes is another matter in dispute which I am unable to resolve, for the same reasons.

47    In short, the parties’ joint occupation of the property for many years gives no inherent probability to one party’s evidence as to ownership rather than the other’s.

48    One matter which I regard as of significance is that although the Plaintiff says that she discovered in October 1985 that the property was not registered in her name, as she believed it to be, she has taken no action to call upon the Defendant for a transfer of the property for almost twenty years – especially after the relationship apparently became strained in 1996.

49    The Plaintiff says that when she confronted the Defendant with the fact that the property was not registered in the Plaintiff’s name the Defendant wrote out and gave to her a document headed “Will” in which the Defendant left the property and the business to the Plaintiff. The Plaintiff says that thereafter she took no action to secure the property in her own name because she trusted the Defendant.

50    I do not accept this evidence. The Plaintiff has never claimed to have been under the influence of the Defendant. Indeed, the Defendant says that it was she who regarded the Plaintiff with respect because the Plaintiff had been a nun. From what I can observe of the Defendant’s character, I think that this is possible.

51    From my observation of the Plaintiff, she is shrewd, astute and assertive in money matters. Even while still a nun, she had responsibility for running the administration and accounts of a religious newspaper for some years. I do not find it easy to believe that she would hesitate to insist on her rights to a proprietary interest in the property if she believed that she had any such rights. I do not easily accept that the Plaintiff would be content for so long to rely upon a document which was not only prepared by the Defendant herself, rather than by a lawyer, but which was founded upon the premise that the property and the business belonged to the Defendant, not to the Plaintiff.

52    The Defendant is the registered proprietor of the property. As I have said at the beginning of this judgment, the Plaintiff bears the onus of proving on the balance of probabilities that there was an agreement between herself and the Defendant prior to the acquisition of the property in 1984 in the terms which the Plaintiff alleges, the result of which would be that the Defendant holds her legal title to the property on trust for the Plaintiff.

53    For the reasons which I have given, I cannot accept the Plaintiff as a witness of truth and there is no other independent and credible evidence which supports her version of the critical facts. The inherent probabilities are not obviously in her favour. Accordingly, I hold that the Plaintiff has failed to prove the agreement with the Defendant which she alleges.

54    Paragraph 16 of the Amended Statement of Claim pleads that since the acquisition of the property the Defendant has made representations to the Plaintiff by words and conduct that the property was the Plaintiff’s. The Amended Statement of Claim does not plead that the Plaintiff relied upon such representations and that in reliance thereon she acted to her detriment or changed her position.

55    In my view, paragraph 16 does not properly plead an independent cause of action in estoppel. The Plaintiff has certainly not conducted the case on the basis that an estoppel was raised on the pleadings. Accordingly, I give no separate consideration to the allegations made in paragraph 16 of the Amended Statement of Claim.

56    In the result, the Plaintiff’s claim fails on the facts. There will be judgment for the Defendant on the Plaintiff’s Amended Statement of Claim. I will hear the parties as to costs.

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