These proceedings are concerned with a dispute between the plaintiff/cross-defendant, Livy Szeto (the Sister), and the defendant/cross-claimant, Liming Situ (the Brother), as to the ownership of several properties situated in suburban Sydney. The Brother and Sister are siblings. The Sister came to Australia in 1988. The Brother came to Australia on a student visa in December 1989 to study English. He became a permanent resident in 1995. The parents of the Brother and Sister arrived in Australia in about April 1998 on tourist visas. After their arrival, they applied for family reunion visas and were subsequently granted permanent residence.
The siblings are in dispute concerning the beneficial ownership of four properties (together the Properties). The Properties are situated at Henry Street, Carlton (the Carlton Property), Yerrick Road, Lakemba (the Lakemba Property), Hannam Street, Turrella (the Turrella Property) and Dowling Street, Arncliffe (the Arncliffe Property).
On 20 November 2017, I published my reasons for determining beneficial ownership of the Carlton Property [1] and orders were made that the Sister was entitled to 48.8% of the proceeds of sale of the Carlton Property. In the course of the hearing in relation to the Carlton Property, it became apparent that there were disputes between the Sister and the Brother as to beneficial ownership of the other three of the Properties and that there is a substantial dispute as to accounts between the two siblings in relation to the income and outgoings in relation to all four of the Properties. On 24 October 2018, an order was made by consent that the determination of the ownership based on respective contributions to the purchase price, for each of the Lakemba Property, the Turrella Property and the Arncliffe Property, be dealt with as a separate and preliminary issue pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW). Once that determination as to beneficial ownership has been made, it will be necessary for accounts to be taken.
All of the Properties are under the provisions of the Real Property Act 1900 (NSW) (the Real Property Act). The Sister is the registered as the sole proprietor of the Lakemba Property. The Brother and Sister are registered as the proprietors of the Turrella Property as tenants-in-common in equal shares. The Sister is registered as the sole proprietor of the Arncliffe Property.
The legal principles to be applied are not in dispute. Thus, each of the siblings accepts that there is a rebuttable presumption that the register maintained under the Real Property Act correctly reflects beneficial ownership. That presumption might be rebutted by the presumption of a resulting trust if a party has contributed to the purchase price of a property registered in the name of someone else. The presumption of a resulting trust might also be rebutted by the presumption of advancement by the person contributing to the purchase price. [2] Alternatively, evidence as to the intention of the parties at the time of the acquisition may rebut any presumption of a resulting trust. To the extent that borrowed funds are contributed to the purchase price, they are generally considered as a contribution by the person liable for repayment of the loan. [3]
The dispute between the Brother and the Sister concerns their respective contributions to the purchase price of the Properties. In that regard, there are disputes as to the communications between them as to their respective intentions in relation to contributions made to the purchase prices of the Properties.
Both the Brother and the Sister were cross-examined at some length. It was apparent that the Sister understands English and she agreed that she understands English and can speak English. Nevertheless, she insisted on giving evidence through an interpreter. However, on occasions she responded in English. During oral addresses, she gave oral instructions to her counsel, apparently in English. The Sister was very voluble in giving evidence and her responses in cross-examination were often unresponsive and evasive. She persisted in making speeches and engaging in long outbursts despite being asked many times to desist from doing so. Very often she began responding to questions before the interpreter had completed his interpretation. On the whole, I find it difficult to accept the oral evidence given by the Sister. While the Brother was fairly measured in his responses in cross-examination, I do not feel confident in accepting all of his evidence as credible. It is therefore necessary to have regard to such contemporaneous and other objective material as is available.
Discussions that took place between the Brother and the Sister prior to the purchase of the Properties took place in Mandarin. However, each swore an affidavit purporting to give evidence of the English translation of the Mandarin words used, without any evidence as to the Mandarin words allegedly used in the discussions. I indicated considerable disquiet about evidence of that character, as a result of which the relevant parts of the affidavits were not read. Each of the parties then gave oral evidence as to the words allegedly spoken in Mandarin. That evidence was interpreted by an interpreter familiar with Mandarin and English.
[2]
Documentary Evidence
At the commencement of the hearing, the parties agreed that, having regard to the limited questions to be decided, considerable numbers of documents that had been copied for the purposes of a Court Book and tender would not be tendered. That is to say, the limited question involved determination of the respective contributions made to the purchase of the Lakemba Property, the Turrella Property and the Arncliffe Property by the Brother and the Sister, on the basis that, after their beneficial interests in the Properties, if any, had been determined on the basis of their respective contributions to the purchase price, an account would be taken in respect of their respective contributions to outgoings and receipt of income from the respective Properties. The material that was not tendered was considered to relate to the subsequent question of taking accounts.
On the other hand, the parties accepted that the extent to which they contributed to outgoings or received income from the Properties could have some relevance to the question of the communications between them prior to and at the time of acquisition of the Properties. That is to say, the fact that one party might have contributed all of the outgoings and received all of the income from a particular property, without complaint or objection from the other party, may well go to the credibility of any assertion by either party as to oral conversations said to give rise to an agreement or understanding prior to acquisition.
[3]
The Lakemba Property
In his further amended statement of cross-claim of 17 May 2019, the Brother seeks a declaration that the Sister holds a 38.1% share, or such other share as the Court determines, of her interest in the Lakemba Property for him and an order that she transfer such share to him. In support of that prayer for relief, the Brother alleges that, in September 1992, the Sister purchased the Lakemba Property for $104,500 and became the sole registered proprietor of it. The Brother then alleges that he contributed $30,000 towards the purchase price paid for the Lakemba Property on the basis that he would be a co-owner of it. The Sister denies that allegation and asserts that the Brother lent the sum of $30,000 to her.
The Brother then alleges that the balance of the purchase price for the Lakemba Property was provided as to $27,500 from the Sister's own funds, as to $25,000 from funds borrowed by the Sister from Advance Bank Australia Limited (Advance Bank) and as to $22,000 from a gift to the Brother and Sister jointly by their father. In response, the Sister asserts that their father lent the sum of $22,000 to her to enable her to buy a home unit and denies that the sum of $22,000 was a gift by their father. It is common ground that the Sister also paid solicitors' fees and stamp duty in the sum of $3,226.35 in connection with the purchase of the Lakemba Property.
The Brother gave evidence to the effect that it was the Sister's idea to buy the Lakemba Property. He said that, in mid-1992, he was living in a student share house at Wiley Park. There were approximately ten people living in the house, including the Sister. He said that he had a conversation with the Sister to the following effect:
Sister: "I've been renting for a long time, why don't we just buy a property to save the rent".
Brother: "It's a good idea; we can save rent in that way".
The Brother's evidence was that he had worked for two years by then and had about $30,000. He said that he suggested to the Sister that he should contribute all of his funds available to the purchase of the Lakemba Property. The Sister said that she had some money and that they should put their resources together to buy an affordable property. One of them said that it was most probable that they could only buy a unit because a unit was cheaper.
The Brother said that the discussion was about first buying a property to save the rent and, secondly, about putting their money together to purchase a property. He said that they decided to look for a property near where they lived at Wiley Park and that they "looked and looked" and in the end the Sister found an ideal property at Lakemba. He said that she asked him to go with her to have a look at the Lakemba Property and if both of them were happy they would buy it. He said that he went with the Sister and had a look and was happy and so they placed a deposit and in the end they purchased the Lakemba Property.
The Brother then said that he and the Sister asked their father to contribute about $22,000 to the purchase. He said that they called their father in China and said that they had found a unit in Australia and wanted to buy it for the purchase price of $104,500, that the Brother could contribute $30,000 and the Sister would be able to contribute about $25,000. He said that their father said that he could give them $22,000 and that the Brother replied "that's very good".
The Brother said that the Sister found a solicitor whose name the Brother could not remember and that he went to the solicitor's office with the Sister perhaps twice. He said that he did not have any discussions with the solicitor and that the Sister had discussions with the solicitor because his English was not good and he could not understand what they were talking about.
The Brother said that, at the solicitor's office, he and the Sister had a discussion but he could not clearly remember what they discussed. He said that his recollection was that he was asked to go to the office to sign a document and there was discussion about:
"…the protection of my - this $30,000 interest. It's about the protection of my investment of this $30,000".
When the Brother was asked about the document that he was asked to sign in the solicitor's office, he said that he could not find the copy that he had. When asked whether the Sister said anything about what the document was before he signed it, the Brother replied:
"she only told me that this will protect my $30,000 investment".
The Brother said that the Sister told him that she would guarantee his "$30,000 investment". When asked whether he or his Sister said anything in the solicitor's office, the Brother responded "I asked that my share and she agreed". That answer is somewhat nonsensical. The Brother said that they did not say much in the solicitor's office but he "just signed something". He said "she just guaranteed my investment and my ownership".
When asked whether anything was said by the siblings about the proposed purchase, apart from what was said in the solicitor's office, the Brother's response was "we didn't discuss much. A purchase is just purchase". He said that he could not remember whether anything else was said. When asked whether there was any discussion about who was going to be the owner of the Lakemba Property, he responded:
"I would like to add my name to the property but at that time ... we discussed about it but I knew that I wasn't able to add my name to the property".
The Brother said that the Sister told him that the Lakemba Property should be in her name because the Brother could not add his name to it because he did not have "the Australian residency". He said that the Sister had temporary residency at the time and he did not have temporary residence at that time.
The Sister's evidence was that, after the Brother arrived in Australia, he lived with her for about a month in a share house at Wiley Park but then went to work in Dubbo and continued to work in the country, only returning to Sydney for short periods. She said that, in 1992, she became a temporary resident of Australia and was working for a shoe company. She said that the Brother was still on a bridging visa and could not buy any property in Australia. The Sister said that, during that time, she had saved some money and wanted to buy a home for herself and was aware that, after his years in Australia, the Brother had also saved some money.
In her affidavit of 22 March 2019, the Sister said that, in about May 1992, she wrote a letter to her father in Mandarin that said words to the following effect:
"I have found an apartment in Sydney, I have saved $30,000 and [the Brother] can lend me $30,000 and I want to buy this unit and I need $22,000. I can afford to buy a Unit if I have some more money. I really want to buy this Unit."
That part of her affidavit was read without objection notwithstanding the absence of any evidence as to the whereabouts of the alleged letter.
In her oral evidence, the Sister said that, in early 1992 she intended to buy a property in Belmore, the asking price for which was $82,000 and she thought it was quite inexpensive. She said that she told the Brother on 17 July 1992 that she had already placed a deposit on the Belmore property, had arranged a home loan of $25,000 and had arranged legal documents. She asked the Brother to take the legal documents to the lawyer's office in Dulwich Hill because he had a motor vehicle and she did not.
The Sister said that she pointed the Belmore property out to the Brother and said "that property is only asking for $82,000. I want to buy that property". She said that the Brother responded "I have about $30,000. I can lend it to you" and that she said "I will ask my father for another $22,000". She said that there was a shortage of $22,000 and she was not sure whether she could get a home loan from the Bank. The Sister said that her father transferred the money to her and she received a cheque. In her affidavit, the Sister said that their aunt in Hong Kong supported both of them when they first came to Australia by sending money from Hong Kong. The Sister said in her affidavit that the aunt sent a cheque for $22,000 in about June 1992.
The Sister said that she applied to get special permission for foreign investment in Australia and that, upon receiving that special permission, she took "the documents" to Advance Bank, who approved a home loan of $25,000. There was no documentary evidence of those matters.
The sister said that, before she could buy it, the Belmore unit was sold to another purchaser. The Sister said that she therefore looked for other properties because she was concerned that the cheque that she had received from her aunt could be lost. She looked at a few properties and in the end she chose the Lakemba Property. She said that the extra funds required to make up the price payable for the Belmore property were arranged through a broker.
The Sister said that she told the Brother that she wanted to buy the Lakemba Property and that she had all the documents and paperwork "in order to avoid any future disputes". She said that she suggested to the Brother that they go a lawyer's office. She said that they then went to a lawyer's office and she told the lawyer "this is my document, this is my father's document, this is the bank home loan documents. Please do a good job". It is quite unclear what the Sister was referring to in saying that.
Messrs Alidenes, solicitors, acted in connection with the purchase of the Lakemba Property. A fee note of 18 September 1992 addressed to the Sister contains a statement of account which relevantly includes the following receipts:
13.8.92 By payment $2,000
21.8.92 By mortgage advance $25,000
By mortgage $52,000
By payment $18,276.35.
Clearly enough, the "mortgage advance" item of $25,000 refers to the Advance Bank loan. The "mortgage" item of $52,000 appears to refer to the sum of $30,000 provided by the Brother together with the sum of $22,000 provided by the father. It is curious that the total is referred to as "mortgage". However, the language is suggestive of loans by the Brother and the father, rather than an investment by the Brother.
The Sister contends that, on the balance of probabilities, the document signed by the Brother in the solicitor's office was a mortgage or an acknowledgement of debt in respect of a loan of $30,000. Otherwise, she contends, Alidenes would not have referred to "mortgage" in the statement. However, the only charge that Alidenes invoiced to the Sister was in respect of the mortgage to Advance Bank. There is no evidence of any charge being made by Alidenes for the preparation of a document evidencing a loan by the Brother to the Sister. I would not draw the inference, as the Sister invited me to do, that the solicitors prepared a document evidencing indebtedness of the Brother to the Sister in respect of the $30,000 contributed by the Brother in connection with the purchase of Lakemba Property. However, it does not necessarily follow that the sum of $30,000 contributed by the Brother was not a loan.
The question of whether there was any impediment for the Brother in acquiring property in Australia is not without doubt. It is likely that the references by the parties to incapacity to own property in Australia were intended to be references to provisions of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (the Foreign Acquisitions Act). At the relevant time, s 26A(2) of the Foreign Acquisitions Act relevantly provided that, where a person to whom s 26A applies enters into an agreement by virtue of which that person acquires an interest in Australian urban land and did not, before entering into the agreement, furnish to the Treasurer a notice stating the intention to enter into that agreement, the person is guilty of an offence. It is common ground that the Lakemba Property was Australian urban land for the purposes of the Foreign Acquisitions Act. Section 26A(2) also provided that, where such a person, having furnished a notice to the Treasurer stating the intention to enter into such an agreement enters into that agreement before the expiration of 40 days after the day on which the notice was received by the Treasurer or before the day on which advice is given that the Commonwealth Government does not object to the person entering into that agreement, whichever first occurs, is also guilty of an offence.
Section 26A applies, relevantly, to a natural person not ordinarily resident in Australia. Under s 5A, a natural person who is not an Australian citizen is ordinarily resident in Australia at a particular time if and only if:
the person has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time; and
at that time the person is in Australia and the person's continued presence in Australia is not subject to any limitation as to time imposed by law.
Section 21A of the Foreign Acquisitions Act empowered the Treasurer, in certain circumstances, to make an order prohibiting a proposed acquisition of an interest in Australian urban land by a foreign person. Under s 21A(4), where a foreign person has acquired an interest in Australian urban land and the Treasurer is satisfied that the acquisition is contrary to the national interest, the Treasurer may make an order directing the foreign person to dispose of that interest to a person or persons approved in writing by the Treasurer. A reference in s 21A to a foreign person was, by the operation s 4(6) to be a reference to a natural person not ordinarily resident in Australia.
Neither the Sister nor the Brother suggested that either of them left Australia during the period between their respective dates of arrival and when the Lakemba Property was acquired by the Sister. There is no evidence that the continued presence of either of them in Australia was subject to any limitation as to time imposed by law. It therefore appears to follow, on the basis of the evidence, that the Foreign Acquisitions Act did not constitute an impediment for either the Sister or the Brother in acquiring the Lakemba Property. In any event, s 38 of the Foreign Acquisitions Act provided that an Act was not invalidated by the fact that it constituted an offence against the Foreign Acquisitions Act. Thus, the only relevance of the Foreign Acquisitions Act is the extent to which light might be thrown upon the evidence of both the Brother and the Sister that they each believed that there was some prohibition on the Brother acquiring an interest in Australian urban land.
In her affidavit of 3 December 2018 the Sister said that, in 1992, the Brother was on a bridging visa and could not buy property in Australia. The Brother corroborated that statement and advanced it as the reason why his name did not appear as a purchaser of the Lakemba Property. The incapacity of the Brother to own property in Australia would be quite irrelevant to the Sister's case that he lent the sum of $30,000 rather than contributed it towards the purchase price of the Lakemba Property. The fact that the Sister referred to the matter in her affidavit rather indicates that it was in their minds at the time when they discussed the purchase of the Lakemba Property. There is otherwise no reason at all for the Sister to refer to the matter.
At the hearing in relation to the Carlton Property, the Sister was represented by Mr C Evatt QC. In the course of opening, Mr Evatt said:
"Finally, there's what I could describe as the elephant in the bedroom. That is, there was not just the Carlton property but three other properties as well - Lakemba, Arncliffe and Turrella - and with those three properties the brother and sister, plaintiff and defendant, had a half interest, and indeed one of them was registered in the plaintiff's name.
If they have a half interest in the other three properties, it does show a likelihood of a half interest in this. And there was a letter written by [the Brother's] solicitor which … said that each party has a half interest in all the houses, including the Carlton property."
[4]
The Turrella Property
In his cross-claim, the Brother alleges that, in or around June 1998, he and the Sister agreed to buy an investment property that they would own in equal shares and that, pursuant to that agreement, they purchased the Turrella Property in June 1998 for $265,000. The purchase price was funded by two loans from St George Bank, being a joint loan in the name of the Brother and the Sister in the sum of $195,000, and a loan in the name of the Sister alone, in the sum of $80,000. The Brother asserts that he is entitled to one half share in the Turrella Property or an interest equal to the contribution made to the purchase price of 35.5% or such other proportion as the Court determines.
The Brother said in oral evidence that the Sister proposed the idea to buy the Turrella Property and that she said to him:
"We should buy an investment property so that we will have equal interest in properties".
The Brother said that he said, "It is a good idea." The Brother said that the Sister told him that she had located a property and asked him to go with her to have a look at it, so he did. He said that after he inspected the Turrella Property he said "it's a good property". He said that they both agreed to purchase the property and then they placed a deposit.
The Brother said that they had a discussion about who was going to own the Turrella Property and that they both agreed to put both of their names on the property. When asked what conversation he had with the Sister he replied:
"Well we didn't say much. It was just decided by both of us. I don't know what to say, I liked it so we bought it. So we didn't say much."
The Brother said in his affidavit that the purchase price for the Turrella Property was $265,000, funded by two loans that totalled approximately $275,000. He said that the additional $10,000 was for the various costs associated with the purchase. The Brother said that the Sister appointed a lawyer to handle the conveyancing but that he could not recall the identity of the solicitor or where the solicitor's office was located. He said that he believed that the Sister told the solicitor to prepare the title documents for the Turrella Property as tenants-in-common in equal shares.
The Brother said that the Sister applied for a home loan through a friend who was a loan broker but he could not recall the identity of the loan broker or where the office was. The Brother said that there was a St George Bank loan in joint names for $195,000 and a second loan from St George Bank in the sum of $79,000 in the Sister's name only. The Brother said the second loan was "from [the Sister's] refinance of the Lakemba Unit". He said that that loan proceeded without any prior discussion with him and he only found out about the "refinance" during these proceedings.
The Brother said that the Turrella Property has three bedrooms, two of which were let out to tenants. He said that the other room was occupied by the Sister and their parents and that that arrangement was contrary to the agreement that Turrella was to be an investment property.
The Sister accepted in her defence to the cross-claim that the Brother is entitled to an interest in the Turrella Property but in the proportion of his initial contribution to the purchase price, being one half of the loan of $195,000. However, she accepted in cross-examination that the Turrella Property was purchased on the basis that she and the Brother would be joint owners as to a one-half share each.
The circumstances surrounding the second St George bank loan to the Sister alone are not clear. The Brother's explanation that the second loan involved a refinancing of the Sister's borrowing in connection with the purchase of the Lakemba Property suggests that the proceeds from that loan were not applied in purchase of the Turrella property. On that basis, the brother and Sister must be taken to have contributed equally.
In those circumstances and in the light of the concession made by the Sister in cross-examination, that at the time of the purchase of the Turrella Property, they were to be owners in equal shares, I consider that the Brother is entitled to a declaration that the Turrella Property is held by the siblings as tenants-in-common in equal shares beneficially and legally. Of course, there remains the question of an account in respect of income and outgoings in relation to the Turrella Property and the repayment of the loans for the purchase price that was secured by mortgage of the Turrella Property. They area matters for another day.
[5]
The Arncliffe Property
The Brother accepts that it was the Sister's idea to buy the Arncliffe Property and said that he, the Sister and their father had several telephone conversations about the matter. The Brother said that, in 2003, the three had a face-to-face talk at the Turrella Property sometime, when their father said that they should buy another property "for the investment". The Brother said that he replied that it was a good idea and that the Sister was always supportive of making further investments and she said that it was a good idea. The Brother said that he then said that he had no time to look for properties and that it was agreed that the Sister would go and look for properties.
When asked if there was any discussion about how the Arncliffe Property would be owned, the Brother said that, at that time, his wife was pregnant and went back to China, so his father said that the Arncliffe Property should be in the Sister's name just in case he and his wife were divorced. He said that the father said that just in case, in the future, there was a relationship breakdown between the Brother and his wife, the Property should be in the Sister's name. The Brother said that he was not happy but that he agreed.
The Brother said that he did not have any conversations with his wife about the issue and that he did not tell his wife voluntarily. However, he said, his wife discovered loan bills from the Bank, which she asked him about, and he then told her about the ownership.
In her oral evidence, the Sister said that she had conversations with her brother about buying the house at Arncliffe before she bought it. She said that she said to him that she would like to buy the Arncliffe Property and that she had already paid half "of the sale price" but did not have the other half. She said that she told him that she needed his help in order to finalise the transaction. She said that she told the Brother that, based on the fact that "we have already subdivided this property into 11 bedrooms", there should be no problem making the repayments. The Sister said that the Brother told her that he did not want to get involved with her business but that he was happy to lend her the money. She said that he told her that he was having headaches "with family matters" so he did not want to get involved with it.
The Sister was asked in examination-in-chief, without objection, whether the Brother lent her some money. She replied that, if he signed some documents, she would be able to get the funds. The following evidence was then given without objection:
"Q. So he didn't actually lend you the money?
A. INTERPRETER: That's correct. I have already paid half of the sale price. At that time the owner of the property, Mr Gong, was my business partner.
Q. You bought the property from Mr Gong.
A. INTERPRETER: Yes. Because at that time Mr Gong was trying to sell the property and I said, "What a pity if you sell the whole property, I'll purchase half of the Property" and then we started doing renovations since April and we subdivided into 11 bedrooms.
Q. That's you and Mr Gong.
A. INTERPRETER: Yes, he contributed some money and I contributed some money. But in the middle of the process he run away so I couldn't continue, so I went to see my brother and asked for a loan from him."
The Sister said that the Brother went to a law firm called "City Lawyers" in the Sydney central business district near her shop on Liverpool Street and "did all the legal documents".
The Sister also relied upon an affidavit affirmed by Mr Robert Gong on 8 November 2018. Mr Gong said that he has known the Sister for over 20 years because she lives close to him in Turrella. Mr Gong said that he formerly owned the Arncliffe Property and that the Sister purchased the Arncliffe Property from him about 10 years previously.
Mr Gong said that, when he owned the Arncliffe Property, it was a single level house with a basement. The Sister told him that she would like to buy it and suggested they discuss the price. After negotiations were complete, the Sister said to Mr Gong "very good you just saved money on the agent's fees". Subsequently, the Sister said to Mr Gong words to the following effect:
"I would like to make the [Arncliffe] property into an investment property and I have paid the deposit. Can I renovate?"
Mr Gong said that he replied that the Arncliffe Property was bound to settle so the Sister could start to renovate.
Mr Gong said that, prior to completion of the sale, a number of workmen began work on the Arncliffe Property, usually three or four workers a day. He said that a lot of partitions were made on the ground floor in order to make more rooms. He said that, at some point during the work, the Sister told him that she had spent $10,000 on rewiring the electrical system and that she had spent a lot of money. Mr Gong said that the work took a few weeks and was not finished when completion of the sale took place. He estimated that the work was more than half complete at the time of settlement. While the property had three bedrooms before the work that was carried out, he did not remember how many bedrooms were in the house after the work was completed.
Mr Gong said that, while the work was being carried out, he saw the Sister at the Arncliffe Property on more than 10 occasions. He did not see the Brother at the Arncliffe Property at all. Mr Gong was not cross-examined on his affidavit.
The purchase price for the Arncliffe Property was $525,000 and was funded by two loans from Homeside Lending. One loan (the Joint Loan) was made to the Brother and the Sister jointly in the sum of $300,000. Another loan in the sum of $380,000 was made to the Sister alone (the Sister's Loan). The funds borrowed exceeded the purchase price. The Sister claimed that the excess was applied in carrying out alterations to the Arncliffe Property. Whatever discussions occurred prior to the purchase of the Arncliffe Property, it is clear that the Brother incurred a joint liability with the Sister for the Joint Loan. On that basis, the Brother contributed $150,000 to the purchase price. The Sister contributed the balance, being $150,000 of the Joint Loan and $251,303 of the Sister's Loan.
The security for the Joint Loan of $300,000, which was for a period of 30 years, was to be a first ranking mortgage over the Lakemba Property by the Sister and a first ranking mortgage over the Lakemba Property by the Brother and the Sister. The security for the loan of $380,000 to the Sister alone was to be a first ranking mortgage over the Lakemba Property by the Sister and a first ranking mortgage over the Arncliffe Property by the Sister.
The evidence indicates that the interest rate on the loans from Homeside Lending was 5.39% for five years. The interest on the purchase price at that rate would amount to $29,715 per year. The Sister accepted in cross-examination that the rent collected from the Arncliffe Property was about $35,000 per year. That figure was consistent with tax returns lodged on behalf of the Sister. Thus, the Brother asserts, the income from the Arncliffe Property exceeded the outgoings, such that there was no need for any contribution to outgoings from him.
The Sister asserts that the Sister's Loan of $300,000, which was secured on the Lakemba Property and the Turrella Property, was to provide working capital as well as part of the purchase price for the Arncliffe Property. The Sister says that that loan has been fully repaid not only from rent received from the Arncliffe Property but also from funds that she held outside Australia. Bank statements in demonstrate that a St George Retirement Access Account in the name of the Sister was credited with four payments as follows:
19 December 2013 - $41,983;
20 December 2013 - $25,932;
20 December 2013 - $54,783; and
23 December 2013 - $54,783.
The statement shows a cash withdrawal in the sum of $176,000 on 2 January 2014, a payment of $175,000 was made to the credit of the Joint Account on 2 January 2014. The four credits in December 2013 appear to be from overseas.
On 12 February 2014, the Sister re-drew, from the Sister's Loan, the sum of $69,446.41 and that sum was credited to the Joint Loan, thereby reducing the balance of that loan to nil. The Sister relies on that material as demonstrating that the Brother did not contribute anything to the repayment of the Joint Loan. She contends that an inference should therefore be drawn that her version of the discussion prior to the acquisition of the Arncliffe Property is more probable than that of the Brother's version.
The Brother's wife, Ms Lijun Guan, affirmed an affidavit on 15 February 2019, which was relied on by the Brother. Ms Guan said that, from July 1998, after her marriage to the Brother, they set up a plastering business in their joint names, which has been operating since then and is still ongoing. She said that the Brother was very busy with work in that business in around May 2003 when she fell pregnant. She said that she decided that she would spend part of her pregnancy with her family in China and was in China from around August 2003 to November 2003. She returned to Australia in November 2003 and gave birth to their son in February 2004.
Ms Guan said that, when she found out from the Brother in about March 2004 that he had borrowed money to purchase the Arncliffe Property but that he was not on title, she was very angry with him as well as with his father and the Sister. Ms Guan said that, in March 2004, she had a conversation with the Sister and her father-in-law, she asked them why the Brother's name was not on the title to the Arncliffe Property when the loan was secured on the Lakemba Property and the Turrella Property and she and the Brother had been paying for the Turrella loan. She said that she told them that the Arncliffe Property was purchased while she was overseas and asked how it was that the Arncliffe Property was in the Sister's name when the mortgage was in two names. Ms Guan said that her father-in-law and the Sister responded that she was not their family because she has a different surname. They pointed out that Ms Guan was 10 years younger than the Brother and now has a child. She said that they said that, if she divorced the Brother, she was likely to get the Arncliffe Property. Therefore, they said, it was better to purchase the Arncliffe Property in the Sister's name only. She said that they told her:
"…you know that you have your equal share if you do not divorce. We only wanted to protect [the Brother's] property."
Ms Guan said that she told them that she wanted to add the Brother's name on the title and that she was willing to pay for the additional expenses. She said that the Sister responded that that was not necessary and that she should keep the money "for home loan repayment". She said that the Sister said to her:
"I will not take your half share away."
Ms Guan said that no agreement was reached and the Brother's name was never added to the title to the Arncliffe Property. She was cross-examined briefly and reaffirmed that the conversation referred to above took place. There was nothing about her demeanour in the course of cross-examination that indicated that she should or should not be believed. There is certainly nothing to suggest that I should not believe the conversation deposed to by her. Income tax returns lodged on behalf of the Sister disclose some inconsistency in the treatment of her interest in the Arncliffe Property. Thus, in her return for the year ended 30 June 2004, the year during which the Arncliffe Property was purchased, the Sister's tax return stated that the Arncliffe Property was owned as to 50% by her. It does not disclose who owned the other 50%. There is no evidence of any tax return on behalf of the Brother. The Sister's tax returns for the years ended 30 June 2005, 2006 and 2007 are not in evidence. However her tax return for the year ended 30 June 2008 states that the Sister owned the Arncliffe Property as to 100%. Somewhat curiously, her tax return for the year ended 30 June 2009 again shows her interest in the Arncliffe Property as 50%. The tax returns for subsequent years revert to 100% ownership of the Arncliffe Property.
[6]
Additional Evidence
In the course of address, the Sister sought to tender certain parts of the material that had been withdrawn at the beginning of the hearing. The material that she sought to tender relates to the respective contributions by the parties to the Arncliffe Property. The Sister contends that the Brother made no contribution to the Arncliffe Property, other than signing loan documentation.
I indicated to the parties that I would rule on the admissibility of the additional material after receipt of the written submissions. I consider that the material should be admitted, but only to the extent, if at all, that it demonstrates that contributions were, or were not, made by either of the parties to outgoings in respect of the Arncliffe Property following its purchase.
The Brother contends that to admit the material would be prejudicial to him because he has not had the opportunity to assert his joint entitlement to relevant funds or to challenge the Sister's entitlement to the relevant funds. In the circumstances, the Brother should be afforded the opportunity of adducing any further evidence on which he wishes to rely in answer to the additional material.
[7]
Conclusion
I have indicated above the conclusions that I have reached in relation to each of the Lakemba Property and the Turrella Property and, provisionally, as to the Arncliffe Property. I propose to direct the Sister to bring in short minutes to give effect to those conclusions. The short minutes should also provide directions for the tender of any additional material by the brother and the taking of accounts in the light of the conclusions that I have reached.
[8]
Endnotes
See Szeto v Situ [2017] NSWSC 1554.
See Calverley v Green (1984) 155 CLR 242 at 246-247; Muschinski v Dodds (1985) 160 CLR 583 at 590 and at 612.
See Calverley v Green at 251 and 257-258.
See [3].
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 October 2019
The letter referred to by Mr Evatt was a letter addressed to the Sister dated 25 May 2007 and written by LAC Lawyers Pty Ltd, who was then acting for the Brother. The letter said that LAC Lawyers were instructed that:
"All the properties should belong to you and your brother in equal shares. You are holding your brother's share in Lakemba and Arncliffe properties in trust for him. Likewise, your brother is holding your share in trust in the Carlton property."
On 17 October 2017, in the course of cross-examination at the hearing of the proceedings in relation to the Carlton Property, the letter was shown to the Sister. It was suggested to the Sister that Mr Evatt told the Court that the letter was relied upon as an admission that all the four properties are jointly owned. The sister's response was:
"I agree that the property at Lakemba my brother has interest in it. As to the property at Arncliffe, when I purchased it my brother didn't want it."
The Sister subsequently said "I agree with my lawyer's statement", referring to Mr Evatt's opening. When she was asked whether all properties were jointly owned, she said:
"…the last property at Arncliffe, he didn't want it and he didn't make any contributions and this four properties his name are - are in it, but he didn't make any contribution."
The Sister was then asked whether she was saying that all four properties were jointly owned and that they are the instructions she gave her lawyer on the morning when the case began. The Sister's response was:
"The fact is that we purchased, you know, this four properties, but my brother didn't make any contribution. The one in Turrella, after 2005, my brother stopped making contribution."
Shortly afterwards, the Sister said "I agree with my lawyer's submissions this morning". In response to the question as to whether all four properties were jointly owned, the Sister said:
"All I want to say is that the one in Arncliffe was all arranged by myself and my brother didn't want it".
In 2015, the dispute as to the Carlton Property was the subject of an earlier hearing before Lindsay J. In the course of that hearing, the Brother was cross-examined about the letter of 25 May 2007. The effect of the evidence given by the Brother in 2015 is consistent with his stance in relation to the Lakemba Property, although, a reasonable reading of his responses suggests that he eschewed an interest in the Arncliffe Property. I shall revert to that question below.
The Brother was asked before Lindsay J whether he claimed that, as at 25 May 2007, he was entitled to a share of the Lakemba Property. He responded that he is entitled to all of it, not a share. He said in cross-examination:
"I have my interest in this Lakemba one but she wouldn't necessarily agree with it".
The Brother was also asked whether, as at 25 May 2007, he claimed an ownership interest in the Arncliffe Property. His response was
"Again, she wouldn't agree with it".
He was asked whether, as at 25 May 2007, he claimed an ownership interest in the Arncliffe Property. His response was:
"This is not my will, this is what the lawyer says".
He agreed that the letter claimed an ownership interest in the Arncliffe Property but said "then I didn't have such a will". Lindsay J intervened at that point and indicated that the answers were not altogether responsive.
Following the decision of Lindsay J, which was adverse to the Sister, she appealed to the Court of Appeal. In connection with the preparation of the appeal, the Sister prepared an affidavit, which relevantly said as follows:
"Around 1992, I found [the Lakemba Property] and after several enquiries I decided to purchase it. The price was $104,500.00. I had a conversation with my brother, and my father who at the time resided in China with my mother, about wanting to buy the flat. Both my brother and father assured me that they will support me financially so I felt confident and I decided to go ahead and buy it. We agreed to be partners and jointly fund the purchase. I have arranged a loan from Advance Bank … of $25,000.00. My brother contributed $30,000.00 cash, my father sends me $22,000.00 via Hong Kong and I pay the balance with my own cash approximately $27,500.00 …
I took care of almost all the works in preparation of the documents and loans, arranging the meetings with the solicitor and the bank's officers as well as the selling agents. I by myself went to Advance Bank and applied for a loan in the amount of $25,000.00, and after a while it was approved. I told my solicitor that the flat will be on my sole name which he did insert on the title later on and I that would later account and return these monies to my brother. My brother entrusted me to do everything needed to complete this purchase. The relationship between us was as best as it could get and we trusted and help each other 100%..."
The affidavit then goes on to make assertions about payment of outgoings and loan repayments in respect of the Lakemba Property.
The Sister points to the absence of any statement on the face of that affidavit that it was read over to her in the Mandarin language before it was affirmed. She asserts that it should not be relied upon. She also asserts that statements by her previous solicitors and counsel should not be taken into account in the absence of evidence that the documents were translated for her and approved before they were sent. However, as I have said, I am satisfied that the Sister has a sufficient understanding of the English language to conclude that she understood and comprehended what she read or was said to her.
The Sister also points to the alleged conduct of the parties after the purchase to rebut any presumption of a resulting trust. Thus, she asserts, the Brother did not share expenses in the proportions that would be expected if there was an agreement that he was to have any beneficial interest in the Lakemba Property. There was no evidence that the Brother paid any part of rates and outgoings in respect of the Lakemba Property or received any share in the rental from the Lakemba Property, all of which, the Sister asserts, she received herself. However, the Brother asserts that he contributed to the outgoings in respect of the Lakemba Property and says that, to the extent that his contribution was different from the proportion of the beneficial interest that he claims is a matter for the taking of accounts.
The Sister also asserts that the Brother did not assert any beneficial interest in the Lakemba Property until 2007, some 15 years after the purchase, when the Sister lodged a caveat in respect of the Carlton Property. The Brother's response is that it was not until the Sister asserted an interest in the Carlton Property, which was registered in his name, that he felt any need to assert his interest in the Lakemba Property. There was no evidence as to the cause of the dispute that arose between them in 2007. Ultimately, the Court of Appeal set aside Lindsay J's orders and remitted the matter for rehearing. I have referred above to the conclusion that I reached on the rehearing. [4]
The Sister gave no evidence in chief as to any discussion concerning the terms of the alleged loan of $30,000 from the Brother. In cross-examination, she asserted that the loan was repayable when she was able to repay it. She said nothing in her evidence about interest on the alleged loan. At various times she has asserted that she has in effect repaid the alleged loan because she allowed the Brother to live rent free in various properties, including the Lakemba Property.
The contents of the Sister's affidavit of 4 April 2017 filed in the Court of Appeal corroborate the concessions made by Mr Evatt and by the Sister in the proceedings concerning the Lakemba Property. The real thrust of the Sister's stance appears to be that the Brother did not contribute his fair share of outgoings or repayments of principal. Those matters, however, are questions for the taking of accounts, which have been deferred until the question of primary ownership of the Properties has been determined.
In the light of the objective material, I consider that it is more likely than not that the Brother and the Sister agreed that the Lakemba Property would be purchased by the Sister on the basis that the Brother would have a proprietary interest. However, I am not persuaded that it is more likely than not that the father said that he would make a gift of $22,000 to the Brother and Sister jointly. The letter alleged to have been written by the Sister to her father and the evidence about the cheque tend to support the Sister's contention. I am not persuaded that the father made a gift of part of the sum of $22,000 to the Brother. Whether it was a loan to the Sister or an investment by the father is not a question that I need to resolve.
I conclude that the sum of $30,000 was provided by the Brother on the basis that he would acquire a proprietary interest in the Lakemba Property but that the sum of $22,000 received from the siblings' father was not a gift to the Brother. The Brother's interest in the Lakemba Property would be calculated as the proportion that the sum of $30,000 bears to the total of the price paid for the Lakemba Property, including purchase costs such as solicitor's fees, stamp duty and the like. The question of contributions to outgoings and apportionment of any income are matters for an accounting.
The significance to be attached to the tax returns is far from clear and the inconsistency was not explained by the Sister. The tax returns are typed and were completed by tax agents. In the absence of evidence from the tax agents, I draw the inference that the Sister gave instructions to the tax agents for the preparation of the relevant tax returns. The reason for changing the proportions in which she claimed to have an interest in the Arncliffe Property can only be a matter of conjecture and I was asked on behalf of the Sister to assume a mistake. I would not make that assumption.
Having regard to the difficulties that I have referred to above in assessing the credibility of the Brother and the Sister, it is necessary to endeavour to draw inferences from the objective material. I accept that a conversation along the lines deposed to by Ms Guan took place with the Sister and the father-in-law. However, I do not regard that as inconsistent with the Brother saying that he did not wish to get involved in the Sister's business. That is to say, I consider that Ms Guan's complaint was really about the Brother's personal liability in respect of the Joint Loan rather than a complaint about the absence of his name on the title. I do not regard the discussion involving the Brother, the Sister and their father as evidence of an arrangement intended to be a sham. That is to say, in circumstances where the Brother's wife, Ms Guan, was out of Australia and there was a possible concern on the part of the father that she and the Brother might be divorced, the intention that the Arncliffe Property be owned by the Sister alone was not intended to be a sham. The intent was that the Arncliffe Property would be owned by the Sister beneficially. To the extent that the Brother incurred personal liability, he would be indemnified by the Sister.
Thus, the Brother became a party to the Joint Loan because he was a joint owner of the Turrella Property, which was to be provided as part of the security for the loans to be made for the purposes of purchasing the Arncliffe Property. Subject to what follows in relation to additional material, I conclude that there was no intention that the Brother would have any beneficial interest in the Arncliffe Property.