Werner-Zolotuchin v Public Trustee

[2004] NSWSC 358

CITATION:	Werner-Zolotuchin v Public Trustee [2004] NSWSC 358
HEARING DATE(S):	10 February, 19 March 2004
JUDGMENT DATE:	30 April 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Master McLaughlin
DECISION:	(1) I order that the proceedings be dismissed; (2) I order that the Plaintiff pay the costs of the Defendant; (3) The exhibits may be returned.
CATCHWORDS:	Family Law - De facto relationship - Adjustment of interests of parties in property - Respective contributions of parties - Both parties died before matter came on for hearing - Whether in such circusmtance the application may be continued by and against the respective legal personal representatives of the deceased parties - Trusts - Absence of writing - Oral statements attributed to deceased de facto partner - Whether sufficient to create a trust - Whether circumstances justify imposition of a constructive trust.
LEGISLATION CITED:	Conveyancing Act 1919 Property (Relationships) Act 1984 Guardianship Act 1987 Statute of Frauds of 1677 (29 Car.II, c.3) Supreme Court Rules
CASES CITED:	Baumgartner v Baumgartner (1987) 164 CLR 137 Evans v Marmont (1997) 42 NSWLR 70 Muschinski v Dodds (1985) 160 CLR 583
PARTIES :	The Public Trustee (First Defendant) The Protective Commissioner (Second Defendant)
FILE NUMBER(S):	SC 5166/00
COUNSEL:	G.I. Foster (Plaintiff) C. Harris (Defendant)
SOLICITORS:	David Weston & Co (Plaintiff) Maclarens (First Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Friday, 30 April 2004

5166/00 GEORGE WERNER-ZOLOTUCHIN -v- THE PUBLIC TRUSTEE

JUDGMENT

1 MASTER: These are proceedings under the Property (Relationships) Act 1984.

2 In contravention of the requirement of Part 77 rule 76A of the Supreme Court Rules, the proceedings were instituted by summons, which was filed on 22 December 2000. The parties named in that summons were Olga Parmonik by her next friend George Werner, Plaintiff; Victor Nikitin, First Defendant; the Protective Commissioner, Second Defendant.

3 By that summons the Plaintiff sought, should it be necessary, an order pursuant to section 18(2) of the Property (Relationships) Act, granting leave for her to apply to the Court for an order pursuant to section 20 of the Act; an order that the Protective Commissioner pay out of the proceeds of sale of the property known as 126 Lurline Street, Katoomba, a sum equivalent to the value of any adjustment in the Plaintiff’s favour pursuant to section 20 of the said Act; injunctive relief, to restrain the Second Defendant from distributing, spending or otherwise withdrawing from the funds derived from the sale of the property known as 126 Lurline Street, Katoomba, and which currently were being held by the Second Defendant on behalf of the First Defendant a sum equal to one half of the net sale amount calculated in a fashion then set forth; in the alternative, a declaration that the First and Second Defendants are holding funds pursuant to sale of property, upon trust as to one half for the benefit of the Plaintiff; and an order that the Protective Commissioner pay out of the proceeds of sale of the aforesaid property the sum equivalent to one half thereof, pursuant to the said declaration.

4 Presumably, it was because of the various other items of relief which were being sought by the Plaintiff, apart from an order for the extension of time in which to institute proceedings under the Property (Relationships) Act, that the Plaintiff did not comply with the foregoing requirement of the Rules and institute the proceedings by way of statement of claim.

5 However, a statement of claim was ultimately filed on 27 March 2001.

6 Subsequently an order was made by Master Macready on 28 August 2001 that the proceedings be dismissed against the Second Defendant, the Protective Commissioner. In consequence, the proceedings have since that time been maintained against only the First Defendant, Victor Nitikin (who may hereafter be referred to as “the Defendant”).

7 By the time the order dismissing the proceedings against the Second Defendant had been made on 24 December 2001 the Defendant, Victor Nitikin, had died on 6 June 2001.

8 Subsequently the Plaintiff (who, it will be recalled, had instituted the proceedings by her next friend, being her son, named in the summons and in the statement of claim as George Werner) also died, on 31 March 2002.

9 In order to regularise the situation concerning the parties, since each of the Plaintiff and the Defendant had died since the institution of the proceedings, application had been made by Mr Werner, who is the only child of the Plaintiff, firstly that George Werner-Zolotuchin (that, it would appear, being the correct name of the next friend of the Plaintiff), being executor of the estate of the Plaintiff, be substituted as Plaintiff, pursuant to Part 8 rule 11 of the Supreme Court Rules. Further, that the Public Trustee as executor of the estate of Victor Nikitin (otherwise known as Sargej Andreevich Krutelev) be substituted as Defendant, pursuant to Part 8 rule 11. Subsequently, on 1 October 2002, orders were made by consent to the foregoing effect, and directions were given for the further conduct of the proceedings.

10 The statement of claim which had been filed on 27 March 2001 (the prolix nature whereof contravened the requirements of Part 15 rule 8 of the Supreme Court Rules) asserted, firstly, that from about 1962 Olga Parmonik and Victor Nikitin had lived in a bona fide domestic relationship at various residences (including a residence at Lurline Street, Katoomba (“the Katoomba property”)). Further, that during the course of that relationship the Plaintiff had been promised by the Defendant “one half of the property”, and “had been advised that he considered one half of the property to be hers”. Further, that the Katoomba property, together with items of personalty, had been sold and the proceeds forwarded to the Protective Commissioner, who had been appointed to manage the estate of the Plaintiff pursuant to the Guardianship Act or other legislation, and that the Protective Commissioner retained part of those funds, the balance thereof having been expended “in the care of the First Defendant or otherwise having been disbursed to some purpose or benefit other that the Plaintiff”.

11 By the statement of claim the Plaintiff sought a declaration that the First Defendant held one half of the Katoomba property upon trust for the Plaintiff; a declaration that the Plaintiff and the First Defendant were parties to a bona fide domestic relationship from 1962 until the time of the filing of that pleading; an order (“whether pursuant to section 20 of the Property (Relationships) Act or not”) that the Protective Commisioner transfer one half of the proceeds of sale of the Katoomba property and of the personalty therein to the Plaintiff or to her next friend George Werner, “as manager of the First Defendant’s [sic] estate”; interest pursuant to section 83A of the District Court Act [sic]; and costs.

12 Subsequently, on 10 February 2004 (that being the first day of the hearing) the Plaintiff filed an amended statement of claim. That pleading was filed in consequence of the respective deaths of the Plaintiff and the First Defendant. That pleading followed the form of the statement of claim as originally filed, the only alterations being to reflect the orders of 1 October 2002 by substituting George Werner-Zolotuchin as Plaintiff and the Public Trustee as Defendant and by substituting the name Olga Parmonik for the Plaintiff and the name Victor Nikitin for the First Defendant.

13 Only two substantive items of relief were sought in the amended statement of claim. The first was a declaration of trust in favour of Olga Parmonik “and now her estate” in respect to one half of the proceeds of the sale of the Katoomba property, whilst the second was an order that the Public Trustee “pay a sum of equivalent to one half of the Deceased’s estate to the Plaintiff pursuant to section 20 of the Property (Relationship) Act [sic] by way of property adjustment”.

14 A defence to the amended statement of claim was also filed on 10 February 2004. By that pleading the Public Trustee, as the present Defendant to the proceedings, admits or expressly does not admit various allegations of fact contained in the amended statement of claim. By paragraph 7 the Defendant raises a defence grounded upon the Statute of Frauds in the following terms,

Further, to the extent that it is asserted that there was an agreement relating to an interest in any real estate, there is no document as required by Section 23C and/or Section 54A of the Conveyancing Act .

15 By paragraph 9 the Defendant asserts that the Plaintiff is not the legal personal representative of Olga Parmonik, and that therefore, under section 24(1) of the Property (Relationships) Act, the Plaintiff does not have any entitlement to maintain these proceedings.

16 Paragraph 10 is as follows,

(a) Even if both Victor Nikitin and Olga Parmonik were still alive, the Court would make no order in favour of Olga Parmonik under Property (Relationships) Act ;
(b) But, both Victor Nikitin and Olga Parmonik having died, it is in any event no longer appropriate to make any such order, and
(c) Under Section 24(2) of the Property (Relationships) Act , no order under that Act should be made.

17 Paragraph 11 of the amended defence consists of a denial that the Plaintiff is entitled as asserted in the amended statement of claim.

18 Section 24 of the Property (Relationships) Act makes provision for the circumstance where before an application under section 20 of the Act is determined either party to the application dies. Subsection (1) of that section provides that in such circumstance the application may be continued by or against, as the case may require, the legal personal representative of the deceased party.

19 It will be observed that one of the defences raised by the Defendant in the defence to the amended statement of claim is that the Plaintiff is not the legal personal representative of Olga Parmonik. The Plaintiff, who is the son of Olga Parmonik, was appointed executor by her will. However, no grant of probate had been obtained by him either before he was substituted as Plaintiff by the consent order of 1 October 2002 or, indeed, before the proceedings came on for hearing on 10 February 2004. In order to conserve the resources of the Court, and to prevent further costs from being incurred by the parties, the course adopted upon that date was that the hearing should proceed, evidence should be received and submissions be presented, and that the matter should then be stood over part-heard to 19 March 2004, noting that in the interim the Plaintiff would obtain (a) a grant of probate of the will of the late Olga Parmonik; (b) an order from the Duty Judge referring the entirety of the proceedings to be heard and determined by myself.

20 The latter order (which subsequently was made by Mr Justice Young, Chief Judge in Equity, on 10 February 2004) was necessary because of the relief sought by the Plaintiff by way of a declaration of trust in favour of Olga Parmonik in respect to the Katoomba property.

21 During the course of the hearing Counsel for the Defendant stated that the Defendant did not dispute that the original parties to the proceedings, that is, Olga Parmonik and Victor Nikitin, were in a bona fide domestic relationship.

22 Subsequently, probate of the will of Olga Parmonik was granted to George Werner-Zolotuchin on 18 March 2004. By that will the testator gave to the Plaintiff her entire estate. It would appear from the affidavit of inventory of assets sworn by the Plaintiff on 12 March 2004 in support of his application for probate that the assets of that testator consisted of clothing, jewellery and cash, having a total value of $320.

23 It will be appreciated that since each of the parties to the relationship and to the asserted constructive trust was deceased at the time of the hearing, the essential evidence for the Plaintiff consisted of the affidavit of Olga Parmonik sworn 9 February 2001. In addition, the Plaintiff relied upon affidavits of himself, his son and a family friend (all essentially going to the nature and extent of the relationship between Olga Parmonik (to whom I shall hereafter refer, without discourtesy, as “Olga”) and Victor Nikitin (to whom I shall hereafter refer, in an equivalent fashion, as “Victor”)). There was no cross-examination conducted or oral evidence adduced at the hearing.

24 According to the affidavit of Olga sworn on 9 February 2001 (she at that time being aged 90 and Victor being then aged 91), she and Victor had lived together for a period of 39 years. No children were born to their relationship. Each of the homes in which they conjointly resided throughout that period (according to Olga, being a house at Burwood, 1962-1972; a home unit at Burwood, 1972-1984; the Katoomba property, 1984-1997) was registered in the name of Victor alone. In the early years of their relationship each was in employment, Olga as a dressmaker and Victor as a toolmaker. Whilst they maintained separate bank accounts, according to Olga they pooled their moneys to pay for household expenses and outgoings. In addition, according to Olga, she contributed to the relationship as a homemaker, being essentially responsible for the housework and cooking, whilst Victor attended to gardening, cleaning and household maintenance.

25 By the time the Katoomba property had been acquired, both Olga and Victor had ceased employment, the mortgage had been discharged, and they were able to subsist upon their respective pensions.

26 In 1997 Olga, on account of declining health, entered the St Basil’s Home for the Aged at Strathfield, and Victor moved into that facility several weeks later. Although occupying separate rooms in that establishment, Olga and Victor spent most of their waking hours together. Although not expressly asserted by her, it is implicit in Olga’s affidavit that at the date when she swore that affidavit she and Victor were still living in a de facto relationship. For example, in paragraph 1 she states, “I have… lived with Victor Nikitin for a period of 39 years”. In paragraph 16 she refers to the removal of herself and, shortly thereafter Victor, into the aged care facility, and states, “I currently live there with Victor”.

27 In paragraph 20 Olga states,

Although I was not married to Victor Nikitin at all times I felt that I was in a marriage like relationship and I regarded Victor as my husband. I introduced him as my husband, from that I mean de facto husband.

28 At the time of his death Victor’s estate was subject to a management order, pursuant to the Guardianship Act 1987, made on 24 August 1998.

29 The Katoomba property (which had been purchased on 6 August 1980 for $44,500) was sold on 27 January 2000 for $262,000. At the time of Victor’s death, a year and a half later, Victor’s assets consisted of the proceeds of sale of that property, together with other investments, totalling $273,361. At the time of the hearing the current balance of the estate held by the Public Trustee was about $270,000. By his will dated 14 May 1998 Victor gave the entirety of his assets to his brother Sergei Krutelev, who is resident in Russia.

30 It is in the light of the foregoing facts and circumstances that the Court must proceed to a determination of the Plaintiff’s claim. I have had the benefit of receiving a written outline of submissions from Counsel for the Defendant. That document will be retained in the Court file.

31 It was submitted on behalf of the Plaintiff that the various contributions made by Olga during the course of the relationship should be recognised by the making of an order in her favour pursuant to section 20 of the Property (Relationships) Act.

32 The Plaintiff also submitted that the statements attributed to Victor in paragraph 19 of Olga’s affidavit (“You are entitled to half the house. This is your house as much as mine” and “It’s our house”) justify the Court making a declaration of trust in respect of a constructive trust of the nature recognised by the High Court of Australia in Baumgartner v Baumgartner (1987) 164 CLR 137 (see, also, Muschinski v Dodds (1985) 160 CLR 583).

33 I will consider first the claim of the Plaintiff in respect to a trust. To the extent that the foregoing oral statements attributed to Victor are relied upon as constituting a declaration of trust, the provisions of section 23C or section 54A of the Conveyancing Act 1919 (re-enacting the relevant parts of the Statute of Frauds of 1677 (29 Car.II, c.3)) prevent such a trust coming into existence. But, in any event, there is no evidence of any intention on the part of Victor that a trust be created. Neither is there any evidence of any circumstances (for example, circumstances of the nature considered by the High Court of Australia in such cases as Baumgartner and Muschinski) which would justify the Court in imposing a constructive trust upon the Katoomba property, or the proceeds of sale thereof.

34 I turn now to a consideration of the claim of the Plaintiff for an order under section 20 of the Property (Relationships) Act.

35 I have already recorded that during the course of the hearing Counsel for the Defendant stated that the Defendant did not dispute that Olga and Victor were in a bona fide domestic relationship. The phrase “domestic relationship” is defined in section 5(1) of the Property (Relationships) Act to be

(a) a de facto relationship, or
(b) a close personal relationship (other than a marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care.

36 Section 4(1) of the Act defines a de facto relationship as follows,

For the purposes of this Act, a de facto relationship is a relationship between two adult persons:
(a) who live together as a couple, and
(b) who are not married to one another or related by family

37 Subsection (2) of that section sets forth various criteria to be applied in determining whether two persons are in a de facto relationship.

38 In all the circumstances of the instant case, I am satisfied that Olga and Victor were in a de facto relationship from about 1962 until the death of Victor on 6 June 2001. The Defendant, whilst not expressly conceding the existence of a de facto relationship between Olga and Victor, did not deny such a relationship and, as I have already recorded, did not dispute that those persons were in a bona fide domestic relationship.

39 It will be appreciated that the factual assertions contained in Olga’s affidavit could not be tested by way of cross-examination. A number of those factual assertions (for example, concerning the geographical location of various residences owned by Victor and in which he and Olga resided) were shown by appropriate title searches to have been incorrect. None of the assertions of Olga concerning her contributions to the household, either by way of financial contributions or as a homemaker, were corroborated by her son, the Plaintiff, or by any other witness. In those circumstances, the Court should be cautious in accepting without question the matters set forth in Olga’s affidavit upon which the Plaintiff relies in support of his claim that an order should be made pursuant to section 20 of the Act.

40 I have already referred to the provisions of section 24 of the Act. Although subsection (1) refers to the circumstance “[w]here before an application under section 20 is determined, either party to the application dies”, neither party submitted that that section does not apply to the circumstances of the instant case where, before the application has been determined, both parties to the application have died. It could be argued that the section applies only to the situation where only one party to the application dies. However, without at present expressing a concluded view in that regard, I shall, consider the Plaintiff’s claim upon the basis that the section applies in the circumstance where both parties to the application have died.

41 Subsection (2) of section 24 is as follows,

Where a court is of the opinion,

(a) that it would have adjusted interests in respect of property if the deceased party had not died, and

(b) that, notwithstanding the death of the deceased party, it is still appropriate to adjust those interests,
the court may make an order under the Part in respect of that property.

42 It will be appreciated, therefore, that in order to enliven the discretion committed to it by subsection (2), the Court must be of the opinion, firstly, that it would have adjusted interests in respect of property if, in the instant case, Olga had not died, and that, notwithstanding the death of Olga, it is still appropriate to adjust those interests.

43 At the outset, therefore, the Court must consider whether, if Olga had still been alive at the time of the hearing, the Court would have made a substantive order in her favour.

44 The Act contemplates that an order for the adjustment of interests in property may be made by parties to a subsisting de facto relationship (see, for example, the wording of sections 14(1) and 20(1) (“a party to a domestic relationship” – not, a party to a former domestic relationship); the limitation provisions in section 18(1) (“if a domestic relationship has ceased”)). Nevertheless, it is rare for an application for such an order to be made by a party to a subsisting relationship. Almost all applications for relief under section 20 are made by one or both parties to a relationship which has already come to an end. (The statement by Meagher JA in Evans v Marmont (1997) 42 NSWLR 70 at 98 assumes such a situation.)

45 If the relationship between Olga and Victor were still subsisting at the time of Victor’s death, the appropriate remedy of Olga would have been by way of a claim for provision for her maintenance under the Family Provision Act 1982. She did not choose to make such a claim, but has persisted in her present claim under the Property (Relationships) Act.

46 I have already referred to the evidence of Olga concerning the sharing of expenses and household responsibilities between herself and Victor. It will be appreciated that, in return, Olga received the benefit of living in a residence of which Victor was the legal owner.

47 Olga did not make any payments towards the mortgage debt. Neither did she cook or clean for the boarders who resided in what she described as the Strathfield house (but which the title searches disclose to have been located at Concord). Neither did Olga in any way, directly or indirectly, assist Victor to obtain his income, or make any contribution to the acquisition by Victor of his assets (such assets being essentially the various residences which he acquired during the course of the relationship).

48 It should also be observed that Olga always maintained her own separate bank account, and that she used her own moneys to give financial assistance to her son and her grandchildren. Further, in the will which she made on 25 June 1991, whilst she and Victor were residing in the Katoomba property, Olga made no provision for Victor, but gave the entirety of her estate to the Plaintiff (with a substitutionary gift to the Plaintiff’s children, being Olga’s grandchildren).

49 I am not of the opinion that, even if Olga (and even if Victor also) had been living at the time of the hearing of the application I would have adjusted interests in respect of the Katoomba property.

50 Further, it will be appreciated that, Olga now being deceased, the benefit of any order under section 20 will pass to the Plaintiff.

51 No submissions have been addressed to the Court on behalf of the Plaintiff as to why, notwithstanding the death of Olga, it would still be appropriate for such an order to be made, which would be in the nature of a windfall in favour of the Plaintiff and which could be of no practical benefit to Olga. There is no evidence before the Court concerning the financial and material circumstances of the Plaintiff. I am not of the opinion that it is still appropriate to adjust interests in respect of the Katoomba property or the proceeds of sale thereof in circumstances where both Olga and Victor are now deceased.

52 But, in any event, even if I were otherwise of the opinion referred to in paragraphs (a) and (b) of section 24(2), there is no basis upon which any adjustment of the interests of the parties in the Katoomba property or the proceeds of the sale thereof could be assessed. In Evans v Marmont, supra, Meagher JA (who in this regard agreed with the joint judgment of Gleeson CJ and McLelland CJ in Eq) said, at 98,

In order to conduct the enquiry mandated by section 20, one should compare each party’s financial situation both at the commencement and at the termination of the liason.

53 The conduct of such an exercise is totally impossible in the circumstances of the instant case, since there is no evidence of the assets of either Olga or Victor at the commencement of the relationship in 1962. Neither is there any evidence of the assets of Olga at the date of the termination of the relationship (which for the purposes of the present approach can be assumed to have been the date of the death of Victor on 6 June 2001), although I am prepared to infer from the inventory of assets set forth in the Plaintiff’s affidavit filed in support of his application for probate, that Olga’s assets in her latter years were minimal.

54 In the exercise of the Court’s discretion, I would not be prepared, in the circumstances of the instant case, to make an order adjusting the interests of Olga and Victor in the Katoomba property or in the proceeds of sale thereof, especially where, as here, both the parties to the relationship have died before the hearing of Olga’s application.

55 In expressing the foregoing conclusion I have proceeded upon the basis that the provisions of section 24 of the Act (in particular subsection (1) thereof) have application to the circumstance where, as here, not merely one of the parties to the relationship, but both the parties to the relationship, have died before the determination of the application under section 20 of the Act. However, I have very considerable doubt as to whether that is a correct construction of the relevant provisions of section 24. A literal construction of that section suggests that is applies only to the circumstance where only one of the parties has died before the determination of the application (the singular noun being used throughout: “either party”, “the deceased party”, “if the deceased party had not died”, “notwithstanding the death of the deceased party”, “the estate of the deceased party”).

56 However, as I have already observed, it is not necessary for me to reach a concluded view on whether section 24 has effect in the circumstance where, as here, both the parties to the relationship have died before the determination of the application.

57 I summarise as follows my foregoing views and conclusions. Even if (contrary to my tentative view that section 24 does not have application to the circumstances of the instant case) the section applies where both the parties to the relationship are now deceased, I have nevertheless reached the conclusion, for the reasons which I have expressed, that, firstly, even if Victor had not died, I would not have adjusted interests in respect of the Katoomba property; and, further, that notwithstanding the death of Victor, it is not appropriate, where Olga also is now deceased, to adjust those interests. Even if, contrary to my foregoing conclusions, I were to be of the opinion set forth in subsection (2) of section 24, I would not, in the exercise of my discretion, where both the parties to the relationship are now deceased, and where such an order can be of no benefit to Olga, make an order adjusting interests in respect of the Katoomba property, or the proceeds of sale thereof.

58 It follows, therefore, that the Plaintiff’s claim must be dismissed.

59 I make the following orders:

(1). I order that the proceedings be dismissed.

(2). I order that the Plaintiff pay the costs of the Defendant.

(3). The exhibits may be returned.

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Last Modified: 05/26/2004