Malter v Procopets [1998] VSC 79

Malter v Procopets [1998] VSC 79 - VSC 1998 case summary — Zoe

[94]

Alternatively, and at best for the plaintiffs, both inferences were open on the evidence at the time of the transfer to the Richardsons in 1972. On that assumption, the plaintiffs, to succeed, must demonstrate that the second of the two inferences is the inference that should be drawn as at the time of the transfer. It does not seem to me possible, however, to determine whether that inference should prevail over the other in the absence of further evidence of acts by the plaintiffs at the time of the transfer which would demonstrate an unequivocal intention to retain possession of the strip of land to the exclusion of the legal owner and the world. Because of the events of 1971 and 1972, they are in the position that they have to demonstrate an intention to dispossess the owners of the adjoining land. All they can point to is the continuation of circumstances which followed from a disrupted dispossession and a continued possession that occurred in the face of a decision by them to transfer ownership, and therefore possession, of the disputed land to the Richardsons. It seems to me that in those circumstances the situation is, at best for the plaintiffs, an equivocal one and that, as a result, the plaintiffs are not able to demonstrate the existence of the requisite intention to possess either at the time of the transfer or immediately after it. Again, it might be argued that, with the effluxion of time, a point was reached where it was clear that notwithstanding the initial intention to transfer ownership of the strip to the adjoining owner, nonetheless, the plaintiffs were unequivocally enjoying adverse possession of this strip with the requisite intention. I refer to my above comments. For reasons advanced above it is difficult to see how such a situation could arise so long as the Richardsons owned the property. Once the Richardsons had sold to a third party, in this case to the defendant, it might be that such an argument could arise. That event, however, occurred in 1987 and thus, as noted above, time has not run against the defendant.

[98]

Mr Procopet in his statement told that, on about 20 September 1994 Mr Malter phoned him and asked him for help in fixing the ducted heating in his home which he could not start. Mr Procopets told that he did so and found a faulty thermostat which he replaced at no charge to him. I note that Mr. Malter on this issue gave oral evidence that he did not telephone Mr. Procopets and that Mr. Procopets happened to call and started the ducted heating by manipulating the equipment that was there. Mr Procopets said in his statement that, on this occasion, he asked the plaintiffs to consent to the fence being moved to the title boundary and told Mr. Malter that the cost would be $6,000 and that he would contribute $4,000. He stated that Mr Malter asked him to put the proposal in writing. Mr. Procopets' statement records that he prepared the consent agreement setting out that the plaintiffs agreed to the existing fence being demolished and the new fence being built on the title boundary and setting out the contributions that he had foreshadowed. In his statement he stated that on the 22 nd September he telephoned the plaintiffs and informed Mr Malter that he had prepared the necessary documents and asked Mr Malter if he could bring them around. Mr Malter told him to bring them around in half an hour which he did. He asserted that he gave the Malters the three documents in triplicate. He said that he left the documents with Mr Malter. That night he received a telephone call from the plaintiff's son who said he had several questions arising out of the consent agreements. Mr. Procopets asserted that he explained the fact that the existing fence was not in the correct position as shown and that he proposed to demolish the existing fence and erect a new one on the correct boundary as shown on the Certificate of Title and explained the contribution arrangements. He said that Mr. Jan Malter responded that everything was "o.k" and that he would speak with his parents and they would probably sign. Mr Procopets, in his statement, then stated that on the following day he called on Mr and Mrs Malter and asked whether he could collect the consent agreement. He said in evidence that he gave them and Jan Malter the details about the construction of the fence, its height, the piers and so on. The plaintiffs told him that they could not afford to pay $2,000 towards the construction of the brick fence and that they then crossed out the four lines setting out the contribution arrangements. Mr Procopets said he would bear the cost and the plaintiffs then signed the documents.

[101]

In determining what evidence to accept on this issue , the defendant has received some unlikely support from his former defacto partner Alla Giller. Ms Giller is currently employed as a court interpreter interpreting Russian and English. Plainly she has strong feelings of bitterness towards Mr. Procopets arising out of events that occurred following the break down of their relationship. In the case of her evidence, it would seem to me that while I need to scrutinise with some care evidence she gave against Mr Procopets, I could approach with reasonable confidence any evidence she gave which appeared to support his case. It is significant, therefore, that she gave evidence from her own recollection that she remembered him preparing some documents and that he had discovered that the fence between the two properties was not on the correct line. Further she recalled him going to the neighbours with these documents and collecting them from the neighbours the next day and recalled him being happy with them because they were signed. She also recalled that someone from the neighbours telephoned between the two visits. Her recollection of the telephone call she said was vague. She recalled that there was a male voice. She said that Mr Procopets had given the caller some explanation and that after the conversation he had told her that it was the neighbour's son. She believed that the call came through on the same day that he had taken the papers to the neighbours. She thought his first visit to the neighbours was longer than the second visit to the neighbours. Before Mr. Procopets went to collect the documents she believed he received a phone call saying that they were ready to be collected. She gave evidence that she had prepared a statement in late 1995 or early 1996 (Exhibit D 17). She described that document as summarising what had happened by that time and it contained the knowledge that they both had about the situation. She said it was written at Mr Procopets request. Asked about the reference in it to a conversation in approximately July 1994 when Mr Malter and Mr Procopets spoke about the location of the fence and his desire to move it, she said she had no independent recollection of that and she was unable to say whether what she recorded about it was what she remembered independently or what she had been told by Mr Procopets. She could not recall the details of the telephone conversation on the evening after the documents had been delivered except to say that she believed that Mr. Procopets was talking about the fence.

[109]

I turn to the cause of action based upon alleged false and deceptive conduct by Mr. Procopets in procuring the agreement. It is necessary for the plaintiffs to establish that in his dealings with the plaintiffs over the consent, he was acting "in trade or commerce". The defendant alleges that he was not. It is true that this transaction, on the evidence before me, constituted the only transaction in which it might be said that Mr Procopets set out on a commercial venture to demolish a house, replace it with two units and sell those units. The transaction, to my mind, had a clear commercial flavour to it and as a result it would seem to me that the conduct of Mr Procopets might be described as conduct "in trade or commerce" even though he was not engaged generally in the business of property development. In O'Brien and Another v. Smologonof (1983) 53 ALR 107, the Full Court of the Federal Court considered the problem posed by the phrase "in trade or commerce" in the context of a sale of property owned by a person who was not a person said to be engaged in the business of buying and selling land. The court referred to a number of American authorities which highlight the fact that it is a matter of fact in each case as to whether there is the necessary business connection to attract the operation of the relevant statutory provision. In that case, the plaintiffs had acquired an area of 875 acres of land made up of 5 identifiable portions. The land was a conditional leasehold under the Crown Land Consolidation Act (1913) (NSW). The appellants after acquiring the land decided they would like to build on one of the portions and, to finance that, decided to sell two of the other portions. It was alleged that, in their advertising of the sale of those portions, statements were made which were false or misleading. The trial judge held that the Trade Practices Act provision relating to false and misleading statements applied. That decision was overruled on appeal. In their reasons, the Full Court referred to a number of decisions under similar legislation where the view had been consistently taken that a private sale of property by an individual was not conduct in trade or commerce for the purpose of that consumer legislation. The Full Court commented that the case before them was not one where the land had been acquired as trading stock by the appellants. In addition it was not a case where the appellants activities involved more than their realisation as a capital asset and constituted the carrying on of land development as such. In that respect the Honours referred to F C T v. Whitfords Beach Pty Ltd (1982) 39 ALR 921. The Full Court also commented that the land had not been used for farming or grazing. In the end the Full Court took the view that at most it could be said that the appellants had used the newspapers and the medium of public advertisement, as was done by persons engaged in commercial transactions, but took the view that that in itself could not create the business context required by the reference "trade or commerce" in s 53 of the Trade Practices Act (1974) (Cwlth). In FCT v. Whitfords Beach Pty Ltd above, the taxpayer acquired land to secure access to certain shacks occupied on an adjacent beach front for its original shareholders. In 1967, the shares in the taxpayer were bought by three companies with the intention of developing, subdividing and selling the very valuable land at a profit. The articles of association were changed to assist this course of action and extensive work carried on with managers appointed. The land was subdivided and sold between 1971 and 1975. The issue to be considered was whether the land had originally been acquired for the purpose of resale at a profit. Thus the point in question here is not one that was considered by the High Court in that case. I note, however that the sub-division and sale of the properties was regarded as a profit making venture by the court . The majority held that the taxpayers activities amounted to more than the mere realisation of a capital asset.

[112]

In considering these matters it is relevant to consider why it was that the dispute broke out in March and April of 1995. The evidence on this issue is unclear. I regard it as incomplete. Mr Jan Malter, I accept, told his father that he had been "stupid" in signing the documents. I am also satisfied that the plaintiffs demanded payment of $5,000 by an instalment of $1,000 and a balance of $4,000. I accept that Mr. Stanley Malter left a message on Mr Procopets' answering machine asking for payment of $1,000 at about that time. Mr Procopets produced a tape recording of this message. I reserved my decision on its admissibility. It is true that a number of points adverse to Mr Procopets can be made about his explanations as to why he did not reveal this tape until late in the litigation. It does not reflect well upon him that he did not give discovery of the tape recording. I have, however, heard Mr Stanley Malter in the witness box and in the course of his evidence, heard the voice on the tape recording. While I believe I am conscious of the dangers implicit in any attempt at voice identification it did seem to me that the similarity was striking and what was said was consistent with the relevant context. It is true that Mr Procopets in his dealing with his former defacto wife appear to have engaged in secret video taping and sought to produce edited versions of their love making for improper purposes. It also appears that he secretly taped conversations with mutual friends for the purpose of obtaining evidence for the dispute with her. There is no evidence, however, that he has ever attempted to create a false visual or audio tape. As pointed out by counsel for Mr Procopets, it was always open to the plaintiffs to have experts called in to examine the tape and give evidence. This was not done and no explanation was offered for not doing it. In all the circumstances I accept the tape to be authentic. Accordingly, I formally rule that it should be admitted absolutely. Counsel for the plaintiffs submitted that Mr Procopets' evidence should be rejected because of his subsequent conciliatory conduct with Mr Jan Malter when they met at the Town Hall and later at the latter's house with his wife. It is said that such conduct was not be expected where the plaintiffs had reneged on the agreement and attempted to extract further money from him. I do not accept that argument. Mr Procopets had a choice. It would be perfectly understandable that he chose to behave as he did in the hope that the dispute that had arisen would be resolved.

[129]

I think it unrealistic to suggest that the obligation to mitigate loss would have required the defendant to sell the property during the dispute. He could only have sold it at a discount, and probably a heavy discount, which would have given rise to a claim for the damages in a substantial amount but on a different basis. There is much force, however, in the proposition that Mr Procopets might have been expected to rent the premises. He said he did not wish to do so because of the value in being able to ultimately sell the unit as new even if this occurred some years after it was built. He called no expert evidence to support that view and was merely expressing the opinion of someone who at the same time resisted any suggestion that he was a developer. He may have a limited layman's knowledge of the property market but no more. It seems to me that a defendant in his position, acting reasonably to mitigate his loss, would have rented the premises. In doing so he would have had to face the prospect at some stage of having repairs and maintenance done to the property to restore it to the "as new" condition for sale but that would have been merely a monetary matter. He conceded in cross examination that he might have expected to receive $500 to $600 per week (T 717). That produces a range from $26,000 to $31,200 per annum gross rent. Taking the higher figure and working on a notional renting of 2 years, he could have received to date an amount from $52,000 to $62,400 gross rental on that basis. He would, of course, have had expenses associated with the tenancy and he may not have secured a tenant for the complete period. Bearing in mind that it was not in Mr Procopets' interest to admit a higher rental figure, and he would have been well aware of that in my judgement, it seems to me appropriate to assess the damages on the basis that the probability was that he would have been able to obtain the rent at the top end of the range that he admitted and that it would have been available. The difference between that figure and the financing costs is approximately $10,000. Having due regard to probable exigencies, some additional allowance should be made. Accordingly, I would assess the damages at $15,000.

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