Giovanni Antonio Dapas v Robert Connell [2015] NSWSC 806

Supreme Court New South Wales

Medium Neutral Citation: Giovanni Antonio Dapas v Robert Connell [2015] NSWSC 806 Hearing dates: 17 June 2015 Date of orders: 17 June 2015 Decision date: 17 June 2015 Jurisdiction: Equity Division - Duty List Before: Kunc J Decision: Caveat extended Catchwords: TORRENS SYSTEM – Caveats – Extension – Serious question as to whether land held on trust for plaintiffs Category: Procedural and other rulings Parties: Giovanni Antonio Dapas (First Plaintiff) Lidia Dapas (Second Plaintiff) Tania Dapas (Third Plaintiff) Robert Connell as financial manager of the estate of X (Defendant) Representation: Counsel: M.G. Popplewell (Plaintiff) R. Connell (Defendant – in person)

Solicitors: Bransgroves Lawyers (Plaintiff) File Number(s): 2015/174206 Publication restriction: No

EX TEMPORE Judgment 1. HIS HONOUR: This is an application by the plaintiffs (to whom I shall refer to as "the Dapas family") for an order for the extension of a caveat over land at Queens Park in Sydney (the "land"). The caveat was lodged in November 2014 and, by reason of a lapsing notice, would otherwise lapse tomorrow. The caveat claims an "equitable interest as beneficiary of trust". It asserts that "the caveators have made financial contributions to the purchase of the land. The registered proprietor acquired the land as trustee for the caveators". 2. The current registered proprietor of the land is Mr X, whose name cannot be published as his financial affairs are under management. For reasons which I will shortly describe, the defendant to these proceedings is Mr Robert Connell, who is the financial manager of the estate of Mr X. 3. The Dapas family's case is not a straightforward one. In addition to the Dapas family and Mr X, another essential player in the drama is Garth Raymond Paterson. Mr Paterson is a property developer who, at all material times, was the sole director and secretary of a company, now in liquidation, known as 31 Blenheim Street Pty Ltd ("the company"). 4. The company was the original registered proprietor of the land. In early 2012 Mr Paterson approached the Dapas family suggesting that he would help them out by arranging for the company to build them a house on the land, which would ultimately be sold to them. It appears that the plan was for the Dapas family to finance the construction but any transfer of the land would ultimately occur at the conclusion of construction when the Dapas family had moved on to the land and had sold their own existing home. 5. Those arrangements were put in train by a contract for the sale of the land between the company and the Dapas family dated 31 May 2012. That contract had as its completion date a time determined by reference to the sale of the Dapas family's existing home. 6. Under the contract of sale for the land between the company and the Dapas family, the purchase price was $750,000 with a deposit of $450,000. The uncontradicted evidence is that members of the Dapas family paid to Mr Paterson the deposit and an additional $50,000 which was said to form the deposit under a building contract in relation to the land. Construction commenced on the land of what the Dapas family understood would be their home. 7. In 2013 Mr Paterson obtained additional payments from the Dapas family, including a payment of $37,790 by bank cheque made out to the Office of State Revenue. Mr Paterson apparently explained that the original contract for sale had to be upstamped because the value of the land had increased. However, what the evidence also discloses is that on 16 January 2013 the company entered into a contract for sale of the land with Mr X. The purchase price under that contract for sale was $940,000. 8. The contract says that the deposit of $94,000 was not to be invested. It appears, unbeknownst to the Dapas family, that the cheque which they had provided for stamp duty was in fact used by Mr Paterson in connection with the stamp duty payable on the second contract for sale of the land. 9. The important point for the present purposes is that the sale of the land from the company to Mr X was completed and Mr X is now the registered proprietor of the land. There is also in evidence a settlement statement in connection with the sale of the land to Mr X. That settlement statement refers to the deposit of $94,000 having been paid directly to the company. Furthermore, the sale appears to have been settled in circumstances where there was an outstanding balance owing to the company of $125,679. The solicitor's settlement statement says: From the above statement, you will observe there is an amount of $125,679 due to the vendor herein, and we note your instructions that arrangements have been directly between you for the payment of this amount (sic). 1. The Dapas family did not become aware that Mr X had become the registered proprietor of the land until about July 2014. This was when Mr X suffered a catastrophic accident on the building site on the land. Mr Connell (who today appeared in person) has informed me that Mr X suffered a major brain injury which has left Mr X seriously impaired. That injury is the reason why Mr Connell, a long-time friend of Mr X's, has been appointed Mr X's financial manager. 2. According to the evidence from the Dapas family, it was when Mr X had his accident in June or July 2014 that the Dapas family discovered that Mr X was the registered proprietor of the land. Mr Paterson then apparently informed a member of the Dapas family that Mr X was holding the land on trust for the Dapas family. 3. The Court also has before it an affidavit by Mr Paterson. His evidence in relation to the transfer of the land to Mr X is: 15. I along with various associated entities started to experience financial difficulties in late 2012. I became concerned at the ability to perform the contracts which had been entered into with the plaintiffs. 16. Mr X and I had a conversation to the following effect: Mr X: I can see what's going on. I am happy to help out so we can get the situation with Nadia's family sorted out at 22 Isabella Street. 17. I arranged for registered title in the Land to be transferred to Mr X in early 2013. Under the terms of a trust deed which I saw Mr X sign at the time, Mr X took title to the Land as trustee or custodian for me, and I in turn held it on trust for the plaintiffs. I also signed the trust deed in Mr X's presence and I left it with Mr X. 18. I believe that I have among my papers an unsigned version of the relevant deed, however I have been unable to locate this at the time of making this affidavit. I believe Mr Connell to have seen the signed version of the deed, however, and that he may well have this in his possession. 19. In 2013: a. Mr X (as trustee for me as sub-trustee for the plaintiffs) entered into a contract for sale with the Company (as trustee for me) for the purchase of the Land at a price of $940,000, which was based on a valuation obtained at the time – a true copy of the front page of the contract is annexed hereto and marked "D". b. no deposit was paid under the relevant contract; c. settlement occurred on 18 June 2013, with only the following amounts being paid at settlement: i. $719,826 to Bank of Sydney Ltd (being the payout figure required to discharge the outgoing mortgage); and, ii. $495.00 to Nicholas Angelos & Co, being as I understand it the settlement agents for the Bank; - a true copy of the front page of settlement instructions showing payment of these amounts is annexed hereto and marked "E"; d. the stamp duty of $37,790 payable on the price from the Land of $940,000 was entirely paid by the plaintiffs; and e. the difference between the contract price of $940,000 and the monies paid at settlement ($219,679) was never paid by Mr X or on his account or by any other person, and remains unpaid. 20. Building works at the Land according to the custom plans and specifications designed for the plaintiffs continued after the transfer of registered title to Mr X. 1. Mr Connell has informed me that he has never seen a signed version of the trust deed to which Mr Paterson refers in his evidence. Mr X is, unfortunately, unable because of his condition to cast any light on the question. 2. For present purposes it is necessary for the Court to be satisfied, similarly to the situation which would apply in relation to an interlocutory injunction, that there is a serious question to be tried as to whether or not Mr X holds the land on trust for the Dapas family, possibly with Mr Paterson interposed as an intermediate trustee. 3. By reason of Mr Paterson's evidence, the Court is satisfied for the purposes of this interlocutory hearing that there is a serious question to be tried as to the identity of the beneficial owner of the land. The circumstances are clearly unusual but the material relied upon by the Dapas family demonstrates that there is a case warranting further investigation. As to whether or not the Dapas family will ultimately be able to make out their claims is not a matter upon which the Court expresses any view at this time. 4. Insofar as the balance of convenience is concerned, Mr Connell has informed the Court that for various reasons which I do not need to record, he has formed the view that it is in Mr X's best interests that the land be sold. However, Mr Connell is not in a position to do so until he receives the consent of the NSW Civil and Administrative Tribunal through its Guardianship Division ("NCAT"). That consent has been sought but has not yet been received. Therefore, at the moment, Mr Connell is unable to deal with the land on behalf of Mr X. That position may change. 5. The order which I propose to make extending the caveat will be until further order. The undertaking as to damages is proffered on behalf of the Dapas family. Each party may well have to consider its position again carefully if and when Mr Connell receives the consent to deal with the land from NCAT. This is because Mr Connell has informed the Court that there is a mortgage over the land which Mr X's estate is unable to service. Interest is accruing. It is therefore in everybody's interests to sort out the beneficial ownership of the land as quickly as possible. 6. For that reason, the Court will make it a condition of the orders which it is making today that the plaintiffs apply to the Expedition Judge within fourteen days for an order that these proceedings be expedited. It is, of course, a matter for the Expedition Judge as to whether or not such an order will be made, but in the circumstances of this case it is at least important that the suitability of the proceedings for expedition be dealt with as soon as possible. 7. Furthermore, in connection with the ongoing conduct of this litigation, it is clear that Mr Connell, who is undertaking an important task for his friend Mr X, should be in a position to obtain legal representation as soon as possible and, if at all possible, before the matter comes before the Expedition Judge. Mr Connell has informed the Court that in order for him to be able to expend funds of Mr X's estate for legal representation, he will require the consent of NCAT. Mr Connell has told the Court that he will be making an urgent application to NCAT for that consent and it is to be hoped that he will be enabled to retain legal representation as a matter of urgency.