Hocking v Yeo

DAVIES J: 1 The respondents ("the respondents" or "the trustees") are the trustees of the bankrupt estate of Brock Simon Arifovic ("the bankrupt") and the appellant is the de facto spouse of Mr Arifovic. The bankrupt's assets include property located at 32 Pimpala Avenue, Seaford, Victoria ("the property") of which he is the sole registered proprietor. In proceedings commenced by the trustees in the Federal Circuit Court of Australia ("FCC") for orders for the vacant possession and sale of the property, the trustees accepted that Ms Hocking had acquired a 32.52% beneficial interest in the property pursuant to a constructive trust having regard to the financial contributions she had made, whereas Ms Hocking claimed a 100% beneficial interest in the property. In issue was whether Ms Hocking has an interest in the property greater than a 32.52% beneficial interest. 2 The FCC rejected Ms Hocking's claim to a 100% beneficial interest in the property or interest as tenant in common in equal shares under a common intention constructive trust, holding that the trustees had correctly assessed the extent of her beneficial interest at 32.52% by reference to the financial contributions she had made. The FCC ordered the sale of the property and for 32.52% of the net proceeds to be paid to Ms Hocking: Yeo & Rambaldi v Arifovic and Anor [2017] FCCA 604. In a separate judgment, the FCC ordered the bankrupt and Ms Hocking to pay to the trustees on account of their costs and disbursements the lump sum amount of $83,837.42: Yeo & Rambaldi (as trustees of the bankrupt estate of Arifovic ) v Arifovic & Anor (No.2) [2017] FCCA 1189. 3 Ms Hocking appealed the orders of the FCC. At the time of filing the notice of appeal Ms Hocking represented herself, but she was later represented by counsel on a pro bono basis pursuant to a court referral under Division 4.2 of the Federal Court Rules 2011 (Cth). Counsel sought and was granted leave to file an amended notice of appeal raising the following grounds of appeal: 3. The learned judge erred in finding that the Appellant held a beneficial interest in the property located at 32 Pimpala Avenue, Seaford (Seaford Property) to the extent of 32.52%; 4. The learned judge should have found that the Appellant held a beneficial interest in the Seaford Property to the extent of at least 50% pursuant to a constructive trust. 4 Counsel also applied for leave to adduce evidence in the appeal that was not presented before the FCC, namely transfer documents lodged with the Victorian State Revenue Office which, it was claimed, supported Ms Hocking's claim to a greater interest in the property than was found by the FCC. 5 During a case management hearing on 4 August 2017 and prior to the filing of submissions in the appeal, counsel for the trustees stated in open court that the trustees would recognise a 50% interest in the property in favour of Ms Hocking. In written submissions for Ms Hocking filed shortly prior to the appeal, Ms Hocking did not contend for an interest greater than 50%, but confined her equitable claim to a 50% interest in the property. On the hearing of the appeal, the only issue agitated was the costs order below and the costs of the appeal. 6 It was argued for Ms Hocking that the costs order should be set aside on the basis that the decision below "should never have been made". Paragraphs [10]-[12] of the appellant's reply written submissions advanced three reasons as follows: Firstly, the trial judge failed to properly take into account the non-financial contributions made by the appellant to the Property. Secondly, the trial judge failed to take into account the appellant's evidence as to her and Mr Arifovic's common intention as to their beneficial interest in the Property. The appellant deposes at [4] of her affidavit sworn 11 October 2016 that the Property is held on constructive trust as tenants in common. The appellant also deposes at [12] that it was agreed between the appellant and Mr. Arifovic that Mr. Arifovic would, in the first instance, finance the purchase of the Property and have it registered in his name because he was in a better position to obtain finance to facilitate the purchase. Finally the appellant deposes at [13] that it was agreed that since Mr. Arifovic applied funds towards the purchase of the Property, the appellant would apply the majority of her funds to Mr. Arifovic's debts and expenses as recognition of her contributions to the initial purchase of the Property (at [20]). Thirdly, the appellant contends that if the trial judge had taken into account the appellant and Arifovic's common intention, the documentary evidence and consider where the presumption of advancement applied to de factor partners the decision at first instance would never have been made. The decision would not have been made. [Errors in original]. 7 The contentions for Ms Hocking should be rejected. 8 First, the mere assertion of a state of facts has no probative value unless there is supporting evidence which shows that the assertion is factually founded: Shord v Commissioner of Taxation [2017] FCAFC 167 [110] - [111]. 9 Secondly, the establishment of a common intention constructive trust required proof that it was actually intended by the bankrupt and Ms Hocking that she should have an interest in the property purchased in the bankrupt's name, and that she acted to her detriment in reliance on that intention: Allen v Synder [1977] 2 NSWLR 68; Green v Green (1989) 17 NSWLR 343 at 355; Shepherd v Doolan & Ors [2005] NSWSC 42 ("Shepherd v Doolan") and the cases cited at [34]. Ms Hocking's evidence in paragraphs [12], [13] and [20] of her affidavit did not compel a finding that they had that common intention. Ms Hocking did not give direct evidence of any agreement between them about co-ownership of the property, or otherwise of express statements as to their intention and whilst common intention can be inferred, an inference of common intention would not be drawn merely from the evidence in paragraphs [12], [13] and [20] of Ms Hocking's affidavit. Furthermore even if such an inference was drawn, there was no evidence that the bankrupt and Ms Hocking specifically considered what would be the extent of her beneficial interest in the property and it did not follow from the inference of a common intention, as a matter of course, that a constructive trust in favour of Ms Hocking to the extent of a 50% beneficial ownership of the property must be found: Baumgartner v Baumgartner (1987) 164 CLR 137; Shepherd v Doolan. 10 Thirdly, as the FCC correctly stated, the mere fact of a de facto relationship in and of itself does not establish that Ms Hocking and the bankrupt had a common intention that both should have beneficial interests in equal shares as tenants in common: Green v Green (1989) 17 NSWLR 343 at 353. 11 Fourthly, the submissions did not explain how reliance on the presumption of advancement (assuming it does apply between de facto couples, as to which see Caverley v Green (1984) 155 CLR 250; cf. Cummins v Cummins (2006) 227 CLR 278 at [68]-[69]), would have affected the decision below with the consequence, as contended, that "the decision would not have been made". 12 Fifthly, the documentary evidence which, it said, was not taken into account was the bankrupt's statement of affairs in which the bankrupt had listed Ms Hocking as an "owner" of the property "arising in equity". Whilst the assertion was consistent with Ms Hocking's claim that she had acquired a beneficial interest in the land, it was a self-serving statement which did not advance the factual claims. 13 Accordingly, I reject the contention that the costs order below should be set aside on the basis that the decision below "should never have been made". 14 As the only issue agitated on appeal was the question of costs below and Ms Hocking has not been successful on that issue, Ms Hocking should pay the respondents' costs of the appeal. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.