Hamed v Elddin

1. [1]

   THE COURT: This is an application for leave to appeal from a decision of a judge of the Common Law Division (Button J). [1] The primary Judge made a declaration that the respondent (Mr Elddin), the plaintiff in the proceedings, was entitled to exclusive possession of residential premises located at South Granville (Premises). His Honour granted Mr Elddin leave to issue a writ of possession in respect of the Premises.

2. [2]

   The defendants to the proceedings instituted by Mr Elddin were the present applicant (Mrs Hamed) and her husband, Mr Hamed. Mr and Mrs Hamed were in possession of the Premises, both when the proceedings were commenced and when the Primary Judgment was delivered. However, following an unsuccessful stay application, [2] the Hameds vacated the Premises. They did so before Mrs Hamed’s application for leave to appeal was heard by this Court.

3. [3]

   At all material times, Mr Hamed has been an undischarged bankrupt. Despite being the first defendant in the Common Law proceedings, Mr Hamed is not a party to Mrs Hamed’s application for leave to appeal from the decision of the primary Judge. Mr Hamed’s trustees in bankruptcy have not been joined to the proceedings at any stage.

4. [4]

   The parties to the present application appear to have assumed that the applicant requires leave to appeal from the decision of the primary Judge. The basis for this assumption is not entirely clear. It may be that the view was taken that the judgment or order did not involve a matter in issue amounting to the value of $100,000 or more, in which case leave is necessary. [3] If this was the view taken, it may not have been correct. [4] Be that as it may, the parties proceeded on the basis that leave to appeal is required and no notice of appeal (as distinct from a draft notice of appeal) has been filed.

5. [5]

   The application for leave to appeal was to be heard concurrently with the appeal itself. In view of some rather obvious obstacles in the applicant’s path, the Court asked the parties to address the question of leave at the outset. The argument also canvassed the merits of the appeal. At the conclusion of argument, the Court reserved its decision.

6. [6]

   These are the Court’s reasons for refusing leave to appeal.

The Primary Judgment

1. [7]

   The primary Judge summarised Mr Elddin’s case as follows: [5]

2. [8]

   The sum of $67,000 referred to by the primary Judge arose out of a side arrangement between Mr Elddin (the purchaser from the trustees) and Mr Hamed. The purchase price paid by Mr Elddin to the trustees for the Premises was $483,000. The primary Judge found that the nature of the side arrangement was not entirely clear, but that Mr Elddin had agreed with Mr Hamed that the total purchase price should be $550,000. Accordingly, his Honour found that Mr Elddin owed Mr Hamed $67,000, which sum had not been paid. [6] Although his Honour did not say so, the debt due to Mr Hamed has vested in his trustees in bankruptcy. [7]

3. [9]

   His Honour said that the Hameds’ case stood in stark contrast to that of Mr Elddin: [8]

4. [10]

   The primary Judge observed that no party had raised the question of whether Mr Hamed was entitled, as an undischarged bankrupt, to engage in litigation without the consent of his trustees in bankruptcy. For this reason, his Honour did not address that question. [9] It seems that the parties also did not draw his Honour’s attention to the possibility that Mr Hamed’s trustees in bankruptcy might be necessary parties to the proceedings.

5. [11]

   The primary Judge noted that it was difficult to make firm findings of fact because of the conflicting evidence given by witnesses and the paucity of documentation. A number of the key transactions were said to have involved large unrecorded cash payments. Moreover, some witnesses, including Mr Elddin and Mr Hamed, had not been “entirely candid” in their evidence. [10]

6. [12]

   His Honour’s key conclusions can be summarised as follows:

The Question of Parties

1. [13]

   Part of Mr Elddin’s pleaded case against the Hameds was that they were liable to him for arrears of rent. Since Mr Hamed was an undischarged bankrupt, Mr Elddin was not entitled to pursue the claim for arrears of rent against him, except with the leave of the Court. [16] While pursuit of the claim against Mr Hamed was a procedural irregularity, it did not require the trustees to be joined to the proceedings.

2. [14]

   The position as to joinder changed when the Hameds filed an amended defence, which pleaded that they were in possession of the Premises not as tenants, but as owners. The amended defence is not easy to follow and the Hameds’ evidence was somewhat confusing. But the substance of their case at trial was that they had obtained monies from third parties, presumably by way of loan, and had used those funds to contribute to the purchase price paid by Mr Elddin to the trustees. On this basis, so they argued, they acquired an equitable interest in the Premises. At no stage did they attempt to quantify their interest or to define it with precision.

3. [15]

   If, as the Hameds claimed, Mr Hamed acquired an equitable interest in the Premises by reason of his dealings with Mr Elddin (none of which was disclosed to the trustees), that interest vested in Mr Hamed’s trustees as the after-acquired property of a bankrupt. [17] For that reason, the trustees had a direct interest in the claims advanced by the Hameds. It is true that the Hameds put forward their claims by way of defence to Mr Elddin’s claim to possession of the Premises. Nonetheless, it would have been an appropriate exercise of the Court’s powers to require the Hameds to formulate their case with precision by way of cross-claim. [18] At that point, the need to join the trustees as parties to the Common Law Proceedings presumably would have become apparent.

4. [16]

   Mr Lange, who appeared for Mrs Hamed on her application for leave to appeal, submitted that it was not necessary to join the trustees to that application. He contended that Mrs Hamed need only show that she had made some separate contribution to the purchase price in order to successfully defend Mr Elddin’s claim for possession. Any such contribution would entitle Mrs Hamed to an equitable interest in the Premises as tenant in common (albeit holding an indeterminate share). This would be sufficient, so Mr Lange argued, to enable her to remain in (or resume) possession of the Premises and to defeat Mr Elddin’s case against her.

5. [17]

   This way of putting the case departed in fundamental respects from the case advance by the Hameds at the trial. Putting that difficulty to one side, it can be seen that the case now advanced by Mrs Hamed is adverse to the interests of the trustees. She now says that she alone contributed some or all of the funds that were provided to Mr Elddin. This claim is contrary to the case run on her behalf at trial, namely that she and Mr Hamed jointly contributed to the funds provided to Mr Elddin. The claim now made by Mrs Hamed is contrary to the interests of the trustees who, if joined, may have wished to contend that Mr Hamed contributed to funds provided to Mr Elddin.

6. [18]

   In short, Mrs Hamed is asserting, albeit by way of defence rather than cross-claim, that she has a proprietary interest in the Premises to the exclusion of Mr Hamed and his trustees in bankruptcy. [19] In these circumstances it would seem that the trustees should have been joined as parties to the application for leave to appeal so that they had the opportunity, if so advised, to advance their claim to an interest in the Premises. If this is correct, the application for leave to appeal is not properly constituted as to parties.

7. [19]

   Independently of the question of parties, as was pointed out in oral argument on the leave application, Mrs Hamed’s case faces an insuperable difficulty. The case presented by the Hameds to the primary Judge was that both had contributed to the purchase price paid to the trustees and thus both had acquired an equitable interest in the Premises. The argument advanced on the leave application was that Mrs Hamed made some (unspecified) contribution in her own right.

8. [20]

   Mr Lange conceded that this case could not be maintained unless there was evidence before the primary Judge that Mrs Hamed had contributed to the purchase price of the Premises in her own right, independently of any contributions made by Mr Hamed. Not surprisingly, given the way in which the Hameds had put their case in the Common Law Proceedings, Mr Lange was not able to point to any such evidence. Mrs Hamed did not say in her evidence that she had provided funds to Mr Elddin independently of monies provided by or through the agency of Mr Hamed. Indeed Mrs Hamed readily accepted that she was not employed and had no income of her own. Mr Lange rather faintly suggested that a rather vague passage in an affidavit sworn by Mrs Hamed supported the claim now sought to be made, but that submission is unsustainable. There was simply no evidence before the primary Judge to support a contention that Mrs Hamed made contributions in her own right to the purchase price of the Premises.

9. [21]

   Even if there was evidence before the primary Judge that Mrs Hamed had independently contributed to the purchase price, that would not necessarily mean that the primary Judge had erred in failing to make a finding to that effect. But the absence of any such evidence is fatal to the success of the application for leave to appeal.

10. [22]

    Mr Lange submitted that the primary Judge fell into error by failing to apply the presumption of a resulting trust in favour of Mrs Hamed. For the reasons already given, it is not necessary to address the argument. It is appropriate to record, however, that the submission cannot be accepted.

11. [23]

    Mr Lange contended that the finding by the primary Judge that Mr Elddin received substantial amounts of cash from the Hameds was sufficient to attract the presumption of a resulting trust. As Gibbs CJ said in Calverley v Green [20] (and as the primary Judge pointed out [21] ), “[f]or the presumption to apply the money must have been provided by the purchaser in his character as such – not, e.g., as a loan”. The party relying on the presumption must establish that factual precondition.

12. [24]

    The mere fact that Mrs Hamed provided money to Mr Elddin (if it was a fact) would not of itself establish that she had provided funds in her capacity as a purchaser. Depending on the circumstances in a particular case, an inference to that effect might be drawn. But here the evidence, at best, was inconclusive. For that reason, the primary Judge was not satisfied on the balance of probabilities that the Hameds (much less Mrs Hamed) made any contribution to the purchase price paid for the Premises. Thus the Hameds had not satisfied the factual precondition required to invoke the presumption of a resulting trust.

Orders

1. [25]

   Mrs Hamed’s summons seeking leave to appeal should be dismissed. She should pay Mr Elddin’s costs of the application for leave to appeal (including the costs of the appeal to be heard concurrently).

2. [26]

   It is appropriate to direct that the solicitors for Mrs Hamed provide within fourteen days a copy of this judgment to Mr Hamed’s trustees in bankruptcy.