New South Wales Supreme Court CITATION : Yoshino v Niddrie [2003] NSWSC 57 HEARING DATE(S) : 12 and 13 February 2003 JUDGMENT DATE : 13 February 2003 JURISDICTION: Equity Division JUDGMENT OF : Young CJ in Eq DECISION : Judgment for Plaintiff (Mother). CATCHWORDS : EQUITY [100]- Presumption of advancement- Mother purchases property in joint names of daughter and son-in-law- Whether presumption applies. Calverley v Green (1984) 155 CLR 242 CASES CITED : Knight v Biss [1954] NZLR 535 Nelson v Nelson (1995) 184 CLR 538 Shigeko Yoshino (P) PARTIES : Rika Niddrie (D1) Steven Albert Niddrie (D2) FILE NUMBER(S) : SC 3675/01 C M Simpson (P) COUNSEL : V Hartstein (D1) A Canceri (D2) Newnhams Solicitors (P) SOLICITORS : Abrams and Associates (D1) J Kekatos Lawyers (D2) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG CJ in EQ Thursday 13 February 2003 3675/01 – YOSHINO v NIDDRIE JUDGMENT 1 HIS HONOUR: The plaintiff is the mother of the first defendant and the mother-in-law of the second defendant. The first defendant, a lady, and the second defendant, a gentleman, were married on 8 October 1994. They separated in September 2000 and were divorced in April 2002. 2 The plaintiff was a full-time resident of Japan when she divorced her husband. She had two children, a son, Osamu, and the first defendant. As part of her divorce settlement the plaintiff received substantial capital funds. 3 At this time the plaintiff decided that she wanted to have a completely fresh start in life. Her daughter was a permanent resident of Australia and the plaintiff made up her mind to emigrate to Australia. It would seem that she also intended in due course for her son to join her. I need not spend any further time on that aspect of the matter as it would appear that later the son did come to Australia but did not like it here and went back to Japan. 4 In early 1996 the plaintiff requested her daughter, the first defendant, to look for a house in which she could live in Sydney. She made it clear that her daughter and son-in-law could live with her, if they wished to do so. 5 The plaintiff remitted various sums from Japan to Sydney. The sums were remitted progressively as the moneys flowed through to the plaintiff from her former husband in instalments, with the final sum coming on the sale of the former matrimonial home in Japan. I will deal with the amounts sent in Australian dollars, though they may have originated in so many Japanese yen. 6 On 25 March 1996 the plaintiff transferred $118,991 to the first defendant's cash management account with the National Australia Bank. Those moneys were withdrawn the next day, but were in the control of the first defendant. On 18 April 1996 the plaintiff transferred a further $115,228 to the same account, which again went in and out. 7 On 18 December 1996 the plaintiff transferred $4,457 to the joint account of the first and second defendant, and on 28 January 1997, when her house was sold, the plaintiff transferred $829,148 to an account that had been opened in her name with the National Australia Bank, Parramatta Branch. 8 With respect to this last payment, a document is in evidence which shows that the plaintiff requested the Tokyo Branch the National Australia Bank to transmit the sum to the plaintiff's account with the same bank at its Parramatta Branch. 9 Mr Canceri of counsel, for the second defendant, says that this is significant because the evidence on the plaintiff's side is to the effect that the plaintiff and her daughter opened the account in Sydney, but I really do not see much significance in this document because it does demonstrate that the account must have already been opened before this transfer was made, and it is equally possible that the account at Parramatta was opened by arrangement with the management of the Tokyo Branch, or with the management of the Parramatta Branch. 10 Finally, on 10 March 1997 the plaintiff provided the first defendant with a further $6,417 cash to discharge her mortgage. 11 The defendants at all relevant times were living in a house at 13 Prince Street, Granville. This house was owned, at least in part, by the second defendant. He said that it had been inherited from his parents, but there are some documents which suggest that it was the former matrimonial home of the second defendant and his first wife. 12 The defendants looked for a house. The plaintiff says this house was to be for her, but the others were to live in it as well. The property, 43 George Street, Pennant Hills, was found, and on 12 November 1996 the purchase of that property was completed, the purchase price being $391,000. The purchase moneys were paid by the plaintiff, with the exception of $150,000, which was raised by a mortgage with Suncorp, the mortgage being taken out by the first and second defendants. 13 Apart from the fact that there was such a mortgage in the defendants' names, no-one tendered any documents before me as to how it came about that Suncorp granted this loan. It would have been extremely helpful, for instance, to the second defendant's case if those documents had disclosed that the mortgage was to be bought for the first and second defendants beneficially; how much was disclosed to Suncorp as to the interest of the plaintiff, and whether the plaintiff was disclosed as the source of the balance of the funds. However, I am just left to speculate. 14 In my view, the material was material one would have expected the second defendant to proffer to the court, and in its absence I can possibly draw the inference that it could not have been of assistance. Mr Canceri says, on the other hand, that it could have been tendered by the plaintiff, if there was anything helpful in the document so far as the plaintiff is concerned. This is true up to a point, except the evidence suggests it was the first and second defendants who negotiated the mortgage. 15 In the long run, it does not matter very much what inferences are or might have been drawn from this material, but it was strange that it was not tendered. 16 At the time the property was tenanted and the rent was paid to the defendants' joint account. It would seem that initially the plan was to demolish the existing house on the Pennant Hills land and replace it with a new house. However, there were problems, in that there was some heritage building status on the house that was to be demolished and the local council would not give approval. 17 It would seem then that there was a subsequent plan to build the house on some other part of the land and to subdivide. It is not completely clear from the evidence what happened, save and except that there was an appeal to the Land and Environment Court at a cost of $50,000, (the cost of which was borne by the plaintiff); that the parties considered that the appeal was successful, but that the property was later resold. 18 In March 1997 the plaintiff came to Australia and commenced to live with the defendants at Granville. Although at that stage she had not been classed as a permanent resident she did achieve that status subsequently. 19 Mr Canceri kept submitting that it was of great significance that at the time when the Pennant Hills property was purchased the plaintiff had not been granted permanent residency. However, there is very little material to suggest that the plaintiff did not believe that she would get that status in due course. Indeed, her evidence was that she was fairly certain of obtaining that status once the marriage of her daughter to an Australian had lasted for three years, which, of course, would have come about in early October 1997. 20 In August 1997 the parties inspected 93 Kenthurst Road, Kenthurst. The plaintiff says that she agreed that the title to the property would be put in all three names, but that it would always be her property. The transfer was effected to the plaintiff and first and second defendants as joint tenants. The whole of the purchase money was paid by the plaintiff, unless it can be said that the $150,000 mortgage money provided through Suncorp when the Pennant Hills property was purchased was the contribution beneficially of the defendants. 21 The proposal was then to build a house at Kenthurst and to sell the Pennant Hills property. The sale of the Pennant Hills property was completed on 17 September 1999. The sale was negotiated by the first defendant. The proceeds were initially invested in term deposits in the name of the first defendant, or her brother, or both, but later the funds were transferred to the plaintiff. A house was built on the Kenthurst property. Costs to date of $250,000-odd have been paid by the plaintiff. The relationship, however, between the defendants broke down in 2000 and thereafter the first defendant and the plaintiff left the Granville property and are now living at a property that is not one of the ones I have already mentioned. 22 The plaintiff claims a declaration that the Kenthurst property is held on trust for her and that the defendants should transfer their interests to her. The first defendant consents to this, the second defendant opposes. 23 This is not at all unnatural when one looks at what has happened. The second defendant has separated from the first defendant and they are now divorced. The mother and daughter are now living in the one house, and the first defendant is closer to the plaintiff than she is to her former husband. 24 The first defendant was represented by Ms Hartstein of counsel. Although on the defendants' side of the record, Ms Hartstein appeared more in the plaintiff's camp than the second defendant's camp. The first defendant's evidence was to the effect that she was acting in the whole transaction as agent of her mother; that she did not expect the presumption of advancement to apply and it was her duty to look after her mother, which she did. 25 The second defendant admits that the Pennant Hills property was purchased with the money borrowed from the plaintiff, plus the money obtained from the Suncorp Building Society. However, he does say, in para 55 of his affidavit, that he agrees with para 28 of the plaintiff's affidavit, which is to the effect not that there was any borrowing or loan, but it was the plaintiff's money for the plaintiff's purposes. 26 Accordingly, the question with respect to the Pennant Hills property involves whether the second defendant is entitled to an interest because of his contribution as a co-mortgagor to Suncorp, and whether he is able to, as Ms Hartstein put it, cling on to the coattails of his former wife and take some advantage of the presumption of advancement. 27 If I find that the $150,000 is a contribution made by the defendants to the purchase of the property then the situation would appear to be that the defendants may be entitled to hold the property on trust for the plaintiff as to 62 percent and as to 19 percent to the first defendant and 19 percent to the second defendant. However, as the plaintiff completely discharged the mortgage out of her own funds, the defendants would be obliged to pay to the plaintiff the capital and almost certainly the interest that they should have paid to Suncorp, but which the plaintiff's payment of capital excused them from paying. 28 Accordingly, it would only be if there had been a significant capital appreciation of the Kenthurst property over and above the interest payable on the mortgage, and without taking into account the amount paid for building the house, that in the long run the second defendant would come out on the credit side of the ledger. However, Mr Canceri said this does not matter very much, if he is entitled to a 19 percent interest in the property, well then that is what I must declare. 29 There is no doubt at all of the proposition that if a person becomes liable under the covenant in a mortgage to repay the principal, and the mortgagee provides part of the purchase money of the property, then that person may claim the liability to pay the mortgage as part of his or her contribution to the purchase of the property. An illustration of that is Calverley v Green (1984) 155 CLR 242. 30 However, it is not always the case that this will be so because it may be, and Mr Simpson for the plaintiff says that the present is one such case, the material shows that the mortgage was taken out as agent for the real owner where there was at least an implied covenant to indemnify the legal mortgagors. 31 Mr Simpson puts that the evidence of the plaintiff and the first defendant, plus four objective facts, all point to the plaintiff as being beneficial owner and the mortgage having been taken out on her behalf. 32 The oral evidence and evidence in the affidavit suggests that everyone knew that the proceeds of the sale of the plaintiff's former matrimonial house in Japan would be flowing to her in the near future. Secondly, the evidence was that the impetus for finding the house at Pennant Hills was provided by the plaintiff in her request to her daughter to look for a place so she could emigrate to Australia. Thirdly, there is the plaintiff's evidence, and the evidence of the daughter, that it was always intended that the property should be the mother's. 33 The evidence of the second defendant was discounted in its effectiveness to a degree because he left the physical arrangements to a great degree to his wife and so while he had some expectations, he really has no first hand knowledge of the details as to what happened. 34 This, I must confess, makes the non production of the Suncorp documents even more extraordinary. Indeed, in the further explanations that were given by the second defendant when he got into the witness box to affirm the correctness of his affidavit, at transcript pp 52-53, he said that while he had indicated in his affidavit that there was a loan: "[w]e never actually discussed a loan as such, as a loan that you would give somebody some money and then ask to pay back. The money was - that $150,000 was to pay off the mortgage of the property and why I thought loan was because there were plans to do extensions and perhaps even build another house down the back of the property for the brother-in-law. So, even though it wasn't physically a loan, I still thought I had to contribute something back, either as doing the extensions, or renovations and in the future, building a second home." 35 That answer shows really that the second defendant was on the periphery of what was happening, and whilst what he said may have been sincerely felt, he just did not have the sufficient personal knowledge that the other two (the plaintiff and first defendant) had. 36 Mr Canceri said I should reject some of the evidence of the plaintiff and the first defendant as unreliable and he points to the fact that the plaintiff did not have permanent residency at the time, a matter, I must confess, I do not put the same significance on, for reasons I have already indicated, and he says there is some confusion in the evidence as to where the account with the NAB Parramatta Branch was opened, a matter with which I have already dealt. 37 In my view, the plaintiff's evidence and the first defendant's evidence should be accepted and, indeed, probably for the reason I have already given, the first defendant does not provide contrary evidence. 38 Then there are the objective facts. Mr Canceri relies very strongly on the fact that there was a registered legal mortgage of which the first and second defendants were liable to pay Suncorp $150,000, and interest. Mr Simpson relies on four different objective facts, viz: (a) that the payment of the mortgage was solely by the plaintiff; (b) that the plaintiff paid all the outgoings on the property; (c) that the plaintiff paid all the costs of the Land and Environment Court, some $50,000; and (d) the plaintiff received the rent. 39 He says all these indicia point to the plaintiff as beneficial owner of the whole property. Mr Canceri says that you have to look at what is the payment for the property, when it is purchased, and the mere fact that the plaintiff pays the mortgage later does not alter the parties' contribution. 40 However, the point being made by Mr Simpson, with which I agree, is that where you see that one person pays the mortgage out of her own moneys, and claims it to be her property, that payment reinforces her claim because why would a person pay the whole of the mortgage if she only had part of the property. 41 In my view, accepting the plaintiff and first defendant's evidence, reinforced by the objective facts to which Mr Simpson has referred, I would find that the plaintiff's case is established. 42 The objective fact pointed to by Mr Canceri is equivocal in that it sits equally well with the defendants taking out the mortgage as the plaintiff's agents, as with any other hypothesis. 43 I should mention the presumption of advancement argument. It would seem to me that even if the presumption of advancement did apply in the instant case that the whole of the circumstances to which I have referred would show that the presumption has been rebutted. Indeed, it takes relatively little to rebut that presumption, but, for the reasons I have already given, the presumption would be rebutted in the instant case on the whole of the evidence. 44 The High Court decision in Nelson v Nelson (1995) 184 CLR 538, is that the presumption of advancement lies now in the case of gifts by a mother to a child, as well as it might to gift by a father, even though most of the text books still suggest that that proposition needs to be modified in many respects. However, for Australia that is the law. 45 The law also seems quite clear that unless a son-in-law is in loco parentis to his parents-in-law a transfer to the son-in-law does not raise the presumption of advancement: Knight v Biss [1954] NZLR 535. I know of no case where a court has considered whether a transfer from a mother-in-law to her daughter and her son-in-law as joint tenants has been held to raise the presumption of advancement. Probably it is a mere theoretical exercise to discuss this, as the fact that the daughter is emancipated and married, and that a non child is an equal transferee, would in the average case mean that even if one started with assuming the presumption of advancement applied, it would almost certainly be negatived, unless one could see a close relationship between the mother and son-in-law. 46 Accordingly, the plaintiff is entitled to relief. There is a typographical error in prayer 2 of the amended statement of claim, which I have corrected, and so I make orders 1 and 2 in the amended statement of claim. 47 I order that the cross-claim be dismissed. 48 I make no order for the first defendant's costs, and I order that the second defendant pay the plaintiff's costs. 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