OLIVERI v JONES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, HANDLEY and STEIN JJA 8 and 9 July 1997, 14 October 1997 [1997] NSWCA 240 Equitable interests in real estate — claim by trustee in bankruptcy of one of the 'legal' owners — disclaimer of interest — no reason to disturb trial judge's findings as to where equitable interests lay. On appeal: The plaintiff's son Dominic Lawrence Oliveri (DLO), a bankrupt, was a co-owner of 3 pieces of real estate, two rural blocks of land, and a block of 4 flats at Petersham which was his principal residence. The plaintiff sought to resist the claims of his son's trustee in bankruptcy for a share in the properties. The trial judge found that DLO was entitled to the whole equitable interest in the Petersham property but that he was not a partner in and had not contributed to, the family partnership for which the two rural properties appeared as assets. The plaintiff appealed against the decision regarding the Petersham property and the trustee cross appealed in relation to the rural properties. Held: There was adequate evidence for the trial judge's finding in relation to the Petersham property. The trial judge was entitled to rely on the partnership accounts rather than the legal title in relation to equitable ownership of the rural properties notwithstanding the attempt to repudiate them by the Oliveris. There was no reason to disturb the trial judge's decision. Handley JA I agree with Stein JA. Meagher JA I agree with Stein JA. Stein JA This case concerns an appeal and cross appeal from the decision of Bryson J as to where the equitable interests lay in three properties purchased in the names of various members of the Oliveri family, including the appellant/plaintiff Giovanni Oliveri and his five adult children. In the context of the bankruptcy of one of the children, Dominic Lawrence Oliveri (DLO), Michael Jones, the trustee in bankruptcy of DLO (the trustee), sought to claim the whole of one property and a share of the other two properties. The appellant commenced proceedings to seek declarations that he held the whole of the beneficial interest in each of the three properties, although the legal title to the properties was in various names. Besides the trustee, the other adult children were joined as defendants - Joseph Oliveeri, Emanueli Oliveri, Rosa Oliveri and Saveria Oliveri. The properties concerned are: a block of four 4 flats at Petersham, one of which was the principal place of residence of DLO and was purchased in the joint names of DLO and his brother Joseph Oliveri (JO); * rural land at Silverdale for which the legal title is held by the appellant and the five children in equal shares; * rural land at Mulgoa for which the legal title is held by the appellant and the five children in equal shares. 2 UNREPORTED JUDGMENTS At the trial all of the Oliveri children sought to disclaim any beneficial interest in the properties. According to their counsel, the disclaimer was said to be in favour of the appellant. Bryson J properly stated that the onus of proof was on the appellant to prove that he had, and that DLO did not have, a beneficial interest in the properties. This was said in the context of the Petersham property in which the appellant held no legal interest. More generally, the onus can be said to lie with the party wishing to assert that the beneficial interest is, as counsel has put it, 'not at home with the legal title'. THE TRIAL JUDGE'S DECISION Bryson J found that DLO had the beneficial interest in the whole of the Petersham property, and that the appellant had no interest in it. Accordingly, the trustee in bankruptcy was entitled to the whole of the property. Giovanni Oliveri appealed against this decision, and Joseph Oliveri, who shared the legal title, sought and was granted leave to be heard on the issue. In respect of the Silverdale and Mulgoa properties, Bryson J found that the appellant was entitled to the whole of the beneficial interest in both properties, because he found, in reliance on the family accounts, that the appellant was the source of the purchase moneys for the properties. The trustee cross-appealed against this finding. THE APPEAL AND CROSS APPEAL The appellant challenges the trial judge's conclusion in relation to the Petersham property contending that the disavowal by the Oliveri children, in particular by Joseph Oliveri, of any beneficial interest in this property amounted to a disclaimer in his favour. The trial judge found that none of the children, apart from DLO, had contributed to the purchase of any of the properties. The appellant submitted that the trial judge should have found that the appellant was the source of the purchase moneys for Petersham as well. As I have mentioned, the trustee cross-appealed against his Honour's finding in relation to the Mulgoa and Silverdale properties. The trustee maintained that the onus on the appellant, to displace the presumption that the legal title reflected beneficial ownership, had not been discharged. The trustee went further and submitted that this court should give effect to the disclaimers of the Oliveri children, other than DLO, leading to a finding that the beneficial ownership was held by the appellant and DLO's trustee in bankruptcy in equal shares. PETERSHAM In determining that DLO alone was entitled to the beneficial interest in the Petersham property, his Honour interpreted the Oliveri children's 'disclaimer' as operating negatively to deny them any interest, but not positively to build up the claim to an interest by the appellant. Counsel for the Oliveri children had submitted at the trial (AB1910): their attitude is properly to be described as a disclaimer in favour of the plaintiff of any legal and beneficial interest.[emphasis added] On appeal, the appellant submits that his Honour misconceived the argument on the 'disclaimer' and did not properly address the issue. The appellant asserts that the children's denial of a beneficial interest should have been interpreted as operating only if the appellant was held to have the beneficial title, or as evidencing an implied trust in favour of the appellant - either of a resulting trust, or a trust formed by common intention. His Honour held that: URJ OLIVERI v JONES (Stein JA) 3 . a disclaimer cannot have any such operation; one person cannot by disclaiming build up the claim to an equitable interest of another person. The appellant also submits that there was no evidence upon which the trial judge could conclude that the purchase price of the Petersham property came from DLO. The appellant submits that if his Honour was not satisfied that the money came from him, then the beneficial interest should remain with the legal title; in respect of Petersham, shared equally between DLO and JO. In a situation such as this, the inquiry as to where the equitable or beneficial interest lies will generally begin with the legal title. In the case of the Petersham property there was, as Bryson J found, adequate evidence to support JO's 'disclaimer' of any interest. In his affidavit sworn on 1 July 1996, Joseph Oliveri deposes: I make no claim to the property. So far as I am concerned I have always believed that the property belonged to my father. In cross-examination, he was asked: Q. Well, do you regard yourself in any way as having a proprietary interest in that property (the Petersham property) as being one of the owners? A. No. In addition, there is evidence of DLO's dealing with the property without reference to JO, which supports the conclusion that DLO was the sole beneficial owner. Examples include that DLO made up any shortfall in payments of the mortgage over the property, as well as any outgoings. He retained any surplus from the rents which he collected. He treated this income as his own for tax purposes. This was consistent with his dealings with the Bank. When his financial difficulties commenced, he offered the Petersham property as security without reference to any other person's interest in the property. He occupied one of the flats without paying any rent. On the other hand, JO made no contribution towards the mortgage, received no income from the property, nor did he treat the income or outgoings as his for taxation purposes. These circumstances are sufficient to overcome the presumption that JO had a beneficial title corresponding to his legal title. His Honour summarised the evidence thus: ... it was intended by himself [Joseph Oliveri] and Dominic Lawrence Oliveri that he [JO] should support the loan with his credit, that is to say, that he [JO] should in substance be a surety or guarantor, and there is no evidence that the plaintiff intended that Joseph Oliveri should have any beneficial interest. In Exhibit D the counterpart agreement signed by the purchaser names only Dominic Lawrence Oliveri as purchaser and is signed only by him. The counterpart signed by the vendor names both Dominic Lawrence Oliveri and Joseph Oliveri as purchasers; Joseph Oliveri's name has been added in typewriting to the initial handwritten purchaser's name, but he [JO] did not sign either counterpart. The appellant's second argument challenges his Honour's conclusion that DLO contributed financially to the purchase of Petersham. His Honour found the appellant's explanation that he provided the deposit to be 'completely unconvincing; some circumstances were given which are very unlikely to have been correct'. His Honour was satisfied that the appellant 'did not in any sense contribute the moneys advanced on mortgage namely $95,000 for the purchase of the Petersham property... he was not a party to the mortgage; he gave no written undertaking to pay it... Nor has he been able to show, on the probabilities, the truth of the allegation that the plaintiff (appellant) contributed $65,000.' 4 UNREPORTED JUDGMENTS To the contrary his Honour found that DLO had contributed to the purchase of Petersham: It would not be remarkable or difficult to accept that Dominic Lawrence Oliveri bought the Petersham flat with the intention to be the beneficial owner. He may have had the resources of his own; he had been working, although part-time and while studying since 1977, and he had been a solicitor for about two years when he purchased the property. Indeed if he were furnished with all or part of $65,000 by the plaintiff, it would be unremarkable that that should be done for the benefit of Dominic Lawrence Oliveri....a gift...would be a rational interpretation of the event if the plaintiff actually did contribute money. He continued: All in all, the proposition that the plaintiff was the beneficial owner of the Petersham property, and was intended to be so by both the plaintiff and Dominic Lawrence Oliveri from the beginning is very improbable The evidence shows no sound reason why, if the plaintiff were (sic) intended to be the owner, he was not the legal owner.... Dominic Lawrence Oliveri, who had recently completed legal studies and had been admitted as a solicitor, and had worked in legal offices for years, must have seen the need in common prudence to record that he and his brother were trustees, if that was what was taking place... His Honour also made more positive findings that DLO had provided the purchase moneys for the Petersham property, either in the form of cash or obligation: The obligation was his, (DLO's) supported by Joseph Oliveri as surety, and the contribution of $95,000 must be taken to have been made by Dominic Lawrence Oliveri. Bryson J summarised his findings thus: My conclusion is that Dominic Lawrence Oliveri is the sole beneficial owner of the Petersham property and the plaintiff has no interest in it. In my opinion this finding was open on the evidence and I have not been persuaded that it is incorrect. SILVERDALE AND MULGOA In respect of the cross appeal, the trustee argues that: 1. the court should take into account the difficult position of a trustee in bankruptcy where the bankrupt's personal interest is against that of the trustee; 2. it was for the appellant to establish that the beneficial interest did not lie with the legal title, which he did not do; 3. the trial judge erred in adopting the partnership accounts, which were admitted to be inaccurate, in preference to the legal title as his starting point. Bryson J commenced his inquiry regarding the beneficial interest in the Silverdale and Mulgoa properties, not with the legal title, but with the partnership accounts. The trustee asserts that his Honour should have commenced his inquiry with the legal title as evidenced by the signatures of the six proprietors on the contracts for purchase of Silverdale and Mulgoa. Although at first blush one may think that the attribution of the beneficial interest ought to commence with the legal title, his Honour rejected it as reflecting the true position. The trial judge faced a difficult task in dealing with the maze of conflicting evidence and lack of credibility of the appellant and the second defendants (the 'other' Oliveri children). In these circumstances his Honour fastened onto the partnership accounts as being more likely to state the true financial position of the Oliveri family. He said: URJ OLIVERI v JONES (Stein JA) 5 These accounts are business records, prepared contemporaneously with the events for serious purposes, and adopted for serious purposes by all the partners (Dominic Lawrence Oliveri not being a partner at any time.) They are clear contemporaneous statements about the equitable ownership of the Silverdale and Mulgoa properties. They far outweigh the maze of oral evidence about the acquisition transactions. As noted above, DLO was not one of the partners and his Honour made an express finding that DLO did not contribute to the purchase moneys: .. it should in my view be found that he [DLO] did not contribute to the purchase money, that the purchase money was contributed by five partners and by no-one else, partly out of money which they borrowed, and there was no intention held by or attributable to the partners to confer any beneficial interest in those properties on Dominic Lawrence Oliveri. Bryson J also rejected the suggestion of any presumption of advancement: ... the circumstance that the partnership paid for the land makes inapplicable, in my opinion, any presumption of advancement which might arise in simpler circumstances where a father paid for the acquisition of land in the name of his adult son; such a presumption cannot be made against the partnership even though one of the partners is a parent. Although Mr Broun QC, appearing on behalf of the trustee, asserted that there was evidence before the trial judge that DLO contributed to and was intended to have both a legal and equitable interest in the properties, I do not accept this submission. While DLO signed the contract and his name appears on the title, his Honour, who had the benefit of observing and assessing the veracity of the witnesses over the course of the lengthy trial, observed that the 'contention that in the circumstances Dominic Lawrence Oliveri was the probable source of the funds was unsupported by evidence.' His Honour stated that it 'remains impossible to know why Dominic Lawrence Oliveri's-name appears on the title' and, '[t]he circumstances in which Dominic Lawrence Oliveri's name appears on these titles are not explained in any comprehensible way'. In these circumstances, where the court was unable to discern the truth among the conflicting evidence of the Oliveris', he concluded: The fact that all 6 purchasers signed the contract seems to make it possible that a number of them could explain the circumstances in which all were parties, but in fact none do. Not being satisfied that the legal title to the properties reflected the contributions of the parties, and there being no basis for any presumption of advancement by the partnership in favour of DLO, Bryson J found that the most cogent basis for determining the beneficial interests in the property was that reflected in the partnership accounts. He said: 'All the evidence on the subject is outweighed by the partnership accounts on which I have decided to act.' Bryson J rejected the partners' assertions that they did not read their tax returns or the accounts. He found that these documents would have been 'of high importance at the time, and are much more likely to be right than recollections given in evidence up to nine years after the relevant events.' In view of the inconsistencies in the oral evidence, even between members of the Oliveri family, Bryson J was in my opinion entitled to rely on the content of the accounts as the best guide to the beneficial ownership. DLO was not a member of the partnership, and had no interest in the properties. 6 UNREPORTED JUDGMENTS There was evidence that the source of the deposit of $11,000 for the purchase of the Silverdale property was a box of money. His Honour was not convinced that DLO had an interest in that money. Bryson J observed that the balance of the purchase money for the Silverdale property came from a number of accounts in the names of the Rosa, Giovanni and Saveria Oliveri. The moneys in these accounts had a number of sources, but his Honour noted that there was no indication that DLO ever had an interest in these accounts. As with the Silverdale property, his Honour found that there was no basis for concluding that DLO contributed financially to the purchase of the Mulgoa property. His Honour did not find a satisfactory explanation for DLO's presence on the title. Although various members of the Oliveri family repudiated the accuracy of the accounts, his Honour did not accept that, saying 'This I regard as extremely improbable, as the natural motivation of any person to wish to understand how much tax he has to pay and why are (sic) very strong..." Notwithstanding his reservations about Emanueli Oliveri's (EO) evidence generally, his Honour accepted his evidence (and that of the appellant) that the purchase price of Mulgoa came from the appellant. Bryson J was entitled to accept some evidence of a witness, particularly when corroborated, even if in other respects that witness was not believed. However, his Honour found (and was justified in doing so) that the moneys contributed by the appellant were a loan to the partnership. The accounts recorded an advance to the partnership of an amount of $299,999, and the term 'advance' was interpreted by Bryson J, correctly in my view, as a loan rather than a contribution to the purchase money. His Honour said that 'money used for the purchase which at the time was treated by the partners, including the plaintiff, as a loan cannot be thought of as a contribution to the purchase money, it can only be thought of as a loan.' Starting from the partnership accounts, Bryson J adjusted the beneficial interests to take account of the disclaimer by the 'other' Oliveri children of any interest in the properties. He had found that DLO did not contribute to the purchase of the Silverdale and Mulgoa properties, and had no beneficial interest in them. As a consequence of these findings Bryson J concluded: Having regard to the disclaimers and the constitution of the proceedings, the plaintiff is in my opinion entitled to succeed in his claim with respect to the Silverdale and the Mulgoa properties. While another judicial officer might have commenced the inquiry with the legal title, it is understandable why Bryson J chose to set this to one side and seize upon the partnership accounts for assistance. The evidence took 11 days and was a mass of contradictions and discrepancies. Accepting that the credit of the Oliveris was, to say the least, suspect, the court took the route of preferring the contemporaneous accounts prepared by an accountant. His Honour was entitled to so do notwithstanding the attempt made by the Oliveris to repudiate their own accounts. I would dismiss both the appeal and cross-appeal with costs. Appeal and cross appeal dismissed with costs. Counsel for the appellant/cross respondent: GK Downes QC and GPF Rundle Solicitors for the appellant/cross respondent: Romano Di Donato URJ OLIVERI v JONES (Stein JA) Counsel for the respondent/cross appellant: M Broun QC and D Durston Solicitors for the respondent/cross appellant: McCabe Brown Counsel for the appellant Intervener: D Raphael Solicitors for the appellant Intervener: P Bollinger