Perkins v Carey

This dispute concerns the equitable ownership of an industrial warehouse property located at Links Road, St Mary’s in New South Wales (Property). On title as tenants in common as to 50% each are the Plaintiff, Veronica Carey (Veronica), who is 87-years-old, and the Defendant, her adult son, Gregory Colin Carey (Greg).

Greg accepts that Veronica now suffers with Alzheimer’s Disease. She is represented by her son in law, William Jeremy Perkins (Jerry), who is married to her elder daughter, Lynne Perkins. Since his appointment on 6 August 2009, Jerry has held Veronica’s General and Enduring Power of Attorney.

Veronica’s younger daughter, Edwina Carey (Edwina) has also given evidence to support her mother’s case. For practical reasons I will refer to the parties by their first names, intending no disrespect.

It is not in dispute that, in 2010, Veronica paid the whole of the purchase price and associated costs for the Property. She alone borrowed money to do so. Greg appears to have operated, from the Property, a business repairing and reselling second-hand cars that had been “written off” by insurers. By about 2012 that business ceased due to legislation affecting the viability of repaired written-off vehicles.

The evidence as to what happened with the Property thereafter is vague.

In 2013, Greg’s evidence was that he was seeking to clear remaining stock to clean up the premises. A real estate agent gave an opinion that, in its current state at the time, the likely sale price would be $120,000. A subsequent valuation report dated 2 June 2014 concluded that the market value of the Property was $220,000. The Property was vacant from 2014 to 2016.

In 2017, Greg and Veronica signed a management agreement with a real estate agent. In June 2018, the Property was leased. It remains leased. At all times until September 2022, Greg has received the whole of the rental income because the management agreement directed the agent to pay rent to Greg’s personal bank account. Greg has not accounted for any rent to Veronica.

Pursuant to a Statement of Claim filed on 1 November 2019, Veronica seeks:

Greg resists such orders because he says:

Greg made it clear under cross-examination that he “understood the factory was half mine and half hers and she always retained that she would bequeath the - the other half in her will …”. Greg sought no positive relief in relation to Veronica’s 50% of the Property.

Therefore, the issues to be determined are:

For all the reasons set out below, I am persuaded orders for sale under s 66G should be made. However, I do not accept that Veronica is the sole beneficial owner of the whole Property. I am also not satisfied that Veronica made a gift of her half-share in the Property or the rental income in its entirety to Greg.

In 2017, Jerry, as Veronica’s attorney, conducted a review of her tax returns and financial records. He discovered that Veronica had purchased the Property and formed the view that Greg had caused Veronica financial disadvantage.

On 29 March 2019, Veronica commenced the proceedings by way of Summons. On 1 November 2019, Veronica filed a Statement of Claim and on 13 December 2019, Greg filed his Defence. Multiple affidavits were filed.

In June 2020, Darke J refused Jerry’s application for the appointment of a tutor for Veronica because there was no medical evidence as to Veronica’s incapacity: Carey v Carey [2020] NSWSC 765.

In April 2020, Greg commenced proceedings in the Protective List seeking orders revoking Jerry’s Power of Attorney. At a hearing of those proceedings before Kunc J on 31 May 2021, counsel for Greg submitted that Jerry had improperly used the Power of Attorney by commencing proceedings against Greg in Veronica’s name, contrary to Veronica’s wishes. Kunc J made consent orders resolving those proceedings, including varying Jerry’s power of attorney to allow Jerry to continue these proceedings on Veronica’s behalf only if he received advice from Senior Counsel that her case had reasonable prospects of success. Such advice was obtained.

On 15 July 2022 Darke J set the matter down for hearing. On that occasion Greg represented himself. He had retained solicitors for the preparation of his defence and evidence. Greg was legally represented throughout the whole proceedings until the latter half of 2022 when “there was a dispute about the legal bill”.

On 30 January 2023, Greg filed a Notice of Motion seeking to adjourn the final hearing for about “6 to 8 months”, so he could sell his house in Pymble to pay for legal representation. According to Greg’s supporting affidavit, affirmed 27 January 2023, he was “dealing with a difficult eviction” of a tenant at the house. However, no further detail was provided. His affidavit included a selling agency agreement dated August 2022 without any explanation as to what steps, if any, had been taken. Greg did assert, orally, that an auction was held on an unspecified date and that no one attended.

Greg did not provide any evidence as to why he had not sold his property earlier between the allocation of the hearing date and the end of January 2023. Nor did he give any evidence of what attempts he had made to engage solicitors. On 6 February 2023 the motion was heard and the adjournment resisted by Veronica.

The Court has inherent and statutory power to adjourn the hearing of a matter in appropriate circumstances to do justice between the parties, having regard to the effect of the adjournment on court resources, the working of the particular list and the importance of adhering to dates fixed for hearing: Sydney City Council v Ke-Su Investments Pty Ltd (1985) 1 NSWLR 246 at 252 (Kirby P); Haset Sali v SPC Limited and Anor (1997) 67 ALJR 841 at 843-844 (Brennan, Deane and McHugh JJ); Civil Procedure Act 2005 (NSW) s 66.

I refused to adjourn the final hearing. The Real Property List is a busy list and Greg’s evidence in support of the adjournment was threadbare and unpersuasive. The matter has been on foot since November 2019. The Notice of Motion was filed two weeks before the first day of the final hearing. Greg did not demonstrate that he is unable to obtain legal representation, including by using his other real property to secure legal costs.

Greg indicated that he would represent himself at the hearing, and subsequently provided written submissions, cross-examined some of Veronica’s witnesses and made oral submissions.

As a preliminary matter, I note that I made known to the parties at the commencement of the hearing the Court’s obligations when a litigant in person appears, namely that, while I would explain the process, procedure and what each party was required to do to satisfy the legal tests, the Court must maintain impartiality: As Samuels JA observed in Rajski v Scitec Corporation Pty Ltd [1986] NSWCA 1 at 27:

When the hearing commenced, the procedure of the hearing was explained to Greg, and he acknowledged that he understood. At no time did counsel for the Plaintiff seek to amend or add to any direction or explanation provided by the Court to Greg. Greg had also been provided with a hard copy of the Court Book. At various times, Greg asked questions about the process and he was provided with answers he appeared to consider sufficient.

Greg remains aggrieved about his late father, Colin Carey’s, estate. As he stated in his opening submissions:

It is not in dispute that when Colin Carey died in 1990, he bequeathed Greg approximately $45,000. His sisters were bequeathed a much larger inheritance including several blocks of land at Pindimar, New South Wales and at Manly, New South Wales.

Colin provided some explanation in his will about the disparity, to the effect that he had “amply provided” for Greg during his lifetime. Colin’s will also noted that because he and Veronica had divorced and had a property settlement he did not bequeath her anything further.

Much affidavit evidence was devoted to a detailed analysis of Colin’s will, the value of the inherence received by his children and Greg’s complaints. It is not my task to determine whether the will was “unfair”. I note that Greg did not challenge Colin’s will or make any legal application for an adjustment pursuant to any legislation.

Greg suggests that his father’s unequal treatment of him provides one reason, or perhaps the main reason, for Veronica to gift him the Property and the rental income.

Greg’s evidence was that Edwina and Lynne agreed to remove one piece of real property from their interest in Colin’s estate and give it to him. Greg’s evidence was in cross-examination:

In 2010 (some twenty years after Colin died), Veronica purchased the Property in her and Greg’s name as tenants in common. Contracts were exchanged on 28 April 2010 and settlement occurred near the end of May 2010. Greg admitted in his defence that Veronica paid $319,005.94, comprising the $280,000 purchase price, stamp duty and other costs. That sum included $291,200 that Veronica transferred to the conveyancer for the settlement amount, stamp duty and registration fee on 31 May 2010.

Veronica financed the purchase using an overdraft facility and a mortgage over her home in Killarney Heights. It is unclear who paid the outgoings over the Property.

Because of her Alzheimer’s Disease, Veronica was not able to give evidence. Therefore, her intention to gift all or otherwise part of the Property to Greg must be determined from the admissible documentary evidence and the evidence of witnesses as to conversations with her.

The starting point is that the parties are entitled to that portion of the title that appears on the Register. Here, it is 50% each.

Veronica seeks orders that she is entitled to the whole of the Property and that Greg holds his 50% on trust for her, because she paid the whole of the purchase price, a fact which is agreed.

Veronica’s counsel accepted that where a resulting trust is asserted and the factual circumstances could also be said to give rise to a presumption of advancement (such as here, as between mother and adult son), then the Court must determine the relevant intention of the paying party at the time of purchase.

In Koprivniak v Koprivinak [2023] NSWCA 2 the Court of Appeal approved the statement of principles by Ward CJ in Eq (as her Honour then was) in Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [161]-[168] which were summarised by Griffiths AJA at [19]:

The concept of “purchase price” is not confined to consideration for the purchase. It also includes incurring liability under a mortgage, legal expenses, stamp duty and registration: Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [167]-[168] (Ward CJ in Eq). Further, in terms of available evidence in determining whether there is a resulting trust, Gibbs CJ stated in Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 at 590:

As Veronica is the only person who paid the purchase price, and put 50% of title in Greg’s name, it is only her intention at the time of the purchase or so immediately after as to constitute part of the transaction that is relevant and must be ascertained here.

Even if I find that Veronica intended Greg to hold 50% of the Property on trust for her, it is relevant to consider the “presumption of advancement”. In Bosanac v Commissioner of Taxation [2022] HCA 34 (Bosanac). At [13], Kiefel CJ and Gleeson J observed (citations omitted):

Their Honours stated at [15] and [22] that the presumption of advancement, like the presumption of resulting trust, can be rebutted by evidence of actual intention: See also Gageler J at [57] and Gordon and Edelman JJ at [115].

Despite the volume of material relied upon by the parties in the proceedings, very little of it is admissible on the question of whether Veronica can establish that Greg held his 50% of the Property on trust for her.

The only evidence of Veronica’s declared intention around the time of purchase, or shortly thereafter, comes from Edwina and Greg.

In Edwina’s affidavit she deposes to a conversation with Veronica after the purchase of the Property, which she places as “in or about 2010 or 2011”:

Edwina was not cross-examined on this evidence, which was not contradicted in any way by Greg or his evidence. Surprisingly, no submissions were made by either party on this evidence.

In assessing Edwina’s evidence, I am conscious that these conversations occurred nearly a decade ago in circumstances where there has been an incomplete documentary trail. The passage of time is a relevant factor to be kept in mind in assigning weight to witness accounts: Watson v Foxman (1995) 49 NSWLR 315 at 319 (McClelland CJ in Eq). Where it is possible, I have given greater weight to oral evidence where it has been consistent with the documents.

I have no reason not to accept that Edwina’s account of the conversation is her honest memory as at the date of her affidavit. Her evidence was cogent and clear. Edwina’s evidence was also consistent with emails that she sent, for example, in February 2014 she sent an email to her mother and Greg (and others) including:

However, even assuming Edwina’s recording of the 2010 or 2011 conversation is sufficiently close to the transaction and is accurate, it still is not without ambiguity. It might equally demonstrate an intention by Veronica to:

None of these scenarios was pleaded. Veronica’s counsel submitted in closing:

Those submissions and the lack of pleading make it very unclear what remedy Veronica is seeking when the terms of the conditions of the suggested “conditional gift” are not identified at all.

It is not in dispute that Veronica took out a mortgage over her home in order to raise the money for the purchase price and at that time she was already in her late 70s and not earning a wage. However, no evidence was brought forward demonstrating her financial circumstances at the time, nor the impact of the purchase on her finances, nor any details of the loan.

It is not in dispute that from 2012 Veronica agitated for the Property to be sold. However, none of that evidence is sufficiently close in time to the date of purchase to be admissible when it is not an admission against interest.

Neither are the 2014 and 2018 wills of Veronica admissible to prove her intention at the time of purchase, as they are not admissions against interest. Instead, in them, Veronica asserts she loaned the purchase price to Greg, which is inconsistent with the suggestion of a conditional gift.

Greg provides evidence of a conversation he says he had with his mother about the purchase of the Property. He was not cross-examined on his evidence to the following effect:

However, other than the above evidence of the conversation immediately prior to purchase, it is not clear at what times these words were “always” spoken.

Greg’s version of the conversation is vague and is likely not the whole of the conversation. The evidence of the conversation does not have any temporal precision. It rises no higher than being a conversation which purportedly occurred “at or about the end of 2009 or early 2010” when Greg was looking to buy a factory unit. Counsel for Veronica suggested that if Veronica had said those words, then Greg might have responded and behaved differently later when Veronica demanded repayment of the purchase price or the sale of the Property, but it was never suggested to him that his evidence was false.

While Greg was obviously motivated by a historical grievance I am not persuaded that his account of the conversation was necessarily false. It is possible to reconcile Edwina and Greg’s evidence to the effect that Veronica intended to gift 50% of the Property to Greg and Greg promised to assist Veronica with her loan using income from his business.

Counsel for Veronica relied on the fact that Greg had paid Veronica money from time to time to demonstrate that she did not gift him his 50% of the Property.

His evidence was that in 2010 he paid his mother $25,000, representing “most of the proceeds” from the business run at the Property. He also gave her a renovated Volvo, for which she only paid $5,000, while Greg’s evidence was that it was more valuable.

Greg accepted that he did borrow money from Veronica for matters other than the purchase price of the Property, for example, to buy stock of cars and to buy other real estate. He claimed he repaid all such loans.

Greg also claimed that some other money provided by Veronica to him was by way of an investment by Veronica in commercial opportunities he had identified. For example, in 2012 Veronica provided money to Greg for an investment scheme which involved the transfer of money towards the development costs and operation of a Kenyan gold mine in return for discounted mined gold. It appears that Veronica provided Greg with $145,000, which was never returned to her. Greg subsequently sought “additional funds” from Veronica for Kenyan gold. He also included the following in an email dated 28 March 2012:

Greg’s evidence is that shortly thereafter Veronica transferred $111,000 to his bank account in Kenya and also paid the bank transfer fee. Veronica also paid to Greg $63,500 for the freight forwarder. Greg’s evidence was that the gold was subsequently shipped to Dubai, but he never received any gold because he was not prepared to pay the receiving agent in Dubai an amount of US$145,000 which he described as a “bribe”. The gold was returned to the vendor, who refused to refund any charges. Veronica lost her money and said to Greg “That will be the end of it I suppose”.

Veronica relies on Greg’s statement in the 28 March 2012 email “Yes, I will sell factory” to support the conclusion that Greg knew his portion of the Property had not been gifted to him. I do not accept that submission. The statement can also be read as Greg offering to sell the Property so that he could use his 50% portion to pay his other debts.

Veronica relies upon Greg’s responses to a letter dated 16 May 2014 from her solicitors, in which they ask that the Property be prepared for sale. In that letter they also assert that Veronica paid the whole purchase price, was paying outgoings and paying 19% interest on her loan for the purchase price.

On 27 May 2014, Greg responded indicating that he had paid some funds to Veronica and that he agreed to carry out repairs to the Property so it could be tenanted or sold. He ended the email:

Counsel for Veronica relied on this email as an admission against interest, because Greg does not assert that Veronica had gifted him 50% of the Property, and that a statement that he would “buy the premises” is logically inconsistent with him having received a gift. It may be inconsistent with him having received a gift of the whole of the Property, but it equally does not exclude the possibility that he was intending to buy out Veronica’s half share of the Property, rather than acknowledging that he would need to buy the whole of the Property. I do not consider this a clear admission against interest or one that bears significant weight.

Further, counsel for Veronica relied upon the fact that in February 2017 Greg was negotiating a property settlement following his separation from his partner and he informed Edwina that he owed Veronica $400,000. There is no indication that this amount is linked in any way to the Property, and I do not consider it an admission against interest concerning his interest in the Property.

Greg relied upon two letters sent by Veronica to her solicitors, which on their face appear to have been signed by Veronica on October 2018 (and re-signed on 4 June 2019) and 10 June 2019.

An image of the October 2018 letter as found in an annexure to Greg’s Affidavit of 8 August 2019 and set out below:

That letter refers to a letter from Veronica’s solicitor dated “26.09.18”, which was not in evidence. There is no evidence as to the handwriting at the bottom of the letter which states “DISMISSED & NEW WILL SIGNED” followed by a signature and “4.6.19”.

A copy of page 1 of the 10 June 2019 letter is below:

The letter continues onto a second page:

Greg relies on these letters as admissions that Veronica intended to gift the Property to Greg and to forgive any loans of money previously advanced to Greg.

Veronica’s counsel submitted that the letters cannot be relied upon because the circumstances in which they were created is unknown and there is a real likelihood that Veronica was suffering from Alzheimer’s Disease or “brain impairment” at the time she wrote them. Counsel made the following submissions.

First, there are factual infelicities or errors. For example:

Secondly, there is an issue about Veronica’s mental capacity at the time of signing these letters and before.

In the 2019 letter, Veronica acknowledges legal advice that she is not able to create a new will. It is not disputed that by this stage lawyers did not consider Veronica had legal capacity to prepare a new will. However, Greg’s evidence was that she did not have capacity to prepare her October 2018 will:

Greg did not accept that Veronica had serious memory issues. However, Jerry and Edwina’s evidence was that the letters were inconsistent with Veronica’s memory.

Both parties relied on an expert report of Adjunct Professor Tuly Rosenfeld dated 28 October 2020 that provided an opinion based on consultations with Veronica on 13 October 2020 and 27 October 2020. He concluded that Veronica suffered from:

His opinion was that she did not have the ability to instruct lawyers as she “suffered from significant cognitive impairments that … would indicate [her] inability to recall, understand or instruct in these proceedings”. He considered that Veronica has “prominent problems with short term memory”. For example, she could not recall these legal proceedings, nor the date, month or day of the week.

Professor Rosenfeld’s report also included some comments in relation to Veronica’s medical records and the historical treatment that had been provided to her by doctors. He noted that on 29 October 2014 Veronica commenced treatment for Alzheimer’s Disease and medication was provided to her from that date onwards. Furthermore:

At the hearing Greg stated that he did not take any issue with the expert report. Nevertheless, Greg did not accept that Veronica was confused in preparing the letters because:

I do not consider that much weight can be placed on the letters because of:

On balance, I do not consider that Veronica can demonstrate that, despite having paid the purchase price and placed Greg on title for 50%, that it was her intention that he hold that interest on trust for her.

Instead, I consider on the balance of probabilities on the evidence before me that it was Veronica’s intention to assist Greg with purchasing the Property and that he would own 50%.

While it is possible that Veronica was motivated to gift Greg part of the Property, because Colin’s will did not leave an equal inheritance to all three children, I consider that is more objectively improbable, as it was 20 years after Colin’s death. Greg’s submission explaining that length of time was unpersuasive:

It is not apparent why, if Veronica was already working with Greg in investments and other ventures, she would wait 20 years after Colin’s will to make a gift to Greg, especially when such timing coincided with both her own increasingly unstable financial position and poor health.

Greg did in fact provide Veronica with some sums of money from the business. However, there is no evidence as to the basis of that arrangement. There is no certainty in the evidence as to whether Greg’s payments to Veronica were to repay other loans or were out of kindness.

There is simply a dearth of evidence and speculation does not assist.

Greg did plead in his defence that he was entitled to the whole of the Property because his mother had “gifted it” to him:

Greg’s affidavit evidence of the alleged gift includes the following statement by his mother:

However, this claim in relation to Veronica’s 50% was not pressed at the hearing and Greg indicated that he could not press for it because Veronica was still alive. Had it been pressed it could not have succeeded because:

There was no pleading nor submission that Veronica’s words gave rise to an express trust in Greg’s favour.

On 26 October 2017, Greg and Veronica signed a standard form management agreement (2017 Management Agreement) with real estate agents in relation to the future rental of the Property.

Greg had populated the document with the relevant personal information, including referring to himself alone as “principal” and providing his personal bank account for the payment of rental income.

On 9 July 2018, Greg and Veronica signed a lease over the Property for a two-year term ending on 3 July 2020, with an initial rent of $36,000 per annum.

In evidence was an unsigned lease granting a 6-month lease term ending on 27 February 2021, with an initial rent of $39,000 per annum.

Another management agreement from about July 2021 was in evidence, but not signed. Greg had inserted his bank account details for the receipt of rent.

The Property is currently leased with a five-year term expiring on 14 August 2027, with a 5-year option.

From 30 September 2022, Veronica has received 50% of the rental income. However, Greg admitted that he received all the rental income before that point in time.

Veronica submits that Greg must account for 50% of the rental income he has received. Greg denies he is so liable. At paragraph 11 of his defence, he pleads:

Greg submits that by signing that 2017 Management Agreement, Veronica “gifted” the rental income to him thereafter. He says in his affidavit that upon signing of the lease at the Property, Veronica said to him:

Further, he also says in his affidavit evidence that Veronica said to him at a time after the factory was cleared in 2016:

In cross-examination Greg stated:

I do not accept Veronica intended to gift all future rental income to Greg to her own detriment for the following reasons:

I also do not accept that the mere signing of a management agreement, which provided a direction to the agent to pay rent to Greg’s account, amounted to a waiver or gift by Veronica of her entitlement to rental income from the Property.

Greg knew Veronica was in financial difficulty, had not received any legal advice about the document she was signing and he did not suggest he explained it to her. Merely because rental income was being paid into Greg’s account did not amount to an intention that she was gifting all the rent to Greg and he need not account to Veronica for her portion.

It is appropriate for Greg to account for 50% of the rental income he has received prior to 29 September 2022.

Greg resists the s 66G orders because his preference was that an “income-producing asset” ought to be retained and legal and other costs of a sale ought to be avoided. In oral submissions he sought a settlement of the proceedings through Veronica offering that he could buy the Property.

None of those matters are relevant to the issue of making s 66G orders.

Section 66G(1) empowers the Court to appoint trustees for sale of real property where:

“Co-ownership”, as defined in s 66F, includes ownership in equity in possession by two or more persons as joint tenants. “Co-owner” is defined to have a corresponding meaning. It is clear that the parties are “co-owners” and, therefore, the s 66G orders ought to be made unless there is a reason against the Court exercising its discretion to do so.

The principles concerning the operation of s 66G are well known: see, for example, the summary by Black J in Pascoe v Dyason [2011] NSWSC 1217, at [5]-[8]:

As noted by Black J, there is no general jurisdiction to refuse to grant such an order on the basis of hardship or unfairness: Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 at [36] (Tobias AJA, with whom Bergin CJ in Eq agreed).

Greg did not raise any contractual or proprietary right in the Property to resist orders appointing trustees for the sale of the Property. Greg’s submission was:

Merely because he would like to negotiate a price at which to purchase the Property is not a reason for the Court not to make orders. The parties have had many years to negotiate an outcome including for s 66I orders allowing Greg to bid at the sale, and have failed to do so.

Veronica proposes solicitors Brendan John Miller and Michael Garvin as trustees to sell the Property, who have consented to so act.

Greg does not provide alternative trustees, nor suggest that the trustees put forward by Veronica are unsuitable. He did query the necessity for the appointment of two trustees, and I explained the operation of s66G(3)(a) to him.

I am satisfied that the proposed trustees are fit and proper persons to act as trustees for sale and that they have the necessary skill and experience to do so. I am satisfied that they ought to be paid for their role at their disclosed hourly rates, which are reasonable and which I will cap in the first instance at $5000 each plus GST.

The plaintiff seeks her costs in the summons and statement of claim. The usual order in a s 66G application is that the costs of the summons are paid out of the net proceeds of sale prior to any distribution amongst the co-owners: see Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28] (Brereton J, with whom Basten JA and Hunt AJA agreed).

However, here, Veronica also sought a declaration that Greg held his 50% interest on trust for her by reason of a resulting trust and that Greg account for 50% of the rental income he has received from the Property.

Veronica failed in her allegation of a resulting trust, but succeeded in relation to the account for rental income.

In the circumstances, exercising my discretion as to costs in the absence of any submissions as to an appropriate order, I consider it appropriate that 50% of Veronica’s costs of the proceedings are paid from the proceeds of sale before distribution between the parties.

For the reasons above I make the following orders: