The plaintiff, Livy Szeto (the Sister), and the defendant, Liming Situ (the Brother), who are siblings, have been litigating for some years concerning ownership of, and entitlements in respect of, properties situated at Carlton, Lakemba, Turrella, Arncliffe and Hurstville (together the Properties). In earlier decisions [1] , questions as to their respective proprietary interests in the Properties were resolved. Thus, the Brother is the sole owner of the Hurstville Property, the Sister is the sole owner of the Arncliffe Property and the Brother and the Sister are joint owners of the Lakemba and Turrella Properties in the following proportions:
Lakemba: the Sister 72.2% and the Brother 27.8%
Turrella: the Sister 50% and the Brother 50%.
The Carlton has been sold. Before it was sold, it was jointly owned by the Sister as to 48.8% and the Brother as to 51.2%.
However, there remained questions of accounting between the Brother and the Sister concerning rental income from the Properties, outgoings in respect of the Properties, repayment of loans borrowed to purchase the Properties and occupation fees for one or other of the Properties. Five Tables were prepared that were intended to identify the issues between the parties and their respective positions as to the issues (the Five Tables). The Five Tables originated in the Brother's defence to the Sister's amended points of claim. The defence was filed by the Brother on 9 February 2021. The Brother adopted the Sister's method in and format of the Five Tables and recast figures in that format alongside the figures propounded on behalf of the Sister so that the differences in the respective positions of the parties could be identified.
On 3 August 2021, the Sister produced a version of the Five Tables prepared with the assistance of an accountant and invited the Brother to provide information to the accountant for insertion into the Five Tables. The Five Tables were treated as defining the issues that were in dispute for the purposes of a hearing fixed for 13 and 14 September 2021. That hearing proceeded on the basis of submissions before evidence was adduced, with the intention of isolating the precise disputes that remained for resolution. The respective entries in the Five Tables were examined line by line and argument ensued. Various admissions and concessions were made in the course of that hearing.
At the end of that hearing, I indicated that I proposed to proceed on the assumption that the figures in Table 1, Table 2 and Table 3 of the Five Tables in the form in which they were then before the Court stated the position without any further determination or resolution by the Court. I also indicated that I proposed to proceed on the basis that the figures in Table 5 were accurate subject to the following questions:
The Brother's obligation to account to the Sister in respect to his use of the proceeds of the sale of the Carlton Property,
The payment of occupation fees in relation to the Lakemba Property and the Turrella Property, and
The entitlement of the Sister to reimbursement of expenses said to have been incurred by her in respect of the Lakemba Property and the Turrella Property.
I indicated that I would decide those questions to enable the parties to produce a final version of Table 5, being a summary that would indicate who owed what to whom. Counsel for the Brother indicated that the only evidentiary matter left concerned whether the parties were able to live together such that notional ouster could be considered as justifying an occupation fee. The parties indicated that they proposed to formulate an agreed fact as to that matter
Thus, the following issues remained:
1. Factual questions as to when the Brother occupied the Lakemba Property and as to when the Sister occupied the Turrella Property.
2. Whether the Brother is entitled to an occupation fee in respect of the Sister's occupation of the Turrella Property and whether the Sister is entitled to an occupation fee in respect of the Brother's occupation of the Lakemba Property.
3. Whether the Brother should account for any benefit that he has derived from use of the proceeds of sale of the Carlton Property by paying interest to the Sister.
4. Whether the Sister was entitled to reimbursement of expenses said to have been incurred by her in respect of the Lakemba Property and the Turrella Property.
The parties subsequently provided written submissions on the outstanding questions and agreed that the questions could be dealt on the basis of the written submissions and without any further oral argument. On 5 November 2021, I provided the parties with a note of my conclusions on the questions and indicated that I expected that it would be possible to produce a final version of the Five Tables reflecting the earlier agreements between the parties and my conclusions, thereby finally resolving all issues as to the taking of accounts between the parties. The parties indicated that that would be possible.
On or about 8 November 2021, the Brother provided to the Sister a form of the Five Tables, which included the alterations and additions that were the subject of submissions at the hearing and which were assumed to be agreed. However, the Sister subsequently proposed further changes in a further version of the Five Tables dated 2 December 2021. Those changes were not accepted by the Brother and, on 2 December 2021, I made Orders by consent as follows:
1. By 5pm on 3 December 2021, the Plaintiff is to provide to the Defendant a final form of the "5 Tables" (on which the Plaintiff seeks to rely), together with any submissions explaining why changes from the 8 November version are justified;
2. By 5pm on 8 December 2021, the Defendant is to provide any response to the documents provided in order 1.
I have now received further material pursuant to those orders.
The Brother accepts that any genuine arithmetical areas should be corrected. However, he opposes what he characterises as the insertion of additional items and the alteration of the method and logic of the Five Tables. He objects to the changes proposed by the Sister on the basis that the Five Tables are, in essence, a pleading and the changes proposed by the Sister are in the nature of a late amendment. He contends that, having regard to the history of the proceedings, the Sister should not be permitted to make amendments at this late stage in the proceedings.
First, the Brother says, the Sister and her advisers were the authors of the form of the Five Tables, which defined the issues for the purpose of the hearing on 13 and 14 September 2021. He asserts that he presented his case on the basis that the method and logic displayed by the Five Tables was correct and that there were no additional issues. He points out that the Sister had ample opportunity, prior to the hearing on 13 and 14 September 2021, to propound changes to the Five Tables.
As the Brother points out, these proceedings have been the subject of extensive case management over a considerable period of time. Essentially, the Sister now contends that she should be given further credit for expenses incurred in relation to the Lakemba Property and the Turrella Property. She seeks to adduce further evidence as to her income during the relevant periods so as to support her contention that expenses for outgoings were borne by her.
The question of the respective contributions made by the Brother and the Sister to outgoings and expenses in relation to the Properties has been a live issue since the Brother filed his defence to the amended points of claim on 9 February 2021. He contends that the changes now proposed by the Sister go beyond mere correction of arithmetical errors and involve a new case.
There is much to be said for the Brother's position. The Sister has had ample opportunity to raise the matters that she now seeks to agitate. On the other hand, in the interests of a more efficient resolution of the detailed disputes between the parties, the hearings thus far have been conducted with a degree of informality and the parties have regularly made concessions in the light of the arguments that have developed and the observations that I have made on the relevant issues.
The Brother has not pointed to any prejudice beyond the delay in final resolution and disposition of the proceedings. In the circumstances, I do not propose to preclude the Sister from raising the proposed changes to the Five Tables. I consider that they are consistent with the stance that has been adopted by the Sister throughout the process.
[3]
The Remaining Issues
The first issue concerns essentially factual questions as to when the Brother occupied the Lakemba Property and as to when the Sister occupied the Turrella Property. The Sister asserted that the Brother occupied the Lakemba Property from April 1999 until the end of November 2005. The Brother accepted that he occupied the Lakemba Property from December 2000 until the end of November 2005 but disputed that he occupied the Lakemba Property before December 2000. On the other hand, the Brother asserted that the Sister occupied part of the Turrella Property from May 1998 to the present time. The Sister accepted that she lived in part of the Turrella property from May 1998 to January 2000 and from February 2008 to the present time but disputed that she lived there from January 2000 to February 2008.
The second issue concerns whether the Brother is entitled to an occupation fee in respect of the Sister's occupation of the Turrella Property and whether the Sister is entitled to an occupation fee in respect of the Brother's occupation of the Lakemba Property. As a general rule, a co-owner of property who exercises his or her right to occupy the property is not liable to be charged with an occupation fee. However, there is an exception to that general rule where one co-owner has ousted the other co-owner from occupation of the property or one co-owner claims a contribution from the other co-owner for expenditure in respect of the property.
There was initially a claim to contribution on the basis of ouster. It was contended that a forceful ouster is not necessary. Thus, an occupation fee may be payable, where, in the case of married or de facto couples whose domestic relationship has broken down, it is no longer reasonable or practically sensible for them to occupy a jointly owned residence together. [2] While it had been foreshadowed that it would be common ground that the relationship between the Brother and the Sister was such that they have been unable to live under the same roof since before April 1999, there has in fact been no evidence or agreement as to that question. It was suggested that the parties might be permitted to reopen their respective cases to adduce evidence as to the question. However, there has been no formal application to do so and I consider that the time has passed for that opportunity. In any event, I would have some reservation as to whether such a principle would apply to the present situation, where there has been no suggestion that the Brother and Sister lived together and that one was compelled to leave because they could not get on together.
Whether or not the Brother and Sister were unable to live under the same roof, it is clear that each has sought contribution from the other for outgoings in respect of the Properties and payments of interest and repayment of principal in respect of loans borrowed to purchase the Properties. Accordingly, the question of ouster therefore does not arise.
If an allowance for expenditure is claimed, the principle that a seeker of equity must do equity would require that the claimant be charged with an occupation fee up to the amount allowed for the expenditure. [3] Once an occupier is required to do equity because he or she is seeking equity, there is no distinction to be drawn between improvements or repairs effected to the Property, on the one hand, and the reduction of a charge on the Property through repayment of monies secured on the Property, on the other. [4] Accordingly, at least to some extent, each would be required to make an allowance for the benefit of occupation against any claim for contribution.
The third issue concerned whether the Brother should account for any benefit that he has derived from use of the proceeds of sale of the Carlton Property. On 29 October 2016, the Brother entered into a contract for the sale of the Carlton Property. The contract for sale was completed on 12 December 2016, when the total proceeds of sale, less commission, were received by the Brother. On 20 November 2017, I published my reasons for concluding that the Brother held the Carlton Property on trust for himself and the Sister in the proportions in which they contributed to the purchase price. [5] Accordingly, the proceeds of sale were owned in those proportions. However, the Brother has retained the proceeds of sale and the Sister claims interest on her share of the proceeds.
The fourth issue concerned contribution to expenses paid in respect of the Turrella and Lakemba Properties. There is a dearth of evidence as to the expenses in question and as to the source of funds for the payment of the expenses.
[4]
The Lakemba Property
In his affidavit of 6 September 2021, the Brother said, relevantly, that from August 1998 to November 2000 he lived in a rented unit situated at McDonald Street Lakemba (the McDonald Street Property) and that, from December 2000 to November 2005 he lived at the Lakemba Property. In particular, he said as follows:
"I remember this well as I only have time to move residence at the end of the year."
No other explanation or corroboration was provided in his affidavit. The affidavit was in English with an interpreter's certificate to the effect that the English was interpreted into the Chinese Mandarin language by the interpreter.
The Sister was unable to give any evidence as to the occupation of the Lakemba Property before December 2000. However, the Sister relied upon two bank statements from the Commonwealth Bank of Australia addressed to "the Secretary, Liming Plastering". The Brother's trade is that of a cement renderer and he accepted that both statements related to an account of his business. Statement No 26, for the period 4 March 1999 to 7 April 1999, was addressed to the McDonald Street Property where the Brother says he lived until December 2000. However, statement No 27, for the period 8 April 1999 to 5 May 1999, was addressed to the Lakemba Property. The Brother offered no explanation as to why the address for the bank statements changed with effect from April 1999 other than by saying that the statements were not necessarily sent to his home address.
The Lakemba Property was let to third parties up to April 1999. No explanation was proffered on behalf of the Brother as to who occupied the Lakemba property from April 1999 until December 2000. In the circumstances, I draw the inference that the Commonwealth Bank sent the statements to a different address from April 1999 because it was asked by the Brother to send them to his new residential address. I therefore conclude that the Brother occupied the Lakemba Property from April 1999 to December 2000.
The parties have agreed that the appropriate occupation fee payable in respect of Lakemba is $155 per week. On that basis, the occupation fee payable by the Brother in respect of the Lakemba Property should be $155 per week from April 1999 until December 2005. Allowance must be made for the fact that the Brother is the holder of a 28.8% interest in the Lakemba Property In addition, the amount allowed must be limited to the amount allowed by way of contribution to expenses and interest and loan repayments made by the Brother in respect of the Lakemba Property.
[5]
The Turrella Property
In her affidavit of 17 March 2021, the Sister said that, on 26 June 1998, when the Turrella Property purchase was settled, her parents moved into the Turrella Property and that she moved to the Turrella property with them on 26 July 1998.
The Sister then said as follows:
14 When we moved to Turrella my parents used the separate dining room as a bedroom. There were two bedrooms, a living room and a separate dining room and kitchen in the house. There was one bathroom and another separate toilet. I had my own bedroom for about a year and a half and I shared that bedroom with my husband. The other bedroom was rented out to one person.
15 After I separated from my husband, I purchased a business which was a photo and video shop in Liverpool Street next door to the Radisson Hotel. I purchased the business in January 2000, but later I turned it into a florist shop when people stopped renting videos. I was able to live at the shop and my bedroom at Turrella was rented out. That situation continued until 2008. If I did stay overnight with my parents I slept on a sofa.
16. In February 2008 I sold the shop and moved back to Turrella, but remained sleeping on the sofa and the other two bedrooms continued to be rented out and my parents continued to use the dining room as their bedroom.
…
18. I did not move into a bedroom of my own at Turrella until both my parents had died. My father died on 17th June 2011 .…
19. Since 2012 after my mother's death I live in converted dining room bedroom and the other bedrooms are available for rent. …
However, in an affidavit sworn on 10 April 2015, in relation to the dispute concerning the Carlton property, the Sister said as follows:
During, the period from May 1998 to November 2005, my late father lived with me. As a tradition of our family with Chinese background, my father had the ultimate authority of all the family matters and managed the finance matters for the whole family. My late father did not have any incomes and did not receive any Australia benefits. I contributed to most of his living costs in Australia till his pass away in 2011.
There was no challenge to the Sister's evidence that, when she moved to Turrella, she shared a bedroom with her husband and that, when she was staying at Turrella after the death of the parents of the Brother and Sister, she occupied a bedroom of her own. Nor was there a challenge to her evidence that, when she stayed at the Turrella Property before the death of the parents, she slept on a sofa. The dispute between the Brother and the Sister is whether the Sister occupied any part of the Turrella Property from January 2000 to February 2008.
The shop in Liverpool Street, where the Sister conducted a photo and video shop and then a florist shop, was a lock-up shop of 22 square metres. It contained no bathroom, although there was a common toilet in the back of the building. The conflict between the Sister's affidavits of 10 April 2015 and 17 March 2021 casts considerable doubt on the sister's credibility. Further, it seems highly unlikely that, for eight years, or even three years, the Sister lived in the shop just described. The suggestion that she lived in the shop is objectively highly unlikely. In the circumstances, I find that it is more likely than not that the Sister lived in the Turrella Property throughout the disputed period.
During the substantial part of the time in question, part of the Turrella Property was occupied by the parents of the Brother and Sister. That appears to be by consent of both of them. Parts of the Turrella Property that were not occupied by the Sister or the parents were let out at the rate of $110 per room. On that basis, an appropriate occupation fee would be $110 per week for the period from May 1998. Allowance must be made for the fact that the Sister is the owner of a 50% interest in the Turrella Property and the occupation fee must also be limited to the amount allowed by way of contribution to expenses and interest and loan repayments made by the Sister in respect of the Turrella Property.
[6]
The Carlton Property
Following my reasons of 20 November 2017, I directed the Sister to bring in short minutes of orders to give effect to the conclusions that I had reached. However, I foreshadowed that it would be necessary for directions to be given for amended pleadings raising all further issues concerning ownership of the Arncliffe Property, the Lakemba Property and the Turrella Property. I indicated that it would not be appropriate to determine how the proceeds of sale of the Carlton Property should be dispersed until the resolution of all outstanding issues.
On 16 April 2018, a declaration was made that the Sister is entitled to 48.8% of the proceeds of sale of the Carlton Property. However, on 24 October 2018, after several inconclusive attempts at directions, the Court ordered, pursuant to s 135 of the Civil Procedure Act 2005 (NSW), that enforcement of that order be stayed pending the determination of the issues concerning the other Properties. That stay remains in operation.
The Sister's share of the proceeds of sale of the Carlton Property amounted to $578,274 and the Brother has had the benefit of that sum since he received the proceeds of sale. The Sister claims interest on that sum under s 101 of the Civil Procedure Act 2005 (NSW). Section 101(1) relevantly provides that, unless the Court orders otherwise, interest is payable on so much of the amount of a judgment as is from time to time unpaid. Interest under s 101(1) is to be calculated at the prescribed rate or at such other rate as the Court may order as from the date on which the judgment takes effect or such later date as the Court may order. The rationale for s 101(1) of the Civil Procedure Act is to ensure fairness because otherwise the amount of the judgment is "fructifying in the wrong pocket". [6] The prescribed rate is above the market rate in order to ensure that a party who is ordered to pay money does not gain a benefit by delaying the payment. That is to say, there is a penal element in the rate.
In the present circumstances, however, I do not consider that s 101(1) of the Civil Procedure Act has application. I have not yet directed judgment for any amount that can be said to remain unpaid. Rather, I have simply determined beneficial ownership of a fund of money. Accordingly, it is unnecessary to consider whether I should order otherwise, as contemplated by s 101(1).
On the other hand, I am presently engaged in the taking of accounts between the Brother and the Sister. That is to say, the purpose of the present exercise is to determine what benefit each of them has received from the use of property or an interest in property owned by the other. Just as each of the Brother and Sister is required to account to the other for rental income received from the Properties, so the Brother should be required to account for the benefit that he has received from the share of the proceeds of the Carlton Property that belong to the Sister.
The brother applied the proceeds of the sale of the Carlton Property, including the Sister's share, towards the purchase price of the Hurstville Property. At one stage, the Sister claimed a proprietary interest in the Hurstville Property. However, that claim was subsequently abandoned. Nevertheless, the Brother has had the benefit of the use of the Sister's share of the proceeds of sale. The Brother acquired the whole of the Hurstville property beneficially on 10 March 2017 and, accordingly, has had the benefit of the use of the Sister's share of the proceeds of sale of the Carlton Property from when the purchase was completed to the present time.
The balance of the purchase price of the Hurstville Property was provided by a loan to the Brother from the Commonwealth Bank of Australia (the Bank). An inference can be drawn that, but for his use of the Sister's share of the proceeds of the sale of the Carlton Property, that amount would have been borrowed from the Bank. Accordingly, it is appropriate for the Brother to bring to account, as the benefit received from the proceeds of sale of the Carlton Property, interest at the rate charged by the Bank on his loan. Up to 18 October 2021, that amounted to $101,329.72 as indicated in the following table:
From To Interest Rate No of Days Interest Amount
10/3/2017 07/05/2017 4.35% 58 $3,997.20
08/05/2017 21/09/2017 4.35% 136 $9,889.86
22/09/2017 31/12/2018 4.35% 465 $29,541.73
01/01/2019 09/07/2019 4.16% 189 $12,456.43
10/07/2019 22/07/2019 3.91% 12 $743.36
23/07/2019 23/03/2020 3.72% 244 $14,380.41
24/03/2020 18/10/2021 3.34% 573 $30,320.73
TOTAL $101,329.72
[7]
Contribution to Expenses
The Sister proposes changes to Table 2 dealing with the Lakemba Property and Table 3 dealing with the Turrella Property concerning expenses that she alleges have been borne by her in relation to the respective Properties. However, there is a dearth of evidence about those matters. As I understand the position, Table 2 and Table 3 have been prepared on the basis that certain expenses were incurred in relation to the Lakemba Property and the Turrella Property. Of those expenses, the Brother has identified sums that he paid. In addition, it has been shown that some of the expenses were paid from rent received in respect of the Turrella Property and the Lakemba Property. However, there is no evidence as to the source of the payment of the balance of the expenses.
In circumstances where the Five Tables have been prepared on the basis that the expenses were incurred and paid, but there is a lack of satisfactory evidence as to the source of the payment, the appropriate conclusion is that the parties should be treated as having paid those expenses in the respective shares in which they own the Lakemba Property and the Turrella Property. I am mindful of the element of arbitrariness in that approach. However, the proceedings must be brought tom an end. I have indicated above the relevant procedural history. It is fair to say that the Sister has failed to approach the litigation in the appropriate spirit.
[8]
Conclusion
I propose to direct the Brother to bring in short minutes, in the form of the Five Tables, that reflect the conclusions indicated above. A further question that arises concerns the date as at which the accounts should be taken. The same date should be applied for the purposes of each of Table 1, Table 2, Table 3 and Table 4. That is to say, the allowance for occupation fees should be calculated as at the same date at which contributions to outgoings and expenses in respect of the Turrella Property and Lakemba Property are calculated. The Brother should file and serve a final draft of the Five Tables, including the summary Table 5 indicating the balance payable by one to the other. The Sister should file any objections to the short minutes if she contends that they do not reflect the conclusions above.
[9]
Endnotes
See Szeto v Situ (No 2) [2019] NSWSC 1312; Szeto v Situ (No 3) [2020] NSWSC 1489.
See Bkassini v Sarkis [2017] NSWSC 1487 at 126 and following.
See Luke v Luke (1936) 36 SR (NSW) 3110 and Ryan v Dries [2002] NSWCA 3 at [61].
See Luke v Luke at [317] and Ryan v Dries at [71].
See Szeto v Situ [2017] NSWSC 1554.
See Grace v Grace (No 9) [2014] NSWSC 1239 at [64], citing Newton v Grand Junction Railway Co [1846] 16 M&W 139 at 141.
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Decision last updated: 23 December 2021