Serkowski v Serkowski [2013] NSWSC 776

Supreme Court New South Wales

Medium Neutral Citation: Serkowski v Serkowski [2013] NSWSC 776 Hearing dates: 12 June 2013 Decision date: 17 June 2013 Before: Ball J Decision: 1. Proceeding dismissed. 2. Order extending the operation of caveats AH41340R and AH41344H is revoked. 3. Plaintiff to pay the defendant's costs of the proceeding. Catchwords: EQUITY AND TRUSTS - claim for entitlement to property - whether property held on an express or constructive trust - operation of Conveyancing Act 1919 (NSW) s 23C - no issue of principle Legislation Cited: Conveyancing Act 1919 (NSW) Cases Cited: Guimelli v Guimelli [1999] HCA 10; (1999) 196 CLR 101 Category: Principal judgment Parties: Rodney Serkowski (Plaintiff) Grace Serkowski (Defendant) Representation: In Person (Plaintiff) Dr CJ Birch SC (Defendant) Thurlow Fisher (Defendant) File Number(s): 2012/260264 Publication restriction: Nil

Judgment 1In this proceeding the plaintiff, who represents himself and who is the defendant's son, seeks declarations that the defendant holds two properties on trust for the plaintiff and the plaintiff's sister. The proceedings were commenced after the plaintiff lodged caveats over the two properties and the defendant served lapsing notices in respect of those caveats.

Factual background 2In about 1977 the defendant, who I will refer to as Grace, and her husband, who I will refer to as Jozef, purchased a property in Punchbowl (No 19) as joint tenants, for the sum of $34,500 with a $25,000 mortgage from Westpac. The property became the matrimonial and family home. Grace and Jozef have two children: the plaintiff, who I will refer to as Rodney, and a daughter, who I will refer to as Jacqueline. 3In about 1982, the mortgage was repaid in full and the property has since remained unencumbered. 4In May 1997, Jozef bought the property next door (No 15) and at the same time transferred his interest in No 19 to Grace. At the time, Rodney was 14 years old and Jacqueline was 11. In his affidavit, Jozef says he transferred No 19 to Grace in order to avoid having to pay land tax and capital gains tax. Jozef says, and it is not disputed, that the two properties were used together to provide additional living space for the whole family. 5There is an issue about what prompted Jozef to buy No 15 - whether he was concerned to stop it from being redeveloped or whether he intended eventually to redevelop No 19 and No 15 himself. Nothing, however, turns on the resolution of that issue. 6In June 1998, Jozef and Grace bought the property on the other side of No 19 (No 21) as joint tenants. The property was purchased for $300,000. The purchase price was funded by a loan with a mortgage from Aussie Home Loans, which has since been fully repaid. The property was acquired as an investment and since its acquisition has been rented out to tenants. 7Over the years, Grace and Jozef have also bought a number of other investment properties. 8In 2005 and 2006, Grace and Jozef conveyed to each of Rodney and Jacqueline a residential property, each of which had been bought as an investment. The value of each property at the time that it was conveyed was approximately $330,000. Both Rodney and Jacqueline have retained their properties and Rodney currently rents his property out for the sum of $350 per week. He estimates that the property is currently worth approximately $400,000. 9At the time he acquired his property, Rodney was entitled to the first home buyer's grant of $10,000. He paid that amount to his parents towards the purchase price of the property. Rodney also says that over a two-year period he paid Grace a further $60,000 to $70,000 in cash towards the purchase price of the property. I do not accept that evidence. It is not supported by any contemporaneous records. Rodney's evidence on the point was vague and somewhat evasive. He did not give a satisfactory explanation for the source of the funds he says he paid to his mother. He was living at home at the time. He had just finished studying. He did not have a job, although he did work for his father. Rodney gave evidence that not even his father knew of the payments, which seems unlikely if they were made. No explanation was given for why he stopped making the payments if the expectation really was that he would pay the purchase price over time. There is no evidence that Jacqueline made similar payments in respect of the property that was transferred to her, although it seems clear that Grace and Jozef were keen to treat their two children equally. The conclusion I reach, then, is that in 2005 Grace and Jozef transferred a property to Rodney which was worth approximately $330,000 for the sum of $10,000, which had been paid to Rodney as a first home buyer's grant. Effectively, then, the property was a gift. 10The marriage between Grace and Jozef has broken down and they have recently divorced. There is currently a proceeding in the Federal Circuit Court concerning the division of their property, which is listed for hearing later this year. Since the separation, Grace has resided in No 19 with Jacqueline. Jozef resides in No 15. Rodney lived with him for a time, although Jozef gave evidence that Rodney now lives elsewhere. 11Rodney says that he did not know of the proceeding in the Federal Circuit Court until after he lodged the caveats that have given rise to this proceeding. That seems unlikely. However, whether he knew of the family law proceeding or not, he certainly knew that the relationship between his parents had broken down and he must have anticipated that there would need to be some property settlement following that breakdown. 12There are some difficulties with the way in which this proceeding is constituted. Rodney seeks a declaration that No 19 and No 21 are held on trust. However, Jozef, who is a joint owner of No 21, has not been joined as a party to the proceeding. Rodney seeks no declaration in respect of No 15. The reason for that is that Jozef apparently concedes that he holds both No 15 and his interest in No 21 on trust for Rodney and Jacqueline. Rodney says that No 19 and No 21 are held on trust for both himself and Jacqueline. However, Jacqueline also is not a party to the proceeding. Both Jozef and Jacqueline have, however, given evidence in the proceeding and if any orders are to be made there is no reason why they could not be joined for the purpose of making those orders.