Zahra v Francica [2009] NSWSC 1206

New South Wales Supreme Court

CITATION : Zahra v Francica [2009] NSWSC 1206

HEARING DATE(S) : 2 - 4 November 2009

JUDGMENT DATE : 4 November 2009

JURISDICTION : Equity

JUDGMENT OF : Bryson AJ

DECISION : Judgment to the defendant with costs.

CATCHWORDS : FAMILY PROVISION – Claim by former de facto – On the evidence, not an eligible person because the relationship ended during the testatrix' lifetime – consideration of merits of claim – If an eligible person, no provision would have been ordered. - TRUSTS AND TRUSTEES – Claim by former de facto to be entitled to a resulting trust of a half interest in the testatrix' house failed for want of credible evidence of a contribution to purchase money.

LEGISLATION CITED : Family Provision Act 1982 s 6(1)

CATEGORY : Principal judgment

Eggins v Robinson (2000) NSWCA 61 Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACSR 785 CASES CITED : Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170 Neilson v Letch [2006] NSWCA 254 Plunkett v Bull (1915) 19 CLR 544 Vandervell v Inland Revenue Commissioners [1967] 2 AC 291

PARTIES : Karmelo Zahra (P) Charles Paul Francica as Executor of the Estate of Mary Francica (D)

FILE NUMBER(S) : SC 6209/06

COUNSEL : J Blackah (P) J Van Aalst (D)

SOLICITORS : Watson & Watson (P) John Hertz & Associates (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRYSON AJ

WEDNESDAY, 4 NOVEMBER 2009

6209/06 KARMELO ZAHRA v CHARLES FRANCIS FRANCICA as Executor of the ESTATE OF MARY FRANCICA JUDGMENT 1 HIS HONOUR: In these proceedings the plaintiff makes claims against the deceased's estate and the facts that he alleges depend for proof very largely upon his own evidence. In approaching his evidence and making findings on a matter he alleges, I bear in mind the need for careful scrutiny to which evidence in such a case should be subjected. This need is well established and was stated clearly by Isaacs J in Plunkett v Bull (1915) 19 CLR 544. Two more modern statements appear in the judgment of McLelland CJ in Eq in Eyota Pty Limited v Hanave Pty Limited (1994) 12 ACSR 785 at 789 in a passage which was cited with approval in the judgment of Sheller JA in Eggins v Robinson (2000) NSWCA 61 at [26]: "... in a claim based on communications with a deceased person the Court will treat uncorroborated evidence of such communications with considerable caution, and will regard as of particular significance any failure of the claimant to bring forward corroborative evidence which was, or ought to have been, available." 2 A clear re-statement of the principle showing its continuing applicability was made by Sheller JA in Eggins v Robinson, see particularly pars [26] to [28] inclusive. Powell JA agreed with Sheller JA and Meagher JA reached the same conclusion although without referring to these authorities. It should be remembered that as appears in Sheller JA's par [28] observations in the High Court of Australia in Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170 at 171 show that the standard of proof is not affected, and the relevant standard is proof on the balance of probabilities. 3 It is important to state at the outset that I take a severely adverse view of the plaintiff's evidence and credibility. His evidence was lacking in detail at many significant points. He made striking claims of lack of memory, and his case was lacking at a number of points in supporting documentation or other corroborative evidence which could well have been available although its absence was not explained. I found his general demeanour most unimpressive. He did not follow directions which I gave relating to interpretation of his evidence. He gave many purported answers which did not respond to questions, and he tended to attempt to brush off difficulties. 4 It is particularly striking to me that he gave an account of dealings by himself with a solicitor in the transactions of April 1994, transactions in which the deceased Mary Francica must have been involved, which I regard as highly improbable. He claimed not to know important details. There were overall improbabilities about what he did say, for example, the "Yes boss" conversation which he gave as the reason for the title to the property at 1471 Botany Road appearing in her name. I refer to this passage again later. The absence of any corroboration of events of April 1994 is significant, for example, the evidence of solicitors to whom the deceased must have given instructions and who are highly likely to have made a written record of instructions on how money was to be dealt with was simply not produced, nor was its absence explained. 5 It was also striking that there was an absence of records of banking transactions showing the movement of money, solicitors' accounts and statements explaining their dealings with money and records relating to investments, change of investments and other movements of money, at other points than the events of April 1994 where such evidence could well have been significant. It is highly likely that careful instructions are taken by solicitors and careful records made when solicitors apply money of one client, or partly owned by two clients, to or towards acquisition of title by someone who is not the owner or sole owner of the money. For his own protection it is likely that a solicitor in such a situation would make a careful record. So a solicitor could well have obtained written instructions and would be highly likely to obtain a written direction about the movement of money and the application of money, to take the example which occurred, arising from the sale of one co-owned property to the purchase of another property in the name of one only. None of this was in evidence. 6 The plaintiff's claim of entitlement to the property at 1471 Botany Road, Botany depends on his allegation that there was a resulting trust arising from contribution made by him to the purchase money. An important and recent statement of the law relating to resulting trusts in relation to purchases of real property was made by Mason P in Neilson v Letch [2006] NSWCA 254, at pars [25] to [28] inclusive where his Honour restated the effect of important and recent authorities. Authorities on this subject extend back some centuries. Consideration was begun almost 500 years ago when common law judges became concerned with identifying uses upon which real property was held as a result of the enactment of the Statute of Uses in the time of King Henry VIII. This field has been well trodden and is well established. The modern authorities, however, were referred to by Mason P. 7 An important aspect of the subject is that resort is had to the law relating to resulting trusts when there is no other explanation available in arrangements made by the parties, particularly by the owner of the money, whether express arrangements or arrangements which can be understood from their conduct. Mason P cited (at [27]) the following statement from the speech of Lord Upjohn in the House of Lords in Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 at 313: "In reality the so-called presumption of a resulting trust is no more than a long stop to provide the answer when the relevant facts and circumstances fail to yield a solution." 8 If the events which the plaintiff claims took place there must as a matter of reasonable certainty have been some surrounding arrangement between himself and Mary Francica which furnished context and explained the disposition. However, his explanation starts at the long stop or explanation of last resort, and as a matter of high likelihood he has left out of his evidence any real comprehensible dealing, or in my finding any true dealing with the surrounding arrangements. Surrounding arrangements must have existed and he does not reveal them. A resulting trust applies where a person pays purchase money for land and title is taken in the name of someone else but it does not arise if the intention to the parties, especially the one who paid the money, with respect to how beneficial ownership can be held can be ascertained in some way. 9 The plaintiff at one time lived in a de facto relationship with Mary Francica who died on 25 July 2005. He claims that the de facto relationship continued, was interrupted for a short time but resumed and existed at the time of her death. The defendant, Charles Paul Francica, her son, obtained probate on 25 October 2006 of her Will of 28 January 2005. This Will gave the plaintiff $10,000 but divided her estate among the five of her seven children who survived her. 10 The significant assets disclosed and valued for the probate application amounted to $1,074,881. However, there are other passages in evidence dealing with the present state of her assets. The significant assets were or are derived from her ownership of property at 1471 Botany Road Botany, of which she was the sole registered proprietor, and the value of this property has been established by evidence and agreement at $750,000. She also had money in investment accounts at banks totalling approximately $170,000. She had other assets but I have given those which have been most significant. There have of course been changes in amounts and values with acts and events in the administration of the estate and litigation. However, there has been no distribution to anybody. 11 The plaintiff's principal claim as I have already said is that he is the equitable owner of a half share in 1471 Botany Road. He contends that it was bought in a purchase settled on 27 April 1994 with funds from the sale of a house in Catherine Street Leichhardt, which he and Mary Francica sold in a sale also settled that day. They were registered proprietors as tenants in common in equal shares of the Leichhardt house. His case assumes that the beneficial interests in the Leichhardt house were in equal shares, the same as the registered interests. This may well be correct. In any event nothing else has been shown or contended for. 12 Mary Francica was born in Malta in 1938 and came to Australia in 1947. She was married to Charles Francica for many years. He died on 3 October 1992. At that time she had been separated from her husband for some years. She worked for many years, her last employment being as caterer at St Vincent's hospital. She had a disabling work injury and had retired by May 1994. 13 The plaintiff was born in Malta in 1932 and came to Australia in 1954. From 1967 he worked on the wharves as a forklift driver. He retired in November 1991 and was paid a retirement benefit of $95,585.75 by Strang Patrick Stevedores. He worked after that, but only for a few days at a time, until early in 1994. His earnings of course were much smaller. The last earnings of which evidence speaks are in a pay slip which shows that on 23 January 2004 his earnings in the year to date were $1,821.60. 14 Apart from savings from earnings, at the time they bought the Leichhardt house each had significant resources to apply towards buying the Leichhardt house. The plaintiff bought land in Lake Heights near Port Kembla in about 1956 and later built a house there which he sold in 1967. In 1977 he bought a house in Hansard Street Zetland and he sold that in 1988 for $134,500. He and Mary Francica bought the house in Catherine Street Leichhardt for about $230,000 in a purchase settled on 21 December 1988. Of this he says (par 14 of his affidavit): "We both contributed approximately equal amounts to the purchase of 319 Catherine Street from the proceeds of our respective sales." 15 This is no proof of anything. He does not say how much, from what sources, he or she put in money. Having regard to my view of his credibility overall I attribute no weight to his evidence about contributions. But that leaves nothing to disturb the conclusion that the interests in the Leichhardt house were as on the title register, tenants in common in equal shares. He had $134,000 from the sale of Hansard Street. She had money from the sale of a property in Hillsdale. The totals are not enough to pay for the purchase and what else each had and contributed to the purchase cannot be known. They co-owned Catherine Street until 1994 and then they sold it. 16 They both had jobs and earnings until the plaintiff retired in 1991 and perhaps somewhat later for Mary Francica. The plaintiff says he does not know what she spent her wages on. 17 In March 1992 each made a Will in favour of the other subject to survival, with gifts over. In 1994 they made three real estate transactions which were all settled on 27 April 1994. There are small differences in the evidence about the date but this date is the one which the plaintiff gave in his affidavit and repeated in oral evidence. It is probably correct and it agrees with what is alleged in his further Amended Statement of Claim. The defendant mis-stated this date at one point and was unable to explain where he got the wrong date, 19 April 1994. It was contended that this was adverse to the defendant's credibility but I do not regard it as more than a matter of minimal significance. 18 On 27 April 1994 the plaintiff settled the purchase of a house in Yagoona Street Belmore for $171,000. Mary Francica settled the purchase of the house at 1471 Botany Road for $285,000 and they both settled the sale of Catherine Street for $250,000. There is no evidence from the solicitors who acted for them both on all these transactions about what money came in or how it was applied. The plaintiff gave evidence which I do not believe to the effect that the solicitor was not given instructions that 1471 Botany Road was to be in Mary Francica's name. How the $250,000 from the sale of Catherine Street was applied cannot be known from the evidence. $250,000 came in from the sale of one house, and $456,000 went out to pay for two houses, one each. The plaintiff says he funded the purchase of Yagoona Street Belmore "from my retirement payments in 1991." This is impossible. $95,500 in the bank at the end of 1991 could not become $171,000 by April 1994. There must have been other money from somewhere. 19 The plaintiff had a long established gambling habit and still does. It is unlikely that he had accumulated significant funds but what he had actually done is not known. The evidence does not enable me to establish the scale of his gambling. It casts a little doubt on whether he still had the funds he received in November 1991. He produces no supporting records about any of his investments. More than $200,000 extra came in from somewhere, and if the plaintiff used his retirement money it was not enough to be half of that. 20 The plaintiff gives this conversation in his affidavit, par 24, the closest he gives to an explanation of the transaction: "The property was registered in the deceased's name only as a result of a conversation I had with her in which she said words to the effect '33 Yagoona Street is in your name, so 1471 Botany Road should be in my name'. I said words to the effect 'Yes boss'."