Camfield Propriety Limited ("Camfield") was incorporated on 31 May 1979 and deregistered on 13 March 1984. During its short existence, Mr John Mangano and his partner, the defendant, Ms Rosemary Ann Bullen, used Camfield as the corporate vehicle to develop five properties in inner western Sydney. They occupied one of these together: a property located in Talfourd Street, Glebe ("the Glebe property").
Close to Christmas day 1986, and almost two and a half years after Camfield's deregistration, Mr Mangano and Ms Bullen witnessed the affixing of Camfield's company seal on a Real Property Act 1900 Transfer of the Glebe property to themselves as tenants-in-common ("the Camfield Transfer"). The Camfield Transfer was registered on 16 February 1987.
They continued to live in the Glebe property together until Mr Mangano died in July 2015. But just before he died, Mr Mangano converted his tenancy-in-common to a joint tenancy with Ms Bullen. After his death she became registered proprietor of the Glebe property by survivorship.
Mr Mangano had been married before he met Ms Bullen. He had a daughter, the plaintiff, Ms Silvana Mangano, by that marriage. In her Further Amended Statement of Claim in these proceedings, Ms Mangano seeks a declaration that the Camfield Transfer to Mr Mangano and Ms Bullen is invalid and void ab initio.
Ms Mangano accepts that, on the application of generally applicable principles, Mr Mangano and Ms Bullen gained indefeasible title to the Glebe property upon registration of the Camfield Transfer: Breskvar v Wall (1971) 126 CLR 376; [1972] ALR 205 ("Breskvar"). But she contends that Ms Bullen did not gain indefeasible title because Ms Bullen's and Mr Mangano's execution of the Camfield Transfer was a fraud upon the National Companies and Securities Commission ("NCSC"), the then statutory owner of the Glebe property after Camfield's deregistration. Ms Bullen contends that the circumstances in which the Camfield Transfer was executed and registered attract the fraud exception to indefeasibility under Real Property Act 1900, s 42.
Ms Mangano accepts that, if she fails on her claim that the Camfield Transfer attracts the s 42 fraud exception, she will fail in this proceeding. But if she succeeds on that first issue, Ms Mangano's path to relief must negotiate the legal effect of a number of other events, which are identified in the next paragraph.
Ms Mangano contends Ms Bullen and Mr Mangano did eventually acquire title to the Glebe property by adverse possession but that she did not acquire Mr Mangano's title by survivorship. She submits that the NCSC is an emanation of the Crown and that for the purposes of the operation of Limitation Act 1969, s 27 Mr Mangano and Ms Bullen only acquired title to the Glebe property by adverse possession against the NCSC, due to their uninterrupted occupation of it for 30 years from March 1984 up to March 2014. And Ms Mangano contends that Ms Bullen's acquisition of a fee simple in the Glebe property by survivorship is defeasible by reason of the same fraud upon the execution of the Camfield Transfer.
Ms Bullen denies participating in any fraud involving the Camfield Transfer. She says that upon registration of the Camfield Transfer she gained indefeasible title to the Glebe property as a tenant-in-common with Mr Mangano. She says she did not acquire her indefeasible title by adverse possession. And she says that after converting her co-ownership to a tenancy-in-common, she acquired an indefeasible fee simple by survivorship after Mr Mangano's death.
This is the second round of litigation between Ms Mangano and Ms Bullen since Mr Mangano's death. In 2016, each of them commenced proceedings under Succession Act 2016, Chapter 3 for further provision out of Mr Mangano's estate. Those proceedings settled after mediation in late 2016. Ms Bullen further defends these proceedings by contending that, during the family provision proceedings and the settlement negotiations, Ms Mangano was aware of all the facts necessary to bring these proceedings and represented that she accepted Ms Bullen was the registered proprietor of a fee simple in the Glebe property. Ms Bullen contends that Ms Mangano's failure to bring these proceedings before resolution of the family provision proceedings now estops her by representation, by convention, or on Anshun principles from maintaining these proceedings against her, and that these proceedings are an abuse of process.
These proceedings were heard on 29 and 30 October 2019. Mr J.S. Emmett of counsel, instructed by Murphy Lyons, appeared for Ms Mangano. Dr C. Birch SC of counsel, instructed by Marsdens Law Group, appeared for Ms Bullen. The second defendant, the Australian Securities and Investment Commission (ASIC), did not appear. No orders were sought against ASIC. Directions were given for filing further post-hearing submissions which were received on 15 November 2019, when judgment was reserved.
The following is a narrative of the relevant history. This narrative represents the Court's findings on the matters covered, except to the extent that the context indicates that only the parties' allegations are being recorded. For reasons of economy, this narrative does not include reference to versions of the facts that have been rejected. The primary issue is whether Ms Bullen and Mr Mangano gained indefeasible title under the Camfield Transfer, or whether the fraud exception applies. The narrative is principally directed to this issue, which is decided in Ms Bullen's favour.
[2]
Credibility
But first, this case turns on the credibility of the parties, especially that of Ms Bullen. Some preliminary observations about Ms Mangano's and Ms Bullen's credibility can be made.
Ms Mangano was an honest, careful and helpful witness, whose evidence can be accepted. She had some difficulty in remembering the course of events but these were genuine problems of recollection that both she and Ms Bullen encountered, in grappling with events almost four decades old.
Ms Bullen is now in her early 80s and had considerable trouble remembering events almost 40 years ago but that is not surprising. She made a number of admissions against interest, and presented as honestly and genuinely trying to answer all the questions asked of her to the best of her ability. At times remembering so far back was difficult for her. Her age appeared to be a factor in this.
But at the heart of the case was a contention that Ms Bullen really did remember a fraud on the NCSC in which she had been closely involved, which she was now seeking to conceal, and which she had been concealing for a long time. She was thoroughly tested on this case. Her credibility and her defence of this serious allegation well survived a searching cross-examination. The Court finds she was not involved in any fraud on the NCSC or anyone else for that matter, as is explained in the narrative below.
[3]
Mr Mangano, Ms Bullen and Camfield - 1967 to 2019
Ms Mangano seeks to establish Ms Bullen engaged in conduct that constituted a fraud within Real Property Act, s 42(1), when executing the Camfield Transfer. In the context of the Torrens system, fraud means "actual fraud, that is, dishonesty of some sort, not what is called constructive or equitable fraud": Assets Co Ltd v Mere Roihi [1905] AC 176, at 210. Not all species of fraud, which attract equitable remedies, will amount to fraud in the statutory sense: Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248, at 255. For equitable fraud to fall within the statutory concept of "Real Property Act, s 42 'fraud'" there must be dishonesty or moral turpitude: Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202, at 221.
The application of these principles requires close examination of the circumstances in which Ms Bullen and Mr Mangano dealt with the Camfield Transfer, notwithstanding that its execution was just under 33 years before the hearing of these proceedings. The materials available to the Court about the execution of the Camfield Transfer were limited after such a lapse of time.
[4]
Mr Mangano and Ms Bullen - up to 1979
Mr Mangano was born in the village of Nunziata in the province of Catania, on the East Coast of Sicily in 1934. He migrated to Australia in 1952. Mr Mangano's given name at birth was Rosario. In Australia he went by the name of John, because it was easier. But Ms Bullen always knew him as John.
The narrative about Mr Mangano and Ms Bullen starts nine years before the Camfield Transfer. Ms Bullen met Mr Mangano in about 1967 and they formed a relationship in 1968. At that time, Mr Mangano was a site manager for a construction company in Sydney, and Ms Bullen was working as a registered nurse, performing contract nursing services, in Sydney's inner Eastern suburbs.
Mr Mangano and Ms Bullen had each been married before. At the time that they met they were each separated from their first spouses.
Well over 12 months after Mr Mangano first met Ms Bullen, in around 1969, he revealed for the first time to her that he already had a family. At the age of 24, in 1958, he had married in Queensland, and had three children, the plaintiff being the youngest of them.
When Mr Mangano met Ms Bullen, she says that he was living in a granny flat at the back of his parents' house, in Miller Street, Haberfield, with his eldest son. Ms Mangano was renting an apartment in Edgecliff, living with her sister and another woman. She later moved into Double Bay, close to where she was working as a nurse.
Between 1972 and 1979, Mr Mangano lived in Nelson Bay and worked there on various property development projects. Although they lived separately, Mr Mangano would regularly come down from Nelson Bay to Sydney to visit her, mainly on weekends when he was not working, so they could spend time together.
By early 1979, Ms Bullen was renting an apartment in Rose Bay. Mr Mangano was taking steps to wind up his property development projects in Nelson Bay. He began visiting Sydney more frequently. But the developments in Nelson Bay had not gone well. Mr Mangano had fallen into a dispute with his co-venturers. The disputes contributed to him not making much profit from the Nelson Bay development and eventually he was declared bankrupt.
[5]
Camfield is Incorporated, Develops Property and is Deregistered - 1979 to 1984
Ms Bullen says, and the Court accepts that, leading up to Mr Mangano returning from Nelson Bay, they were both becoming frustrated that each of them were paying rent. Mr Mangano suggested that they take steps to acquire a home together. He had a plan, which he explained:
"I've come up with a plan to get you into your own home, that way we can stop paying rent. We should buy and renovate property and use the profits from that to buy a house without a mortgage. I think if we renovate and sell five properties then we will have enough money to buy a house for ourselves. We don't need to pay rent after that."
The couple had a number of discussions on this issue in 1978-1979. They agreed to combine their savings, which were then of about $4,000 each. They borrowed the balance necessary to begin to purchase the properties for renovation and sale. During these discussions, Mr Mangano proposed that they: "get a company together and everything will be above board. I just want to get a roof over our heads." Ms Bullen was happy with this proposal. She vaguely understood that incorporating a company was for some commercial purpose associated with developing the properties. But to her the plan Mr Mangano was proposing was principally a positive sign that her relationship with him was being established on a more permanent basis.
Mr Mangano and Ms Bullen met with an accountant to discuss the idea of acquiring a shelf company as a vehicle for property development. They acquired Camfield, around 31 May 1979. Ms Bullen became a director of Camfield, and Mr Mangano became both a director and the company secretary. Between 1979 and 1983, Camfield did acquire five properties, as Mr Mangano had proposed in his plan.
In or around August 1980, Camfield purchased its first property, the Glebe property, for $42,000. Mr T.J. Passaro, the solicitor acting for Mr Mangano and Ms Bullen, executed the Memorandum of Transfer to them of the Glebe property on 10 August 1980.
To fund the purchase of the Glebe property, Camfield borrowed $33,000 from clients of Mr Passaro, Domenico and Vincenzina Americano, Elizabeth Craig, and Edna Alexander. Mr Mangano and Ms Bullen paid this mortgage jointly ("the Glebe mortgage"). The Glebe mortgage was dated 22 August 1980 and was registered on 18 September 1980.
Over the course of 1980 and 1981, Mr Mangano and Ms Bullen substantially renovated and refurbished the Glebe property. Records do not now allow an accurate valuation of the work that they did on the property but they were substantial and were both decorative and structural. Ms Bullen has records showing expenditure of about $1,800 but that does not include her or Mr Mangano's extensive labour. She moved into the property in December 1980. Mr Mangano joined her there permanently in about July or August 1981.
Whilst Mr Mangano and Ms Bullen were renovating the Glebe property in 1980, the property next door in Talfourd Street ("the next door property"), came up for sale. They also acquired it through Camfield for $46,000. For this second purchase, Camfield borrowed funds. Mr Mangano and Ms Bullen also renovated the next door property. Records of expenditure on this property are sparse. There is no evidence that they charged Camfield for their labour. They subsequently sold the next door property for $72,000.
In or around 1981, Camfield purchased its third property, which was in Gottenham Street in Glebe. Camfield borrowed the funds to purchase the Gottenham Street property, which was acquired for a total consideration of $52,000. Again, Mr Mangano and Ms Bullen renovated and refurbished this property for Camfield. It is probable that the same pattern was used for earlier properties and they contributed the expenditure on the renovations from their own financial resources. Again Camfield did not, so far as the evidence discloses, pay for their renovating labour. Camfield sold the Gottenham Street property for $75,000.
On 24 August 1981, Camfield refinanced the Glebe mortgage from Mr Passaro's clients. It obtained a mortgage from the National Australia Bank ("the NAB mortgage"). The Glebe mortgage was discharged on 11 September 1981. In the years that followed, both Ms Bullen and Mr Mangano also paid down the capital and interest on this NAB mortgage over time from their joint funds. Ms Bullen says the mortgage payments were met from their resources, rather than from Camfield's funds, and the Court accepts her evidence.
The NAB Mortgage was registered on 2 November 1981. It records stamp duty paid as $33. Ms Bullen estimates the mortgage would have been $85,000, based on the rate of stamp duty on loan instruments at that time being $5 for the first $15,000 of loan borrowings, and $4 per $1,000 thereafter. The plaintiff did not contest this calculation.
But a different conclusion is open, using the rate Ms Bullen claims was applicable at the time. If one treats the first $5 in stamp duty as representing $15,000 in borrowings, the remaining $28 of stamp duty, at $4 per $1,000, would represent another $7,000 in borrowings. That means the total borrowings represented by the stamp duty paid on this mortgage may have been $22,000, rather than $85,000. This is a little over half of the consideration for the original acquisition cost of the Glebe property.
Camfield bought its fourth property later in 1981. This property was located in Darghan Street, Glebe ("the Darghan Street property"). Mr Mangano and Ms Bullen sold this fourth property, the Darghan Street property, without performing any remedial work to it, for a small profit. Ms Bullen recalls neither the purchase nor the sale price of the Darghan Street property.
Camfield purchased its fifth and final property, which was located in Glebe Point Road ("the Glebe Point Road property") at a date which is unclear but was probably sometime in 1982. The Glebe Point Road property was a boarding house in which some 8 or 9 tenants were paying weekly rent. This last property was sold not renovated and within two or three months of being purchased. Ms Bullen does not recall whether or not Camfield made a profit on the purchase and sale of the Glebe Point Road property.
Camfield did not purchase any further properties. But it retained the Glebe property, all the others having been sold. Ms Bullen says, and the Court accepts, that Camfield ceased trading activity after the sale of the fifth property. The couple then ceased renovating properties. Ms Bullen returned full time to nursing. Mr Mangano redirected his energies to building and development activity through his building company Mangano Constructions Pty Ltd ("Mangano Constructions") that had been set up in 1972. They continued to live in the Glebe property.
[6]
Camfield is Deregistered and an Accountant Advises - 1984 to 1986
Camfield was deregistered on 13 March 1984. Ms Bullen says that she was unaware of Camfield's deregistration until 18 April 2018, when Ms Mangano's solicitors sent Ms Bullen a letter advising her of the deregistration. Ms Mangano disputes this and mounts a case that Ms Bullen must have known of the deregistration by the time of the Camfield Transfer in 1986. The Court accepts Ms Bullen's account as to how and when she later discovered Camfield's deregistration.
In or around 1986, Ms Bullen says, and the Court accepts, that Mr Mangano consulted his accountant, Socratous, Joannou & Co ("Socratous"). Mr Mangano was advised about a possible land tax liability that would arise if the Glebe property remained in Camfield's name. Although Mr Mangano is deceased, the Court infers this was some of the content of the discussion with Socratous from Ms Bullen's evidence about what Mr Mangano told her of his 1986 visit to the accountant. Ms Bullen says that following this meeting Mr Mangano reported to her about what had passed between him and the accountant:
"The accountant said that because the house is in the Company's name we may have to pay land tax. We're not using the Company and not doing anything more to the property so let's get it put into our names".
That a meeting of this kind took place in the second half of 1986 accords with the surviving documentary evidence from the time. On 18 July 1986, records that Ms Bullen retained in a filing system that Mr Mangano and she had kept show that G. Kenyon & Son, Law Stationers, performed a company search of Camfield, at the direction of Socratous. The company search records that Camfield was deregistered on 13 March 1984. It is likely, in my view, that Socratous told Mr Mangano of Camfield's deregistration as a result of this search during a meeting in July or August 1986. It is difficult to see why if the search was commissioned why its contents would not be given to Mr Mangano.
But from the limited information we have about this conference with the accountant what can be inferred about Mr Mangano's state of mind? It is unlikely he was about to commit any kind of fraud in my view.
Dr Birch submits on behalf of Ms Bullen that it cannot be established that Mr Mangano himself was committing a deliberate fraud upon the NCSC. There is much to be said for this. The NCSC and its successor, ASIC, did not assert a beneficial interest in the assets of deregistered companies, or indeed oppose their reregistration. It could reasonably have been expected that had an application been made in 1986 to reinstate Camfield to the register of companies that the NCSC would not have opposed the action and that all that would have been required of Mr Mangano was a little time to initiate the application for reregistration and some legal and filing fees.
The more probable mental state to be inferred in Mr Mangano, after he had received advice from competent accountants about Camfield's reregistration, is that he may have preferred to avoid the inconvenience of trying to reregister the company. Trying to defraud the NCSC is not an obviously tenable theory about his state of mind in late 1986. It is not the first inference that should be drawn on such limited information as we have Nor is there any evidence that Camfield had any significant creditors (other than the NAB, which was ultimately paid out as part of the Camfield Transfer), who Mr Mangano might have been trying to defraud.
On 18 September 1986, Socratous invoiced "Mr J Mangano" for recent accountancy work. The invoice was sent to an address in Millar Street, Haberfield. The invoice had originally been addressed to Empire Street, Haberfield, which was the address where Mr Mangano's wife and children lived. The Millar Street Haberfield address was that of his parents, where he had lived for a period in a granny flat before moving to the Glebe property.
It is unclear who amended this address to Millar Street. It is likely to have been someone in the accountant's office, who was posting it out. It is likely that Mr Mangano gave this as the new billing address to the accountants. It is difficult to conceive that anyone else would have done so. He was the only person who had contact with these accountants about Camfield. But importantly he did not give the Glebe property address, where he then lived, to the accountants.
The Socratous invoice detailed professional services Socratous had rendered, including: "Investigation of Camfield Pty Ltd and discussions on subject Company". The Court infers from this that Mr Mangano probably did discuss Camfield with Socratous. But just what he discussed is in dispute. Ms Bullen maintains, and the Court accepts, that the only conversation that she ever had with Mr Mangano at this time was the one set out above, to the effect that land tax was payable on the Glebe property because it was in Camfield's name, and that it was therefore a good idea then to transfer it into each of their names.
The Court also accepts Ms Bullen's disclaimer of any detailed knowledge of the books of account of Camfield. She was not qualified as a bookkeeper. Bookkeeping and financial matters were not one of her strengths. But her answers in her cross-examination revealed she had a sound financial common sense, which was somewhat better than the average person's understanding of company procedures, governance and decision making. She had a general understanding of the role of a company director. She was well aware that Mr Mangano was the Secretary of the company and that both their signatures were required to witness the affixing of the company's seal to documents.
Ms Bullen did not deal with Camfield's external legal and accounting advisors. She left that entirely to Mr Mangano. The Court accepts her testimony that she left such dealings to him. The objective evidence supports the same conclusion. Consistently, the invoice from Socratous, is addressed to "Mr J Mangano" at Millar Street, Haberfield, where he had been staying. This suggests that he was directing Camfield's accountants to send some company correspondence away from (or at least failing to redirect correspondence to) the Glebe property, where he lived with Ms Bullen.
Neither Mr Mangano nor the accountants were a source of information for Ms Bullen about the reregistration of Camfield.
[7]
The Camfield Transfer - 1986 to 1987
Preparation for the Camfield Transfer began soon after the consultations with Socratous. A Discharge of Mortgage for the NAB mortgage over the Glebe property was signed on 21 November 1986. This was part of the NAB refinancing the acquisition of the Glebe property in their own names. But this discharge was not registered until 16 February 1987, after the Camfield Transfer, when the bank lodged all the refinancing instruments including a new mortgage.
The Camfield Transfer is dated 25 December 1986 and transfers the Glebe property to Mr Mangano and Ms Bullen for an express consideration of $80,000.
Ms Bullen does not recall signing any transfer of the Glebe property on Christmas Day. The dating of the document on 25 December 1986 is a mystery to her. In my view, she is probably likely to have recalled signing a document such as this on Christmas Day. Whilst there is some logic in a couple signing a document like this on a festive occasion, the Court accepts her evidence that it was not signed that day. The handwriting of the date of the Camfield Transfer is not hers, nor is it Mr Mangano's. It was probably their solicitor's handwriting.
Ms Bullen was extensively cross-examined as to how she could have believed that the consideration for the Camfield Transfer was $80,000. But part of the consideration was provided by the refinancing of the existing mortgage. And given the extensive renovation, restoration and development work that Ms Bullen and Mr Mangano had undertaken on some five properties owned by Camfield, she could have and did honestly hold the belief that this consideration represented money that Camfield owed Mr Mangano and her on various accounts. The Court is not prepared to find that Ms Bullen was aware or even suspected that this was or might have been some falsely calculated figure.
The Camfield Transfer was signed on behalf of the purchasers by the solicitor, Mr Passaro. Ms Bullen says and the Court accepts that she did not have any direct interaction with Mr Passaro, in relation to the preparation of the Camfield Transfer form. Mr Passaro was not called in evidence.
Knowledge of fraudulent acts is usually kept to the minimum number of people necessary to facilitate the fraud. The more probable inference from the limited known circumstances here is that the solicitor did not know that the vendor did not exist. It is unlikely that he too was participating in a deliberately false act which would have misled the Registrar-General, which would have been likely to circumvent proper processes in reregistering Camfield, and which could have been calculated to defeat Camfield's unsecured creditors. And of course, if he was participating in a dishonest conspiracy, he was engaging in professional misconduct which risked heavy professional sanctions.
As the solicitor for both purchasers from Camfield, Mr Mangano and Ms Bullen, the solicitor's involvement presumably also gave them each some reassurance that they were proceeding in a legitimate fashion. Otherwise the improbable alternative scenario is that the legally unqualified Mr Mangano and Ms Bullen were both cleverly concealing their fraud on the NCSC from their own solicitor. This is a possible explanation of events but not the first one that would be adopted. Reasoning towards fraud at this complexity is difficult to sustain.
[8]
Mr Mangano's Will and Creating a Joint Tenancy - 2014 to 2016
By the second half of 2014, Mr Mangano was very unwell and knew that he did not have very long to live. On 5 August 2014, he undertook one formality to reaffirm his Italian heritage. He executed a Change of Name form, changing his name back from "John" to "Rosario" in the Register in respect of the Glebe property.
On 11 February 2015, Mr Mangano signed his last Will. The making of this Will appears to have triggered tension between Mr Mangano and Ms Bullen. Schedule 1 of the Will applied if Ms Bullen survived Mr Mangano. By it, he appointed Ms Bullen and Ms Mangano as his executors. He gave all the personal effects in the Glebe property to Ms Bullen. He then gave a life estate in the property to Ms Bullen.
The Will gave all of Mr Mangano's interest in the Glebe property to his daughter, Ms Mangano. He gave other property in Leichardt to his son, David Mangano, and his shares in Mangano Constructions. He appointed David Mangano the sole director of Mangano Constructions and gave the residue of his estate to Ms Mangano.
On 21 May 2015, the Glebe property was converted from a tenancy in common into a joint tenancy. Ms Bullen was quite open in her evidence that she instigated this change. She was becoming more and more concerned with her lack of security in the home in which she had lived with Mr Mangano since the early 1980s. She was by then aware of the Will and feared that, unless a joint tenancy was created in the property, she would lose half of the home upon the death of Mr Mangano.
Mr Mangano was being passive about acting on her request for a joint tenancy. The Court infers he was prevaricating because of pressure from his first family. Ms Bullen was determined to have that security. She ultimately had to commence proceedings in the Family Court of Australia to prompt Mr Mangano to convert the property into a joint tenancy.
But this did not lead to any other changes to his Will, which assumes that he could dispose of his interest in a tenancy-in-common to Ms Mangano. He did not survive for much longer and he died on 28 July 2015, aged 81.
Following Mr Mangano's death, the Court accepts that Ms Bullen further renovated the Glebe property. She expended sums in the order of $60,797.99 to improve the property. She says, and the Court accepts, that she would not have undertaken such renovations if she had known that thsse proceeding were likely to be launched.
[9]
Family Provision Proceedings - 2016
Mr Mangano's death triggered a double set of family provision proceedings. Ms Bullen first commenced proceedings for further provision out of Mr Mangano's estate, pursuant to Succession Act 2006, Chapter 3 against Ms Mangano; Mr David Mangano, the deceased's son; and, Mr Mangano's superannuation fund trustee, Mangano SMSF Pty Ltd ("Mangano SMSF").
On 27 July 2016, Ms Mangano countered. She commenced proceedings for further provision out of Mr Mangano's estate, pursuant to Succession Act 2006, Chapter 3. She also sought orders that a half share of the Glebe property be designated as notional estate. She issued proceedings against Ms Bullen, David Mangano, and Mangano SMSF.
Both sets of proceedings settled at mediation on 16 December 2016. Ms Bullen says, and the Court also accepts, that she would not have settled her family provision proceedings on the terms that she did, if she had been aware that Ms Mangano would be commencing these proceedings. She says, and the Court accepts, she relied in settling those proceedings on Ms Mangano's affidavit evidence in the family provision proceedings which asserted that the Glebe property was owned jointly by Mr Mangano and Ms Bullen.
[10]
Commencing This Action - Ms Bullen Told of Camfield's Deregistration - 2018
On 18 April 2018, Ms Mangano sent Ms Bullen says a letter stating that Camfield had been deregistered in 1984 and that the Camfield Transfer was invalid. Soon afterwards these proceedings were commenced by Summons on 8 June 2018.
Ms Bullen says that she had not known before this that Camfield had ever been deregistered. The Court accepts that Mr Mangano never told her. Nor did she find out from any of the company's advisors at any time before his death. She did not consult them, so this is understandable.
Ms Bullen had some of Camfield's documents remaining in her possession, when these proceedings commenced. They were part of Mr Mangano's records that she had retained. They actually recorded Camfield's deregistration. But she was not aware that they did. The fact that she kept the documents in her possession for over 30 years and then voluntarily produced them as part of her affidavit evidence in these proceedings is itself compelling evidence of her true state of mind. If Ms Mangano's case theory is correct and Ms Bullen was concealing a fraud, it is difficult to understand why she would have retained evidence of the fraud for so long and then produced it without even being required to do so.
Fraud rarely looks like this. A fraudster, conscious of wrongdoing, would be likely suppress any lines of inquiry that might reveal the fraud. The evidence did not explore why she retained this material. But the fact is she did. Its retention is closely consistent with the innocent state of mind she claims and which the Court finds from her oral testimony that she had. She was not aware at any time in 1986 or in 1987, or indeed in the years before 2018, of any fraud by Mr Mangano and was not aware that Camfield had been deregistered. She was quite unaware: that the documents in her possession showed that a search of Camfield's corporate history had been done in July or August 1986 at the behest of Mr Mangano's accountants. She was equally unaware until 2018 that they had discovered in that search that the company had been deregistered in March 1984.
Mr Emmett contended for Ms Mangano that there was no reason why Mr Mangano would mislead Ms Bullen about the deregistration of the company. That is not a compelling ground for the drawing inferences in this case. Mr Mangano had treated Ms Bullen on a "need to know" basis at earlier times and about important personal matters. For example, he did not disclose to her his prior marriage and his three children until well over a year into their relationship.
Mr Emmett presses the point by asking rhetorically: on what basis could it be suggested that Mr Mangano had a motive to conceal Camfield's deregistration from Ms Bullen. The point is well taken: it is difficult to attribute any clear motive at this point. To do so would be speculative now, given how little we now know. But motives are not difficult to find. Non-disclosure was probably the course of least inconvenience to My Mangano.
Moreover, the objective evidence, namely the September 1986 Socratous invoice from his accountants, shows that his consultations with his accountants were conducted through channels that were unlikely to come to Ms Bullen's attention at their joint residence at the Glebe property. Whether that was calculated or accidental is unknown. But it shows a complexity in the domestic communication channels Mr Mangano used that makes it difficult to reason from the assumption that Mr Mangano was likely to disclose to Ms Bullen everything about his financial affairs.
In my view Ms Mangano's primary case fails. She has not established that either Mr Mangano or Ms Bullen participated in any fraud on the NCSC, when they executed the Camfield Transfer. The Court is mindful of the comfortable satisfaction that is needed before a finding of fraud can be made. Such a state cannot be reached for either Mr Mangano or Ms Bullen at the time of the Camfield Transfer.
The Real Property Act s 42 fraud exception to indefeasibility was not enlivened by their conduct in taking the Camfield Transfer. They both gained indefeasible title as a result of registration of the transfer. This also means that there was no earlier fraud on her part that could arguably taint Ms Bullen's later acquisition of title by survivorship from her joint tenancy with Mr Mangano after his death
The Court's finding on the principal issue means that it is no longer necessary to decide any of the other consequential issues raised by the parties, although the necessary factual findings have been made about those issues.
[11]
Conclusions and orders
For these reasons the court orders as follows:
1. The Amended Statement of Claim is dismissed as against the first and second defendants.
2. Subject to Order 3, order the plaintiff to pay the first defendant's costs of these proceedings on the ordinary basis, as agreed or assessed.
3. Grant liberty to the parties to apply to vary Order 2 by filing a motion to apply for a special costs order before 17 December 2019, and if filed, such motion may be made returnable on 4 February 2020, at 9.30am.
[12]
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: 03 December 2019