Odelli v Gabrielle

1. [1]

   These proceedings arise out of a dispute concerning the ownership of a residential property at Redman Parade, Belmore, in south-western Sydney. The property is registered in the names of the defendant and plaintiff as tenants in common in equal shares. The defendant claims that the plaintiff’s share is held on trust for him.

2. [2]

   The property was originally acquired in 2003 in the names of the plaintiff, Chakib Carlo Gabrielle, and Stephen Anthony Odelli. They were both then in their early thirties and had been close friends since school. For convenience and without disrespect, I will refer to them as “Carlo” and “Stephen”. The acquisition was financed by a loan in their names from National Australia Bank Limited (“NAB”), secured by a registered mortgage over the property.

3. [3]

   Stephen was a panel-beater by trade. In 2008 he died in a boating accident at the age of only 36. He did not leave a will and his parents, Guido Odelli and Edda Odelli, inherited his estate, including his share of the Redman Parade property. About five months after Stephen’s death, Mr and Mrs Odelli obtained a grant of letters of administration for his estate. They did not however take any steps to deal with his share of the property, which remained registered in his name. Mr Odelli died in 2019 leaving Mrs Odelli the sole heir to Stephen’s share of the property.

4. [4]

   According to Carlo, following the acquisition of the property, Stephen, and after Stephen’s death, his parents, had nothing to do with it. Carlo arranged for it to be tenanted, using the rent to meet the mortgage payments and other outgoings. But not all of the outgoings appear to have been met: payments of council rates and water rates are very substantially in arrears (although Carlo disputes the amounts claimed).

5. [5]

   In the first half of 2021, or thereabouts, Mrs Odelli consulted Mr Brian Lane, solicitor of Lane & O’Rourke, about the situation. Mr Lane was assisted by his daughter, Emily Lane, who is also a solicitor with the firm.

6. [6]

   Later in 2021, Lane & O’Rourke arranged for Stephen’s half share to be transmitted to Mrs Odelli. This of course did not affect the mortgage to NAB, which remains on the title. Mrs Odelli has not made any mortgage payments (although Stephen’s estate remains liable for a half share of the loan). But, she does say that she has made payments towards the rates.

Claims for determination

1. [7]

   The proceedings were commenced in the name of Mrs Odelli as plaintiff, by summons, in February last year. Lane & O’Rourke acted, and continue to act, as Mrs Odelli’s solicitors. Carlo was named as the first defendant (the second defendant was later removed from the proceedings). The summons sought the appointment of trustees for sale of the property pursuant to s 66G of the Conveyancing Act 1919.

2. [8]

   Carlo cross-claimed. He sought a declaration that Mrs Odelli holds her share of the property as trustee for him, and an order for transfer. His claim, on various bases, was that Stephen’s share in the property was always held on trust for him and Stephen had no more than a bare legal interest in the property.

3. [9]

   On 30 January, not long before the hearing, Mrs Odelli’s solicitors served a proposed amended summons. The amendment would have added a claim for a declaration that the property belonged in equity to Mrs Odelli as to 57%. This was based on a resulting trust, the allegation being that Stephen provided approximately 57% of the purchase price of the property.

4. [10]

   Whether the amendment should be permitted was held over for the trial and was addressed on the first day of the hearing. Counsel for Carlo objected to it. Counsel took the preliminary point that the proposed claim should be set out in pleaded form. Counsel for Mrs Odelli resisted this, but I considered that the point had been well taken.

5. [11]

   It is common for s 66G claims to be brought by way of summons, as this one was, but a claim for a declaration of trust based on an alleged resulting trust is a different thing entirely. It rests on equitable doctrines which depend upon the factual circumstances in which the property was acquired. Such a claim should usually be pleaded where the facts are disputed. That was the case here and I therefore ruled that a pleaded claim would be needed if the application was to be pursued.

6. [12]

   On the second day of the hearing counsel for Mrs Odelli produced a proposed statement of claim which pleaded the resulting trust claim. Counsel for Carlo maintained his objection. Counsel for Mrs Odelli submitted that there was no prejudice to Carlo. Counsel pointed out that the question of the parties’ relative contributions to the property were already in issue: indeed, Carlo himself had mounted a resulting trust claim.

7. [13]

   It may be accepted that the questions of relative contributions were already in issue. But counsel for Carlo had also foreshadowed a possible laches defence. Having to regard to the delay in bringing the proceedings, and the lack of evidence on the contributions issue (referred to in more detail below), that was clearly a plausible answer to the claim.

8. [14]

   Counsel for Mrs Odelli however pointed out that counsel for Carlo had, in his submissions, argued that the delay in bringing the proceedings had made it harder to test Mrs Odelli’s case on the contributions issue. Counsel for Mrs Odelli therefore submitted that the delay issue was already part of the case. Thus, in counsel’s submission, there really was no prejudice.

9. [15]

   I did not accept this submission. This was for two reasons.

10. [16]

    First, while it may be accepted that delay had been raised at an evidentiary level, that was not a complete answer to the claim of prejudice. Delay was only one feature of the evidence and did not necessarily require the Court to reject Mrs Odelli’s evidentiary case. On the other hand, laches, if established, would have prevented the Court from granting any relief on the Mrs Odelli’s claim, whatever the merits of that claim might have appeared to be. Loss of the ability to mount such a defence was a form of prejudice which, in my view, was not ameliorated by the ability to make submissions as to the credibility of Mrs Odelli’s evidence.

11. [17]

    Secondly, the evidentiary area potentially opened up by a defence of laches went beyond testimony from Mrs Odelli. To make the defence good in the context would require evidence of prejudice from the delay, such as the loss of potentially relevant evidence: Orr v Ford (1989) 167 CLR 316 at 330. While it seems likely that relevant evidence has been lost (for instance, the conveyancing file for the purchase), that question had not been addressed in the evidence.

12. [18]

    A related point is that it would have been necessary to determine when it was that proceedings should have been brought, because loss of evidence prior to that point might not have been relevant. This in turn might have required some investigation into why Mrs Odelli did not bring proceedings earlier. That question, although touched on in the evidence, had not exhaustively been addressed.

13. [19]

    For these reasons, I considered that allowing the amendment would prejudice Carlo. An adjournment was clearly out of the question. In those circumstances I considered that I had no alternative but to refuse the application for an amendment.

14. [20]

    Prior to the trial, NAB (which was, and is, not a party to the proceedings) indicated that it proposed to exercise the power of sale under its mortgage on the ground that the mortgage loan was in default. At one point the course of the trial it seemed that it might not be necessary to determine Mrs Odelli’s s 66G application, but, in the end, counsel for Mrs Odelli indicated that the application would need to be dealt with.

15. [21]

    It is convenient to deal with Carlo’s constructive trust claim first. When I have done so, I will return to the s 66G claim.

Trust claim over Redman Parade property

1. [22]

   The allegation that Stephen acquired, and thereafter held, his share of the Redman Parade property for Carlo was pleaded in several different ways in Carlo’s statement of claim. These included an express trust; a common intention constructive trust; and a constructive trust based on “unconscientious” use of the legal title. Counsel for Carlo accepted in his submissions that each of these alternative allegations depended ultimately upon the Court accepting that there had been some prior agreement between Stephen and Carlo that the property would be acquired in their joint names, but for the sole benefit of Carlo.

2. [23]

   The statement of claim also pleaded an allegation of a resulting trust on the footing that Carlo had contributed the whole purchase price (apart from $40,000 from Stephen which, according to Carlo, was a loan). But counsel accepted in the course of final submissions that this basis for the claim did not add to the other bases which I have mentioned and did not press it.

3. [24]

   According to Carlo, he was solely responsible for the negotiations which resulted in the agreement to purchase the Redman Parade property. The vendors were Vincenzo Pucariello and Debra Gaye Watling. Apparently, it was Mr Pucariello who negotiated on the vendors’ behalf with Carlo.

4. [25]

   In evidence is a handwritten note setting out some of the particulars of the agreed sale. The note was prepared by Mr Pucariello and Carlo. It recorded the price as $550,000. The note includes:

5. [26]

   The change from 6 to 7 months is initialled by Carlo.

6. [27]

   The note is undated but, according to Carlo, was written in early November 2002. The contract itself is not in evidence. But, according to Carlo (and this was not disputed), he exchanged contracts on 14 November.

7. [28]

   The duty stamp on the transfer of the Belmore property records that nominal duty of $2 was paid on the transfer on 12 March 2003. Presumably the contract was stamped on the same date. Consistently with this, there is in evidence a copy of an NAB bank cheque in favour of the Office of State Revenue dated 6 March for $20,000 (this figure is rounded to the nearest thousand dollars, as are other figures later in the judgment). It is common ground that this cheque represented the stamp duty on the purchase. It is consistent with a purchase price of $550,000.

8. [29]

   The mortgage instrument is in evidence. It is dated 13 June 2003. It identifies both Carlo and Stephen as the mortgagors. The mortgage was stamped for a loan of $440,000.

9. [30]

   Neither the loan offer nor the loan agreement are in evidence. The bank statements for the mortgage account, however, are. The first statement shows that the account was opened, and $440,000 was drawn down, on 30 June 2003. After deduction of fees and mortgage stamp duty, the total amount applied at settlement was $437,000.

10. [31]

    An important document in Mrs Odelli’s case was a passbook for an account held by Stephen with the Commonwealth Bank of Australia (“CBA”). That passbook records two entries upon which counsel for Mrs Odelli relied. One is dated 6 November 2002. It records a withdrawal of $60,000, leaving a balance in the account of $41,000. A handwritten annotation appears against the entry which states “Carlo House”.

11. [32]

    The second entry is dated 30 June 2003 (the date of settlement). It records a withdrawal of $50,000, leaving a balance of less than $1,000. This withdrawal is annotated (in what appears to be the same handwriting) as “House Vince”.

12. [33]

    Counsel for Mrs Odelli noted that the first withdrawal occurred a few days before the contract was entered into and the second withdrawal took place on the day of settlement. Counsel noted that the total amount withdrawn, namely $110,000, represented 20% of the agreed purchase price of $550,000, leaving the other $440,000 borrowed from NAB. Counsel invited the Court to infer that the reference to “Vince” in the second annotation was to Mr Puciarello.

13. [34]

    Mrs Odelli gave evidence that she found the passbook among Stephen’s records after he died. There was no direct evidence identifying the handwriting or when it was placed on the document. Counsel for Mrs Odelli, however, submitted that the Court would infer, from the evidence of Mrs Odelli about where the passbook came from, that the note was written by Stephen.

14. [35]

    Counsel for Carlo objected to the annotations being received into evidence. In the course of argument, counsel accepted that if I could infer that the notation was made by Stephen, that it would be admissible under the provisions of the Evidence Act 1995 dealing with statements made by witnesses who have died or are otherwise unavailable (s 63). But counsel submitted that no such inference could be drawn. Given the dispute, I admitted the annotations on the basis that they were provisionally relevant for the purposes of s 57 of the Evidence Act. I will return to this issue when setting out my conclusions below (see [104]).

15. [36]

    In 2010, Carlo went bankrupt and was required to submit a statement of affairs (the bankruptcy was later annulled, but it is not necessary to go into that for the purposes of the present case). The statement was in evidence before me. The statement is dated 24 December 2010 and was completed and signed by Carlo. The declaration contained an express reference to the provisions of the Bankruptcy Act 1966 (Cth) which make it a crime to sign a declaration which is known to be false.

16. [37]

    In his answers, Carlo identified the Belmore property as part of the real estate owned by him. One of the questions in the form was whether there were any other owners. Carlo indicated the answer to this was “yes” and wrote underneath “Stephen Anthony Odelli (late)”. The form also asked how much Carlo owed to creditors holding security over the property. Carlo’s answer was $229,000. In cross-examination, he confirmed that this represented half the amount then owed to NAB. The same figure appeared in answer to the question concerning secured creditors in the liability section of the statement. In answer to a question whether the loan from NAB was a joint loan, Carlo indicated “yes”.

17. [38]

    The statement also contained a list of unsecured creditors. This included Canterbury City Council to which $12,000 was said to be owed for council rates for the property. In answer to the question of whether the debt was a joint one Carlo indicated “yes”. It seems that, as with the mortgage debt, the sum shown in the statement represented half the amount actually owed to the council on the property. As will be seen below, Carlo accepted that the sum of $40,000 had been provided by Stephen towards the purchase. According to Carlo, this amount was a loan. However, Stephen’s name did not appear as an unsecured creditor in the statement.

18. [39]

    Also in evidence was an email sent by Carlo to Lane & O’Rourke in September 2021. That email was a response to an email which the solicitors had sent to the managing agent for the property, claiming that Mrs Odelli was a half owner of the property, and seeking banking account details from the agent.

19. [40]

    Carlo’s email refers to conversations between him, Mrs Odelli and Gianna Maiorana. She is the daughter of Mr and Mrs Odelli and was therefore Stephen’s sister. For convenience and without disrespect, I will refer to her as “Gianna”.

20. [41]

    In the email Carlo wrote (emphasis added):

21. [42]

    Counsel for Mrs Odelli drew attention to the reference to Stephen’s “contribution” to the property. Counsel noted that the email did not deny that Stephen had had any interest at all. It also did not refer to the alleged $40,000 loan.

22. [43]

    Finally, Carlo gave evidence (which was not disputed) of an exchange of text messages between him and Gianna on 29 April 2022:

23. [44]

    On the face of it, this exchange of texts suggests that Carlo had made some sort of offer to Mrs Odelli for her share in the property, although it does not reveal what the offer was. I deal below with the parties’ evidence about the circumstances in which the exchange occurred.

24. [45]

    Carlo gave evidence in support of his claim. Mrs Odelli and Gianna gave evidence in response. All three witnesses were cross-examined.

25. [46]

    Mrs Odelli’s case also included a formal affidavit from her solicitor, Mr Lane. Mr Lane was cross-examined in the course of the hearing. In view of the conclusions which I have reached I do not need to go into his evidence in any detail.

26. [47]

    Carlo’s evidence was vigorously challenged in cross-examination, and in final submissions his credibility was attacked. Counsel for Carlo, for his part, challenged the reliability of the evidence given by Mrs Odelli and Gianna. I deal with these challenges, to the extent necessary, in the course of analysing the evidence later in this judgment.

27. [48]

    Carlo: Carlo’s principal affidavit was made in July last year. This affidavit responded to the affidavit from Mrs Odelli which had been filed in support of her Summons when the proceedings were commenced. Carlo made a supplementary affidavit about a month after his principal affidavit, in August last year.

28. [49]

    Carlo graduated in 1993 with a diploma in Science in Building from the Institute of Technology Sydney. In the same year, he obtained a building licence and established a business performing design and development works on building projects. In 1995 he established (or expanded his existing business to include) an architectural design and consultancy business. In 1997 he undertook further university study in Architecture. He worked initially for a commercial building design and construction company and later for other residential building contractors. Later still, he became self-employed. The work he undertook for other companies was carried out during his study.

29. [50]

    Over time, Carlo became involved in property development. The first development venture in which he was involved (with one of his brothers and uncles) was undertaken in 1997. According to his affidavit, he undertook other developments after that and decided to focus on development as it was more lucrative. The evidence does not indicate whether he still remains in business working for outside clients as a builder or architect.

30. [51]

    Carlo emphasised in his affidavit how close he was to Stephen. In particular, he was privy to Stephen’s financial affairs. Carlo stated that Stephen was wary of investing in property and preferred instead to lend money to friends and acquaintances. Carlo himself had previously borrowed money from Stephen for the purposes of a property investment venture, on the basis that on completion of the venture he would return the monies and repay an additional sum of 10% of the amount borrowed by way of interest. This was for a property at Condell Park.

31. [52]

    According to Carlo, he conceived the idea of buying the Redman Parade property in 2002. It was next to a property owned by his brother Milad. At the time, Carlo was also negotiating to buy another property, also in Belmore, at Albert Street.

32. [53]

    Carlo described, in his affidavit, his negotiations with Mr Pucariello to buy the Redman Parade property. He stated that he knew Mr Pucariello as “Vincent” rather than “Vince”. Final agreement was reached for the purchase of the property on Sunday 3 November 2002. This was the occasion on which the handwritten note ([25]-[27] above) was signed (Carlo in his affidavit gave the date of the note as 2 November, rather than 3 November; there was no evidence to clarify this discrepancy).

33. [54]

    According to Carlo, “a few days following” he contacted his bank manager at NAB about financing the purchase. The manager suggested purchasing the property in joint names “as this would assist [Carlo] in obtaining further loans in the near future”. Carlo then decided to approach Stephen.

34. [55]

    Carlo’s account of the ensuing conversation with Stephen was:

35. [56]

    Carlo stated that Stephen played no part in arranging the purchase. Carlo inspected the property on his own, conducted all of the negotiations with the vendors, organised the finance, and retained the solicitor (a Mr Safi) who acted. All Stephen did was attend the NAB office (in accordance with arrangements made by Carlo) to sign the loan and mortgage documents.

36. [57]

    Carlo explained the title arrangements as follows:

37. [58]

    Carlo’s evidence about exchange of contracts was:

38. [59]

    According to Carlo, he began design and the preparation of architectural drawings for the purpose of the development application early in 2003. He intended to begin construction of the development works in late 2004 or early 2005. Carlo continued:

39. [60]

    Carlo stated that he and Stephen attended the NAB office to sign documents on 13 June. Carlo stated:

40. [61]

    According to Carlo, following the settlement he arranged to have the property tenanted while he pursued his development plans. But those plans were later derailed by legal proceedings in which he became embroiled. Carlo described those proceedings as having been brought against his construction company by ex-clients “and/or” the Building Insurance Guarantee Corporation (“BIGC”). He stated:

41. [62]

    Carlo stated that as a result of the proceedings against his construction company he was made bankrupt “following default judgment”. Christopher John Palmer was appointed as his trustee in bankruptcy and took control of his assets including his properties. In one paragraph of his affidavit he stated that this was sometime between late 2006 and mid-2007. However, in the preceding paragraph he indicated that the bankruptcy occurred in mid-2006 and that the bankruptcy proceedings were “a culmination of monetary issues which [he] was experiencing at the time” which had been exacerbated by the legal proceedings.

42. [63]

    According to Carlo, he had a conversation to the following effect with Stephen in “about mid-2007”:

43. [64]

    Later in the affidavit Carlo stated:

44. [65]

    Meanwhile, Carlo (who had been self-represented) obtained legal representation and set about challenging the default judgment which had resulted in his bankruptcy. This was the state of affairs when Stephen died in May 2008.

45. [66]

    According to Carlo, a few weeks after Stephen’s death he had a discussion with Mr and Mrs Odelli about the Redman Parade property. He told them about the arrangement with Stephen involving the $40,000 loan but that he had been unable to complete the development and unable to return the monies. According to Carlo, he told them that after his litigation with BIGC was finished he should be able to return the $40,000 plus 10% interest and remove Stephen’s name from the property title. According to Carlo, they agreed to this.

46. [67]

    Mrs Odelli’s affidavit contained a different version of this conversation, in which, on her account, Carlo offered the sum of $40,000 to buy out Stephen’s interest in the property and this was angrily rejected (see [87] below). Carlo denied that version of events. Mrs Odelli also gave evidence of a conversation in Stephen’s room, following his death, in which Carlo stated that Stephen had contributed to the mortgage payments and asked them to take over, which they refused. Carlo denied that any such conversation had taken place at all.

47. [68]

    According to Carlo, he had little contact with the Odellis over the few years following the 2008 meeting because of the strain of the bankruptcy proceedings. Eventually, in “about 2011” the default judgment was overturned, and the bankruptcy was annulled.

48. [69]

    Carlo’s evidence was that following the annulment of the bankruptcy, he went to see Mr and Mrs Odelli. His account was as follows:

49. [70]

    Carlo did not in fact pay the $50,000 he said he had promised to Mr and Mrs Odelli. Carlo explained the failure to pay the money, initially, by a need to get his “life and finances in order”. In particular, Mr Palmer had lodged caveats on properties owned by him (including the Redman Parade property), presumably to secure fees. Those caveats remained on the properties despite the annulment of the bankruptcy, which, according to Carlo, made it impossible to refinance them. Meanwhile, in 2012 Carlo’s mother fell ill and he was caring for her. She died in mid-2015 and soon afterwards there were court proceedings between Carlo and two of his siblings about her estate. Then, in mid-2019, he became embroiled in a dispute with the local council about leasing part of his primary residence as a secondary dwelling.

50. [71]

    According to Carlo, while all this was happening he heard nothing from the Odellis and he assumed that they were allowing him further latitude to pay. In Mrs Odelli’s affidavit she claimed that in more recent times she visited Carlo at his house on several occasions and asked him whether he was ready to buy Stephen’s share of the Redman Parade property, to which he replied that he could not afford it. Carlo denied that any such conversations had occurred, or, indeed, that any such visits had taken place.

51. [72]

    Carlo stated that he was unaware that Mr Odelli had died in 2019 until he was told about it when contacted by Gianna in early April 2022. He said that Gianna asked for a meeting with her and Mrs Odelli concerning the property. He indicated his willingness to do so but did not hear back from her until 29 April when the exchange of text messages with Gianna quoted above (at [43]) happened. But, according to Carlo, after that he heard nothing further.

52. [73]

    On Carlo’s evidence, the series of problems culminating in the dispute with the local council which had prevented him getting his “life and finances in order” so as to be able to pay the $50,000 he owed the Odellis seems to have ended by “about mid-2020”. When I asked counsel for Carlo in the course of the hearing whether he would undertake to pay the $50,000 as a condition of the grant of equitable relief in his favour, counsel indicated that instructions would be required. By the end of the hearing the position remained unclear.

53. [74]

    In his supplementary affidavit, Carlo also addressed the statements he had made about Stephen’s interest in the property in his bankruptcy statement of affairs ([37] above) and in his email to Lane & O’Rourke of September 2021 ([41] above).

54. [75]

    As to the statement of affairs, Carlo’s explanation was:

55. [76]

    As to the email to Mr Lane, Carlo stated:

56. [77]

    Carlo was cross-examined, among other things, on the hand-written note setting out terms of the contract. He said that the note was in his handwriting except for the vendor details, which were written by Mr Pucariello. Counsel pressed Carlo about the reference in the note to the deposit remaining in the solicitor’s trust account. Carlo suggested that the idea had come from his solicitor and counsel asked him whether, as a consequence, he had suggested it to Mr Pucariello. Carlo replied:

57. [78]

    At a later point in that cross-examination, when asked whether he had written the note with Mr Pucariello on the day or at a later point, Carlo stated:

58. [79]

    Counsel then took Carlo to the statement in his affidavit (quoted at [58] above) that he paid the deposit directly to Mr Pucariello in the sum of $27,500 from his own funds. Counsel put to Carlo that in fact he never paid the deposit directly to Mr Pucariello at all. Carlo replied:

59. [80]

    Counsel also cross-examined Carlo about the statement in his affidavit (quoted at [60] above) about having paid an initial 5% deposit and a further 5% deposit from his own funds. Counsel pointed out that 80% of the purchase price of $550,000 was borrowed from NAB. This meant that on Carlo’s version of events in his affidavit, 10% was unaccounted for. Counsel put to Carlo that in fact Stephen had paid the remaining 20% and Carlo’s statement that he had paid the balance was false. Carlo denied this, and asserted in general terms that he had contributed all of the monies not borrowed from NAB but was unable to provide any real detail.

60. [81]

    Counsel then turned to Carlo’s 2010 statement of affairs. Carlo confirmed that the statement showed Stephen as a half owner of the property; that the figure for the debts owing on the property was only half of the total; and that the alleged loan from Stephen was not shown. He said:

61. [82]

    When asked what he could remember of his thought process at the time he said:

62. [83]

    In the end, he described the content of the statement of affairs as “factual” and “accurate”. But he acknowledged that the supposed loan from Stephen was not mentioned.

63. [84]

    Carlo also acknowledged some of the passages in his email to Lane & O’Rourke which spoke of Stephen having a “share” in the property and having made a “contribution” to it. He was not pressed on why he described the situation that way.

64. [85]

    Mrs Odelli: Mrs Odelli swore an affidavit in February last year in support of the summons. She later swore an affidavit in August in response to Carlo’s affidavit.

65. [86]

    In her February affidavit, Mrs Odelli described a conversation which took place in Stephen’s bedroom with Carlo and Gianna after Stephen’s death. She stated:

66. [87]

    Mrs Odelli described a further conversation between herself, her husband and Carlo. This conversation was evidently the same as the conversation described by Carlo at [66] above. Mrs Odelli’s version was:

67. [88]

    In her August affidavit, Mrs Odelli stated that following the conversation Mr Odelli remained angry with Carlo, saying that he was a crook, and that Mrs Odelli was not to deal with him.

68. [89]

    In her February affidavit, Mrs Odelli referred to visiting Carlo in more recent times. She stated:

69. [90]

    In her August affidavit, Mrs Odelli described how Stephen’s passbook (see [31] above) came to be in evidence. She stated that she found the passbooks in his bedroom after his death. They were kept in a bag. After verifying what they were, she returned them to the bag and left them there. She did not touch them before delivering them to her solicitors. At no stage did she write anything in the passbooks.

70. [91]

    In the August affidavit Mrs Odelli also rejected Carlo’s version of his dealings with her and Mr Odelli. She stated in particular that a loan of $40,000 had never been mentioned by Carlo.

71. [92]

    Mrs Odelli is 83 years old. She suffers from a respiratory disease which requires her to use oxygen. In order to save her the trouble of coming to Court, arrangements were made, with the consent of both parties, for her to give her evidence by way of video link. Unfortunately, there were difficulties with the quality of the connection. These were exacerbated by the way in which Mrs Odelli gave evidence.

72. [93]

    Mrs Odelli clearly had only a rudimentary command of English and it was difficult at times to make out what she was saying. Furthermore, she tended not to give direct answers to the questions that she was asked. More than once I intervened and asked her to answer questions yes or no when the questioner was seeking a yes or no answer, but this had little or no effect. There were several occasions on which Mrs Odelli appeared to contradict what she had said in her affidavits or her earlier testimony, but the circumstances in which the evidence was given made it difficult, if not impossible, for counsel to get to the bottom of these apparent contradictions.

73. [94]

    Mrs Odelli was asked about what she knew of Stephen’s dealings with Carlo. It was apparent that she had no real information on this question. She said that Stephen was a “secret boy” and did not discuss his finances with her. Mrs Odelli was not asked about her evidence concerning the passbooks.

74. [95]

    When asked about the alleged conversation in Stephen’s bedroom with Gianna, to which she herself had deposed in her affidavits, she said that she could not remember. So far as the conversation involving her husband and Carlo was concerned, she initially said that she had never seen Carlo write on wrapping paper. She did, however, insist that Carlo made an offer of $40,000 for Stephen’s share of the property, which made her husband angry, and he ordered Carlo out of the house. She also maintained her denial of the conversation alleged by Carlo about delaying payment until his court case was finished.

75. [96]

    It was put to Mrs Odelli that she did not seek advice from a solicitor about the matter for more than a decade after Stephen’s death because she did not believe that there was any claim against Carlo. But Mrs Odelli denied this and maintained that it was because of her husband’s attitude that they should have nothing to do with Carlo. Her evidence about the later conversations with Carlo referred to in her affidavit was confused. She did refer to one occasion on which she said she had made a cup of coffee for Carlo when he visited her house, but I was left unsure as to what period of time she was referring to.

76. [97]

    Mrs Odelli was asked about how, with her limited command of English, she had sworn an affidavit in English without the assistance of an interpreter. She said that her daughter Gianna had helped her in this regard. Gianna came with her to the solicitor’s office and translated things for her when she could not understand.

77. [98]

    Gianna: Gianna’s affidavit was sworn in August last year in response to Carlo’s.

78. [99]

    Gianna denied that there was a meeting in 2011 in which it was agreed to give time for Carlo to repay the sum of $50,000, as Carlo claimed. Gianna also supported the evidence in her mother’s February affidavit about a meeting between her mother, herself and Carlo following Stephen’s death in Stephen’s bedroom. She deposed:

79. [100]

    In cross-examination, Gianna confirmed that she acted as interpreter for her mother for the purposes of preparing her mother’s affidavits. There were four to five conferences with Mr Lane about the affidavits. She said that Mr Lane spoke to her mother first on his own before she was brought into the room. It later emerged, however, that this was only for the second affidavit. During the preparation of the first affidavit, she was present throughout.

80. [101]

    Gianna said that the affidavits were read to her mother, and she appeared to understand them. But she conceded that, in English as well as in her native Italian, her mother’s linguistic abilities were limited. She explained that her mother had only been to school up to “third class” in Italy, after which her family had brought her home to help with the household. Gianna also referred to her mother’s health difficulties. She stated that “at the moment” she was not “getting 100% oxygen” and this was probably affecting her memory.

81. [102]

    Gianna confirmed that Stephen kept his financial affairs private. He did not tell her anything about his dealings with Carlo. She said that the family found a diary which recorded payments by Stephen totalling $195,000 by way of contribution to the property. When challenged about the lack of reference to this in her evidence, she said that the diary had not been tendered because it had not been possible to authenticate it by means of expert handwriting evidence.

82. [103]

    Gianna maintained that she and her mother had indeed had a conversation with Carlo in Stephen’s bedroom following his death. She also maintained that there had been no meeting between Carlo, her parents and herself in 2011, as Carlo claimed. She was firm in her recollection on these matters.

83. [104]

    Mrs Odelli’s testimony about the passbooks was not challenged. On that evidence, there is a clear inference that the relevant notations were made by Stephen. In the end, I am not sure that this was disputed.

84. [105]

    The evidence of Mrs Odelli and of Gianna was that, so far as they were aware, Stephen did not have a friend or acquaintance called Vince or Vincent. That is not conclusive, but there was no evidence of any other person to whom Stephen might have been referring in the notations apart from Mr Puciarello. As already noted, the total of the two amounts neatly matches the shortfall in the purchase price when the amount lent by NAB is taken into account.

85. [106]

    Carlo accepted in cross-examination that his version of events, involving a loan by Stephen of $40,000 is not supported by any written evidence. But in my view, the difficulties for Carlo go further then that. Carlo’s own statement of affairs, and his later correspondence with Mr Lane, are contrary to the version of events he now seeks to advance.

86. [107]

    In summary, Carlo’s story up to the date of Stephen’s death involves three elements. First, Stephen agreed to be a joint purchaser and joint borrower, thus making him liable to NAB for the loan if Carlo was unable to meet his obligations, but, at the same time, agreed that he would have no interest in the property. Second, Stephen agreed to make a loan in return for 10% interest, but the interest was payable only on completion of the development which might take many years. Third, after Carlo’s development schemes came unstuck, Stephen effectively agreed to defer repayment of the loan indefinitely.

87. [108]

    Carlo’s version of events describes a series of transactions which were highly favourable to him. It involved Stephen taking on significant risk, while Carlo was to receive all the gain, if any, from the purchase. I remind myself of the need for caution in dealing with self-serving evidence which cannot now be contradicted because the other party to the alleged conversations has died: see Plunkett v Bull (1915) 19 CLR 544 at 548-549; Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 789; Eggins v Robinson [2000] NSWCA 61 at [26].

88. [109]

    The evidence that Stephen had a practice of making loans to friends and acquaintances may be accepted, but it cuts both ways. What Carlo described was hardly a normal money-lending transaction. There was no evidence of any other similar transaction where Stephen accepted a liability to a financier for the benefit of those to whom he was advancing funds.

89. [110]

    There is also the circumstance that a $40,000 loan left $70,000 of the purchase price unaccounted for. If, as Carlo now claims, he found that money himself, why was he able to find only $70,000 and not the full $110,000? These and other questions were simply not answered.

90. [111]

    I found Carlo’s evidence on this point in cross-examination unconvincing. I was left with the impression (confirmed by evidence Carlo gave, including evidence I have set out above) that he had little actual memory of the transaction. It seemed to me that his testimony was more in the nature of improvisation than recollection.

91. [112]

    Carlo’s account of events following Stephen’s death similarly describes very favourable treatment by the Odellis. He claims that: first, the Odellis agreed to continue the indefinite arrangement with Stephen; second, in 2011, they again extended it, effectively indefinitely, in return for increasing the amount repayable from $40,000 to $50,000 (at a time when the loan had been outstanding already for almost ten years); and third, that they took no action to chase Carlo up before Mr Odelli’s death, nor even to pursue the issue after Carlo had made some sort of offer in 2022.

92. [113]

    Carlo’s account of the litigation and the bankruptcy raises many other questions. It seems extraordinary that a bankruptcy annulment could take 5 years. Carlo did not support his description of what had happened with any documents from the Court or reports from Mr Palmer which would indicate precisely what happened and when. But at least some of this would be a matter of record and the relevant documents would have been available to Mrs Odelli’s legal representatives, yet there was no documentary evidence from her on the subject either.

93. [114]

    According to Carlo, Mr Palmer was told in mid-2007 by Stephen that he (Carlo) was the true owner of the property. If that was so, there would, on the face of it, have been no impediment to selling the property. This is difficult to reconcile with Carlo’s evidence of the later conversation in late 2007 or early 2008 in which he and Stephen supposedly agreed to maintain Stephen’s name on the title until the litigation with Mr Palmer was over. But, in the absence of any cross-examination or submissions on this point, I do not propose to take it any further.

94. [115]

    Leaving these matters to one side, I still found Carlo’s evidence unpersuasive. I was particularly unimpressed by the evidence he gave in cross-examination attempting to explain away the omissions from his statement of affairs. His account was not consistent with the explanation he gave in his affidavit (which itself raised unanswered questions). I find it difficult to see how an obviously intelligent person such as Carlo could have believed that only documented transactions had to be disclosed in a bankrupt’s statement of affairs. Carlo was not similarly pressed in cross-examination on his email to Lane & O’Rourke, but that speaks for itself, and I do not find the explanation offered for that in his affidavit very persuasive either.

95. [116]

    Because of the difficulty in testing Mrs Odelli’s evidence, I do not place any great weight on disputed details of her dealings with Carlo. I note, however, that she maintained at all times that her husband was angry with Carlo. She was not challenged, or at least not successfully challenged on this point, and it stands in stark contrast to the evidence from Carlo that his relationship with the Odellis remained good throughout a period of almost a decade when it appears he had little, if any, contact with them.

96. [117]

    It is not necessary to decide finally whether there was a conversation in Stephen’s bedroom in which Carlo asked Mrs Odelli to contribute to the mortgage, or not. The onus is on Carlo to prove his case. But for what it is worth, I thought that Gianna’s evidence on this point was unshaken. I saw no good reason to reject it simply because Carlo did not agree with it. Given the evident difficulties with Mrs Odelli’s health, I place little weight on her failure in cross-examination to recollect the conversation.

97. [118]

    The evidence presented from Mrs Odelli and Gianna does leave some loose ends. One is the delay in pursuing the recovery of Stephen’s share of the property. Antipathy on Mr Odellis part, which I am prepared to accept existed, does not, it seems to me, necessarily provide a full explanation. The reference in Gianna’s evidence to a diary and book containing details of loans is tantalising. But in the end, the diary was not in evidence, and it is impossible to draw any conclusions about the relevance it might have had to the case.

98. [119]

    But, in the end, I see these loose ends as subordinate matters. I think they provide little, if any, support for Carlo’s case.

99. [120]

    Taking all these considerations into account, I am not satisfied that Carlo’s story is correct. Carlo has not proved that Stephen contributed only $40,000 to the purchase, and did so by way of loan, as Carlo claimed.

100. [121]

     On my findings, Carlo has not established the agreement upon which he relied to support his contention that Stephen held his legal share in the property on trust. That claim fails.

Application for appointment of trustees for sale

1. [122]

   It was common ground that, if Carlo’s cross-claim failed, there was no defence to Mrs Odelli’s s 66G claim. But, in the course of final submissions, questions arose about whether further proceedings might be necessary to make adjustments to the parties’ entitlements before the proceeds of the sale could be divided between them.

2. [123]

   Counsel for Mrs Odelli took the position that no adjustments were sought by her, and none should be permitted in favour of Carlo. Counsel for Carlo, on the other hand, foreshadowed the possibility of a claim for improvements made to the property, and possibly also for contribution to expenditure on the property.

3. [124]

   Counsel for Mrs Odelli submitted that it was too late to be making such claims. Counsel submitted that if Carlo had wished to pursue them, he should have done so at the trial, in a form fully supported by evidence, so they could have been dealt with at the hearing along with other issues.

4. [125]

   But while that may be desirable in some cases, it is not a universal rule. The Court does not always (or, in my experience, usually) itself undertake or conduct accounts and inquiries at trial. That may be (and, in my experience, usually is) left for later, often by way of reference.

5. [126]

   The fact is that some evidence was presented by Carlo of expenditure on the property, although submissions based on that were not fully developed. That is understandable because, had his cross-claim succeeded, adjustments would not have been necessary. I do not think Carlo should be shut out from seeking any adjustments at all. In my view, the convenient course is to make an order for appointment of the trustee and allow any adjustment questions to play out while that process takes place.

6. [127]

   This does not mean that the foreshadowed claims will necessarily be successful. The circumstances in which a claim may be made for improvements to the property are limited: see Forgeard v Shanahan (1994) 35 NSWLR 206 at 223F-224C. On the face of it, Mrs Odelli has made no contribution to the costs of the property. There may thus be a claim for contribution available. But any such claim would involve giving credit for the income derived from the property over the same period.

7. [128]

   I think that what I should do is give Carlo a final opportunity, before making an order for appointment of trustees, to decide whether he wishes to advance any claims for adjustments. If so, then appropriate orders and directions can be incorporated within the order for appointment of sale by the trustees. It may well be convenient for the trustees to undertake any account or inquiry which is necessary.

Conclusions and orders

1. [129]

   I have concluded that Carlo’s claim that Stephen’s share of the property was held on trust for him fails. Carlo’s cross-claim will be dismissed. But I will defer making an order for appointment of trustees for sale to allow Carlo to decide what, if any, application he wishes to make for adjustments when the proceeds are distributed. I will reserve costs until final orders are made on Mrs Odelli’s claim.

2. [130]

   The orders of the Court are:

   1. (1)

      Order that the defendants cross-claim be dismissed.

   2. (2)

      Order that proceedings on the plaintiff’s claim be adjourned to 9:30am on Friday 10 May at 9:30am or such other date as may be agreed by the parties and notified to my Associate, for the making of final orders, including orders for inquiry and account.

   3. (3)

      Order that the costs of the proceedings, including the costs of the cross-claim be reserved.