Buffrey v Buffrey & Anor

Buffrey v Buffrey & Anor - [2006] NSWSC 1349 - NSWSC 2006 case summary — Zoe

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1 The Plaintiff, Mr Buffrey, and First Defendant, Mrs Buffrey, are the registered proprietors as joint tenants of an investment property, Unit 2, 208 Gardeners Road, Kingsford ("the Kingsford Property"). Mr Buffrey seeks a declaration that Mrs Buffrey holds her interest in the Kingsford Property upon a resulting trust for him and an order that she convey her interest to him accordingly. 2 The circumstances giving rise to the proceedings are as follows. In 2004, Mrs Buffrey was accused by her former employer, ORIX Australia Corporation Ltd ("ORIX"), of having defrauded it of a large sum of money. ORIX commenced proceedings against her to recover the money and obtained an interlocutory asset-freezing order which affected three properties registered in the names of Mr and Mrs Buffrey as joint tenants, namely, their matrimonial home and two home units acquired as investments, one of which is the Kingsford Property. 3 Mr Buffrey says, and I accept, that he first found out about the accusations of ORIX against Mrs Buffrey and of the proceedings commenced by it against her in March this year. 4 Mr Buffrey was advised to protect his own interest in the Kingsford property and, consequently, he commenced these proceedings against Mrs Buffrey. Mrs Buffrey has not participated in the proceedings at all. However, ORIX obtained an order joining it as a second defendant in the proceedings as its interests might be affected and, otherwise, there would be no proper contradictor. 5 ORIX does not assert that any of the proceeds of Mrs Buffrey's alleged fraud can be traced into the Kingsford Property. However, it says that Mrs Buffrey's interest in that property is an asset against which it can enforce a judgment if it succeeds in establishing its fraud case against her in other proceedings. It is for that reason that ORIX contests the orders sought by Mr Buffrey against Mrs Buffrey in these proceedings. It asserts that Mrs Buffrey's interest as joint tenant is held by her both legally and beneficially.

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mortgage payments to St George Bank were made out of the joint account. 21 The fact that the property was placed in the names of Mr and Mrs Buffrey as joint tenants is, of course, material but insufficient on its own to give rise to the inference of a common intention of equality. The presumption of a resulting trust can only arise where the equality demonstrated by the legal title is inconsistent with the parties' contributions to the acquisition cost. 22 More persuasive, both as an implied admission by Mr Buffrey against interest and as a relevant subsequent mutual dealing between the parties, is the fact that Mr and Mrs Buffrey's income tax returns show them as equally entitled to the rent from the property and that the rent went into a joint account at St George Bank. 23 I take into account the following additional relevant surrounding circumstances. 24 First, Mr Buffrey's evidence is that Mrs Buffrey is shown on the title to the property only because the St George Bank would not lend on the security of the property to him alone as he was then unemployed, whereas Mrs Buffrey was employed. I accept that evidence. It was not challenged and it is inherently probable, as I shall explain further below. 25 Second, all of the equity came from Mr Buffrey's damages pay-out; no contribution to equity came from Mrs Buffrey other than the fact that she joined in the mortgage as co-mortgagor. 26 Third, I accept the unchallenged evidence of Mr Buffrey that at all relevant times he and Mrs Buffrey were earning separate incomes from their separate and independent activities and that: "I run my side, my wife run her side" : T24.35-.55 27 Fourth, the property was an investment, not the matrimonial home. People may have different attitudes to joint ownership of investment property and property which is acquired for the use of the family. 28 Fifth, I accept without hesitation Mr Buffrey's evidence that he was never aware of how and why his accountant arranged the tax affairs of his wife and himself. His reading and numeracy difficulties were obvious in the witness box - for example, he could say that he had been married at the age of twenty-one and that he was now fifty-seven years old, but he could not say how many years he had been married or even in what year he was married. He had difficulty in understanding some questions and concepts. He had no familiarity with legal or business terms. I accept that Mr Buffrey left management of matters such as tax returns and banking arrangements to his accountant. From his evidence generally and from my observation of him in the witness box, I do not think that Mr Buffrey had any real understanding of what his tax returns provided or why, or as to what the legal implications might be. It would be quite unjustified to assume that Mr Buffrey's tax returns reflected his own intentions as to ownership of the Kingsford Property at the time of its acquisition. 29 Sixth, although Mrs Buffrey may well be better than Mr Buffrey at understanding the reasons for, and implications of, showing the income of the Kingsford Property in the couple's tax returns as shared equally between them, there is no direct evidence that she had any particular understanding at the time of acquisition and that she had it in common with Mr Buffrey. 30 Seventh, the fact that the rents of the property were paid into the parties' joint account at the St George Bank may well have been part of the arrangement insisted on by the St George Bank when approving the mortgage, bearing in mind that it would only approve the mortgage if Mrs Buffrey was shown on the title and was joined in the mortgage. The few bank statements relating to the joint account which are in evidence show that there were weekly credits of rent of $200 into the account followed by weekly debits of $200 on account of the mortgage payments due to the Bank. There do not seem to be any transactions on this account other than the payment in of rent and the payment out of loan repayments. I cannot assume that the establishment of the joint account for the receipt of rent and the payment therefrom of mortgage repayments reflected any broader agreement or understanding between Mr and Mrs Buffrey than that the Bank required such an account to be established as part of the arrangements for the loan, just as it had required Mrs Buffrey's name to be shown on the title and the mortgage. 31 Bearing in mind all of these circumstances, I do not feel satisfied that the tax returns of the parties and the payment of rent into the joint account with St George Bank have the significance that ORIX would place upon them. The state of the evidence as to the common intention of the parties is equivocal at best. I do not think that it is sufficient to displace the presumption in favour of resulting trust.

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32 Mr Buffrey bears the onus of proving facts which displace the presumption of advancement in favour of Mrs Buffrey. He seeks to discharge this onus only by his own evidence as to his intention at the time of the transaction. He is entitled to adduce such evidence but it is regarded cautiously by the Court. The essential question is whether I believe Mr Buffrey when he says that he did not intend that Mrs Buffrey have an interest in the Kingsford Property equal to his, despite the surrounding circumstances invoked by ORIX which, it says, indicate that Mr Buffrey had a contrary intention or had no sufficient intention at all. 33 I begin by saying that I found Mr Buffrey to be a witness who was honestly endeavouring to tell the truth and to be accurate, to the best of his ability. In giving his evidence he was hampered by the fact that he was taking medication for depression, that he was sometimes overcome by emotion because of the trouble his wife was in and how it had affected their relationship and their family, by his difficulty in reading, by his limited education, and by his general lack of familiarity with business and legal matters. Nevertheless, to my observation, he tried his best to answer questions directly. 34 Mr Buffrey's unchallenged evidence was that he decided to buy the Kingsford Property as a result of advice given to him by a solicitor, Mr Vizzone, a friend of his who had played football with him. Mr Vizzone had told Mr Buffrey that the money he had received in damages and compensation would not last long and that he should buy real estate as an investment so that he would have money later. Mr Buffrey said that he followed this advice. 35 Mr Buffrey was asked about the earnings he made from a small business and his wife's earnings. He said: "A. I run my side, my wife run her side. She had super. I bought that property at Kingsford for my super. I had no super, so I had to so Vizzone advised me for my super to buy the property at Kingsford, 'and buy as much property as you can', he said."

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Mr Buffrey insisted throughout his evidence that the Kingsford Property was his "super", i.e. superannuation fund, because he could no longer be employed, unlike his wife who had her own superannuation: T30.1-.4, T30.45-.51, T31.12; affidavit 13 September 2006, paras 29, 30. 36 Mr Buffrey said that he could have paid the purchase price of the Kingsford Property out of his own money without taking a loan but decided to borrow $50,000 because he needed money to live on and to buy another business. He said that it was because he was unemployed that the St George Bank required his wife to be a co-mortgagor of the property. 37 Mr Buffrey denied that he had wanted the Kingsford Property to be in his wife's name and he insisted that his wife was on the title only because the Bank required for the purpose of making the loan: T31.27-.53. 38 Mr Buffrey was cross examined searchingly. His disabilities are such, to my observation, that I find it hard to believe that he is capable of sustained dissembling. Yet he was not shaken in his evidence as to his intention in purchasing the Kingsford Property or as to the reason that his wife's name was placed on the title. There was no inherent implausibility in this evidence. 39 I have explained earlier why, in my opinion, it is not of decisive weight in assessing Mr Buffrey's intentions that his tax returns show the income from the Kingsford Property as shared equally with Mrs Buffrey and that the St George Bank joint account was used to receive rent from the property and pay mortgage repayments. Had Mr Buffrey been a more sophisticated person and had he not been so completely dependent upon others to arrange his financial affairs, those circumstances would have greater weight as evidence of Mr Buffrey's own intentions as to ownership of interests in the property. However, I am persuaded that Mr Buffrey did not understand at any material time the significance of the tax returns and the joint account as indicating his intention to make a gift to Mrs Buffrey of a full half-interest in the Kingsford Property. 40 I am satisfied that Mr Buffrey actually had an intention as to ownership of interests in the Kingsford Property at the time of his acquisition, and that that intention was that the property would represent his own superannuation fund, just as his wife would have her own superannuation fund. I am satisfied that Mr Buffrey did not consider this to be at all unfair to Mrs Buffrey, despite the fact that she was a co-mortgagor, because all of the equity for the purchase had come from him and the rent from the property would be sufficient to relieve Mrs Buffrey of any obligation to pay mortgage principal and interest and outgoings in respect of the property from her own money. 41 I accept Mr Buffrey as a witness of credit. In doing so, I take into account the inconsistency between paragraph 31 of his affidavit of 13 September 2006 and paragraph 29 of an affidavit sworn by him on 5 April 2006 in proceedings commenced by ORIX against Mr and Mrs Buffrey seeking the extension of caveats placed over their properties. In paragraph 31 Mr Buffrey says that Mrs Buffrey has made "no payments whatsoever" towards the mortgage over the Kingsford Property and towards the outgoings of that property. However, in paragraph 29 of the earlier affidavit Mr Buffrey says that at all times since he and Mrs Buffrey purchased the property: "… we have paid all of the loan repayments and outgoings in relation to it, such as, rates and maintenance expenses from the rental income from it and from my earnings and wife's earnings from our various employment we have had over the years." 42 I do not think that this inconsistency is indicative of a general unreliability in Mr Buffrey's evidence. The affidavit of 5 April 2006 was directed to demonstrating that ORIX had no caveatable interest in any property because none of the proceeds of Mrs Buffrey's alleged fraud could possibly have been used to acquire the Kingsford Property. I do not find it surprising that paragraph 29 was in general terms and asserted that the source of funds for the acquisition and servicing of the interest was Mr and Mrs Buffrey's own money and earnings, whereas in the present proceedings, which concern the rights as between Mr and Mrs Buffrey, paragraph 31 should be more directed to which of the two of them had provided what particular funds. I bear in mind also Mr Buffrey's difficulties in dealing with concepts and issues, which may go some way in explaining how the inconsistency could have arisen. 43 For these reasons, I am satisfied that Mr Buffrey has proved facts rebutting the presumption of advancement in favour of Mrs Buffrey.

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