ACTACTCA

Fedorow v Fedorow [2011] ACTCA 10

[2011] ACTCA 10

Court of Appeal (ACT)|2011-06-23|Before: Butt P, Gray P, Penfold J, Nield AJ

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Court

Court of Appeal (ACT)

Decision date

2011-06-23

Before

Butt P, Gray P, Penfold J, Nield AJ

Source

Original judgment source is linked above.

Judgment

Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.

PETER FEDOROW v ALAN MICHAEL FEDOROW, GENADY FEDOROW, VICTOR FEDOROW [2011] ACTCA 10 (23 June 2011)

APPEAL – appeal from factual findings and conclusions – Function of appellate court – Inferences of fact set aside.

TRUSTS – Resulting trust – Purchase of property as joint tenants – Deposit provided by one party – Mortgage for balance liability of both parties – Property held on trust as tenants in common.

Evidence Act 1995 (Cth), s 63

Land Titles Act 1925 (ACT), ss 54, 55

Fedorow & Ors v Fedorow [2009] ACTSC 92

Fox v Percy (2003) 214 CLR 118

Warren v Coombes (1979) 142 CLR 531

Wright v Gibbons (1949) 78 CLR 313

Calverley v Green (1984) 155 CLR 242

Delehunt v Carmody (1986) 161 CLR 464

Meagher R, Heydon D, Leeming M, Meagher Gummow and Lehane’s Equity Doctrines and Remedies (4thed, 2002)

Evans M, Equity and Trusts (2nded, LexisNexis Butterworths, 2009)

Butt P, Land Law (6thed, Thomson Reuters, 2010)

ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

No. ACTCA 24-2009

No. SC 475 of 2006

Judges: Gray P, Penfold J and Nield AJ

Court of Appeal of the Australian Capital Territory

Date: 23 June 2011

IN THE SUPREME COURT OF THE ) No. ACTCA 24-2009

) No. SC 475 of 2006

AUSTRALIAN CAPITAL TERRITORY )

)

COURT OF APPEAL )

ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: Peter Fedorow

Appellant

AND: Alan Michael Fedorow

First Respondent

Genady Fedorow

Second respondent

Victor Fedorow

Third respondent

ORDER

Judges: Gray P, Penfold J and Nield AJ

Date: 23 June 2011

Place: Canberra

THE COURT ORDERS THAT:

The appeal be allowed.
The judgment of the Master of 11 August 2009 be set aside.

Fedorow v Fedorow [2011] ACTCA 10 | Case summary | Zoe

The appellant’s grounds of appeal put in issue the Master’s admission into evidence of the affidavits of each of the plaintiffs as well as challenging his admission into evidence of a certain conversation between the third respondent and Michael Fedorow. These grounds were not really pursued in oral argument and nor do they have any substance. The remaining grounds of appeal challenge, in various ways, the Master’s factual findings, or the conclusions that he draws from them, as revealing that he had “erred in law”.
For his part the first respondent, by notice of cross-appeal, complains that the Master erred in failing to take into account certain considerations and in particular in his findings with respect to the question of who paid the deposit on the purchase of the property. The Master’s findings
The Master had before him the affidavits and evidence of each of the parties. He found the appellant and each of the respondents to be “honest and genuine”. As to conflicts in the evidence he said that he was “inclined to attribute these to the perspective from which different people will perceive and recall the same event and to the frailties of human memory”. On appeal, although the parties disputed the conclusions that the Master drew, his general approach to the witnesses was not put in question. The approach of the appeal court
As mentioned, the grounds of the appeal and cross-appeal put in issue the factual findings and conclusions drawn by the Master. In such a circumstance the proper approach of an appeal court, on an appeal by way of rehearing such as in this matter, is governed by the principles considered by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 (Fox v Percy) at [27]: [There is] the need for appellate respect for the advantages of trial judges, and especially where their decisions might be affected by their impression about the credibility of witnesses whom the trial judge sees but the appellate court does not.
That principle of appellate respect for the advantages of trial judges does not derogate from the obligation of a court of appeal in accordance with the applicable legislation to perform its appellate function. In Fox v Percy at [27] it was said: Such courts must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute.
Further, in Fox v Percy (at [87]), the High Court approved what was said to be the rule stated by Gibbs ACJ, Jacobs and Murphy JJ in Warren v Coombes (1979) 142 CLR 531 at 551, as follows: Shortly expressed, the established principles are, we think, that in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it. These principles, we venture to think, are not only sound in law, but beneficial in their operation.
We approach this appeal on that basis. The facts
The Master at [7]-[31] set out the factual background which he found not to be in dispute. We respectfully adopt his narrative: I shall commence by setting out those aspects of the factual background which are not in dispute. In doing so I shall refer to the members of the family by the Anglicised first names they adopted after arriving in Australia. The father, Michael Fedorow, was born in Russia in 1909, and died in the family home in O’Connor on 8 July 1995. The mother, Anna, was born in Russia in 1913 and died in October 1986 at the then home of one of her sons, Peter, at Burra, near Canberra but in New South Wales. The four sons of Michael and Anna were all born in Russia, in an area near St Petersburg (then Leningrad) where their father worked as a farm labourer. George was born in 1935, Alan in 1937, Peter in 1939 and Victor in 1941. George is now 74, Alan 72, Peter 70 and Victor 68. The family migrated to Australia in 1950. They lived in migrant accommodation near Albury and later Cowra before moving to Canberra in 1952. During that year they were allocated a government house at 11 Coolibah Crescent, O’Connor on a rental basis. Tenancy documents were signed, Michael Fedorow being the tenant, and the family moved in in July 1952. The family lived in the house until 2007 when it was sold. Michael Fedorow worked as a labourer with the Department of Interior of the Commonwealth, which was in those years responsible for the administration of the Australian Capital Territory. He worked initially with the Roads and Bridges section of the Department and subsequently with the Parks and Gardens section. Canberra was still quite a small place in 1952, and O’Connor was an outer northern suburb. Michael Fedorow kept a dairy cow in a paddock close to the house. The family planted fruit trees and a vegetable garden and kept chickens and ducks. They were close to self-sufficient and sometimes sold excess produce. Nevertheless life was frugal and there was never much spare money. George became a painter after completing an apprenticeship. He left home to get married in 1963 but returned in 1972 after separating from his wife and generally seems to have lived at the O’Connor house thereafter until it was sold. Alan became a boilermaker. Early in 1964 he married and left home. Ultimately his marriage failed. In early 1996, after his father’s death, he returned to the house and lived there with George until it was sold. The third brother, Peter, married in about 1961 and left home. Peter became a carpet layer and started a successful business at Fyshwick with a number of employees and contract layers. The business expanded to surrounding areas including Cooma and the south coast of New South Wales. Peter separated from his second wife and moved back to the house at O’Connor where he lived with George and Alan for about six months. This was some time between 1999 and 2003, well after the death of both of the parents. At some point Peter bought a house in Blackall Avenue, Queanbeyan, where he was living when these proceedings were instituted in June 2006. During 2005 he suffered a stroke. I was unable to detect any particular symptoms by way of aftermath of the stroke while he was in the witness box but as I had not seen him before his stroke I am unable to form a view as to whether he may have presented differently prior to the stroke. I note that in an affidavit sworn in May 2008 Peter Fedorow gave his address, without any explanation, as an address at Pascoe Vale South, Victoria. He swore a further affidavit in August 2008 giving an address at Forster on the mid-north coast of New South Wales and this was the address he gave when giving oral evidence. The youngest brother, Victor, qualified and worked as an insurance agent. He married and left home in June 1964, the last of the brothers to do so. He remained in the Canberra region until 1989 when he moved to Queensland. He moved back to Canberra at the end of 1999 with his family. He was by then a disability pensioner. In May 1962, Michael Fedorow asked the Housing Branch of the Department of the Interior to provide him with a valuation of the property, presumably because he was thinking about buying it. He was provided with a valuation and informed that he was entitled to purchase the house by paying a deposit of 10 percent of the valuation, followed by monthly instalments over a period of forty years. The instalments at that time would have been rather less than the rent. Mr Fedorow did not proceed with the purchase: I expect that the required deposit would have been quite a significant amount to him at that time. It is very doubtful, having regard to the other evidence, that he would have had access to the amount of money required. He asked for a further valuation in February 1965, but again decided not to proceed with the purchase. In 1973 a further valuation was conducted. A standard form of application to purchase a government house from the Commonwealth was completed and signed by Mr Fedorow on 14 June 1972. The form included a section worded “mortgage documents should be drawn up in the following names:”. It is apparent that this was initially completed with the names Anna Fedorow and Michael Fedorow. At some point the name Anna was deleted and replaced with the name Peter Fedorow. In accordance with the procedure in place at that time, the form then went to the chief valuer’s office. The valuation was not completed until 2 March 1973 when a valuation of $10,400.00 was recorded. Interestingly the valuer estimated the remaining life of the house at thirty-five years, a period of time which has now elapsed although my understanding is that the house is still standing and occupied. The form then went to another section of the Department where calculations were set out as to the deposit payable ($520.00) leaving $9,880.00 to be secured by mortgage and paid off at 6.25 percent interest over thirty five years, by monthly repayments of $58.00. This part of the form was completed on 5 March 1973. On 8 March 1973 a letter was sent to Mr Michael Fedorow by the Commissioner for Housing within what had become the Department of the Capital Territory, offering to sell the house to him for $10,400.00 on a deposit of $520.00 with the balance payable over thirty five years as set out in the calculations. On 6 April 1973 the calculations were amended in an attachment to the form, showing a deposit of $6,000.00 leaving $4,400.00 to be paid over fifteen years at $37.73 per month. On 20 September 1973 the Commissioner sent a letter addressed to Mr and Mrs M Fedorow, asking for “the full names to be written into the Crown lease and mortgage”. The letter pointed out that if their son’s name appeared on the lease as a joint tenant, he would not be eligible for a government housing loan in the future. On 10 October 1973 Peter Fedorow replied to this letter, saying “please make contract out in the names of Peter Fedorow and Michael Fedorow”. A Crown lease and mortgage were prepared and Michael and Peter Fedorow attended the office of the leasing section of the Department on 17 July 1974 to sign those documents. The lease was formally granted on that date, for a term of ninety nine years commencing on 6 April 1973. On 6 April 1973 a receipt was created, evidencing payment of $5,995.80 ($6,000.00 deposit less a valuation fee of $4.20) from M. Fedorow. The receipt does not record the manner of payment. The monthly repayments were approximately the same as the rent. Michael Fedorow retired at the age of 65, in August 1974. By that time George had moved back to live at home with his parents. In January 1986, Peter asked the Department for a payout figure for the mortgage. The amount then owing was $1,025.08. In mid-1986 Anna Fedorow, who was unwell, moved to Peter and his wife’s home at Burra, where she died in October 1986. In September 1987 Peter Fedorow asked again for a mortgage payout figure. The payout by then was down to $402.78, and Peter paid this amount on 2 October 1987, and obtained possession of the Crown lease and discharge of mortgage, which was registered on 9 October 1987. Peter paid some, and perhaps all, of the mortgage repayments from 1985 until the discharge. In November 1996, after Michael Fedorow’s death but before the lodgement of a notice of death, Victor Fedorow lodged a caveat on the title. He withdrew the caveat in May 1999 at Peter’s request. At some time after that, a notice of death must have been lodged, and Peter Fedorow was thereafter recorded as the sole registered proprietor. On 1 August 2003, a mortgage over the O’Connor property in favour of Adelaide Bank Limited was registered. In April 2006 Alan Fedorow lodged a caveat when he became aware that Peter was intending to sell the house. On 30 June 2006, Marshall J ordered by consent that Alan’s caveat be removed, that Alan and George vacate the house on settlement and that the net proceeds of the sale be invested pending the making of final orders in the action. On 29 September 2006 the orders were varied to provide for Alan and George to vacate by 30 November 2006. It is not clear from the evidence precisely when contracts were exchanged or when settlement took place, but it is apparent that Peter contracted to sell the house through a firm of estate agents to an arms-length purchaser for $420,000.00 in the second half of 2006, and that settlement had taken place by the end of the year. Peter deposed, in an affidavit of 20 June 2006 in support of his application for removal of the caveats, that he had a loan from Adelaide Bank with a then balance of $312,347.00, secured by a mortgage over his Queanbeyan house and the house at O’Connor. The loan was repaid on settlement leaving a net balance of about $90,000 which I understand has been invested pending my decision. I infer that since that settlement Peter’s house at Queanbeyan has been unencumbered. The original proceedings
On 21 June 2006 Peter Fedorow applied to the ACT Supreme Court for orders that Alan Fedorow and Genady Fedorow did not have an equitable interest in the O’Connor house and that each withdraw a caveat that he had lodged on the title of the O’Connor house.
As noted in the Master’s narrative, on 30 June 2006 Marshall J ordered, by consent, that the caveats lodged by Alan Fedorow and Genady Fedorow be removed from the title to the O’Connor house.
On 18 July 2006 Alan Fedorow filed a “counterclaim” in the ACT Supreme Court for a declaration that Peter Fedorow held the O’Connor house as trustee for himself and Genady, Alan and Victor Fedorow as joint tenants or, alternatively, as trustee for himself as to one part and for Genady, Alan and Victor as to the other part as tenants-in-common in shares proportionate to the respective interests of Michael Fedorow and Peter Fedorow.
Also on 18 July 2008 Genady Fedorow filed a “counterclaim” in the ACT Supreme Court in a form identical to that lodged by Alan Fedorow.
On 31 October 2006 Victor Fedorow filed (without the aid of a lawyer) a claim in the ACT Supreme Court against Peter Fedorow claiming to be entitled to “a quarter of the proceeds of the sale of” the O’Connor house.
On 2 February 2007 the claims were ordered to be consolidated and stood over generally.
On 4 March 2008 Alan Fedorow (now named as the first plaintiff) and Genady Fedorow (now named as the second plaintiff) filed a claim seeking, inter alia, declarations that – a. from 8 July 1995 Peter Fedorow held [the O’Connor house] as a trustee for himself as to one part and for the estate of Michael Fedorow as to the other part as tenants-in-common in shares proportionate to the respective contributions of Michael Fedorow and Peter Fedorow as determined by the court; and b. as the issue of Michael Fedorow, each of Genady Fedorow, Alan Fedorow, Victor Fedorow and Peter Fedorow are entitled to a one-fourth share of the estate of Michael Fedorow.
On 14 March 2008 Genady Fedorow (now named as the third plaintiff) filed a claim in a form identical to that filed by Alan Fedorow and Victor Fedorow.
On 4 April 2008 Peter Fedorow (now named as the defendant) filed a defence to the claims of Alan Fedorow, Genady Fedorow and Victor Fedorow, disputing their claims and claiming to be the sole owner of the O’Connor house “by operation of law”.
It was in this form that the proceedings were heard by the Master. The legal principles to be applied
The Crown Lease granted to Michael Fedorow and Peter Fedorow was granted to them “as joint tenants”. Section 54 of the Land Titles Act 1925 (ACT) (Land Titles Act) provides for registered joint proprietors and tenants in common and s 55 of the Land Titles Act provides for the registration of the survival of a joint tenancy. Although the wording of these sections has changed over the time that the property has been held by Michael Fedorow and Peter Fedorow this content has not.
Tenants in common hold land with each having a proportionate interest in the land. In contrast a joint tenant is seised of the whole with the other joint tenants (see generally Dixon J in Wright v Gibbons (1949) 78 CLR 313 at 329). The right of survivorship is an inherent and necessary incident of a joint tenancy. When one joint tenant dies, the whole remains with the surviving joint tenant or tenants. Provision is made in s 55 of the Land Titles Act for the Registrar General to register the survivor as proprietor of the interest.
It is clear from the terms of ss 54 and 55 of the Land Titles Act that entitlement by survivorship arises before and independently of registration.
It is also clear that in circumstances where persons provide the purchase price for a property in unequal shares, equity presumes that despite their holding the legal estate as joint tenants, they hold the equitable (beneficial) interest as tenants in common in shares proportionate to their respective contributions (Butt P, Land Law (6thed, Thomson Reuters, 2010) p 229). In Calverley v Green (1984) 155 CLR 242 (Calverley v Green) (at 246) Gibbs CJ said: Where a person purchases property in the name of another, or in the name of himself and another jointly, the question is whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such – not, e.g., as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money. (citations omitted) Mason and Brennan JJ at 258 said: When two or more purchasers contribute to the purchase of property and the property is conveyed to them as joint tenants the equitable presumption is that they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contributions unless their contributions are equal (citations omitted). And also see Deane J at 266-267.
The principle was affirmed by Gibbs CJ, Wilson, Brennan, Deane, and Dawson JJ in Delehunt v Carmody (1986) 161 CLR 464 at 472-473.
Contribution to the purchase price may be by way of undertaking to repay principal and interest under a mortgage to secure a sum contributing to that purchase price (see Calverley v Green (at 252 and 257)). The payment of mortgage instalments may have relevance to an equitable accounting but is not relevant to a determination of the share that each has in the property (see Calverley v Green (at 253, 264, 265 and 271)). Arguments on appeal The payment of the deposit
The respondents by their pleadings had claimed that it was Michael Fedorow who had paid the deposit of $6,000 and that accordingly the Crown Lease was held by Michael Fedorow and Peter Fedorow “as joint tenants on a resulting trust in favour of Michael Fedorow and Peter Fedorow, as tenants-in-common in shares proportionate to their respective contributions”. Findings of fact
The Master found that, as to the payment of the deposit, he accepted that the bulk of the deposit came from Peter Fedorow’s funds.
The respondents challenged that finding by their cross-appeal. They pointed to the evidence that the actual receipt was issued to “M. Fedorow” and that could only relate to Michael, not Peter, Fedorow. Reference was made to the fact that the affidavit evidence established that Michael Fedorow had been saving to buy a farm which he had decided not to pursue when the last offer to purchase the property had been made. Reference was also made to the fact that whilst Michael Fedorow was employed as a labourer he had a propensity and capacity to save and had had no dependent children for some 9 years previously, and that $18,000 in savings was distributed to his sons on his death. All of these circumstances involve inferences being drawn from less than conclusive evidence.
On the other hand, the Master had the direct evidence of Peter Fedorow. The Master at [42] said this about his evidence: As I have said earlier in these reasons, I thought that he was doing his best to give truthful evidence based on his recollection of events. I did not find his evidence particularly reliable, partly because the events took place so much earlier, partly because of his stroke, and perhaps partly because of a natural human tendency to recall past events in a way which is favourable to one’s own interest.
Peter Fedorow’s evidence was that neither his father or his brothers were interested in buying the property but he, Peter Fedorow, said that he was. The Master at [43] said this about Peter Fedorow’s interaction with the Department in relation to the purchase of the property: He [Peter Fedorow] said that having been told that he could not buy the house in his own name, he took his father in with him and they signed some papers. Staff in the Department calculated for him the deposit that would have to be paid to reduce the mortgage repayments to an amount equal to the rent. It had been council staff who had suggested the deposit of $6,000.00. Peter said that he could not remember where the $6,000.00 had come from, but was sure that he had paid it by cheque. He had not told his father in Russian precisely what was happening, and his father did not speak or understand English in any more than a rudimentary fashion.
The documents indicate that the offer from the Commissioner for Housing was to sell the property to Michael Fedorow for $10,400 on a deposit of $520 and a mortgage for 35 years with repayments of $58 per month. Peter Fedorow said that he requested a figure from the Commissioner for his father to be able to meet the mortgage repayments at the same rate as what he had been paying as rent. He was given a figure of $6,000 as deposit, with the balance to be repaid over 15 years at $37.73 a month (the reduction in the term offered was not explained).
The documents only seem to support the appellant’s contention that he paid the deposit on the basis that his father would then be able to afford the repayments at the same rate as he was paying rent.
The respondent’s contentions to the contrary do not support a finding that Michael Fedorow made any contribution to the deposit. It does not appear likely that Michael Fedorow could have expected to be called upon for the payment of more than the initial deposit that had been advised. It is clearly more likely that the appellant, who was a successful businessman at the time and had an interest in purchasing the whole property for himself, would have been able to meet the deposit requirement. Whatever reservations the Master had expressed about the reliability of Peter Fedorow’s evidence it does, in this case, appear to be supported by the surrounding circumstances.
The only other evidence to the contrary is the assertion by Genady Fedorow that on the day the property was purchased his father came home and said words to the effect of “I’ve paid the deposit, it’s our house now”. Genady Fedorow was cross-examined and confirmed that the appellant was present at the time. Although the hearsay rule does not apply to this representation (s 63 of the Evidence Act 1995 (Cth)) and it appears to be a contemporaneous representation, there must be considerable reservations about Michael Fedorow’s statement accurately representing the circumstances. In particular, there is ambiguity in the word “our”, and there is uncertainty whether the statement was only a representation that the deposit had been paid (rather than a claim that he personally had paid it). The appellant did not give evidence to the contrary, but in view of the other circumstances to which we have referred, Genady Fedorow’s evidence does not make it more probable than not that it was Michael Fedorow who provided the deposit from his own funds.
In any event, the Master accepted that the bulk of the deposit came from the appellant’s funds, and we have not been persuaded that he should have found that Michael Fedorow paid the deposit. Implications of the findings of fact
The Master went on to say that even if he was satisfied that the appellant had paid the whole of the deposit from his own funds he would treat the appellant and his father as each having a half interest in the property. Such a finding is inconsistent with an acceptance of the proposition that the deposit was paid by Peter Fedorow.
It seems to us that the Master’s finding about the appellant’s contribution of the deposit squarely raises the presumption referred to in Calverley v Green, namely that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed towards the purchase money. Nor was it suggested in this case that a presumption arose that the appellant was making his contribution for Michael Fedorow’s advancement.
It also follows that Michael Fedorow, by undertaking a mortgage of $4,400 jointly with the appellant, is regarded as a contributor. As in Calverley v Green (at 252-253) per Gibbs CJ, if the appellant provided the whole of the deposit, Michael Fedorow’s proportional interest was 2200/10400, representing his contribution of half the money borrowed as a proportion of the total purchase price. The finding as to an equal share
This raises the issue as to whether it was open to the Master to find that the presumption to which we have referred, and that would otherwise apply, was rebutted so as to justify a finding that the appellant and Michael Fedorow each had a half interest in the property. The Master said that there were two reasons for his finding that each had a half interest in the whole property.
The first was: that the title was placed in their joint names so that Peter, even though he probably did not appreciate the effect of a joint tenancy, must be taken to have appreciated that the title was to be in the names of himself and his father in equal shares.
This finding by the Master is inconsistent with the principle in Calverley v Green relating to the provision of disproportionate contributions to the purchase price. The very issue to be determined by the Master was the effect of the disproportionate contributions in this case. The evidence only shows that Peter Fedorow intended to purchase the property “together” with his father, and that he was not able to purchase the property without putting his father’s name on the title. It does not imply an intended equality of shareholding. There is, in fact, no evidence of any actual intention on the part of either Peter Fedorow or his father that their shares be equal.
The other reason given by the Master was: that the very fact that the father was a party to the mortgage must lead to a finding that the father made a significant contribution to the purchase: Calverley v Green, (1984) 155 CLR 242. In fact the father made a greater contribution: the opportunity to purchase the house on favourable terms was available only by reason of the father’s existing tenancy.
There is no support for the Master’s proposition that an intangible contribution such as provision of an opportunity to purchase is a contribution that may be taken into account. It is contrary to the reasoning in Calverley v Green which is concerned only with tangible contributions. The Master’s finding in this regard cannot be supported. There was in fact no evidence at all that Peter Fedorow intended that his father take a half interest in the property. The mortgage repayments
Peter Fedorow says that he met the mortgage repayments apart from the period of about 16 months before his father’s retirement. It was also his evidence that he paid out the mortgage from his own funds.
The Master specifically found that by 1985 Peter Fedorow “had become aware of the effect of his holding the property as a joint tenant with his father, and of the doctrine of survivorship”. He also found: it likely that by then Peter realised that he had gained the benefit of the joint tenancy contrary to the intention of his father at the time of the purchase. In the circumstances it would be unconscionable for Peter to be given credit from his brothers for any of these payments.
The Master’s observations in this regard go to the issue of what equitable accounting should take place consequent upon the resulting trust that the Master found had arisen from Peter Fedorow’s greater contribution to the purchase of the property.
The Master’s observations about the motive of Peter Fedorow in making the mortgage repayments would not support a claim that the sums that he paid in respect of the mortgage should be recognised in any such accounting.
Although the use of the expression “unconscionable” in this context may not be strictly accurate, the operation of the equitable maxims that he who seeks equity must do equity and that he who comes into equity must come with clean hands (see generally Meagher R, Heydon D and Leeming M, Meagher, Gummow and Lehane’s, Equity Doctrines and Remedies (4th ed, LexisNexis Butterworths, 2002) at [3.055] et seq and [3-110] et seq; Evans M, Equity and Trusts (2nded, LexisNexis Butterworths, 2009) pp 22-24) would, in the light of the Master’s findings, seem to preclude the appellant relying upon his mortgage repayments in any equitable accounting. That is because the appellant made the payments for what he perceived as being his own ultimate benefit without notice to his father.
The appellant’s pleadings do not seek such an accounting but, in any event, we do not consider that he should be able to recover, or be given credit for, the mortgage payments. Conclusions
For the foregoing reasons the appeal should be allowed and the judgment of the Master set aside.
The matter appears to have proceeded on the common assumption that Michael Fedorow died intestate and each of his sons, the appellant and the three respondents, is entitled to an equal share in his estate.
On that assumption, this Court finds, in relation to the property (block 12, section 25, O’Connor, being the land comprised in volume 538, folio 16), that: (a) immediately before Michael Fedorow’s death, the joint tenancy was held by Michael Fedorow and the appellant Peter Fedorow as trustees, on trust for Michael and Peter Fedorow as tenants in common with respective shares of 22/104 and 82/104 of the property; and (b) as from 8 July 1995 when Michael Fedorow died, the appellant Peter Fedorow held the property in a tenancy in common: (i) as to the 82/104 share of the property, on his own behalf; and (ii) as to the 22/104 share of the property, as a trustee for himself and the respondents in equal shares.
As we have noted, two of the respondents are now deceased and formal orders are required to regularise the proceedings. The Court is mindful of the costs of these proceedings to date and would wish to see future costs minimised, certainly as far as implementation of this Court’s decision is concerned. We would expect the parties to agree on the form of the orders to be made, and accordingly remit the matter to the Master to proceed in accordance with the judgment of this Court.
As to the costs to date, the Court’s view is that each party should bear its own costs, but we will give the parties 14 days to make submissions in writing on this aspect if necessary.