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[2011] VSC 166
Supreme Court of Victoria
2011-04-29
MACAULAY J
Original judgment source is linked above.
APPEAL - Appeal from a decision of the Victorian Civil and Administrative Tribunal - Victorian Civil and Administrative Tribunal Act 1998 (Vic) ss 97, 98, 117 and 148 - Property Law Act 1958 (Vic) , and - Claim by co-owner for order for sale of land and division of proceeds - Cross-claim by other co-owners for order for transfer of whole of land to them - Claim against deceased's estate - Tribunal unable to make findings on balance of probabilities - Cross-claim determined by onus of proof - Whether tribunal's conclusion open on the evidence - Whether actual or constructive failure to exercise jurisdiction - Whether failure to give adequate reasons for decision - Appeal on cross-claim dismissed.
1 On 16 November 2009 the Victorian Civil and Administrative Tribunal (VCAT), constituted by Deputy President MacNamara, ordered[1] that a rural property at Bannockburn, Victoria, be sold and the proceeds be divided. The proceeds were to be applied (after commission and selling costs) as to one half to Atanas ("Arthur") and Polixent ("Pauline") Krsteski (the appellants in this proceeding) and, as to the other half, to Sussan Spasia Jovanoski (the respondent in this proceeding), as administratrix of the will and estate of her late father, Trajce ("Terry") Jovanoski.
2 The order was made pursuant to s 225 of the Property Law Act 1958 (Vic) on a claim brought by Sussan Jovanoski (whom I will simply refer to as "Sussan", to distinguish her from her parents) on the footing that she (as administratrix) and the Krsteskis were co-owners of the land, each being registered (or entitled to be registered[2]) as proprietors of an undivided half-share in the land.
3 The tribunal also dismissed a cross-claim brought by the Krsteskis. By that cross-claim they sought an order that Sussan transfer her half-interest in the land to the Krsteskis, alleging that her father (and her mother, when alive) had held their half-interest in the land on trust for the Krsteskis. As will become apparent it was the dismissal of the cross-claim that was pivotal to the making of all of the orders, and it is the cross-claim that is the real focus of the intended appeal in this court.
4 The Krsteskis seek leave to appeal from the orders pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('the VCAT Act'). Subsection 148(1) of the Act provides that a party to a proceeding may appeal, on a question of law, from an order of the tribunal if (relevantly) a judge of the trial division of the court gives leave to appeal. Pursuant to previous orders made in this court, in this proceeding, the leave application and, if leave was so granted, the appeal are to be heard together by a judge.
5 The Krsteskis' draft notice of appeal listed some 14 questions of law upon which the appeal was said to be based, repeating those same "questions" as grounds of appeal. The Krsteskis gave notice prior to the hearing of the matter of four further questions of law for the proposed notice of appeal. No objection was raised to those further questions of law being relied upon. I will return to those questions in due course.
6 The questions are, first, should leave be granted to the Krsteskis to appeal the order of VCAT and, if so, should the appeal be allowed? I have decided to grant leave to appeal on some (not all) questions but to dismiss the appeal. I give my reasons below.
7 The Deputy President succinctly and, for present purposes, sufficiently described the non-contentious facts, and the nature of the proceedings before him, in the following terms:
At all relevant times held a bare legal interest in the subject property and held same on trust for [the Krsteskis] as beneficially entitled thereto.
By operation of Section 53 of the Property Law Act 1958 and/or Section 126 of the Instruments Act 1958.
8 The tribunal was not persuaded that the Jovanoskis held the whole of the Bannockburn property on trust for the Krsteskis, and thus rejected the Krsteskis' cross-claim. There being no other defence in respect of Sussan's claim for sale the tribunal made orders referred to above.[4]
9 Of the total of the 18 questions of law raised by the Krsteskis, six of them concerned the quantification of the division of proceeds,[5] or costs.[6] No submissions were addressed in oral argument on those points and they were not pressed.[7] In any event it may be doubted that such questions involve any question of law. The remaining twelve questions can, in my view, be more readily reduced to six and, of those, four of them are arguably different ways of contending the same thing. Those six questions may be summarised in the following way:
(1) The tribunal misapplied the onus of proof by not first requiring Sussan to establish that she was a 'co-owner' of the land for the purposes of Part IV of the Property Law Act.[8]
(2) No tribunal acting reasonably upon the evidence could have found otherwise than that the Jovanoskis held the whole of the land on trust for the Krsteskis.[9]
(3) No tribunal acting reasonably on the evidence would have failed to accept (as the tribunal failed to do) Krsteskis' evidence adduced on various admissions allegedly made by the Jovanoskis.[10]
(4) The tribunal 'constructively' failed to exercise its jurisdiction by asking itself the wrong question, or not properly and logically analysing the evidence.[11]
(5) The tribunal failed to exercise its jurisdiction because it did not act on the 'substantial merits' of the case (s 97 of the VCAT Act) and did not give 'proper consideration' to the case (s 98(1)(d)), by virtue of the preceding errors.[12]
(6) The tribunal failed to properly expose its reasoning in its reasons for decision[13] ('Reasons').
10 In my view the alleged errors in questions 2, 3, 4, and 5 all make the same essential contention, namely that no reasonable tribunal acting lawfully, upon the evidence before it, could have come to the decision to which it came, or could have failed to uphold the Krsteskis' claim. I consider that the issues in questions 4 and 5 are a sub-set of that broad matter, but characterising the error in terms of exercise of jurisdiction.
11 Seen in this way the alleged questions of law essentially raise three (or perhaps four) broad issues: whether the tribunal identified and applied the correct onus of proof; whether it was open to the tribunal to reach the conclusions which it reached on facts, including whether it actually or constructively failed to exercise its jurisdiction; and whether the tribunal erred in law in failing to properly express its reasons. These issues conform with the issues identified in oral submissions by counsel for the Krsteskis.[14]
12 Counsel for Sussan argued that the bulk of Krsteskis' grounds of appeal were, in substance, an attack on the merits of the tribunal's decision. Although, as will appear, there is much to be said for that view from the perspective of having completed a detailed analysis of the Krsteskis' arguments, I am nevertheless satisfied that each of the six questions identified above is framed as an arguable error of law within s 148 of the VCAT Act. Leave is therefore granted to appeal on those six questions, but not otherwise.
13 Before proceeding to analyse each of these asserted errors it is convenient to address three preliminary matters. The first is, what did the tribunal have to decide? The second is, what did it in fact decide? And the third is, how did it arrive at that result?
14 To open the gateway to relief Sussan had to establish that she was a co-owner of the land with the Krsteskis. Of the species of relief available to a co-owner under s 225 of the Property Law Act (ie sale and division of proceeds; physical division of land; or a combination of the two) Sussan specifically sought sale and division of the proceeds.
15 The defence of the Krsteskis, relevantly, admitted that:
... At the date of his death Trajce Jovanoski was the registered proprietor of a one-half interest in the Land, which is now vested in [Sussan].
16 There was no defence which took issue with the claim for sale and division of proceeds other than by asserting that the Jovanoskis, at all relevant times, held a bare legal interest in the property on trust for the Krsteskis.
17 "Co-owner" is defined in the Property Law Act to include a person who has an interest in land with one or more other persons as joint tenants or tenants in common. The Krsteskis' defence admitted that the interest vested in Sussan was a half interest in the land, with the Krsteskis holding the other half interest, each as tenants in common.[15] Accordingly there was no debate on the pleadings[16] that Sussan was a co-owner. (I will return to this issue below in the context of discussing the question regarding onus of proof).
18 Once a co-owner has made a claim of a kind permitted by s 225 of the Property Law Act the tribunal may make any order it thinks fit to ensure that a just and fair sale or division of land occurs (s 228).
19 Accordingly, on the central question of whether there should be any sale of the land for the purpose of dividing proceeds between Sussan and the Krsteskis, the tribunal first had to decide the issue of the Krsteskis' cross-claim. That is, it had to decide whether the Jovanoskis held their interest in the whole of the land at all relevant times as bare trustees for the Krsteskis such that Sussan should now be ordered to transfer the half interest vested in her to them. If that issue was decided in favour of the Krsteskis plainly there would have been no order for sale and division of proceeds. On the other hand, if that issue was decided in favour of Sussan then there was no alternative contention to the effect that the property ought not to be sold. The only remaining question in those circumstances was as to the just division of proceeds upon sale.
20 For this reason it was clear that the tribunal's primary task was to decide the question of whether or not the land was, from the beginning, held by the Jovanoskis on trust for the Krsteskis as they alleged. The Krsteskis advanced their case either on the basis of an express trust (proven by actual common intention), or by an implied or resulting trust (presumed from the alleged fact that the Krsteskis paid the entire price for the purchase of the land).
21 All of the rival evidence adduced by the parties bore upon the questions whether any such common intention existed or whether the Krsteskis paid the whole price. Some of that evidence was of events occurring well after the purchase in 1992 but was adduced to persuade the tribunal to draw an inference as to the intention of the two couples at the time of purchase.[17]
22 The Deputy President noted that arguments had been advanced on the question of what legal presumptions should or could be made. He referred to the presumption that arises when one person purchases a property (ie by paying the price) in the name of another, absent any countervailing presumption of advancement. He also referred to the proposition that, where land is purchased using borrowed money, the one who was liable to repay the loan is prima facie deemed to have contributed that part of the price funded by the loan, noting that such a presumption is capable of being rebutted by evidence. He specifically made mention of Calverley v Green.[18]
23 No issue appears to have been taken in the proceeding before me regarding the Deputy President's analysis or application of these legal principles. Rather, the arguments in the case have focused upon the evidence and the conclusions that were available, as a matter of law, to be drawn from the evidence.
24 To understand what the tribunal decided, it is useful to begin with the uncontested evidence, namely that:
(b) The deposit of $16,500 was paid by cheque drawn upon the Jovanoskis' bank account;
(c) A loan of $80,000 was made to the Jovanoskis by Westpac secured by mortgage over the Bannockburn land (and also, according to the loan approval documents, by a mortgage over the Jovanoskis' home[19]);
(d) The funds to pay the settlement sum were drawn from the Jovanoskis' Westpac account - that is, presumably a combination of the loan funds and other funds already sitting to the credit of their account;
(e) Funds were subsequently deposited to the Jovanoskis' Westpac account to reduce and ultimately discharge the mortgage loan;
(f) Title to the property was registered solely in the names of the Jovanoskis until 2002 when a half interest was transferred to the Krsteskis, the consideration recorded to be "for natural love and affection".
25 It is also important to bear in mind that the cross-claim made by the Krsteskis was a claim against a deceased estate. Much law exists concerning the need to carefully scrutinise the evidence in such circumstances because the deceased is not available to tell his or her own side of the story.[20]
26 In Weeks v Hrubala[21] Young CJ in Eq said:
In a case of a person suing a deceased estate the court normally looks for some sort of corroboration: see Re Hodgson (1886) 31 Ch D 177 even though, as a matter of law, corroboration is not absolutely necessary. Experience, however, shows that when plaintiffs are making a claim against a deceased estate the court is wise to look for corroboration.[22]
27 In Plunkett v Bull Isaacs J said,[23] after referring to the need to scrutinise very carefully a claim against a deceased estate:
Then we come to the question how far the onus of proof which lay upon the plaintiff was satisfied. She had the burden of establishing the original creation of the indebtedness of the deceased to her, and undoubtedly it is established that in cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff's case with suspicion and as primâ facie fraudulent, but it scrutinizes the evidence very carefully to see whether it is true or untrue. In the case of Lachmi Parshad v Maharajah Narendro Kishore Singh Bahadur some observations were made by the Privy Council with reference to the sufficiency of proof. In that case their Lordships were not satisfied that the plaintiff had established a reasonably clear case. For instance, he had failed to bring forward evidence which he ought to have brought forward, and which was available. That was a material circumstance, and having regard also to some other circumstances of the case their Lordships thought that his appeal should fail. Lord Morris said: - "In an action brought to recover money against an executor, or, as in this case, the heir, of a deceased person, it has always been considered necessary to establish as reasonably clear a case as the facts will admit of, to guard against the danger of false claims being brought against a person who is dead and thus is not able to come forward and give an account for himself".[24]
28 It was in this context that the tribunal set about examining the evidence concerning an agreement that the property be held on trust for the Krsteskis and that the Krsteskis paid the whole purchase price for the property, together with various other indicia said to be consistent with the existence of the alleged trust. Specifically, the Deputy President recited the following facts as being relied upon by the Krsteskis:[25]
The Krsteskis say that they paid for the whole purchase price of the property, occupied it exclusively subject to a few minor items of storage such as some barrels and a boat which were stored on the property either for or at the request of the Jovanovskis. They say that they carried on all farming operations, were known in the area as the sole owners of the property and to the exclusion of the Jovanovskis.
Mr McKenzie on the Krsteskis behalf relied upon the evidence of Ms Fernando, a solicitor who documented the transfer of a half legal interest in the farm in 2002. She said that at a conference attended by both the Jovanovskis and the Krsteskis it was stated and accepted that the entire beneficial interest in the farm lay with the Krsteskis.
Mr McKenzie put in evidence that the Krsteskis paid the rates on the property.
29 The Deputy President then posed for himself this question: "But can these findings of fact be made?", observing that, in his view, there were "significant obstacles to acceptance of the Krsteskis' account". After a consideration of each of the factual issues he had identified, referring to matters that in his view were inconsistent with the asserted fact, not independently corroborated, implausible or simply equivocal, the Deputy President concluded that "the factual basis to make good [counsel's] contentions on behalf of the Krsteskis is simply lacking".
30 Accordingly the Deputy President dismissed the cross-claim and, in the absence of any defence other than the cross-claim, held that the claim should succeed.
How did the Deputy President arrive at the result?
31 Instead of arriving at decisive factual findings on each of the asserted facts the Deputy President pointed to "obstacles" to acceptance of each of the facts which the Krsteskis contended established the existence of an express trust or from which a trust should be implied. He explained why in the following terms: [26]
In a majority of legal proceedings whether in Court or in Tribunal the presiding officer, judge, magistrate or Tribunal member will come to a fairly confident conclusion as to what really happened. He or she will in effect believe that the truth has been reached and this is so even in civil proceedings where the findings are made on a balance of probabilities only. In a minority of cases the Court or Tribunal will not be confident that it has got to the truth and will determine the matter based upon the incidence of burdens of proof, the operation of presumption and the like. The present is, I regret to say, one of the latter class of proceeding.
32 It is well to remember that for a court or tribunal to be satisfied on the balance of probabilities about a fact it "must feel an actual persuasion of its occurrence or existence before it can be found".[27] It is apparent that the tribunal saw the burden of proof being imposed upon the Krsteskis and, having applied that burden, it was unable to feel an actual persuasion on the balance of probabilities about the principal allegations of fact upon which the Krsteskis relied. The tribunal then concluded that the factual basis for their claim was lacking, thus it was dismissed.
33 Such a position is entirely legitimate as a matter of principle. As stated in Cross on Evidence:[28]
There are, of course, three, not two, logically possible outcomes to the application of the appropriate degree of proof to the facts. The first is that the Tribunal of fact is satisfied to the appropriate standard that the case of the prosecution or plaintiff has been made out; the second that the Tribunal of fact is satisfied that the case of the accused or the defendant has been made out; and the third that the Tribunal of fact is in a state of doubt[29] as to whether any case has been made out. In each of the last two cases the plaintiff or the prosecution fails.[30]
34 This statement likely emanates from the what was said by Lord Brandon for the House of Lords in Rhesa Shipping Co SA v Edmunds:[31]
... the judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden.[32]
35 The statement was cited with approval by the High Court in Kuligowski v Metrobus[33].
36 That is precisely the position the Deputy President explained he had reached, namely that he was "not confident that [he] has got to the truth" so that he "determine[d] the matter based upon the incidence of the burden of proof, the operation of presumptions and the like".[34]
37 Such a position reflects what is said in Phipson on Evidence:[35]
While a judge or tribunal of fact should make findings of fact if it can, in exceptional cases it may be forced to the conclusion that it cannot say that either version of events satisfies the balance of probabilities. In such a case the burden of proof may determine which party succeeds.[36]
38 I then turn to each of the principal grounds of complaint raised by the Krsteskis.
39 The argument on the question of onus of proof can, in my view, be disposed of in relatively short compass.
40 It need not be doubted that for VCAT to have jurisdiction to grant relief under s 225 of the Property Law Act it must be established that the applicant for relief (here, Sussan) is a 'co-owner' of land or goods.[37]
41 The Krsteskis' argument on this point was that, although the Act defines co-owner to mean 'a person who has an interest in land or goods with one or more other persons as (a) joint tenants or; (b) tenants in common', such expression must as a matter of logic exclude an owner of a legal interest only. That must be so, the argument went, because a co-owner with no beneficial interest is not a person who is likely to be entitled to the remedy of partition. And if that is so, then the expression 'co-owner' should be construed to mean only those kinds of co-owners who would be entitled to partition.
42 Mr Uren QC, who appeared with Mr McKenzie for the Krsteskis, conceded he was unable to support the proposition with authority, but argued it as a matter of logic. In my view the argument is flawed. There is no warrant as a matter of textual analysis to limit 'an interest in land' to mean only a beneficial interest in land. Such limitation, if intended, could readily have been imposed.
43 Further, the fact that the jurisdiction is opened does not, of course, mean that relief will be granted. If it be established, by someone with an interest in doing so, that one of the co-owners holds no beneficial interest in the land, that may well be a circumstance affecting the tribunal's discretion whether to grant relief under s 228 at all, or in what particular form. I do not accept the premise that a co-owner with a legal interest only could not obtain a remedy of partition (or sale) under any circumstance. Partition may seem an unlikely result in a case such as this where the alleged beneficial owner is also the other co-owner; but such unlikelihood does not pertain where the relevant beneficial owner is not the other co-owner.
44 In my view the jurisdiction of VCAT was engaged by proof that Sussan had an interest in the land, legal or beneficial, with the Krsteskis either as joint tenant or tenant in common. So much has been admitted by the parties and is not in dispute.
45 The jurisdiction having been opened, the onus lay on the Krsteskis, as the parties with the interest to establish the fact, if it could be established, to show that Sussan held her interest on trust for them so as to deny her the relief of sale that she sought, and to support their cross-claim for an order that she transfer her interest to them.
46 Accordingly, I reject the first ground of appeal raised by the Krsteskis.
47 There is a considerable body of authority to support the proposition that whether or not there was any evidence to support a finding of fact (including an inference of fact) is a question of law. It suffices to refer to the recent statement of principle in Kostas v HIH Insurance Services Pty Ltd[38] where it was said:
Whether there was no evidence to support a factual finding is a question of law, not a question of fact. ... As Dixon CJ said in Gurnett v The Macquarie Stevedoring Co Pty Ltd [No 2]
"in the legal dichotomy between questions of fact and questions of law we place under the latter head a question whether there is sufficient evidence to submit to a jury in support of a cause of action. That is because it is a question for the court to decide and not for a tribunal of fact".
A tribunal that decides a question of fact when there is "no evidence" in support of the finding makes an error of law. What amounts to material that could support a factual finding is ultimately a question for judicial decision. It is a question of law.[39]
48 In this case the Krsteskis rely upon that line of authority to justify the appeal, and to rebut the contention that they are merely seeking a merits review. However, this is not a case in which the Krsteskis can complain about a finding of fact being made in the absence of evidence because, as I have explained, the tribunal did not proceed to make any positive findings of fact. Rather, it rejected the claim that the trust existed because it was unable to reach a positive finding in favour of the Krsteskis or the various underlying facts upon which the existence of that trust might be inferred. Therefore, it is not apt to speak of an absence of evidence to leave open a finding in favour of the Krsteskis.
49 The broader formulation of this question of law is: whether the fact-finding tribunal arrived at a conclusion which was simply not open to it.[40] Expressed in this way the principle extends to the question whether the evidence, rationally, allows only one conclusion which the tribunal nevertheless failed to reach. It seems to me that it is this species of the particular question of law that the Krsteskis must be relying upon.
50 In other words, their case must be that, on the evidence before the tribunal on each of the supporting facts, there was only one conclusion that was open to the tribunal to reach; it could not logically, or by any process of rational analysis, reach a conclusion other than positive persuasion on the balance of probabilities that what the Krsteskis said was true; it could not even be open to the tribunal to be left in a state of equilibrium about each asserted fact.
51 Was it open to the tribunal to not be persuaded as to the correctness of the Krsteskis' case?
52 The arguments for the Krsteskis were detailed and lengthy, and ranged across all of the evidence in the proceeding below. It is not necessary to canvass the detail of every argument, but it is convenient to summarise the scope of them in order to lay the groundwork for the analysis that will follow.
53 In essence Mr Uren argued that the tribunal was wrong not to have found for the Krsteskis on the evidence, and that its Reasons do not expose a logical or rational reason for not finding in their favour.
54 As to the payment of money by the Krsteskis, he argued the Krsteskis gave uncontradicted oral testimony in support. The exercise book was a genuine record. It appeared there was no dispute that the Krsteskis made payment as to half, so why not accept they made payment of the whole? And if half was paid, that would suggest the exercise book was accurate as to part; so why not accept the veracity of the exercise book as a whole?
55 He made reference to the Krsteskis' use and possession of the land from the date of purchase onwards. He also drew attention to the evidence about the Krsteskis having custody of the title, asserting it was eventually established they held it from the date the mortgage was paid out and it was returned from the bank. He argued that those facts were not given proper weight (or no weight) by the tribunal, and that it at least should have drawn a prima facie presumption of ownership from them.[41]
56 Further, attention was drawn to the evidence of the neighbours, amongst other things, regarding the Krsteskis' use of the land; and it was argued that the countervailing evidence of Sussan and her witnesses had problems.
57 Mr Uren was critical of the various matters referred to by the tribunal as constituting obstacles to acceptance of the various supporting facts,[42] arguing:
(a) no proper analysis was given to why the lack of documentation threw doubt on the proposition that the Krsteskis were the source of funds for the purchase;
(b) the 'self-serving' nature of the exercise book is a statement of the obvious but does not disprove the Krsteskis' case;
(c) the fact of Thomas Krsteski being named as the original purchaser needs to be balanced against the fact that, in contemporaneous correspondence from the conveyancer, it is apparent that Arthur Krsteski is the 'moving spirit' behind the transaction;
(d) any minor discrepancy in the arithmetic in the exercise book not matching the total payments to Westpac is more a sign of authenticity than concoction;
(e) the conclusion that the 2002 transaction was at odds with the Krsteskis' account does not recognise that it was at odds with the alternative version as well; so it did not disadvantage the Krsteskis any more than it disadvantaged Sussan;
(f) the 'taxi licence' explanation[43] for the retention by the Jovanoskis of the half interest in the land in 2002 was not disproved because the application for a taxi licence never eventuated;
(g) the contradiction between the Krsteskis' explanation and Ms Fernando's explanation as to why stamp duty was paid on the transfer,[44] when it need not have been paid if the consideration was truly an entitlement in equity, was more consistent with veracity than falsity;
(h) the tribunal should have decided who was right and who was wrong about the Jovanoskis' claims made in their lifetime about how many farms they owned, rather than simply saying the evidence went two ways on the topic.
58 Mr Uren then criticized the tribunal's conclusion that the factual basis for the Krsteskis case was 'lacking', arguing that this demonstrated that the tribunal was taking a piecemeal approach to the task, in contravention of its obligation as a fact-finder as described in Chamberlain v R (No 2).[45] He argued that the tribunal thus failed to ask itself the correct question, namely, whether on the whole of the evidence the Krsteskis' account was shown to be more probable.
59 Further, it was contended that the tribunal did not express any views about the credit of the Krsteskis, and that having failed to do so it could not come to a resolution of the case. If it rejected the evidence of the Krsteskis, it had to say so and give its reasons for doing so.
60 Finally, it was argued that the tribunal's decision making process did not reveal a reason for regarding the Krsteskis' case as not being established.
61 As already mentioned, the tribunal found that the factual foundation for the cross-claim - the trust - was "lacking". In examining that factual foundation the tribunal is to be taken to include the oral testimony of the Krsteskis that went to the very heart of the claim, namely the testimony summarised by the Deputy President in the following terms:[46]
He [Arthur Krsteski] said that the Jovanoskis agreed - "that the property although in their name would always be the property of Pauline [that is Mrs Krsteski] and I".
62 In a sense that testimony begged the very question that had to be decided; the ultimate issue for resolution. It was that testimony which, although being direct evidence of the fact in issue, was also the object of the search for corroboration given the nature of the proceeding and the absence of the Jovanoskis.
63 When the tribunal said that the factual basis to make good the Krsteskis' case was lacking, it was saying that it was unable to reach the requisite state of persuasion about each of the supporting facts which otherwise might have lent some corroboration to the assertion of the oral agreement. By necessary implication the tribunal was also saying that it was left unpersuaded about that oral agreement.
64 Along with the assertion of the oral agreement, the supporting facts upon which the principal fact might have been inferred, included:
65 At VCAT the Krsteskis sought to prove those "facts" in an endeavour to displace the inference that might otherwise arise from other uncontested facts already set out above.[47]
66 In respect of a number of the purported supporting facts the tribunal pointed to reasons why it doubted their truth, without expressing a concluded view in relation to them. Mr Uren undertook a root and branch attack on each 'obstacle' the tribunal raised in connection with each alleged supporting fact, by reference to the evidence from the witness statements, transcript and exhibits.
67 Having read all of the evidence and the transcript of the proceedings, it is apparent that the tribunal's Reasons are concise, and highlight the principal points in the evidence without exhaustively referring to all evidence that might have been regarded as a hurdle to acceptance of each proposition. It also seems to me there was valid cause for the tribunal not to feel compelled to accept the Krsteskis' version but to be left unpersuaded on the balance of probabilities as to where the truth lay. I will explain why.
68 It is not necessary to go through the debate on each and every point. To do so would be to get drawn into a review of the merits of the tribunal's decision. Rather, it is sufficient to mention some facts and matters that demonstrate why it was open to the tribunal not to be persuaded on the balance of probabilities in favour of the case for the Krsteskis.
Possession of the land and custody of the title
70 I will discuss in some greater detail the arguments raised about possession of the land and custody of the duplicate certificate of title. Considerable emphasis was given to the failure by the tribunal to apply a presumption in favour of the Krsteskis arising from the evidence of their possession of the land[48] and their custody of the duplicate certificate of title.[49] It was observed that the tribunal did not mention the custody of the title and then argued that it therefore gave no weight to what was said to be an important fact.
71 There was some debate before me as to whether the evidence permitted the tribunal to conclude that the Krsteskis did possess the title certificate, either from 1995 (after the discharge of the mortgage) or some time prior to the 2002 meeting with Ms Fernando, the conveyancer. For present purposes I assume the evidence did warrant those findings.
72 As regards the point that the tribunal did not refer to the custody of the title, first it may be said that the mere failure by a tribunal to mention a particular fact does not necessarily mean that it did not take that fact into account.[50] Particularly is this so when, as is the case here, the issue of the custody of title was akin to the issue of the use and possession of the land itself, the significance of which the tribunal did specifically discuss, in this way -
The fact that someone might rear cattle on a rural property, enter into share cropping arrangements with respect to the property, construct a cattle run, enter into fencing arrangements with neighbours and so forth is consistent with that person being an owner. It is certainly consistent with that person being the sole owner but it is not inconsistent with that person being a co-owner. Proceedings for account between co-owners particularly contemplate the possibility and the reality that one or more co-owners frequently occupy co-owned property to the exclusion of others. The possession of one co-owner is the possession of all. Acceptance of all the types of evidence to which I referred a moment ago and to the evidence as to the payment of the rates does not lead to the conclusion that the Krsteskis were the sole owners of the property.[51]
73 To that last observation could equally be added that neither does custody of the duplicate certificate of title lead to that conclusion (although, in the same way, it may be consistent with it). Hence, the issue of the custody of the title, along with the evidence of the use of the land, merely begged the question rather than resolved it. Failure to specifically mention the custody of the title in these circumstances was in my view of relatively little moment.
74 As for any presumption that might or ought to have been drawn, in Allen v Roughley Dixon CJ said of the presumption of ownership arising from the fact of possession of land,
But it affords no more than prima facie evidence which may readily be rebutted. In other words its probative value depends upon circumstances.[52]
The presumption is one of fact, and the reason for it is simply that "men generally own the property they possess" : Taylor on Evidence, 11th ed. (1920), p. 130. The law recognizes the probability which common experience suggests. In a particular case, if there is nothing to the contrary, the probability remains and the tribunal of fact is entitled to act upon it. But the whole of the evidence must be weighed, and consideration of the proved circumstances, particularly the origin, character and duration of the possession, may suffice to satisfy the tribunal that what is probable in the generality of cases is not probable in the particular instance. When that occurs, the inference of seisin in fee simple will not be drawn.[53]
76 A further thing to note is that the various potentially applicable presumptions operated in opposing ways on the facts of the case. That the Jovanoskis were liable for the repayment of the Westpac loan which funded half the purchase money would result in a rebuttable presumption that they (at least) had a half interest in the land.[54] To an opposing effect, the Krsteskis possession of land and title certificate potentially gave rise to a presumption that they owned the whole of the land.
77 In my view the evidence before the tribunal took the resolution of the case out of the realm of presumption. Whatever starting gain either party might have had from a presumed position, other facts and circumstances diminished the probative value of such presumptions. Not surprisingly, in those circumstances, the tribunal endeavoured to resolve the matter upon a close scrutiny of the facts.
78 It is not sufficient for the Krsteskis to persuade me that there was material upon which a tribunal could reasonably have made positive findings in their favour; they have to show it was not open to a tribunal not to make such findings. As is apparent, that is a very high hurdle to jump.
79 The Krsteskis attempted to jump that hurdle by pointing to different arguments in relation to each asserted fact, and to the effect of those facts as a whole. But, in the end, the arguments did not reach that height. In each case they were driven to unsustainable propositions, or to argue various reasons why their particular version should have been preferred from a range of alternative explanations, rather than contending it was the only available finding.
80 For example, it was argued that it was not 'rationally explicable', if the property was purchased and financed by the Jovanoskis, that the certificate of title should be in the possession of the Krsteskis. I have already discussed this issue at length. I disagree that there could be no rational explanation, especially if the property was to be jointly owned.
81 The Krsteskis criticised the tribunal's view that Ms Fernando's recollection of the 2002 events (including the so called admission made by the Jovanoskis that they had purchased the land for the Krsteskis) was "imprecise". The Krsteskis' contentions on this point were merely argumentative, seeking to chip away at what was plainly a forensic conclusion drawn from a range of features of Ms Fernando's evidence. It was hardly a contention that the evidence could only have allowed one rational conclusion.
82 By way of final example, Mr Uren sought to meet the fact that the Jovanonskis had filed tax returns over a period of years claiming deductions for expenses associated with grazing cattle on the Bannockburn property, and the Deputy President's opinion that it represented an 'embarrassment' to the view the Jovanoskis had no beneficial interest in the land. Evidence was also given by Arthur Krsteski had he provided the expenditure details to the Jovanoskis to enable them to make the claims. Mr Uren criticised the tribunal's characterisation of those facts, arguing that the tax returns were documents made by persons other than the Krsteskis, for their own tax reasons, which said nothing about the ownership of the land and were at best only neutral. However, the tax returns indicate that the Jovanoskis claimed to have incurred expenditure conducting cattle grazing on the land when the Krsteskis staunchly claimed to have exclusively possessed and used the land, and relied on their exclusive possession as denying that the Jovanoskis had manifested any claim to hold any beneficial interest in it. In my view the tribunal's view of the existence of the tax returns as an obstacle to accepting the Krsteskis' case was perfectly reasonable.
83 Similar observations as to the nature of the Krsteskis' arguments could be made about each of the points raised.
84 In my view there were some internal inconsistencies, some implausibilities, some equally plausible alternative explanations (ie equivocality) and some contradictory or opposing evidence in relation to the various asserted supporting facts. Hence, it was not the case that the evidence before the tribunal in relation to each fact only left open a single outcome as a matter of rational conclusion. One rational conclusion open in respect of each asserted fact was that the tribunal be left in a state of equilibrium - a lack of actual persuasion on the balance of probabilities - as to where the truth lay.
Whether the tribunal disbelieved the Kresteskis
85 Mr Uren relied heavily upon the argument that the Deputy President failed to properly engage with his task, and failed to properly expose his reasoning, by not stating that he disbelieved the Krsteskis' testimony as to the agreement and paying the price, and why he disbelieved them. He assumed that the Deputy President's decision necessarily involved that conclusion. In my view that assumption is wrong.
86 When a tribunal of fact does not reach an actual state of persuasion of the existence of a fact on the appropriate standard of proof (here, proof on the balance of probabilities), as a matter of logic and reality that inability to make a positive finding does not involve the tribunal positively rejecting the possibility that the asserted fact was true. The tribunal may legitimately say: "I am not persuaded you are probably right; but I cannot deny you are possibly right".
87 Accordingly, there is a logical flaw in the assertion that a non-finding of fact, due to the absence of the requisite state of persuasion, necessarily involves a conclusion that the proponent's testimony was false and untrue. It merely means that the proponent's testimony left the tribunal in a state of equilibrium about the matter.
88 Having regard to all of the foregoing considerations I am not persuaded that the tribunal reached a conclusion that was not open to it on the evidence before it. To the contrary, the result that the tribunal be left unable to determine the principal issue of whether the Jovanoskis held the Bannockburn land on a bare trust for the Krsteskis, on the balance of probabilities, was a result that was clearly open to it.
89 The Krsteskis fail to make out this ground of appeal.
Constructive failure to exercise the jurisdiction
90 The notion of a constructive failure to exercise jurisdiction is explained by Gray J in the Kekes v Police:[55]
In the case of a constructive refusal, a purported performance of the statutory duty is treated as a case of the decision maker refusing or declining to perform that duty, because the purported performance is deemed legally void.[56]
91 His Honour traces the source of the distinction between actual and constructive failure to exercise jurisdiction to the reasons of Jordan CJ in Ex Parte Hebburn Ltd; Re Kearsley Shire Council.[57] In those reasons the Chief Justice listed a number of errors which denote a purported but not real exercise of jurisdiction by a tribunal with statutory jurisdiction, such that the decision so given leaves the jurisdiction 'constructively unexercised'.[58] Those errors include a mistake in construing the statute vesting jurisdiction leading the tribunal to a misunderstand the nature of the jurisdiction to be exercised; to apply a wrong or inadmissible test; to misconceive its duty; not to apply itself to the question the law prescribes; to misunderstand the nature of the opinion to form.
Failure to deal with the whole of the evidence?
92 It was argued on behalf of the Krsteskis that, in the manner already described, the tribunal failed to address itself to the correct question of whether the Krsteskis case was made out on the whole of the evidence. Whether or not such a 'failure', if established, would amount to a jurisdictional error need not be decided for I do not accept it has been shown that the Deputy President fell into any such error.
93 In my view, the argument that the tribunal dealt with the facts in isolation and not as a whole, and thus failed to ask itself the correct question, is simply not borne out on a fair reading of the tribunal's Reasons.
94 True it is that the tribunal deals with each fact one by one, and considers whether there are reasons to accept or not be persuaded about the veracity of each fact. From that observation the Krsteskis contend that such a method demonstrated that the tribunal did not consider whether one fact might draw reinforcement from another, and in that way failed in its task to ask whether the Krsteskis' case was established on the whole of the evidence.
95 I fail to see why that conclusion should be drawn. A series of imponderables does not have to make a probability. There is no reason to suppose that in dealing individually with each factor said to support the Krsteskis' case the tribunal was not also considering the effect of one upon the other. Indeed, that is the benefit of dealing with all of the factors together in the way the tribunal has done.
96 I do not consider that there is any error in the tribunal's process of reasoning or approach to fact finding in this respect.
97 Likewise, it was argued that for the same reasons and on the same grounds the tribunal failed to properly exercise its statutory jurisdiction in not acting 'according to the substantial merits of the case', as it was obliged to do pursuant to s 97 of the VCAT Act; and it failed to undertake a 'proper consideration of the matter before it', as it was obliged to do pursuant to s 98(1)(d) of the Act.
98 An appeal based upon a failure to decide on the 'substantial merits' of the case closely resembles a review on the merits, which is not permitted when an appeal is limited to a question of law. The same may be said about an alleged failure to undertake a 'proper consideration of the matter'. Again, whether or not such provisions could found a basis for contending an error that involves a question of law for the purpose of a s 148 appeal need not be decided. For the reasons already expressed, I do not accept that the tribunal fell into any error in the manner in which it decided or considered the case.
99 Under the same umbrella of jurisdictional error, the Krsteskis urged me to find that the tribunal's decision was illogical, arbitrary, capricious or unreasonable[59], or not found on probative material or logical grounds[60], or disclosed a failure to respond to or engage with the material in support of the Krsteskis case.[61] As I have sought to explain, the tribunal's decision demonstrates that it fell into none of these errors.
100 The Krsteskis have not made out this ground of appeal.
101 By s 117 of the VCAT Act the tribunal is obliged to give reasons for any order it makes in a proceeding. If the tribunal gives written reasons, it must include in those reasons its findings on material questions of fact.
102 In Secretary to the Dept of Treasury and Finance v Della-Riva,[62] the Court of Appeal considered the question of whether non-compliance with s 117 of the VCAT Act constitutes an error of law which enables the court to set aside an order of the Tribunal. Buchanan JA, with whom Ashley JA and Smith AJA agreed, said:
It is necessary that a tribunal's reasons disclose the findings and reasoning upon which the tribunal's conclusion is based. Failure to provide such reasons, which frustrates the ability to review the tribunal's decision, constitutes an error of law.[63]
103 In the context of an appeal from a judgment of a County Court judge in a proceeding under the Transport Accident Act 1986 Nettle JA stated[64] that reasons for decision should deal with the substantial points which have been raised, include findings on material questions of fact, refer to the evidence on which the findings are based, and show an intelligible process of reasoning leading from the evidence to those findings and to the ultimate conclusion. They should not leave the reader to wonder which of a number of possible routes has been taken to the conclusion expressed.
104 Mr Uren argued that, in a sense, the Krsteskis' appeal was like a 'lay down misere'. He argued that the tribunal's Reasons do not expose an intelligible path of reasoning and leaves the reader to wonder how the tribunal arrived at its conclusion. He put it this way:
The Krsteskis gave evidence [ie about the agreement and paying the price], the tribunal didn't reject it. If it hadn't, therefore they should win. If the tribunal rejected their evidence, it should say so and say why, and it hasn't.[65]
105 This pithy formulation of the Krsteskis' case on appeal is answered by understanding a number of things about the case and the way it was decided, and some simple but important principles. I have already dealt with them in the course of discussing the earlier grounds. I will summarise them.
106 First, the onus lay on the Krsteskis to establish the existence of a trust for them over the whole of the land.
107 Second, they were to do so against the backdrop of uncontested facts which showed that the purchase monies came out of the Jovanoskis' bank account or from monies borrowed by them on mortgage security, and that the Jovanoskis were initially registered as the sole proprietors of the land, until they transferred a half interest to the Krsteskis for consideration stated to be "natural love and affection".
108 Third, the Krsteskis' claim was a claim against a deceased estate where the only persons who could contest the claim were deceased, in which circumstances a court should scrutinize the claim very carefully and in which "it is wise to look for corroboration".[66]
109 Fourth, it is a valid and available position, in appropriate circumstances, for a tribunal to be unable to reach a state of actual persuasion on a fact or facts, and thus refrain from making a finding of fact, whilst at the same time not positively rejecting the possibility that the fact may be true.
110 Fifth, it follows from the last point that a failure to reach a decision on a fact because the tribunal's mind is in equilibrium does not involve or necessitate a positive rejection of the proponent's case or a rejection of the proponent's credit as a witness.
111 Sixth, the tribunal's approach in this case was to search for corroboration of the oral assertions by the Krsteskis' as to the agreement and payment of money, and it did so by a careful examination of the evidence of such documents, conduct and alleged admissions as were adduced as corroborative material.
112 Seventh, having considered such material, the tribunal found them each to be either neutral (equivocal) or not proven on the balance of probabilities, thus not assisting the tribunal to reach a state of actual persuasion on the balance of probabilities that such agreement was made or the Krsteskis paid the whole of the price.
113 Eighth, in doing so, the tribunal identified the salient reasons why it could not be positively persuaded on each of the facts put forward as corroborative of the primary facts. Each were, in my view, logically and reasonably capable of inducing sufficient doubt in the mind of a reasonable person as to where the truth lay in relation to the asserted fact as to justify that person not being able to reach a conclusion on the balance of probabilities. Put another way, in each case the evidence was such that it is not possible to say that a failure to be convinced on the balance of probabilities was not open to the tribunal.
114 The tribunal's Reasons, thus understood, followed a logical approach, adequately dealt with the points raised, referred to and examined the relevant evidence, and clearly disclosed an intelligible path of reasoning from the evidence to its ultimate conclusion.
115 The Krsteskis appeal on this ground also fails.
116 I grant the Krsteskis leave to appeal on the six questions[67] which I have assimilated under the broad headings of onus of proof, findings not open on the evidence, constructive failure to exercise jurisdiction and failure to give adequate reasons. Leave to appeal is refused in relation to those questions which concerned the quantification of the division of sale proceeds, or costs.
117 For the reasons I have given, I dismiss the Krsteskis' appeal on each of the questions of law for which leave to appeal was granted. I will hear the parties on appropriate final orders.
[1] Nowhere in the materials before me were the tribunal's orders actually exhibited. I have assumed that the draft notice of appeal correctly sets out the orders as made.
[2] Sussan Jovanoski has not yet been registered as proprietor of her father's half-share in the land, although, as the personal representative of her father's estate she is entitled to be so registered.
[3] It was accepted in the proceeding before me that this sentence from the Deputy President was incorrect and that, at the time of the hearing before VCAT and also at the time of the hearing before me, no such transmission application had been made. Nevertheless it had been admitted at VCAT, and was not in dispute before me, that, at the date of his death Trajce Jovanoski was the registered proprietor of a one-half interest in the land which interest had vested in Sussan Jovanoski.
[7] While these grounds were not formally abandoned, the reason they were not pressed is probably explained by Sussan Jovanovskis' written submissions on those grounds. It seems that the Deputy President ruled against the Krsteskis on 6 November 2009, after the Reasons were given on 21 October 2009, in separate discretionary decisions both in respect of costs, and in respect of an application to amend their cross claim on the question of the distribution of proceeds. Final orders were then made on 16 November 2009. No arguments were advanced before me as to why the exercise of discretion in each case was not open to the tribunal.
[15] The certificate of title was not produced (notwithstanding enquiry made of the parties), and does not appear to have been exhibited in the proceeding at the VCAT. Nevertheless the parties proceeded on the assumption that the certificate of title recorded the Jovanoski's (or, at least Terry) and the Krsteskis as joint proprietors in one form or another.
[16] VCAT is not a court of pleading, and does not have pleadings as such; rather, in this case brought in the Real Property List, the parties filed 'Points of Claim' and 'Points of Defence and Cross-Claim'.
[17] Some of the evidence was also relevant, if sale and division of proceeds was to occur, to the question of a just division of proceeds having regard to each family's contribution to the upkeep and improvement of the property over time.
[19] A matter not specifically adverted to in the Reasons, but apparent from the Westpac letter of offer (Exhibit 8 in the proceeding below).
[20] Plunkett v Bull [1915] HCA 14; (1915) 19 CLR 544; Weeks v Hrubala [2008] NSWSC 162; Re Hodgson (1886) 31 ChD 177; Varma v Varma [2010] NSWSC 786 [417]-[423] (in which a number of authorities are collected). This need for careful scrutiny is also reflected in the statutory requirement to give a jury a warning regarding "unreliable evidence" in cases of this kind: Evidence Act 2008 (Vic), s 165(1)(f).
[24] Plunkett v Bull [1915] HCA 14; (1915) 19 CLR 544, 549.
[27] Helton v Allen [1940] HCA 20; (1940) 63 CLR 691, 712.
[28] LexisNexis, Cross on Evidence, vol 1 (at 27 April 2011).
[29] A mental condition described by McInerney J as that of being "in equilibrium on the issue": Re Peatling (dec'd) [1969] VR 214 at 226.
[30] LexisNexis, Cross on Evidence, vol 1 (at 27 April 2011) [9020].
[31] Rhesa Shipping Co SA v Edmunds [1985] 2 All ER 712.
[33] Kuligowski v Metrobus [2004] HCA 34; [2004] 220 CLR 363, 385 [60].
[35] Hodge M. Malek (ed), Phipson on Evidence (Sweet and Maxwell, 16th ed, 2005).
[37] Yeo v Brassil [2010] VSC 344, [16]; Kelly v Kelly [2007] NSWSC 1076, [16].
[40] S v Crimes Compensation Tribunal [1998] 1 VR 83, 89 (Phillips JA).
[41] Relying on Allen v Roughley [1955] HCA 62; [1955] 94 CLR 98, 108, 138; Francis v Francis [1952] VicLawRp 42; [1952] VLR 321, 343.
[42] See paragraphs [44]-[54] of the Reasons.
[43] The Krsteskis claimed that although the Jovanovskis wanted to transfer the land to them, the Jovanoskis also wanted to retain an half interest to be used as security for a loan to fund the purchase of a taxi licence.
[44] Ms Fernando said she was told that there was a concern about revealing the Krsteskis' interest to CentreLink; the Krsteskis said they were simply told that is how it had to be done.
[45] [1984] HCA 7; (1984) 153 CLR 521, 535-536.
[46] At paragraph [20] of the Reasons.
[48] Allen v Roughley [1955] HCA 62; [1955] 94 CLR 98, 108, 138.
[49] Francis v Francis [1952] VicLawRp 42; [1952] VLR 321, 343.
[50] Harrison v Mansfield [1953] VicLawRp 60; [1953] VLR 399, 404 (Sholl J).
[52] Allen v Roughley [1955] HCA 62; [1955] 94 CLR 98, 108.
[53] Allen v Roughley [1955] HCA 62; [1955] 94 CLR 98, 138.
[54] Calverley v Green [1984] HCA 81; (1984) 155 CLR 242.
[57] Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416.
[59] Minister for Immigration and Citizenship v SZMDS [2010] HCA 16, [22]-[25], [40], [103]-[104], [121]-[136].
[60] Minister for Immigration and Citizenship v SZLSP [2010] FCAFC 108, [40].
[61] Goodwin v Commissioner of Police [2010] NSWCA 239.
[64] Hunter v Transport Accident Commission & Avalanche [2005] VSCA 1, [21].
Krsteski & Anor
Jovanoski [2011] VSC 166
(1984) 155 CLR 242
(1915) 19 CLR 544
(1940) 63 CLR 691
(2010) 241 CLR 390
(1984) 153 CLR 521