Commonwealth Bank of Australia v Estate of the late Mahmoud Slieman

General observations

1. The requirement for evidence of identity varies in life, particularly in commercial and legal spheres, depending on the purpose for which the evidence is sought and any applicable statutory regimes, policies, protocols and procedures that govern or inform the requesting or verifying party's need to establish identity.
2. The requirement for evidence might arise at an initial point of establishing the uniqueness of a claimant or presenting party's identity for a particular purpose, such as opening a bank account or registering with a body or entity to obtain permission to use a system or services. Alternatively, the requirement might arise subsequently in the sense of confirming an existing or established identity in order to take some steps such as drawing money from a bank account or accessing or utilising a system or services (i.e. after the account is opened or after the initial registration has occurred).
3. Many public and private sector entities and organisations have procedures, criteria and checklists for facilitating proof or confirmation of identity. The object of such procedures includes establishing that the presenting party is who he or she purports to be and, if the need arises, addressing and then excluding other possible claimants to the identity.
4. The initial establishment of an identity ordinarily requires production of sufficient materials (oral, documentary or otherwise) to authenticate the identity of a person.
5. Frequently, this is achieved by the production of a number of so-called primary documents having a high level of authenticity (often satisfied by the fact that the documents emanate or are sourced from government agencies) such as passports, citizenship certificates, birth or marriage certificates and driver's licences, supported by the production of secondary documents such as cards issued by public sector agencies or private sector organisations, or notices received from rating authorities or agencies. In Australia, the procedures for a party who requests proof of an identity commonly involve a point system which allows the claimant some flexibility in the choice of documents which may be obtained to satisfy the requisite primary and secondary proof.
6. The reason why certain types of primary or secondary documents are sought to facilitate initial proof or confirmation of identity is that they contain types of specific information such as a name, address, signature or photo. Such information shows the uniqueness of the claiming party or aids the requesting party in being satisfied that the claiming party is who he or she purports to be.
7. Proof of identity within the operation of society will vary markedly depending upon the specific need for proof that arises. Common examples relate to persons opening bank accounts or accessing medical services. More complex and detailed arrangements are put in place where the stakes of identity fraud, or risks of misidentification, are very high. These may or may not include arrangements for proof of identity by some physical or personal characteristic such as a fingerprint, palmprint, eyeprint or voiceprint.
8. Once an initial identity is proved, confirmation of the identity on occasions where the claimant seeks to claim property or an item, or use a service, is often effected through testing of the various indicia, such as a manual visual comparison of a person's face against a photograph on a primary document.

Payment out applications

1. Courts require proof of identification of certain persons for different purposes. A very common example arises where a person is served with a document and the Court requires proof that the person who has been served is in fact the party required to be served. Sometimes, statutory provisions facilitate requirements for proof of identity by making certain things admissible which might not otherwise be admissible. Thus, the UCPR provide that, for the purposes of proof of service, evidence of a statement by a person of his or her identity or of his or her holding some office is evidence of his or her identity or that he or she holds that office, as the case may be: r 10.27 UCPR. The rule permits the mere admission to suffice as proof of identity, which would not be admissible under the general law: e.g. Re Williams; Ex parte Whatmore's Sports Centre (1965) 7 FLR 101 at 102 per Gibbs J (as his Honour then was).
2. However, in the case of entitlement to funds paid into Court, the Court requires strict proof as to who is entitled and such proof should be by the best evidence available; there is a heavy burden on a party who seeks payment out: see Commonwealth Bank of Australia v Estate of the late Mahmoud Slieman [2010] NSWSC 661 at [8]-[11] per Slattery J.
3. Occasionally, even in what seem to be otherwise straightforward cases, issues can arise in demonstrating that the applicant is the person entitled. In cases of mortgagee sales, further issues can arise in demonstrating that the applicant was the registered proprietor of the property who is entitled to the fund, especially in cases where there are other security interests to be satisfied: e.g. Perpetual Trustee Co Ltd [2018] NSWSC 734 (Perpetual).
4. To avoid such issues, the applicant must not merely identify him or herself as a person having the same name as the registered proprietor, but also identify him or herself with the property: Perpetual at [8] per Campbell J.
5. Proof of identify may be established in a number of ways. Often, the means of proof regarding identity in court proceedings for payment out of funds will not involve establishing identity from first principles, for example by what I have described above as primary documentation. Rather, it will involve showing connection to an existing identity reference point.
6. That might include, for example, adducing evidentiary materials connecting the claimant to the property by reference to emails or other documents showing the purchase of the property or, more usually in the case of a mortgagee sale, connecting the claimant to the person who is entitled by reference to documentation and address details provided by the mortgagee in the affidavit of the mortgagee's relevant officer or legal representative by which the funds had been paid into Court.
7. The nature and quality of that evidence will vary in any given case.
8. In this case, as will be seen, the evidence to establish the necessary strict proof was eventually provided. That evidence established the creation of an email address and provision of copies of emails to the second applicant's email address, which showed receipt of documents from (a) the law firm acting on the purchase of the Rhodes property, (b) Westpac as mortgagee and (c) the agent who managed the Rhodes property. Some queries which I had regarding use of the email address were explained in a subsequent affidavit provided by Ms Xiao.
9. In the circumstances of this case, the mortgagee sale was the culmination of a number of events that bear familiarity with many mortgagee sales. However, when initially presented to me, the case had a number of curious aspects which invited inquiry as to the provenance of the applicants' identities.
10. I set out below some of the relevant details to explain: first, why I had some concerns regarding identity; and secondly, the eventual provision of evidence which resolved those concerns.

Events leading to mortgagee sale

1. The Rhodes property was purchased in about 2012 by Ms Xiao and Mr Xiao, holding the property respectively in shares of 80/100 and 20/100 as tenants-in-common. At some point, a loan agreement was entered into between the registered proprietors and Westpac. A mortgage was entered on 14 January 2013 and registered.
2. By 30 May 2018, there was default under the loan agreement and a formal default notice dated 1 June 2018 was sent by Westpac to the borrowers at their then known addresses, which for Mr Xiao was an address in the Jingan District, Shanghai and for Ms Xiao was an apartment in a building in Sussex Street, Sydney.
3. The default notices gave the borrowers until 12 July 2018 to remedy the default. There is little detail of what happened over the course of the next year. However, on or about 17 May 2019, Westpac entered possession of the Rhodes property. On 31 July 2019, Westpac settled the sale of the Rhodes property in its capacity as mortgagee in possession.

Unsuccessful attempts to locate registered proprietors

1. On 30 August 2019, Thomson Geer (the solicitors for Westpac) once again issued letters to the borrowers at their last known addresses, being those mentioned above, to which there was no response. On 30 September 2019, further letters were issued, again with no response.
2. On 23 October 2019, Thomson Geer instructed a credit collection agency, Probe Group Pty Ltd (Probe), to conduct a "skip trace" (the practice of searching for a missing person, especially one who has defaulted on a loan or broken bail conditions: Macquarie Dictionary, online ed) in an attempt to contact Ms Xiao. On 17 December 2019, Thomson Geer instructed Probe to conduct a further skip trace in an attempt to locate Mr Xiao.
3. On 14 November 2019, Probe provided Thomson Geer with a report in respect of Ms Xiao. Probe was unable to locate Ms Xiao (described in the report as "the subject"). The report indicated that there was no ABN listing for Ms Xiao, nor any listings for Ms Xiao applying for property. The only residential listing for Ms Xiao was for a unit in George Street (i.e. not Sussex Street). The telephone number for the address in George Street had been disconnected. Inquiries were conducted in relation to a listing in Sussex Street, which showed that the applicable telephone number had been reallocated to an unrelated business.
4. On 20 February 2020, Probe provided a report in respect of Mr Xiao (also described as "the subject"). A site visit had been conducted at the residential address provided in Shanghai, China. However, only residents were allowed to enter the complex due to the Coronavirus outbreak. A discrete enquiry made to the property management office revealed that the last name of the occupant of the target address was "Gu", not "Xiao". The report further revealed that Mr Xiao's name was very common in China. A directorship check identified 101 name matches on directorship records, with (apparently) three such subjects in Shanghai having a matching name. None of the details of the three matching names corresponded with the address which Westpac had provided for Mr Xiao. Further media searches were conducted by Probe using the identifiers of date of birth, residential address and name of the residential complex. However, no matches were identified.
5. On 10 March 2020, Thomson Geer issued a final letter to the borrowers, sent to the same addresses from which Westpac had previously corresponded with them, indicating that if no response was received the surplus funds would be paid into Court.

Initial court listing and evidence

1. On the initial application before me, the affidavit of Ms Xiao affirmed 13 December 2023 was read. The affidavit indicated that in or around 2011 she attended Macquarie University as a college student and lived in the Sussex Street apartment. Ms Xiao indicated that whilst residing in Australia she established a Hotmail email account, which she used when she and her father signed the loan and mortgage documents with Westpac.
2. In around 2016, Ms Xiao returned to China and has been residing in China since.
3. It appears that the Rhodes property was placed in the hands of an agent (who was not identified in the initial evidence) and an arrangement was reached for the rent to cover loan payments, expenses and fees. Ms Xiao stated that after her return to China in 2016, the Sussex Street apartment was vacant and unmanaged.
4. Ms Xiao stated that, in or around 2021, she attempted to contact the agent to enquire as to the status of the Rhodes property, but did not receive any response.
5. In early 2023, Ms Xiao stated that she and her father decided to follow up on the management of the Rhodes property because they "felt the need to take action to manage it to avoid any potential financial loss". Ms Xiao indicated that, at the time, she and her father realised they "could not even remember the address of the [Rhodes] property".
6. The fact Ms Xiao indicated that she could not at that point even remember the address of the Rhodes property was somewhat underwhelming in providing the Court with confidence that she was one of its registered proprietors.
7. In June 2023, Ms Xiao stated that she and her father instructed Ms He to conduct a property ownership search, which revealed the sale of the Rhodes property. Ms Xiao said it was only then that she checked her Hotmail email account and found the email of Thomson Geer enclosing the letter dated 30 September 2019. Ms Xiao provided this information to Ms He, who subsequently contacted Thomson Geer.
8. Ms He filed and served a notice of appearance on or about 16 June 2023, which led to the application that I have noted above.
9. Part of my concern as to identity is that the events show a rather lackadaisical approach on the part of the applicants to stewardship of the Rhodes property, if it were indeed their property.
10. Little detail was provided as to what, if anything, occurred during the five-year period between Ms Xiao's return to China in 2016 and the attempt in 2021 to contact the agent. In circumstances where no response was received at that stage, there is really no detail explaining why a further two-year period passed until there was another attempt at following up about the status of the Rhodes property.
11. The evidence at that stage did not reveal why Ms Xiao did not check her Hotmail email (which would have revealed the correspondence from Westpac). Additionally, no indication was given as to arrangements with or feedback from the agent.
12. In the above circumstances, I directed the applicants to file and provide to my Associate additional affidavit material addressing the identification of themselves with the persons who owned the Rhodes property by Thursday, 18 April 2024. I stood the matter over for mention on 24 April 2024.

Supplementary evidence

1. On 17 April 2024, Ms He provided an affidavit of Mr Xiao affirmed 17 April 2024 and an affidavit of Ms Xiao affirmed 17 April 2024, together with an exhibit to Ms Xiao's affidavit.

Mr Xiao's affidavit

1. The affidavit of Mr Xiao deposes to details regarding the purchase of the Rhodes property. Mr Xiao indicates that, in or around January 2013 when the purchase of the Rhodes property was settled, he directed his daughter to engage an estate agent (who he did not identify) to manage the property, with the intention of utilising the rent to cover the mortgage loan repayments and him being responsible for any balance of the mortgage loan if the rent was insufficient. He indicates that he was not involved in the management of the Rhodes property and that his daughter took responsibility for that. He did not actively monitor the management arrangements.
2. Mr Xiao had a business trip to Australia for several days in 2018 and 2019, during which he indicates that he attempted to contact the agent, but was unsuccessful.
3. Mr Xiao's affidavit is curious in that his signature on the affidavit does not look remotely like the signature on the mortgage document.
4. Nonetheless, Mr Xiao responded to the affidavit of Lauren Hatton (a solicitor at Thomson Geer) made in support of the payment of surplus funds into Court. His response pertained to the details of the Probe report prima facie indicating that there were three directors in Shanghai with the same "subject" name as Mr Xiao. Specifically, Mr Xiao provided evidence of licences relating to two of the businesses in connection with the first individual matched in Shanghai, and states that he was the owner and legal representative of the businesses referenced as matching to the second and third individuals. He states that those companies and businesses were deregistered or closed during the COVID-19 pandemic. In other words, Mr Xiao's evidence shows that the three individuals listed as being "directors" located in Shanghai are one and the same person, being himself.
5. Based on his evidence and the evidence in Ms Xiao's supplementary affidavit, to which I am about to refer, I am satisfied that Mr Xiao is in fact Guangwei Xiao, one of the registered proprietors of the Rhodes property.

Ms Xiao's supplementary affidavit

1. In Ms Xiao's supplementary affidavit, she indicates that when she stayed in Australia she had two email addresses, being the Hotmail email address and another "163.com" email address. She states that she used a new email address when she returned to China in 2016.
2. In around July 2020, when Ms Xiao attempted to access her Hotmail email account and reset the password, she was unsuccessful. In correspondence with Microsoft, she was informed that it had locked her Hotmail email account apparently due to unusual sign-in activity.
3. Ms Xiao has provided email correspondence from: 1. a conveyancing solicitor, JurisBridge Legal, whom she indicates her father had retained for the purchase of the Rhodes property; 2. Westpac; and 3. the agent for the Rhodes property, whom she identified as C J Real Estate.
4. The emails from JurisBridge Legal to Ms Xiao are to her Hotmail email address and enclose documents relating to the purchase of the Rhodes property. Those documents include a copy of the front page of the contract for purchase of the Rhodes property and a tax invoice in respect of JurisBridge Legal acting on the purchase of the Rhodes property.
5. The emails from Westpac are to Ms Xiao's Hotmail email address. They include initial correspondence involving "Customer Account Opening" documentation and some later correspondence when the mortgage was in default.
6. The emails from the agent are also to Ms Xiao's Hotmail email address, and relate to matters including electricity bills, tax invoices for management of the Rhodes property and a residential tenancy agreement.
7. Based on her evidence (including the above-mentioned correspondence to her Hotmail address from JurisBridge Legal, Westpac and the agent), I am satisfied that Ms Xiao is in fact Yao Xiao, one of the registered proprietors of the Rhodes property.

No other claimants

1. Ms Xiao's first affidavit demonstrates that there are no other parties who make a claim to the funds. That is confirmed, at least in part, from the title search to the Rhodes property, which shows no other mortgagees or parties who have lodged a caveat recording any interest in the Rhodes property. The affidavit of Ms Hatton also asserts that the only persons entitled to the surplus funds are the borrowers under the mortgage (i.e. the then registered proprietors of the Rhodes property).

Orders

1. In his affidavit, Mr Xiao has requested the Court to release the surplus funds to his solicitor's trust account, as has Ms Xiao. I will accede to that request.
2. The orders of the Court are as follows: 1. Order that the funds paid into Court, together with any accumulated interest, be paid to the trust account of Ren Zhou Lawyers to be held by those lawyers on behalf of the applicants as to shares of 20% to the first applicant and 80% to the second applicant as tenants-in-common. 2. Order that there be no order as to the applicants' costs, to the intent that they will bear their own costs of the application. 3. Order that the listing for 24 April 2024 be vacated.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 April 2024