Application under Part IV of the Trustee Act 1925 (NSW); ex parte Dominic Ziino [2018] NSWSC 1625

Supreme Court New South Wales

Medium Neutral Citation: Application under Part IV of the Trustee Act 1925 (NSW); ex parte Dominic Ziino [2018] NSWSC 1625 Hearing dates: 26 October 2018 Decision date: 26 October 2018 Jurisdiction: Common Law Before: Adamson J Decision: See paragraph [30] Catchwords: REAL PROPERTY – co-ownership as joint tenants – one party contributed nothing to purchase of property – property sold by mortgagee and monies paid into court – appropriate relief to recognise equity of applicant – declaration that proceeds held on trust for the sole benefit of the applicant – order for payment out of court made Legislation Cited: Real Property Act 1900 (NSW), s 58 Supreme Court Rules 1970, Pt 70, rr 11, 12 Trustee Act 1925 (NSW), Pt 4 Uniform Civil Procedure Rules 2005 (NSW), rr 41.3, 41.8 Cases Cited: Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839 Axon v Axon (1937) 59 CLR 395; [1937] HCA 80 Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Corin v Patton (1990) 169 CLR 540; [1990] HCA 12 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 Public Trustee v Pfeiffle [1991] 1 VR 19 Residential Housing Corporation v Esber (2011) 80 NSWLR 69; [2011] NSWCA 25 Ross v NRMA Life (1993) 7 ANZ Ins Cas 61-170 Scott v Scott [2009] NSWSC 567 Category: Principal judgment Parties: Westpac Banking Corporation (Plaintiff) Dominic Michael Ziino (Applicant) Julie Young (Third Party) Representation: Solicitors: H A Miedzinski Lawyers (Applicant) File Number(s): 2004/181625 Publication restriction: None

Judgment

Introduction 1. By amended notice of motion filed on 5 October 2018, Dominic Ziino (the applicant) seeks orders and declarations that the balance of funds which were paid into court by Westpac Banking Corporation (Westpac), together with interest, be paid to him. 2. Westpac paid the funds into court in 2004 after it had sold a property, as mortgagee, of which the applicant and his co-owner, Julie Young were registered proprietors as joint tenants. 3. In order to address the question whether the applicant is entitled to the relief sought it is necessary to summarise the evidence, all of which is uncontroverted.

Facts 1. In about 2002 the applicant and Ms Young began a romantic relationship in the course of which the applicant stayed overnight with Ms Young at a home she rented in Beverly Hills where she lived with her two children from a previous relationship. When the applicant mentioned to Ms Young that he was saving for a deposit to buy a home, she suggested that they use his funds to pay the deposit on a home which they could buy and live in together. She agreed that she would pay half the mortgage repayments. At that time she was working in a Vietnamese restaurant and had a connection with a beauty salon in Marrickville. 2. The applicant and Ms Young applied to Westpac for a loan to purchase a property at Narwee. In their loan application they described their relationship as "de facto". They each verified statements of financial position which were included in their loan application. The statements indicated that the applicant had total assets of $262,000, of which $124,000 was in cash and Ms Young had total assets of $45,000 which comprised superannuation ($15,000) and a motor vehicle ($30,000). According to her statement of financial position, she had no cash. The applicant's income was recorded as $55,016; Ms Young's income was recorded as $40,000. The statement recorded that Ms Young worked at Nam Vietnamese Restaurant in St Georges Road. There was no mention of the beauty salon in the statement of financial position. The applicant had no liabilities; Ms Young had liabilities of $19,000. On 27 May 2003 the applicant and Ms Young each signed the application and verified that it was true. Westpac advanced $408,000, which enabled the applicant and Ms Young to purchase the property in Narwee. The applicant paid the deposit of $104,000, which amounted to 20% of the purchase price, the whole of the stamp duty of $18,500 and the legal fees of $1,700. Ms Young made no contribution to the purchase of the property. 3. From the time of settlement of the purchase of the property (being the date Westpac advanced the loan monies) the applicant made all the mortgage repayments. By late 2003, when the applicant had made five mortgage repayments (for each of the months of July to November 2003), he ascertained that Ms Young had no intention of making any contribution to the mortgage repayments. Indeed, Ms Young told the applicant that she was in considerable debt and had a new boyfriend who was supporting her financially. In November 2003 the applicant approached Westpac and signed a voluntary surrender declaration as he was unable to continue to meet the mortgage repayments from his own salary. Ms Young eventually signed the voluntary surrender declaration on 2 January 2004. Westpac took vacant possession of the property on about 16 February 2004. Since that day, the applicant has had no further contact with Ms Young. 4. I am satisfied, on the basis of the applicant's uncontroverted evidence and the business records produced on subpoena by Westpac, that Ms Young did not make any financial contribution towards the purchase of the property. 5. The sale of the property settled on 4 June 2004. There was a surplus once the proceeds of sale had been applied to the costs of sale and to discharge the debt secured by the mortgage to Westpac. 6. On 21 October 2004 Suzanne Baran, a conveyancing clerk employed by Henry Davis York, the solicitors for Westpac, telephoned Ms Young to tell her that there was a surplus from the sale of the property and asked for an authority to pay 50% of the funds to her and 50% of the funds to the applicant. Ms Young agreed to do so. Ms Baran then rang the applicant who told her that he would not authorise any payment to Ms Young as she had not contributed any funds to the mortgage. Later that same day, Ms Baran phoned Ms Young again but the telephone number had been disconnected and she was no longer employed at the workplace for which she had contact details. 7. When it became plain that the parties could not agree on how the money should be distributed, Westpac commenced proceedings by filing a summons pursuant to the Supreme Court Rules 1970 (NSW), Pt 70, rules 11 and 12 (which then applied), together with an affidavit of Ms Baran sworn 22 December 2004. Westpac paid the money into court pursuant to Part 4 of the Trustee Act 1925 (NSW), thereby discharging its liability to the applicant and Ms Young. 8. On 15 December 2017 the Principal Registrar wrote to the applicant at an address provided to the Court by Westpac and informed him that the Court was holding funds from the sale of the property and that, because the funds had been held by the Court for a period of more than six years, the Court proposed to pay the money to Treasury NSW as unclaimed funds. The Principal Registrar also attempted to contact Ms Young but was unsuccessful. 9. On 28 March 2018 the applicant filed a notice of motion seeking orders that the monies paid into Court by Westpac be paid to him. When a sealed copy of the notice of motion was returned to the applicant, he instructed his solicitors to attempt to serve Ms Young. The applicant also conducted his own enquiries of Ms Young's whereabouts, which included a search on Facebook. The applicant's solicitors sought the issue of a subpoena to Westpac to obtain contact details for Ms Young. 10. On 8 May 2018 the applicant's solicitors engaged All State Investigations to ascertain the whereabouts of Ms Young. They instructed All State Investigations of Ms Young's pre-marital name of Pham and provided them with a copy of her driver's licence and passport. Ms Young's place of birth was recorded on her passport as Saigon. She was born in 1968. All State Investigations provided a report dated 29 May 2018 to the applicant's solicitors in which they set out their attempts to locate Ms Young, all of which proved to be unsuccessful. 11. In June 2018 a licensed process server attended the beauty salon in Marrickville with which Ms Young had previously been associated and spoke to two employees, neither of whom knew Ms Young. The process server also attended another business premises formerly associated with Ms Young but was unable to find anyone who knew her. Further inquiries were undertaken at all known addresses associated with Ms Young. 12. After several directions hearings before the Registrar (relating to the difficulties of serving Ms Young), the matter was listed for hearing before the Duty Judge. On 26 July 2018, Button J ordered that 50% of the monies paid into Court be paid out to the applicant and directed that the balance was not to be paid out until further order of the Court. On 5 October 2018 the applicant filed an amended notice of motion (service of which was dispensed with by the Registrar) in which he sought additional declaratory relief as to his entitlement to the balance of the monies paid into Court.

Consideration

The applicant's submissions 1. Mr Charles, the applicant's solicitor who appeared on his behalf, contended that the balance of the funds ought be paid to him on the following two alternate bases: 1. Ms Young ought be presumed to be dead and the applicant is entitled to the funds as the sole surviving joint tenant; and 2. the applicant is, on equitable principles, entitled to the whole of the funds as Ms Young made no contribution to the purchase of the property.

General principles 1. The general principles are well established and can be shortly stated. 2. A joint tenancy can be terminated in any one of three ways: 1. death of one joint tenant (which results in the other owning the whole by survivorship); 2. alienation by one joint tenant of his or her share (which destroys the unity of time) and converts the joint tenancy into a tenancy in common; 3. mutual agreement between the parties; or 4. an order of a court granting equitable relief. 1. A joint tenancy cannot be terminated by a unilateral declaration of intention: Corin v Patton (1990) 169 CLR 540; [1990] HCA 12. Of the four ways set out above, only (1) and (4) were suggested to be relevant. In these circumstances it is not necessary to consider, in the context of (3), whether severance ought be inferred, as sometimes occurs when parties to a marriage which has ended have come to an agreement to sell the matrimonial home but one dies before the sale is effected: Public Trustee v Pfeiffle [1991] 1 VR 19 at 23-28 per Kaye J; and texts summarised by Ward J in Scott v Scott [2009] NSWSC 567 at [64]-[69]. 2. As to (1), the applicant submitted that it should be presumed that Ms Young is dead on the basis of the presumption in Axon v Axon (1937) 59 CLR 395; [1937] HCA 80 that once seven years have passed and a person has not been seen by the persons who would be expected to be contacted by that person (the propositus) the court can presume that the propositus is dead although not that he or she died at any particular time. This presumption operates even in cases where the propositus was a person who had deliberately cut him- or herself off from friends or was avoiding arrest: Ross v NRMA Life (1993) 7 ANZ Ins Cas 61-170. 3. As to (4), the applicant submitted that, as Ms Young had made no contribution to the property, he was entitled, in equity, to all of the proceeds which had been paid into court and that the court ought grant equitable relief accordingly. 4. Because I consider, for the reasons given below, that the applicant is entitled to equitable relief which will result in his being entitled to the whole of the funds, it is not necessary for me to consider whether the presumption of death arises. 5. When considering who owns property, equity has always had regard to intention and contribution. Thus, where two people contribute equally to the purchase of a property which is in the name of one of them, the property will be held by the legal owner on trust for the persons who paid the purchase price in equal shares as tenants in common: Calverley v Green (1984) 155 CLR 242 at 258-259; [1984] HCA 81 (Mason and Brennan JJ). Similarly, when two people buy a property as joint tenants, but one contributes more than the other, the equitable presumption is that they hold the legal estate on trust for themselves as tenants in common in shares proportionate to their contributions: Calverley v Green at 246-247 (Gibbs CJ); 258-259 (Mason and Brennan JJ); 266-267 (Deane J). 6. The basic equitable presumption is that joint tenants hold the legal estate on trust in proportion to their contributions. This presumption may be displaced by the presumption of advancement or by presumed or actual intention. Thus, a married couple in a lifelong relationship might be presumed to intend that the property be enjoyed together during their joint lives and by the survivor on the death of the other: Calverley v Green at 259. 7. Under s 58(3) of the Real Property Act 1900 (NSW), the applicant and Ms Young, as registered proprietors, became entitled to the surplus proceeds subject to any adjustment for their respective equitable interests: Bofinger v Kingsway Group Ltd (2009) 239 CLR 269; [2009] HCA 44 at [34]-[35]; Residential Housing Corporation v Esber (2011) 80 NSWLR 69; [2011] NSWCA 25 at [139]-[144]. When property held jointly is sold to a third party by a mortgagee or trustee, the mortgagee holds the proceeds of sale upon such trust as may be required to give effect to the rights of the co-owners: Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839.

The present case 1. In the present case, there is, in my view, no operative presumption of advancement. Although the applicant and Ms Young were in an intimate relationship, they were not married. Their plan to buy real property together was motivated by practical concerns about the relative cost of a mortgage as opposed to the cost of rent. 2. The relevant equitable presumption is, accordingly, the presumption that joint tenants hold the legal estate on trust in proportion to their contributions. The applicant has established, by uncontroverted and largely incontrovertible evidence, that Ms Young made no contribution to the property. Following the sale of the property, Westpac held the proceeds on trust, in accordance with the equitable principles referred to above, and the funds in court are to be paid out in accordance with that constructive trust. The order for payment out made by Button J did not sever the joint tenancy at law. It neither created, nor recognised, any equitable interest in the funds. 3. In these circumstances, the applicant is entitled, in equity, to the whole of the funds paid into court. An order for payment out of the balance of the funds ought be made, together with declaratory relief to give effect to the equitable presumption.

The appropriate relief 1. It is desirable that a declaration be made to reflect the position in equity that the parties' respective legal interests in the funds are subject to a constructive trust in favour of the applicant solely, having regard to his contribution to the purchase of the property. This was the mechanism adopted in Muschinski v Dodds (1985) 160 CLR 583 at 623-624; [1985] HCA 78 (Deane J).

Orders 1. For the reasons set out above I make the following orders: 1. Declare that Dominic Ziino (the applicant) was the sole contributor to the purchase of the property known as 6/32-41 Graham Road, Narwee (the Property) which he purchased with Julie Young (the co-owner) as joint tenants. 2. Declare that, until the sale of the Property, the applicant and the co-owner held their respective legal interests as joint tenants in the Property on trust for the applicant solely. 3. Declare that, upon the sale of the Property on 4 June 2004, Westpac Banking Corporation (Westpac) held the balance of the proceeds of sale on trust for the applicant solely. 4. Order, pursuant to Uniform Civil Procedure Rules 2005 (NSW), rr 41.3 and 41.8, that the balance of the proceeds of the sale of the Property, which were paid into Court by Westpac, together with any interest accrued on such monies, be paid to the applicant for his sole benefit and use.

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