Pupo v Pupo; Pupo v Pupo

The Credibility and Reliability of the Witnesses

This is a case that is particularly fact sensitive. Findings of fact and assessment of the credibility of the witnesses and the reliability of the evidence are extremely important. It is necessary to form an assessment of whether to accept a witness as a witness of truth, as there are many facts, as well as a number of important conversations, that are the subject of dispute.
Of course, as has been observed, many of the events occurred over 25 years ago, some about 15 years ago, and only a few, more recently, with the result that the memory of witnesses will have faded. As has been demonstrated, there is some contemporaneous documentation, the authenticity of which is not disputed. Other documents, which may have proved useful, have not been able to be produced due to the passage of time that has passed since the documents would have been created.
As was observed by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315, at 318-319: "Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances … Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience."
In that case, his Honour was talking of a cause of action founded on s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act 1987 (NSW): see the discussion by McDougall J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813, at [10]-[18]. However, as McLelland CJ in Eq also pointed out, the views apply to all types of litigation.
The present case reveals the importance, also, of what Bryson AJ wrote in Pennimpede v Pennimpede [2009] NSWSC 85, at [29]: "Considerations of these kinds pose serious difficulties of proof for a party relying upon spoken words as a foundation of a cause of action in the absence of some reliable contemporaneous record or other satisfactory corroboration. In this case there is no contemporaneous document which supports the claim that the true arrangement was only a loan on mortgage, not a purchase, and there is no satisfactory corroboration. McLelland CJ in Eq's observations apply with only slight changes to the present case. A great deal of what I was told related to conversations which were alleged to have occurred well over 10 years before I heard the evidence. Most of what I was told about the conversations seemed to me to be little more than impressions, accompanied by plausible details which were very unlikely to be based and were not based on actual memory. These impressions came to me through a filter (perhaps an osmotic barrier) of years of conflict, argument and strong feeling."
Although the decision was subject to an appeal (see, Pennimpede v Pennimpede [2010] NSWCA 121), the appeal was dismissed, and there was no suggestion that what Bryson AJ had said about difficulties of proof was wrong.
The circumstances of this case, as has been noted, make what was written by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (trading as Uncle Ben's of Australia) (Federal Court of Australia, Tamberlin J, 29 June 1995, unrep), at 122-123 (in a passage cited with approval by the High Court when it upheld his Honour's decision: Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599, at [15]), appropriate to remember: "[Given the lapse of time] between the events and conversations raised in evidence and the hearing of the evidence before me, the only safe course is to place primary emphasis on the objective factual surrounding material and the inherent commercial probabilities, together with the documentation tendered in evidence. In circumstances where the events took place so long ago, it must be an exceptional witness whose undocumented testimony can be unreservedly relied on. The witnesses in this case unfortunately did not come within that exceptional class. The discussions referred to in evidence were capable of bearing quite opposed meanings depending on subtle differences of nuance and emphasis, and a proper appreciation of the significance of those matters must necessarily be considerably diminished over such a long period of time."
I also remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]: "When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2)."
I have also found useful what Lord Pearce wrote, in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd's Rep 403, at 431: "Credibility involves wider problems than mere 'demeanour' which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part."
I should also mention an article by the former the Chief Judge at Common Law, P McClellan entitled "Who Is Telling the Truth? Psychology, Common Sense and the Law" (2006) 80 ALJ 655, in which he wrote, at 665, quoting a passage from the "Guidelines Relating to Recovered Memories" (2000) of the Australian Psychological Society: "Memory is a constructive and reconstructive process. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempted remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval."
Justice McClellan's observations were recently described by Leeming JA, in Nominal Defendant v Smith [2015] NSWCA 339, at [82], as uncontroversial and "supported not merely by one's ordinary experience but also by a body of psychological evidence".
Section 140 of the Evidence Act 1995 (NSW) should also be considered. It provides: "(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account: (a) the nature of the cause of action or defence, and (b) the nature of the subject-matter of the proceeding, and (c) the gravity of the matters alleged."
Ordinarily, the more serious the consequences of what is contested in litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion. However, as has recently been reaffirmed by the Court of Appeal in Bibby Financial Services Australia Pty Limited v Sharma [2014] NSWCA 37, at [205], s 140(2) provides for no new principle but simply reflects the principles stated in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336, that there should be clear and cogent proof of serious allegations.
In Nguyen v Cosmopolitan Homes [2008] NSWCA 246, speaking with the concurrence of McColl and Bell JJA, McDougall J expressed the view, at [44]- [52], that proof on the balance of probabilities required a feeling of actual persuasion; that the event in question was more likely than not to have occurred; with "a probability in excess of 50%". His Honour repeated that view in Ballard v Multiplex [2012] NSWSC 426, at [126].
I have also remembered the general principle, stated by Lord Mansfield CJ in Blatch v Archer (1744) 1 Cowp 63; 98 ER 969, at 970, that evidence is to be weighed "according to the proof which it was in the power of one side to have produced, and in the power of the other side to have contradicted". This has particular significance in considering the submissions made by counsel for Saverio regarding the knowledge of Sam, Giuseppe and Frank on how, and to whom, the proceeds of sale were disbursed.
I should also mention that there is nothing, in writing, evidencing what is said to have been the agreement reached between Saverio and his three sons. Accordingly, the evidence of conversations said to have taken place inevitably suffers from lack of immediacy and from subjectivity compared with the available contemporaneous documentation which deals with other events. (I have not forgotten, also, that the competing witnesses are family members. It is, in those circumstances, unexceptionable that any agreement said to have been made between Saverio and his three sons, Sam, Giuseppe and Frank, was not in writing. However, this must be looked at in the context of other circumstances, including events involving Francesco and the evidence of Saverio as to what he was told by a solicitor, Mr Papallo.)
Finally, Saverio and Rosetta gave evidence through an interpreter. On occasions, the evidence given by Francesco was difficult to understand because of language difficulties. I have reminded myself that it is often not only difficult, but sometimes may be dangerous, for a Court, dependent on interpretation of evidence of witnesses whose first language is not English, to make clear findings on credibility.
In this case, however, I am able to do so, having reviewed the evidence, which confirmed a number of my impressions made at the time of the hearing. I have had regard, amongst other things, to whether the evidence given is inherently plausible or implausible; whether it is consistent; and whether, in a material way, it is, or is not, conformable to other evidence in the case including the available contemporaneous documents; and whether it is contradicted by other evidence which is undisputed or indisputable.
I have endeavoured to consider the evidence, not only in its context, but in the context of the total evidentiary fabric of the case. Common sense and experience in life is also applied. My conclusions cannot be clouded by sympathy.
With these considerations in mind, I turn to the evidence of each of the witnesses.
I was not overly impressed with the evidence of Saverio. Overall, I formed the view that he was an unreliable witness.
Their counsel described Saverio and Rosetta as "simple folk, lacking in sophistication". Whilst that might be an apt description of Rosetta (and I make no finding on whether it is or not), I am sure that the description does not apply to Saverio. In this regard, it is to be remembered that he and Francesco conducted a building business for about 7 years; and as will be read shortly, that in the 1980's and 1990's he conducted, on his own behalf, proceedings in a tribunal and in the Court of Appeal in New South Wales, in both of which he was successful. (Whilst ultimately unsuccessful in the Court of Appeal, in the substantive appeal, he was represented by junior counsel.)
I am satisfied that, at the hearing, Saverio understood far more of the English language than had been suggested by the requirement for an interpreter, a matter I raised with his counsel on the first day of the hearing, at T53.31-T53.47: "HIS HONOUR: Gentlemen, I'm going to take an adjournment. Mr Gemmell, it's quite clear to me that your client understands more than he's letting on. You either tell him, despite the fact that he's in cross examination he obviously isn't going to listen to me, because I've told him more than once that he has to wait for Mr Carolan to finish the question and the interpreter, who is doing a sterling job under obvious difficulties, he is answering in English, it's quite clear to me from my observations of him and please tell me if this is wrong he was able to read para 20 despite his denial of the ability to read para 20, he certainly gave me the impression that he was reading it, so I'm going to take a five minute adjournment, Mr Gemmell, and I think you need to have a firm word with the first plaintiff that it is not doing his case any good at all to continue in this way. Everything in this case so far as what he alleges the arrangements were depends upon my acceptance of him as a witness of truth. Mr Carolan, do you have any objection to me taking this course? I'm just trying to say it's quite clear to me, Mr Carolan, we are not going to finish before Thursday."
No objection by counsel for Sam and Rosa is identified in the Transcript.
In addition, Saverio appeared to be able to read English: T52.20-T52.40.
When his cross-examination continued on the second day of the hearing, which was some months later than the first day, the matter that I had raised became even more obvious. Counsel for Sam and Rosa asked questions regarding Saverio's employment record during the 1980's. Saverio stated that he had some casual work and that for some time he had been in receipt of unemployment benefits. There was then tendered reasons for judgment of proceedings in the Administrative Appeals Tribunal in March 1988 (Ex. 1D13), in which proceedings Saverio, who had appeared without legal representation (T83.42-T83.45), had successfully sought a review of a decision to cancel his unemployment benefit "upon the ground that the applicant was not making sufficient efforts to obtain suitable employment". It was not suggested that he had appeared at the time with an interpreter.
I have earlier referred to the Court of Appeal decision in which Saverio and Francesco were involved. Prior to the hearing in the Court of Appeal, there was an application for an adjournment of the appeal. In the reasons for judgment, although there is no specific reference to Saverio as the person who had appeared, I am satisfied, bearing in mind Saverio's evidence, that Francesco did not have anything to do with defending the litigation, that it was Saverio who "applied for an adjournment. He began to address the Court himself in support of his application without the assistance of an interpreter". However, his Honour also noted that "if [Mr Pupo] were compelled to proceed with the appeal today he would have to do so through an interpreter, without an appeal book and further, unable himself to read the appeal book, if he had one". (I note that these matters were raised in proceedings that were heard almost 20 years before the hearing of these proceedings.)
In addition, there are examples of Saverio answering questions asked in cross-examination before counsel had concluded the question and before the interpreter had had an opportunity to translate the question into Italian: T83.20-T813.26; T98.20-T98.25; T99.29-T99.36; T105.23-T105.30; and T106.12-T106.13.
Otherwise, and perhaps, unsurprisingly, Saverio did not appear to have a particularly good recollection of the conversations. I say, unsurprisingly, because the conversations took place about 25 years ago, they involved his children, who were, at that time, relatively young, and in circumstances in which the course proposed was for the benefit of the immediate family, because it would enable the family home, in which all of the children had lived for virtually all of their lives, and in which their parents also lived, to be retained.
To the extent that Saverio makes such an assertion, I am quite unable to accept that there was any agreement between Saverio and Francesco that each would receive $70,000 out of the proceeds of sale of the Leichhardt property. (It is difficult to know whether such an agreement is being asserted because in the Statement of Claim what is asserted is that he and Francesco "were told by [Saverio's] Solicitor that they should each receive approximately $70,000 for their respective shares in the property" (Paragraph 19) (my emphasis) and that "Francesco… informed [Saverio]… that he wanted to be paid money for the sale of his share of the house ($70,000)…") In this regard, Saverio's recollection of any conversations with Mr Papallo is far from precise.
I tend to the view that it might have been hoped that there would be sufficient to achieve a distribution of that amount to each of Saverio and Francesco. In this regard, Saverio, at the time, probably, was able to tell Mr Papallo, a solicitor, that the sale price was $291,000 and that $130,000 or thereabouts, had been borrowed and secured by registered mortgage. The difference ($161,000), taking into account costs and expenses of sale, might have led to the statement that about $70,000 should be left for each of the registered proprietors.
At the time that Saverio spoke with Mr Papallo, the total amount of the debts to be repaid, on the evidence of Saverio, does not appear to have been known. That the total of the debts would be less than $151,000 is highly unlikely, particularly bearing in mind the events of 1988 and 1989, and the borrowings that had been made during this period. That the total amount to be repaid under the mortgage, was shown to be a little more than $165,000, a short time later, suggests that it was unlikely that the total amount of the debts would be less than $151,000 at the time of the conversation with the solicitor.
Saverio did, however, give evidence that Mr Papallo "recommended that I take money the same way as the brother did": T95.34-T95.35; T110.03-T110.04. However, this recommendation was made at a time when the precise debts were not known.
(It is worth mentioning at this point, that, on the last day of the hearing, counsel for Saverio and Rosetta sought leave to re-open the case to file in court, and read, an affidavit sworn 11 October 2015, of their solicitor, Mr J Restuccia. Without objection, I granted leave to do so. The contents of the affidavit revealed that an email had been sent to Mr Papallo on 29 September 2015 confirming an earlier telephone conversation in which Mr Papallo had told Mr Restuccia that his firm had "no records pertaining to" and that he had "no recollection" of the conference with Saverio and Francesco prior to the sale of the Leichhardt property. Mr Papallo, in a letter, a copy of which was annexed to the affidavit, that "we have searched our files and all documents that are still in our possession and we have not been able to find any file or document in regard to your client, Saverio Pupo, in the sale of [the Leichhardt property]". He also confirmed in the letter that "we have no recollection of this matter at all".)
Also, for reasons to which I shall come, I prefer the evidence of Francesco to the evidence of Saverio, generally, and on this topic, namely that there was no discussion, in Francesco's presence, about what part, if any, of the proceeds of sale, Saverio was to receive. I accept that the only discussion with Francesco related to what amount he, Francesco, would receive to enable the sale of the Leichhardt property to Sam, Giuseppe and Frank, to be achieved.
(Although there were some submissions made about Francesco being paid more than that to which he was entitled from the proceeds of sale, it is to be remembered that had Saverio not agreed to pay him, and if Francesco had not agreed to the loan to Sam, Giuseppe and Frank, the likelihood was that the Leichhardt property would have had to be sold, with the result that Saverio and his family would no longer have a home. In addition, bearing in mind the rates of interest at, or about, this time, as evidenced by the original terms of the Deed between Francesco and Sam, Giuseppe and Frank, the grant of an interest free loan was a significant gesture by Francesco.)
Accepting Francesco's evidence regarding the sale of the Leichhardt property, it does seem a remarkable coincidence that the amount that he was told he would receive out of the proceeds of sale was the precise amount that Sam, Giuseppe and Frank required to enable the completion of the sale, the other amounts being borrowed ($190,000) or raised by them (about $31,000): T167.50-T169.20.
I raised the question of the coincidence with counsel during submissions. Counsel for Saverio and Rosetta made submissions that satisfy me that it was only a coincidence and nothing more: T273.09-T273.46. (Each of the other counsel accepted that it was a coincidence also, so I shall say nothing more about it.)
On the other hand, if the total amount of the debts was known to Saverio, then that total was not disclosed to Francesco. Also, it seems that the total of the debts was not disclosed to Sam, Giuseppe and Frank, although they did come to know about the amount due to ICLE prior to the sale being completed.
Nor do I accept Saverio's evidence that he told Sam, Giuseppe and Frank that he would "keep my money in the property and Mum and I will continue to live in the property" and that they said "[w]e are happy with that Dad. You and mum can live here for the rest of your lives". Importantly, each of Sam and Frank denies such a conversation, and I prefer his evidence to the evidence of Saverio, generally, and in this regard.
Even if the conversation occurred, at its highest it might have been a hope that there would be some of the proceeds of sale left to which Saverio would be entitled to receive. But it is clear that Saverio, even then, did not know precisely, how much had to be repaid out of the proceeds of sale to ensure the discharge of the registered Mortgage, the withdrawal of the caveat registered on title, and in respect of any other debts that needed to be paid.
Even accepting that a conversation regarding the family members living in the Leichhardt property occurred, that does not establish the interest that Saverio claims.
Furthermore, had such a conversation occurred, it is likely that, despite the family relationship, some attention would have been paid by all of the family members to the amount that Saverio was "keeping" in the Leichhardt property. One might have expected the topic to be discussed with Mr Sarajinsky.
More importantly, one might think that Mr Sarajinsky would have been able to calculate the amount, if any, that Saverio was entitled to receive out of the proceeds of sale after the payment of all secured, and other, debts and the amount of $70,000 to be paid to Francesco. As Saverio's solicitor, and one who appears to have been careful to ensure that Francesco's loan to Sam, Giuseppe and Frank, was properly documented and relevantly protected by caveat, he is likely to have been equally careful to ensure that any amount payable to Saverio, which he did not receive, and which created an interest in the Leichhardt property, was properly documented, and relevantly protected, in a similar, or at least in some, way.
Not only is there no evidence of any conversation with Mr Sarajinsky, there is no record of the amount, if any, that would be available after repayment of the secured, and other, debts and the amount of $70,000 to be paid to Francesco. All that one has, by way of a contemporaneous document, is the written Direction given to their solicitors by Sam, Giuseppe and Frank, to which reference has been made.
Another aspect of Saverio's evidence is demonstrably wrong. He asserted that he had taken out the loan the subject of the registered Mortgage dated 10 November 1988, securing the debt to Permanent Trustee Australia Limited, in order to repay "all" of his debts and that he was left "with one mortgage" (T46.43-T46.48; T57.45-T57.48; T60.21-T60.29; T63.08-T63.31). However, other evidence (Ex. 1D12) reveals that there was a subsequent "loan or other financial accommodation granted or to be granted" identified in Caveat Y244 (and an agreement in writing dated 24 February 1989), which Saverio was unable to explain. In addition, there is also evidence that Emery Berg & Co paid at least one other reasonably large amount ($26,514.31 to I Finance Corporation Limited) out of the deposit paid into its trust account on 30 July 1990.
It was submitted by counsel for Saverio that the court could not be satisfied that the amount paid to I Finance Corporation Limited was a debt that was required to be paid out of the proceeds of sale. In written submissions, counsel noted that Ex. 1D14 (the Trust Account Ledger) referred to payments out, one of which is for $234 and the "Item" referred to is "Gordon & Johnstone". The date of the payment is 30 July 1990. The entry immediately above that entry is also dated 30 July 1990, and the "Item" referred to is "I Finance Corp Ltd".
Somewhat inconsistently, it was submitted that: "Given that Gordon & Johnstone were paid sequentially to I Finance Corp and that Gordon & Johnstone acted for ICLE, the Court could reasonably find that I Finnace [sic] Corp & ICLE are the same entity and that there is no evidence of any other significant creditor at the time of settlement."
This submission does not take into account Saverio's evidence, on the second day of the hearing. It was put to Saverio that his signature on the Transfer had been witnessed by Mr Sarajinsky, to which he responded (T89.25-T89.45): "This is to do with the court case that I had with a finance company that lent me money… and the solicitor handling this was a Polish solicitor in York Street."
He also described Mr Sarajinsky as "the solicitor dealing with the finance company": T93.36-T93.40. He could not remember the name of the finance company but identified it as "the finance company who [sic] was charging me double rate of interest": T89.42-T89.46. He did not identify ICLE as the finance company to which he was referring.
Saverio added, at T94.01-T94.05: "I never gave any instruction to the solicitor Sarajinsky… for any dealing with the house. He was a solicitor for dealing with the finance company."
Saverio's evidence, if accepted, does suggest that ICLE, the caveator, and I Finance Corporation Limited, to whom Mr Sarajinsky paid an amount out of the firm's trust account, were not one and the same creditor, as was submitted, and that there was likely to have been two debts (other than the debt secured by mortgage), one secured on the Leichhardt property by caveat, and one to do with, as Saverio put it, "the finance company which lent me money".
Furthermore, the entries in Ex. 1D14 are equally consistent with an amount being paid to I Finance Corporation Limited, and an amount being paid to Gordon & Johnstone for the costs of the Withdrawal of Caveat Y244.
Furthermore, the Withdrawal of Caveat clearly refers to ICLE and not I Finance Corporation Limited. Had they been the one entity, it is likely that the reference in the Trust Account Ledger would not have been to I Finance Corporation Limited but to ICLE.
In the circumstances, I am unable to accept the submission of counsel for Saverio on this topic.
The evidence to which I have referred is also inconsistent with Saverio's affidavit evidence in reply that "my family did not have any significant financial problems until about 1988 or 1989": Paragraph 1(c) of his affidavit sworn 3 December 2014.
Saverio's evidence that Mr Sarajinsky was only acting in relation to the finance company is also inconsistent with the information contained in the firm's Trust Account Ledger, as well as with the documents relating to the loan to Sam, Giuseppe and Frank, which demonstrates, clearly, that Emery Berg & Co, and Mr Sarajinsky of that firm, was acting for Saverio and Francesco on the sale of the Leichhardt property.
A further difficulty in accepting Saverio's evidence, where in dispute or otherwise unsupported by contemporaneous documentary evidence, is that he said that he could not even remember the sale price of the Leichhardt property: T55.30-T55.41. (He would not even accept the proposition that the sale price was $291,000: T56.02-T56.07.) He asserted, also, that he could not remember what amounts had to be repaid out of the proceeds of sale, maintaining that there was, then, only one debt: T94.07-T94.12.
Finally, to demonstrate the difficulties of memory that Saverio asserted he had, the following cross-examination is instructive, at T95.48-T97.48: "Q. How much do you say was left over after the finance company had been paid, after the bank had been paid, Perpetual mortgage A. INTERPRETER: I don't remember what it was whether it was 200 or 150, I don't remember. Q. Can you just concentrate on my question for a moment? Let me ask it in a number of tranches. The sale price was $291,000, correct? A. INTERPRETER: No I don't remember. Q. Well that was the amount that was agreed and put into the contract, wasn't it? A. INTERPRETER: I don't remember. Q. The debt to Permanent Trustee company was $165,878. A. INTERPRETER: What I could've done then is to sell the house for $300,000 but I didn't do it because it would have meant putting the children on the, on the street. HIS HONOUR Q. At the moment you're just being asked about some things. Would you have a look at the document that I'm about to show you please? I'm showing annexure C being the copy of the transfer of the property. Would you have a look at that document? You've been shown that document before. A. INTERPRETER: This has been signed by myself and my brother. What is written there I cannot deny it. Q. Yes, would you have a look at about a fifth of the way down, you'll see the figure of $291,000. Do you see the figure of $291,000? A. INTERPRETER: I do not remember. Q. Please listen to my question. Do you see it there? A. WITNESS: Yeah, yeah, yeah. Q. That refers to the sale price of the property at Leichhardt. A. INTERPRETER: I can see that it is there, what can I say? But I do not remember. Q. Would you turn over the page please and look at annexure D? This is a document that relates to the amount paid to the company shown and it is the amount of $165,878.58? A. INTERPRETER: 165,878-- Q. 58. That was the amount that was said to be owing to the mortgagee, the company shown there? A. INTERPRETER: Yes, that amount about 160, 150. HIS HONOUR: Yes, Mr Carolan. Thank you, I'll take those documents back. INTERPRETER: Yes, that was the amount attached but then what they write, whatever as they write, they can write whatever they like. Q. The note of the sale proceeds an amount of $26,514.31 was paid to I Finance Corp Limited? A. INTERPRETER: That was my brother who had the problem, they put my name on it but I never, I didn't get the money, didn't - and I didn't say to give the money. Q. Where is that in your affidavit? A. INTERPRETER: This is the truth, that's what I'm saying. I didn't get money, I don't know what they did. Q. An amount of money was paid to Montepaschi(?) ICLE? A. INTERPRETER: When, when I got to 165 I paid all the debts that I had including Montepaschi. Q. When you were paid the 165 you weren't paid 165 by anybody, were you? A. INTERPRETER: The 165 were borrowed so that I could pay the other debts that I had. Q. You borrowed 130, didn't you? A. INTERPRETER: I don't remember that but the money that I borrowed from the company I borrowed so that I could pay all the debts and be left debt free. Q. Mr Pupo, you've had some time to think about this between the time we were last in Court and today. How much do you say you weren't paid out of the $291,000? A. INTERPRETER: I never got any money. A. WITNESS: Never. Q. How much do you say you were entitled to be paid? A. INTERPRETER: Same, same as my brother, as much as my brother got. A. WITNESS: The same. Q. There was no evidence from you of any agreement with your sons about that though, was there? A. INTERPRETER: My evidence is that my brother got a caveat on the house but I didn't want to take one because I didn't want to put my, the children on the streets. Q. Mr Pupo, there is nothing in your affidavit about any of that, is there? A. INTERPRETER: I've always said that, I've - I said that all along. Q. What I want to suggest to you is that by the time that various financiers had been paid out and the cost and disbursements of conveyance had been paid there was nothing left for you, was there? A. INTERPRETER: That's not true, my children always said you live here and your money's here. A. WITNESS: This is the truth."
I note, also, that when Saverio was asked whether Francesco had lent $70,000, being the amount that he agreed he would accept for his share of the Leichhardt property, Saverio answered "I don't know what he did": T56.22-T56.24. He did not say, on this occasion, that he did not remember. It is difficult to believe that Saverio did not know that Francesco was lending his share of the proceeds of sale to Sam, Giuseppe and Frank to enable the purchase to proceed to completion as they could not raise more than $190,000.
Nor could Saverio remember how much money, if any, had been repaid to ICLE. He denied that it was $24,121.42 and asserted that the debts to ICLE had been repaid when he had borrowed the money which was subject of the mortgage: T60.23-T60.29.
At the conclusion of Saverio's evidence, I was not satisfied of the reliability of his recollection of some of the events that had occurred. I am unable to find that the conversations alleged by him as to "keeping" money in the Leichhardt property were proved, on the balance of probabilities, to have occurred.
In my view, the evidence, overall, makes clear that there was no surplus money available from $190,000, being the amount borrowed by Sam, Giuseppe and Frank from the Commonwealth Bank, and that the whole of the available part of the purchase price was used to pay other debts. In addition, Ex. 1D14 makes clear that the amount of the deposit, and the interest accrued, was wholly disbursed as well for debts and expenses.
There are other matters, to which I shall turn later in these reasons, that provide additional support for the conclusion to which I have come regarding the reliability of Saverio's evidence.
Rosetta stated in her affidavit that Saverio had told her, in about 1990, that the business was in trouble and that if he and Francesco were unable to repay the mortgage debt, that they would lose the house.
Although there was some criticism of this evidence, and whilst I think it was unlikely that a reference was made in any conversation to the business being in trouble, I am also satisfied that there was likely to have been some general conversation to the effect asserted.
I am also satisfied that Saverio probably told Rosetta that Francesco had wanted to sell his share of the Leichhardt property. The general subject of the conversation was being discussed with Sam, Guiseppe and Frank. It is unlikely that Rosetta, as Saverio's wife and their mother, would be excluded from the conversations, although the significance to her of the conversations is difficult to know. However, she admitted in cross-examination, that she did not really remember what he had said to her, and she acknowledged that he was trying to protect her from additional worry.
Rosetta also stated in her affidavit that "there were a number of conversations between Saverio and… Sam, Giuseppe, and Frank, regarding [the three sons] purchasing the [Leichhardt] property to save it from repossession". She also stated, frankly, in her affidavit that "I do not recall specific details of those conversations" which "would usually occur at the dinner table". Again, I am satisfied that the subject of the conversation was likely to have been discussed.
I do not accept Rosetta's evidence, however, that there were discussions with Saverio that included Francesco. In my view, the topic of the sale of the Leichhardt property probably occurred at, or about the time, that Francesco moved. Thereafter, as will be shown, Francesco had no discussion with Saverio until shortly prior to the sale of the Leichhardt property.
Rosetta said that she recalled Saverio saying "[w]e will leave our money in the house. We will continue to live in the house". This conversation is difficult to accept. At its highest, if it were said, it was likely to have been said when there was a hope of some of the proceeds of sale being available, and at a time when Saverio did not know how much had to be repaid out of the proceeds of sale to ensure the discharge of the registered Mortgage, the withdrawal of the caveat registered on title, and in respect of any other debts that needed to be paid.
It is also inconsistent with Saverio's evidence which was to the effect that he was to leave his money in the Leichhardt property.
In cross-examination, Rosetta accepted that she could not recollect any conversation of how much money was being "left in the house" but thought that "it was half": T116.43-T117.28. Nor could she recollect when the conversation had occurred. She said that such conversations occurred both before, and after, Rosa and Sam were married.
Rosetta also recalled that one of the three sons, said, followed by the actual agreement of the other two, "Mum don't you worry. You and Dad can move downstairs and no one will ever make you move from there". Whilst I am not sure that she had an actual recollection of the conversation, I am satisfied, bearing in mind the general subject of the conversations, namely the retention of the Leichhardt property, that something along the lines of all of them continuing to live in the Leichhardt property was said. It cannot be forgotten that, at this time, all of their children were still living at home with Saverio and Rosetta and that the whole purpose of the sale of the Leichhardt property to them was to ensure that they would all have somewhere to live.
As I have said, even accepting that a conversation regarding them all living in the Leichhardt property occurred, that does not establish the interest that Saverio claims.
I find the conversations that Rosetta alleges that she had with Rosa about Saverio and her "having money in the house" did not occur. In this regard, I prefer the evidence of Rosa to that of Rosetta.
It seems highly unlikely, if the conversation had occurred at, or about, the time that Sam and Rosa were contemplating purchasing Frank's interest in the Leichhardt property, that Rosa would not ask how much Saverio and Rosetta had left in the house, or that Rosa would not raise the issue with Sam or Frank. There is no evidence that she did so and it was not suggested to her that any conversation with either of them had occurred.
There are other reasons, to which I shall return, for not accepting Rosetta's evidence of any conversation with Rosa relating to Saverio and Rosetta having money in the Leichhardt property.
I accept Rosetta's evidence that she did not expect money for what she did for Sam and Rosa in looking after her grandchildren. As she put it "we [were] on very good terms so there was a great deal of friendship so why should any money be asked [for] or given": T121.29-T121.31.
Having heard Rosetta's evidence, I am of the view that Rosetta did not go to the upstairs area of the Leichhardt property after Sam and Rosa married, unless invited to do so. She did not go upstairs to have meals other than "when I got invited it was on a special occasion, once in a while": T120.50-T121.07; T123.09-T123.19 and that, generally, Sam, Rosa and their children, lived separate lives to the lives of Saverio, Rosetta and Antonio.
My conclusions regarding the reliability of Saverio's evidence were not altered following the conclusion of Rosetta's evidence.
Antonio was next to give evidence. Although it might be thought that he has no personal interest in the outcome of the proceedings, he has lived with Saverio and Rosetta for the whole of his life, and it was not suggested that he would not continue to do so. To his credit, Antonio acknowledged that he had a "big interest in staying in" the Leichhardt property because Saverio and Rosetta were looking after him, but he denied giving evidence to assist them because of that interest: T127.40-T127.48.
To his credit, also, Antonio stated that he had suffered an injury in 2000, and that he had had an operation, following which he had difficulties of memory.
He acknowledged that in 1990, he did not know about the debts that Saverio and Francesco had that were secured on title to the Leichhardt property; that he did not recollect any discussion about the purchase price of the Leichhardt property at the time of its sale to Sam, Giuseppe and Frank; or any discussions about the loan obtained by them from the Commonwealth Bank.
I formed the view that he did not have an independent recollection of the events surrounding the purchase of the Leichhardt property by his three brothers. This is not intended as a criticism of his evidence, because I also remember that in 1990, the time of these events, he would have been about 14 years old.
Although Antonio stated that he could recollect Saverio saying "[d]on't worry about paying me for my share. I will leave the money in the property", he acknowledged that Saverio did not say how much money "would be left in the property": T125. Later, in re-examination (at T129.01-T130.31), when asked about the conversation, he gave the following evidence: "Q. Can you recall any conversation between your father, your mother and your brothers at the dinner table regarding the sale of the house to your brothers? A. Yes. Q. Could you tell me as best you can what your recollection of that conversation is? A. My uncle is selling out of the property Q. Could you keep your voice up and speak into the microphone? A. My uncle was selling out of the property and my brothers couldn't afford to buy the house unless my dad kept his house - money in the house. Q. What was said? A. Precisely I don't - I can't remember. Sorry. … Q. Do you recall whether or not there was any discussion about your parents and where they would live? A. Yes. Q. What do you recall about that part of the conversation? A. My brothers said that the house downstairs will be fixed up for my parents to live in, and upstairs they - at one stage or another they'll rent it out, collect the money, cause they were paying off - pay off the house. Q. Was there any discussion about uncle Frank in this discussion? A. That I can remember no. Q. Do you remember any discussion about uncle Frank in relation to his share of the property? A. Yeah. Yes I do. Q. What do you recall about those conversations? A. That my uncle Frank want..(not transcribable).. sell the house - sell you the house and my brothers decided to buy, buy his half. Q. I'm sorry I can't hear. A. Buy his half. My brothers decided to buy his half of the house. Q. When you say his half of the house A. Mm-hmm. Q. whose did you understand was the other half of the house? A. My father's. Q. Do you recall any conversation about what was to happen to that half of the house? A. My father's meant to stay there. My parents. Both my parents was meant to stay there until their death. CAROLAN: I'm sorry, the answer was non responsive. GEMMELL: Yes, well I was going to repeat the question. That's precisely what I was going to do. Q. Do you recall though, was there a conversation about what was to happen in relation to your father's share of the house? A. Not really. I can't remember. Sorry."
Antonio's evidence is neither accurate nor precise.
My conclusions regarding the reliability of Saverio's evidence were not altered following the conclusion of Antonio's evidence.
Giuseppe was then called, albeit that he is the third Defendant, principally because his evidence was said to support the evidence of Saverio and Rosetta.
I was reminded, during submissions, that his evidence is, effectively, evidence given against his own interest, since, if Saverio is successful, Giuseppe's interest in the Leichhardt property would be reduced. Whilst this is an important matter in considering his credibility, it is not the only matter. Also, his interest in the Leichhardt property is limited to one third.
Overall, I thought that Giuseppe was very emotionally involved in the proceedings and in the case being advanced by his parents. He viewed the conduct of Sam and Rosa as inappropriate, describing their conduct as "pushing their weight around saying that they owned two thirds of the property plus garage, they just were grabbing more and more, creating more problems": T133.06-T133.08.
I was not very impressed with Giuseppe's evidence and it does not enable me to alter my conclusions regarding Saverio's evidence. As in the case of Saverio, I am not satisfied of the reliability of Giuseppe's recollection of the conversations. In my view, some of his evidence is implausible and is inconsistent with other objectively established evidence, or evidence that was not really the subject of challenge.
Also, as I shall state, I prefer the evidence of Francesco, and of Frank, where there is any dispute between his evidence and the evidence of Giuseppe.
Giuseppe gave evidence that "[b]y the late 1980's Dad and Uncle Frank were approaching retirement age and their business was not doing well". Saverio was born in 1936 and would have been in his early 50's. Francesco was born in 1942 and would have been in his late 40's. Also, as earlier stated, the business had ceased to operate in 1977.
Giuseppe also stated that he had participated in a conversation with Saverio, Francesco, Sam and Frank "in 1989 or 1990" in which they had discussed the sale and purchase of the Leichhardt property. I do not accept this evidence, firstly, because Francesco gave evidence, which I prefer, that he had no conversations at all with any of Sam, Giuseppe, or Frank, between 1988, the time he moved out of the Leichhardt property, and after the completion of the sale in 1990. He had no conversation with Saverio between 1988 and about the time of the sale of the Leichhardt property.
Next, Giuseppe stated that, in the conversation, he said to Saverio and Francesco, "Frank Jnr, Sam and I want to buy the property from you. We will take on the mortgage as the three of us are working", whereas, in cross-examination, he had stated, in giving evidence about the transaction, at T156.33-T156.35: "Like I said, it was a family affair, we were trying to save the, the family home, there was three boys, two of them unemployed, we were trying to please the bank to get this loan. That, that's it.
Furthermore, there was no suggestion made by Saverio that the idea of the sons buying the Leichhardt property emanated from them, rather than from him. The suggestion that the three boys, then in their early and mid 20's would make this suggestion seems a little unlikely.
Interestingly, there is nothing in Giuseppe's first affidavit, affirmed 29 September 2014, in which he recites any conversation about Saverio "keeping" his share of the proceeds of sale in the Leichhardt property. He does state that Saverio "was not paid anything for transferring his half share of the property" but simply adds: "Instead he, Mum and Antonio continued to live upstairs with me, Frank Jnr and Sam".
Giuseppe does, however, refer to a conversation in his affidavit in reply affirmed on 17 December 2014, in which Saverio is alleged to have said "I will retain my share of the property and Mum and I will continue to live there". Had such a conversation occurred, I tend to think that it would have appeared in Giuseppe's first affidavit rather than in an affidavit in reply.
Giuseppe also gives evidence of a conversation with Sam and Frank, some months prior to Sam and Rosa's marriage, in which Sam said that "[w]e were thinking to buy one of you out". I do not accept that this conversation occurred as there was unchallenged evidence from each of Sam and Rosa that, in January 2000, they were looking to purchase an apartment in the Five Dock area, and that they subsequently found one which they wished to purchase. It was only when Frank raised the possibility of them buying his share that they gave consideration to doing so.
Nor do I accept Giuseppe's evidence that he had a conversation with Frank and Sam sometime after the marriage of Sam and Rosa, in which Frank said that "the house is valued at $600,000, but Mum and dad still have money in the house"; or that Giuseppe said "[t]heir interest would be worth around $120,000"; that Frank agreed to "accept $160,000" from Sam and Rosa for his one third share; or that Sam agreed with what had been said; and that Giuseppe said that he would allow Sam and Rosa "five years to get on your feet from when you were married but then we need to rent upstairs".
My reasons for rejecting his evidence on this topic are as follows.
Firstly, Giuseppe admitted in cross-examination that he had no basis to suggest that Frank had not received $200,000: T161.43-T161.45. (Frank denied that he was prepared to accept, $160,000 for his one third share, in circumstances where the value of that share was agreed to be $200,000.) As part of this reason, Sam and Rosa each gave evidence, and I accept, that they paid Frank, or paid for his benefit, the total sum of $200,000, which Frank had acknowledged he received (or of which he had the benefit): Ex. 3D1/14).
Secondly, Giuseppe was unable to explain, in a comprehensible way, how the value of the interest of $120,000 (or 20 per cent of the then value of the Leichhardt property) to which reference was allegedly made in this conversation, had been calculated. On this topic, in his cross-examination, the following passage appears at T150.35-T150.43: "Q. How did you place a value on that interest? A. Well, we evaluated the house at about 600 to 650 thousand and we basically divided it into three, for the three sons, came to two hundred and so thousands. And we said there is a value, there is equity that we should leave behind in case things go foul with Tony - with Sam and Rosie in the future. Anything can happen in the future. So if Frank can just accept a reasonable offer of 150, 165 thousand, leaving an amount of equity in the house, so if something goes wrong the equity can be used to assist my parents in buying the property or moving on in life."
This evidence does not suggest, even remotely, that Giuseppe was asserting to his two brothers that Saverio had any interest in the Leichhardt property. Interestingly, Saverio was not even mentioned in this version of the conversation, other than in the context of there being a fund available to "assist my parents in buying a property or moving on in life", to which the three owners would contribute.
Then, after further trying to explain how the figure of $120,000 was reached, he was forced to admit that "[w]e made a guess. It was three brothers involved, we made a guess, a fair estimate guess at their estimate value of their equity": T160.04-T160.07.
Like some of his other evidence, to which I shall refer, I did not find his evidence on this topic at all convincing.
Thirdly, Frank, Sam and Rosa, all deny such a conversation and I prefer the evidence of each to the evidence of Giuseppe.
Next, correspondence was tendered (Ex. 1D15), passing between Sam and Rosa's solicitors and Giuseppe, in April 2014, in which they had suggested the sale of the Leichhardt property upon the basis that its then value was $1.5 million. They offered to sell him their interest for $1 million, but in the alternative suggested that the Leichhardt property should be sold by public auction with a reserve price of $1.5 million.
Giuseppe replied in two letters, neither of which even faintly suggest that he was aware of, or that he asserted that, Saverio (or Rosetta) had an entitlement to any part of the proceeds of sale (although there was a reference to Saverio and Rosetta, living "in my 1/3 of the property at no benefit to myself and that they [had] agreed to have our mother and father live there till there [sic] death").
Indeed, in the correspondence, Giuseppe offered to purchase Rosa's share of the Leichhardt property for $500,000 (one third of $1.5 million), which does not suggest that her interest in the Leichhardt property was affected by any interest of Saverio or Rosetta in the property.
In the second letter sent, Giuseppe suggested that the solicitors "advise [their] client on this particular matter of what is to happen with the tenants first before we can consider any sale" and noted that Saverio and Rosetta "are seeking legal representation to this matter".
Finally, in cross-examination, he said at T162.36- T163.02: "Q. …Going first to your letter of 14 April 2014, nowhere in that letter do you make any reference to any equity in the property held by your parents, do you? A. When I wrote that letter Q. I'm sorry. A. No. Q. Similarly in relation to your letter of 22 April 2014 A. No. Q. I want to suggest to you that if, as you now seek to say, there was such an arrangement, and if there was an unpaid purchase price which had subsisted since 1990, that would've been the first thing you would've said in this letter - firstly in the letter of 14 April and in fact all you asserted was that you owned a third, Sam owned a third and Rosemaria owned a third. Is that correct? A. That's, that's what's on the title but in our hearts we know it's different."
The answers given by Giuseppe do not provide any corroboration of an agreement to leave money in the Leichhardt property to which Saverio was entitled from its sale.
I also do not accept Giuseppe's evidence, given in his last affidavit, and at T140.15-T140.24, that the deposit of $29,100 was paid to Francesco directly, at, or about, the time of the sale. I set out later some reasons for rejecting Giuseppe's evidence on this topic when I deal with Francesco's evidence.
Importantly, the trust account ledger (Ex. 1D14), to which reference has been made, does not reveal any such payment to Francesco. Indeed, Giuseppe conceded that the cheque for the deposit, made payable to Emery Berg & Co, was given to Saverio to pass on to the solicitors: T139.43-T139.50.
Ultimately, Giuseppe conceded that "all I know is that we paid $29,100 to Emery Berg directed at his solicitors, as a deposit": T141.22-T145.28. He did not attempt to explain his affidavit evidence and the unambiguous assertion made in it that the deposit had been paid to Francesco.
Another aspect that does not sit well with the contemporaneous documents, but which was relied upon by counsel for Saverio and Rosetta (and his own counsel) was Giuseppe's evidence that the amount of $190,000 that he, Sam and Frank had borrowed was "applied to paying out the existing mortgage to the Howard Mortgage Trust for a sum of $165,878.58, stamp duty, mortgage duty and various other expenses" (my emphasis).
I have earlier set out the contemporaneous evidence about the date of the payment of stamp duty on both the Contract and the mortgage (on 24 July 1990), whereas settlement of the sale of the Leichhardt property took place on 30 July 1990, some six days later. As stated earlier, in Ex. 1D4, there is a reference to $8,901, which includes the amount of stamp duty and mortgage duty, having been "paid by you by bank cheque drawn directly in favour of the Department of Finance" and the receipt bears the date 24 July 1990. This leads to the conclusion that it was not part of the $190,000 borrowed by Sam, Giuseppe and Frank.
There is no evidence of the "various other expenses" to which Giuseppe referred in his evidence.
Furthermore, unless Sam, Giuseppe and Frank were reimbursed from the borrowing, and it was not put in cross-examination to either Sam, or Frank, that he had been, the payment of stamp duty on the Transfer and mortgage duty occurred before the Commonwealth Bank was likely to have made the amount of the borrowing available to them (that is, at the time of the settlement of the Contract).
Although Giuseppe gave evidence, in cross-examination, that "we reinvested [sic] ourselves plus had paid other bills that were left behind, like counsel [sic] fees and bits and pieces that my father and my uncle couldn't afford to pay", he accepted that he "didn't put that in the affidavit": T144.20-T144.34.
The following passage of the cross-examination, at T145.01-T145.29, is significant: "Q. There is nothing in your affidavit, nor is there any document that you have produced, which suggests that any part of the $190,000 was ever returned to you, Sam or Frank. A. No. Q. In fact what your solicitors say is that when they settled the sale there was insufficient funds, either from your father A. Correct. Q. or available A. Correct. Q. to pay the rates? A. Stamp duties, bits and pieces. Q. Well, no - or to pay their fees? There's no suggestion by them that any of the $190,000 was paid back to you, was there? A. Like I see - you've got those documents in front of you. Those documents, they're not very clear most of the time. I mean, we borrowed the 290, 291, for the purchase of the property and 163 went to the, the, the main borrowers or the lenders, and the 29,000 went to Francesco Pupo Senior to pay off his caveats that he had on top of that loan. HIS HONOUR Q. I'm not sure that that's entirely accurate. First of all, you didn't borrow 291,000 A. No, no, sorry, not - the 190. I apologise, the 190 we borrowed, of the sale price of 291."
Later, Giuseppe said that, initially, he did not know the amount of the debts that were required to be repaid to have the caveat by ICLE withdrawn or the amount to repay I Finance Corporation Limited: T146.05-T146.11.
He also said that they did find out that "they had another $30,000 or so with ICLE" and that this was discovered on the second occasion they had gone to the Commonwealth Bank: T151.22-T151.32; T151.48-T151.50; T152; T153.44. He accepted that about $195,000 was required to repay the registered mortgagee and ICLE: T153.
Giuseppe maintained that he did not know anything about the payment made by Emery Berg & Co to I Finance Corporation Limited: T159.39-T159.42. I accept the evidence that he did not know of the payment. There is no reason why he would have known since that firm was not acting for the purchasers but for the vendors.
However, it may mean, since Giuseppe gave evidence that he knew of the ICLE debt which required the amount to be borrowed from the Commonwealth to be increased to $190,000, that there was not only the debt to ICLE that was required to be paid out of the proceeds of sale, but also the amount that was paid out of the trust account of Emery Berg & Co.
Although it was submitted by counsel for Saverio that the court could not conclude that the payment to I Finance Corporation Limited was the repayment of a debt, I am satisfied that it was. I base this finding upon, amongst other things, Saverio's evidence about what Mr Sarajinsky had been retained to do, and because of the likelihood that the vendors' solicitors would not have paid out of the funds held for, and unless it was a debt due by, the vendors.
I should also specifically mention the following exchange that occurred between Giuseppe and the Bench, at T167.50-T169.20: "Q. Mr Pupo, your attention has been directed quite a lot during the course of the cross-examination to the amounts that had to be paid out of the proceeds of sale. Could I just ask you some questions about the payment of the purchase price of the property? As I understand it your evidence and the evidence that has been filed so far is firstly that the purchase price was $291,000. That was a figure that was agreed to by your father, Saverio, and Francesco as vendors and by you, Sam and Frank as purchasers. Is that correct? A. Correct. Correct. Q. I understand that you, Sam and Frank raised between yourselves $29,100 which was paid by way of the deposit and deposited into the solicitors acting for the vendors on 12 July 1990. It also appears that $190,000 was able to be borrowed by you, Sam and Frank from the Commonwealth Savings Bank which resulted in a mortgage being registered on title to the property after the purchase was completed. Is that correct? A. Mm. Q. Thank you. Keep your voice up, would you? A. Correct. Q. …In addition to that I observe that in a letter to you, Frank and Sam dated 1 August 1990 which is exhibit 1D4 in the proceedings that an amount of $1,900 was paid for in cash by you and your brothers-- A. Correct. Q. --to the solicitors. And finally there was the loan amount of $70,000 which was the balance of the amount required to enable you to put together, as it were, with your brothers the total of the purchase price. Is that correct? A. Correct, yeah. Q. It was that $70,000 which was the subject of the mortgage to Francesco that you and your brothers subsequently signed. Is that correct-- A. On paper, correct, yeah. Q. --all of that correct? A. On, on paper, correct, yes. Q. I'm just wondering whether in fact the figure of $70,000 was reached because that was the amount that was the balance of the purchase price that had not been able to be raised by you, Frank and Sam to get to $291,000. A. Well yeah, yeah, correct, that's correct. Q. Is that what occurred? A. Yeah, well, there was, there was no money left. We were paying already a huge amount on the interest itself of 190,000. … HIS HONOUR: He says that that was all that was left. WITNESS: That's-- HIS HONOUR: They couldn't-- WITNESS: --..(not transcribable).. HIS HONOUR: --raise any more money themselves. Q. Is that right? A. Correct. There's no more money. Q. So the $70,000 was the balance of the purchase price which if there was not going to be a forced sale would be required to be raised to enable the purchase to be completed? A. Correct. Q. And it was for that reason, was it, that Francesco Senior agreed to, as it were, provide vendor finance in that sum to you three boys as the purchasers of the property? A. Correct. It wasn't what we paid for it."
(As previously mentioned, for the reasons provided by counsel for Saverio and Rosetta, I am satisfied that it is only a coincidence that $70,000 to be paid to Francesco out of the proceeds of sale was the precise amount required by Sam, Giuseppe and Frank to complete the purchase price.)
Francesco was another witness. He has no personal interest in the proceedings but was called in the case presented by Sam and Rosa. I was impressed with him in the witness box. I found him to be open and forthright and he endeavoured to assist the court. Whilst there were some difficulties of understanding some of what he said (because he spoke with a heavy accent and quite quickly), it seemed to me, at the time, and when I re-read his evidence, that he answered the questions asked of him to the best of his ability.
I regard Francesco as an honest witness and am confident that what he told me was truthful. Importantly, there is no financial benefit to be gained by him in the result of the case. Nor was it suggested to him, by counsel for Saverio and Rosetta, that he had any reason to support Sam's and Rosa's case in preference to their case.
(I reject any submissions made by counsel for Saverio and Rosetta that Francesco felt "sympathy for Sam who had helped him when he faced criminal charges", as this assertion was not put to Francesco during cross-examination. I also reject the submission that it is "human experience that Francesco is grateful to Sam": T267.06-T267.07.)
Furthermore, Francesco's version of the events is more consistent with the contemporaneous documents to which reference has been made, and with an overall view of the evidence.
I accept his evidence that he and Saverio shut down the building business in about 1977; that he then returned to full time work; that, thereafter, he started making all of the mortgage repayments because Saverio was unable to do so; that he provided about three quarters of his net wage to Saverio for the mortgage repayments and as a contribution for living expenses; and that when he did so, he had no family to support and regarded Saverio, Rosetta and the four children as "my only family".
It is also clear that at about the time that Francesco left the Leichhardt property in mid-1988, he spoke with Saverio about selling, and that Saverio was opposed to the idea, asking where he and his family would then live. I accept Francesco's evidence that the reason why the conversation occurred at that time was because Saverio was still receiving unemployment benefits and some cash for casual work, whilst Francesco was receiving only workers compensation benefits.
I also accept Francesco's evidence that following the conversation about the sale of the Leichhardt property, Saverio said that he would make all of the mortgage repayments after Francesco moved out of the Leichhardt property. Thereafter, Saverio was unable to keep up those repayments and that the debts secured on the Leichhardt property continued to increase as a result of him being unable to do so.
I accept Francesco's evidence that he was approached by a mutual friend of his and Saverio, Mr Pasquale Polistina, and that a discussion had taken place regarding the sale of the Leichhardt property to Sam, Giuseppe and Frank, otherwise there would be a forced sale. I am also satisfied that he was told that if he agreed to sell the Leichhardt property, he would receive $70,000 out of the proceeds of sale.
(The fact that Francesco was approached by a third party, rather than by Saverio, or one of Francesco's nephews, also provides a basis for rejecting the evidence of Saverio, and of Giuseppe, that Francesco was coming and going from the Leichhardt property. Had this occurred, there would have been no need to involve a third party, albeit a mutual friend of Saverio and Francesco.)
I have earlier referred to accepting Francesco's evidence that he moved out of the Leichhardt property in mid-1988 and that he did not return. I also accept his evidence that after he left "I never, never meet Frank, Sammy, Joe when I sell the place. I never have any conversation with them": T215.40-T215.41.
There was no reason put to him for making untrue statements about each of these matters. This makes Giuseppe's evidence about the conversations that he said he had involving Saverio and Francesco unlikely and I have said that I do not accept those conversations.
Importantly, then, I am satisfied that there was no discussion between Francesco and Saverio, or with Francesco and any solicitor, as to what amount, if any, Saverio would receive out of the proceeds of sale. Francesco's evidence is clear that when he attended on Mr Papallo, with Saverio, there was only talk about what Francesco's share of the proceeds of sale would be, not what Saverio would receive out of those proceeds: T213.03-T213.04; T213.17-T213.23.
I reject the submission by counsel for Saverio that the amount of $70,000 communicated to Francesco as his share was "most likely to have just been an estimate of what they thought would be left over" because, in fact, there was no evidence to suggest that there was ever any amount to which Francesco would be entitled. Furthermore, the amount of $70,000 was the amount that he actually lent to Sam, Giuseppe and Frank to enable the completion of the sale.
There is no suggestion that Francesco made any cash contribution to enable the purchase to proceed. As stated, what he did was to provide vendor's finance, in the amount of $70,000, to enable Sam, Giuseppe and Frank to complete the purchase of the Leichhardt property.
Francesco must have been informed, at some point in time, that Sam, Giuseppe and Frank would not be able to pay the $70,000. It was only then that he agreed to enter into the Deed and its variation to which reference has been made. (I have dealt with the lodgement of the caveat, the repayment of an amount to him in 1994, and the withdrawal of the caveat that was lodged on his behalf.)
It is to be remembered that Francesco agreed to receive no interest for 5 years, which, at that time, would have meant that he would not receive a significant amount of interest.
As stated earlier, I do not accept any suggestion in Giuseppe's evidence that Francesco received any part of the proceeds of sale (namely the deposit of $29,100) of the Leichhardt property in 1990. Firstly, Francesco denied that he did so, a denial that I have no hesitation in accepting. Secondly, it is clear from Ex. 1D14 that no payment was made to Francesco out of the funds paid to Emery Berg & Co. Thirdly, had the deposit, or any part of it, been paid to Francesco, it is unlikely that he would have received the amount that he did receive in 1994.
There was no suggestion in any correspondence passing between solicitors in regard to the repayment to Francesco, in 1993 and 1994 that he had received, directly or indirectly, any amount out of the proceeds of sale.
I am satisfied that where there is any conflict between the evidence of Saverio and Francesco, or the evidence of Giuseppe and Francesco, I should accept the evidence of Francesco unless the evidence of the other witness is supported by a contemporaneous document.
Frank also gave evidence and was cross-examined. I am satisfied that Frank gave his short evidence calmly and dispassionately. I accept his evidence as truthful. Also, I remember that he has no personal interest in the outcome of the proceedings as he, no longer, has any interest in the Leichhardt property.
It was not put to Frank by counsel for Saverio and Rosetta, that he was giving evidence in order to assist Sam and Rosa, which evidence was untrue.
Frank says, and I accept, that he was paid for his one third share of the Leichhardt property, in about 2000. He confirmed that the value of that share, at the time of the payment made to him, or on his behalf, was $200,000, the whole of which amount he received. He gave evidence that he had received about $149,000 directly into his bank account; he had his share of the mortgage debt repaid (about $35,000); and he received the balance from Sam in cash: T230.35-T230.47. (He did not mention the cash component in his affidavit, but he confirmed, in cross-examination, that he had received an amount in cash from Sam: T231.03-T231.07).
Frank also denied any conversation with Saverio in which it was suggested that any part of the proceeds of sale to which Saverio was entitled from the sale to Sam, Giuseppe and Frank would be retained in the Leichhardt property: T229.01-T229.13.
Finally, as I have earlier noted, it was not put to Frank that any part of the amount of $190,000 not used to repay the mortgage debt, was repaid to him or was used to reimburse him for moneys expended on the Leichhardt property.
Sam was another witness to be cross-examined. He was cross-examined on the key events in question and he was not shaken in the process.
It was put to him that some of his evidence, as to what was paid out of the proceeds of sale had not been based on an actual recollection but had been calculated bearing in mind what had been found to be payments that had been made. He accepted that this was so and did not prevaricate in giving this answer.
I am not sure that the criticism of his evidence was valid because it was not for him to establish how the proceeds of sale had been spent, or for that matter, what amount, if any, had been left in the Leichhardt property by Saverio. As he admitted, he did not know but was inferring the expenditure from the fact that the amount borrowed from the Commonwealth Bank was expended. It was not put to Sam that any part of the amount of $190,000 that was borrowed and not used to repay the mortgage debt, was repaid to him.
Importantly, Sam, too, denied that any conversation had occurred between himself and Saverio in which it was suggested that any part of the proceeds of sale to which Saverio was entitled would be retained in the Leichhardt property. That such a conversation took place is unlikely in any event, and that Sam's (and Frank's) evidence in this regard should be accepted, is also based on the written direction to the solicitors regarding the adjustment of rates. Had there been available funds from the amount borrowed, then one might think that the rates would have been adjusted in accordance with proper conveyancing practice. Also, there would have been no need for each of Sam, Giuseppe and Frank, to contribute $1,900 towards the purchase price, which it seems they did.
Rosa also denied that she had heard about any interest that Saverio held in the Leichhardt property prior to her marriage to Sam. This is hardly surprising since she met Sam in 1994, when in her early 20's and at a time when she would not have been interested in his family's private affairs. They did not marry until about 5 years later.
Following their marriage, however, it is far more likely that Rosa would have taken an interest in family affairs, particularly when those affairs might impact upon her, and Sam's, financial interests.
Rosa gave evidence that she had a conversation with Rosetta to the effect that Frank had offered to sell her his interest in the Leichhardt property, but she categorically denied that Rosetta had responded by saying anything about any money that she and Saverio had in the house. Rosa also disputed that Rosetta had said that she, Saverio and Antonio, would continue to live downstairs: T239.25-T239.38.
Rosa maintained her denial that when she purchased her interest in the Leichhardt property, she knew that Saverio had an interest in it: T247.40-T247.50. Having observed her in the witness box, I am satisfied that this evidence was truthful.
I have no doubt that had there been any discussion about Saverio having an interest in the Leichhardt property, she would have been involved in that discussion, since, effectively, she (and Sam) were purchasing Frank's one third interest for its full value. That he was paid one third of what Sam, Giuseppe and Frank agreed was the value of the Leichhardt property cannot but lead to the conclusion, when taken with other evidence to which I have referred, that there was no discussion about any interest held by Saverio and Rosetta in the Leichhardt property.
Furthermore, had there been such a discussion, it would have been the perfect opportunity for all of the family members to calculate the value of that interest, in order to determine the true value of Frank's share. That they did not do this is clear from Giuseppe's evidence to which I have already referred.
If Saverio did, indeed, have a 20 per cent interest in the Leichhardt property, as was asserted by Giuseppe, the share of each son would have been reduced by about 6.66 per cent, or, taking account of its agreed value of $600,000 at that time, by about $40,000. Rosa specifically denied that she and Sam paid Frank $160,000, as did Frank.
Alternatively, that Sam and Rosa would have been prepared to pay an additional amount of $40,000 to purchase Frank's interest in the Leichhardt property seems somewhat unlikely, and if they paid $200,000, which I accept they did, Saverio would not have been receiving the benefit because the value of that proportionate interest was being paid to Frank.
Rosa was also cross-examined about the continued occupation of the Leichhardt property by Saverio, Rosetta and Antonio. Whilst she was somewhat defensive, I regard her evidence as truthful on this topic also. She denied that any agreement had been made that they would continue to live in the downstairs area because Saverio had an interest in the Leichhardt property.
Where her evidence conflicts with that of Saverio, Rosetta or Giuseppe, I prefer her evidence.
Rosa explained that following her marriage, she was "happy in my space", which she regarded as "ample", and that she had not made any enquiries about the reasons why Saverio, Rosetta and Antonio were living in the downstairs area. She said, "I was 24 years old, so I didn't make any enquiries".
She also said, candidly, that she had no interest in whether Giuseppe was, or was not, receiving any rent from Rosetta, as she did not regard it as her business.
In relation to Rosa's evidence as to what she would have done if she had been told of any interest that Saverio had, I remember what was said in Seltsam Pty Ltd v McNeill [2006] NSWSCA 158, per Bryson JA, with whom Handley and Tobias JJA agreed, at [115]-[123], that evidence by a witness of what he, or she, would have done, if some aspect of the past had occurred differently to the way it in fact occurred, is admissible, though its weight should be carefully assessed because "[o]bservations on the limited value, and self-serving and hindsight nature of evidence of this kind have considerable force…" (at [121]). Even so, I accept her evidence, which evidence I consider to be inherently credible.
Whilst Rosa, not unnaturally, was a little emotional, she was prepared to make concessions about her relationship with Rosetta, and she conceded that Rosetta had assisted her, on occasions, in looking after the children. I accept her evidence that Rosetta did, on occasions, look after Danielle and Marcus when she had time to do so. As described, it was an ad hoc arrangement.
Rosa also accepted that, on occasions, Sam might have called on Rosetta to collect one, or both, children from school, if he was running late. She said collecting them from school was part of his parental duty.

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