Federal Court of Australia

Yushkova v Johnston (Trustee) in the matter of bankrupt estate of King [2024] FCA 454

ORDERS

THE COURT ORDERS THAT:

1.    Orders 1a and 1b of the orders made on 15 February 2024 be vacated pursuant to the slip rule.

2.    The appellant’s application to lead further evidence on the hearing of the appeal and to raise related new issues of fact and law (further evidence application) be dismissed.

3.    The appeal be dismissed.

4.    The appellant pay the respondent’s costs of and incidental to the appeal and the further evidence application, including reserved costs, to be fixed in a lump sum by a registrar if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LOGAN J:

1    As long ago as 13 July 2016, a sequestration order was made by the then Federal Circuit Court of Australia (Circuit Court, which includes the successor court) against the bankrupt estate of one Jeremy David Allen King. That name is an alias of Mr Jerome King (Mr King): Harrison (Trustee) v King (Bankrupt) [2021] FCCA 185 (Judge Jarrett’s first decision); Paul John Cook and Adam Lee Johnston (Joint Trustees of the Bankrupt Estate of Jerome King) v King [2021] FedCFamC2G 388. In respect of property which was not after-acquired property, and pursuant to s 58 of the Bankruptcy Act 1966 (Cth) (the Act), the effect of that sequestration order was to vest forthwith in Mr King’s trustee in bankruptcy what the Act terms “the property of the bankrupt” (see s 5 definition).

2    The administration of Mr King’s bankrupt estate has brought with it a lengthy and complicated history, both in the Circuit Court and in this Court, about whether and to what extent real property at 13 Bairnsdale Court, Helensvale in the State of Queensland forms part of that bankrupt estate. It is necessary to recite that history. Fortunately, it is possible for that purpose to draw on summaries offered in earlier judgments delivered by this Court.

3    On 16 September 2019, the then trustee of the bankrupt estate of Mr King’s bankrupt estate, Mr Brett Harrison, applied to the Circuit Court for declarations that Jeremy David Allen King was an alias for Jerome King and that Jerome King had a legal and beneficial interest in a property described as Lot 801 on Registered Plan 162672 with title reference 15771110 situated at 13 Bairnsdale Court, Helensvale in the State of Queensland (the Helensvale property), which was registered to Mr Jeremy David Allen King and Ms Larisa Ivanovna Yushkova as joint tenants.

4    Orders were also sought by the trustee that the interest of Mr King in the Helensvale property be transferred to the trustee and that the Helensvale property be vacated, sold and the sale proceeds distributed, with Ms Yushkova at liberty to purchase the property, with her share in the property set-off against the purchase price (the primary proceedings).

5    The primary proceedings came before Jarrett FCJ (as he then was) in the Circuit Court. On 3 September 2020, Jarrett FCJ heard an application in the primary proceedings by the trustee for default judgment or, in the alternative, an application for summary judgment. Mr King appeared at the hearing by telephone but did not file any evidence. Ms Yushkova did not appear and did not file any evidence.

6    On 4 February 2021, Jarrett FCJ determined the trustee’s application: see Judge Jarrett’s first decision. Default judgment was entered against Mr King and Ms Yushkova on 4 February 2021. Judge Jarrett was satisfied that each was in default by not having defended the proceedings with due diligence, by not complying with orders and by not filing a response as required under the Federal Circuit Court Rules 2001 (Cth). His Honour also entered summary judgment. The orders and declarations sought by the trustee were made. Jarrett FCJ also ruled that Jeremy David Allen King was an alias of Jerome King and that they were the same person. No appeal has been made by Mr King against Judge Jarrett’s first decision.

7    On 24 February 2021, Ms Yushkova, by her solicitors, filed an application to set aside Judge Jarret’s first decision, insofar as it concerned her and the Helensvale property, on the basis that she had not been served. Ms Yushkova also sought a readjustment of her beneficial ownership in the property, contending that she was the beneficial owner of the property in its entirety.

8    Ms Yushkova’s application was heard and, on 26 August 2021, determined by Jarrett FCJ. His Honour was not satisfied that Ms Yushkova was served with the proceedings: Harrison (Trustee) v King (Bankrupt) (No 2) [2021] FCCA 2015 (Judge Jarrett’s second decision). The following orders were made on 26 August 2021:

1.    The judgment entered on 4 February, 2021 against [Ms Yushkova] be set aside.

2.    Until the determination of the proceedings as between [the trustee of the bankrupt estate of Jerome King] and [Ms Yushkova] or earlier order, the appointment of statutory trustees in paragraph 4 of the orders made on 4 February, 2021 be stayed.

3.    By 22 September, 2021 [Ms Yushkova] shall file any further affidavit material upon [which] she intends to rely on at the hearing of the matter.

4.     By 6 October, 2021 [the trustee of the bankrupt estate of Jerome King] is to file [any] further affidavit material that he intends to rely on at the hearing of the matter.

5.     By 20 October, 2021 [Ms Yushkova] is to file her outline of submissions.

6.     By 3 November, 2021 [the trustee of the bankrupt estate of Jerome King] is to file his outline of submissions.

7.     The [parties’] costs of and incidental to the application in a case filed 24 February, 2021 be reserved to the trial judge.

8.     The matter is to be listed for a review on 12 November 2021.

(Errors in original)

9    None of the orders made in Judge Jarrett’s second decision interfered in any way with so much of the orders in Judge Jarrett’s first decision which were in respect of Mr King.

10    On 28 July 2022, on the application of the Mr King’s then joint trustees in bankruptcy (Mr Paul John Cook and Mr Adam Lee Johnston), the Circuit Court made the following declaration in relation to the Helensvale property: Cook (Trustee), in the matter of King v King [2022] FedCFamC2G 817 (Vasta FCJ):

1    Immediately prior to the sequestration order dated 13 July, 2016 being made against the First Respondent [Mr King]:

(a)    the name of Jeremy David Allen King, shown as a former registered proprietor of the land described as Lot 801 on Registered Plan 162672 with title reference 15771110 also known as 13 Bairnsdale Court, Helensvale in the State of Queensland (“the property”) was an alias of the First Respondent [Mr King]; and

(b)    the First Respondent [Mr King] had a legal and beneficial interest in the property as a joint tenant with the Second Respondent [Ms Yushkova].

…

5    Upon the making of the sequestration order, Jeremy David Allen King’s interest in the property vested in the Applicant [the bankruptcy trustees] pursuant to s 58 of the Bankruptcy Act 1966 (Cth).

[Identity of the parties added]

11    At the same time, the Circuit Court ordered that the stay of the appointment of statutory trustees for the sale of the Helensvale property pursuant to the order of that Court of 26 August 2021 be lifted. The Circuit Court also ordered on 28 July 2022 that the “Applicant, Respondents, Trustees for Sale and the Mortgagee file and serve written submissions as to the form of orders by no later than 4pm on 15 August 2022”.

12    As to the underlying beneficial interests in the Helensvale property, the Circuit Court concluded that the bankruptcy trustees did have a beneficial interest in that property. The Circuit Court recorded, at [38], in respect of the underlying beneficial interests:

For these reasons, I accept that the trustee does have the equitable interest. There has been a concession by Ms Long, on behalf of the Applicants [the trustees in bankruptcy], that the equitable interest should be confined to the equitable interest of the loan amount, which was 75 per cent of the purchase price, and so, therefore, the equitable amount that the trustee holds is 37.32 per cent of the property, given certain other adjustments that ought to have been made.

[Applicant parties identified]

13    There remained a controversy in the Circuit Court as to the form of orders which should be made to give effect to the 28 July 2022 reasons for judgment and with respect to costs of the proceedings. That controversy was resolved by orders made on 13 October 2022: Cook (Trustee), in the matter of King v King (No.2) [2022] FedCFamC2G 838 (Vasta FCJ). As to the underlying beneficial interests and the distribution of the proceeds of sale of the Helensvale property, the Circuit Court’s order made that day provided:

4.    The Statutory Trustees shall distribute the sale proceeds in the following manner and order of priority:

(a)    in payment of all costs and expenses of and incidental to the sale as provided for by s.37A of the Property Law Act 1974 (Qld) including those of any appointed real estate agent and agent's commission, legal costs, marketing and advertising costs;

(b)    in discharge of Westpac Banking Corporation's registered mortgage number 716964167;

(c)    in payment of the Statutory Trustees’ reasonable fees and disbursements incurred by them in performance of their obligations pursuant to these orders and the orders of Judge Jarrett dated 4 February 2021

(d)    in payment of the costs order at paragraph 5 below in the applicants’ [the then joint trustees in bankruptcy] favour against the second respondent [Ms Yushkova] from the second respondent’s [Ms Yushkova] share of the sale proceeds; and

(e)    the remains to be paid to the applicants [the then joint trustees in bankruptcy] and the second respondent [Ms Yushkova] in proportions of 37.3% and 62.7% respectively, subject to paragraph 3 and 4(d) hereof.

[Identity of parties inserted]

14    Notably, the Circuit Court’s order made that day also repeated the earlier provision that Ms Yushkova be at liberty to purchase the Helensvale property upon terms that she not be required to pay any deposit and that she may set-off, against the purchase price, the value of the whole of her share in the property.

15    On 4 November 2022, a notice of appeal was filed in this Court. That notice is an unusual document. On its face it was prepared by Mr King using his alias Jeremy King, which name is also used as one of the two named appellants. The other named appellant is Ms Yushkova. The notice recites that “The Appellants appeal from the judgment set out in this notice of appeal” and identifies that as “all Orders of the Federal Circuit and Family Court of Australia, given on 13th October 2022 at Brisbane”. As expressed in the notice, the grounds of appeal are:

1.    I, Larisa Yushkova, am appealing all the Orders, as the Judge did not take into account at the hearing or in the Orders given, the finding of facts:

a.    Whether I hold a Resulting Trust over the subject property, 13 Bairnsdale Court, Helensvale, Gold Coast, and

b.    Whether the Trustee has constitutional legal right in law to take their fees for a bankn1pt person from a non-bankrupt, what as is determined in the Court Order.

2.    I, Larisa Yushkova, am also appealing the Court Order on the grounds that I require to be returned my full verified deposit that I personally paid in the purchase of the subject property. This was not determined by the Judge.

It is repugnant if I am not returned this deposit, and this amount is paid to the Trustees on their account of a bankrupt person.

3.    Also, penalty to be awarded against the Trustee for not allowing the subject property to be rented for an extended period of time, especially when mortgage payments needed to be paid to Westpac Bank. Also for the accounting of a relatively small amount of rents received by the Trustees. Again, this was not determined by the Judge.

4.    Where in Clauses 24, 28, 29, 32, 36, 38 and 46 the Judge states I am dishonest and attempting to perpetrate a fraud upon the Court, and as in Clause 44 states, “I travel to Russia on a semi-regular basis”, indicating the Judge is anti-Russian, and as such endeavours to arrest assets of such Russian citizens, including myself.

5.    I was never dishonest in the Court hearing, answering all questions truthfully. All my evidence is factually backed up by exhibits. It is repugnant that I am labeled dishonest, and this is Court discrimination in Australia against Russians. This has to be addressed.

[Sic]

16    It will be noted that the orders which are challenged are only those made on 13 October 2022 and, further, that, although Mr King is named as an appellant, the grounds of appeal concern Ms Yushkova alone.

17    An application before Derrington J as duty judge for the stay of the orders made on 13 October 2022 failed: Yushkova v Cook (Trustee), in the matter of the bankrupt estate of King [2023] FCA 77. The appeal came later to be docketed to his Honour. However, although the appeal was set down for hearing on 24 April 2023, the way in which, as at that stage, Ms Yushkova had come to conduct her case on the appeal persuaded Derrington J that he was obliged to disqualify himself: Yushkova v Cook (Trustee), in the matter of the bankrupt estate of King (No 2) [2023] FCA 415.

18    The appeal was consequentially docketed to another judge of the Court, Thomas J. The appeal came to be listed for hearing before his Honour on 27 July 2023. On 25 July 2023, Thomas J dealt with an objection which the trustees in bankruptcy made to Mr King’s participation in the appeal as an appellant party: Yushkova v Cook (Trustee) in the matter of the bankrupt estate of King (No 2) [2023] FCA 846 (25 July 2023 judgment). The only formal order made on 25 July 2023 was that, “The joint trustees provide to the other parties and my Associate a draft set of orders to reflect these reasons by 10.00 am on Wednesday, 26 July 2023.”

19    There were a number of separate orders made by Thomas J on 26 July 2023. One was that, “The appeal by Jeremy David Allen King filed 4 November 2022 be dismissed.” Also on 26 July 2023, a case management hearing was conducted by Thomas J. As a result, by a separate order made that day, the appeal was listed for hearing a third time. The date fixed for that hearing was 24 August 2023. On that day, Thomas J dealt with an objection which Ms Yushkova had made informally, via an email to the Registry of 22 August 2023, to his hearing the appeal. Ms Yushkova stated in that email:

I strongly object to Judge Thomas presiding in the case QUD401/22, as he would be influenced by his previous Orders.

1.    Judge Thomas has pre-judged the case, stating in Paragrah 112 of his Order, 25 July 2023, ‘The dispute in this case is over ownership of the Helensvale property between Ms Yushkova and the Joint Trustee.....’ This is absolutly incorrect, as Judge Vasta in his Order, 28 July 2022, stated that first, intention in purshase is required by both Larisa Yushkova and Jeremy King alone.

2.    Judge Thomas has made a factual error, Paragrah 2 in his Order, stating, ‘Jeremy David Allen King was an alias for Jerome King ’.

3.    Judge Thomas cannot now determine perjury as he has already made a decision naming Jeremy as an alias. Judge Thomas cannot contradict his own decision.

4.    Judge Thomas dismissed Jeremy King in appealing, although he has standing and entitlement from his intention of purchase as determined by Judge Vasta, and standing in determination of not an alias.

[Errors in original]

20    In the result, on 24 August 2023, Thomas J dismissed the objection made by Ms Yushkova to his hearing the appeal: Yushkova v Cook (Trustee) in the matter of the bankrupt estate of King (No 3) [2023] FCA 1027. It did not, however, prove possible for his Honour substantively to deal with the appeal that day. Instead, the hearing of the appeal was adjourned that day to a date to be fixed. With the pending retirement from the Court at the end of January this year of Thomas J, the appeal came in November last year to be allocated to my docket. On 9 November 2023, I set the appeal down for hearing on 2 February 2024. It later became necessary to move that hearing date to 15 February 2024.

21    Prior to the hearing of 15 February 2024, there was some agitation by Mr King to continue to appear and to make submissions as if a party to the appeal. In the result, on 15 February 2024, I made the following orders in relation to Mr King:

1.    The orders of 25 July 2023 be amended by adding the following orders:

1.    Jeremy David Allen King be dismissed as a party to the appeal.

a.    The notice of appeal filed on 4 November 2022 be amended accordingly.

b.    Order 1 take effect nunc pro tunc on and from 25 July 2023.

2.    Each and any application by Mr Jeremy David Allen King to remain a party or to be heard on the hearing of the appeal be dismissed.

22    At the time of making these orders, the order separately made by Thomas J on 26 July 2023 concerning Mr King escaped my attention. I had thought, erroneously as I now see, that the intent evident in reasons given by Thomas J in the 25 July 2023 judgment had not been carried into formal effect. But the order of 26 July 2023 to which I have referred did that. Accordingly, orders 1a and 1b of those made on 15 February 2024 were based on a mistake of fact. That mistake should be corrected under the slip rule by vacating those orders. Given the later agitation by Mr King, order 2 still has utility.

23    Mr King’s agitation was always misconceived. As Thomas J pointed out in the 25 July 2023 judgment, the orders made against him by the Circuit Court on 4 February 2021 have never been set aside. He has never even appealed against them. The time for so doing without an extension of time has long since passed. The result of the subsisting orders is that Mr King has no relevant interest in the Helensvale property. The controversy concerning that property is solely between Ms Yushkova and Mr King’s present trustee in bankruptcy, Mr Johnston. For these reasons, I declined to permit Mr King to appear and make submissions on the hearing of the appeal. To have done so would have been subversive of the reasons given by Thomas J in the 25 July 2023 judgment and, as I now see, subversive of the separate order Thomas J consequentially made on 26 July 2023. As this appeal stands, Mr King is just an officious and vexatious bystander.

24    I turn then to the issues on the appeal by Ms Yushkova.

25    As to the grounds of appeal, the bankruptcy trustee put that issues regarding the alleged resulting trust were considered and determined on 28 July 2022. It is true that these issues were dealt with in the reasons for judgment published that day. However, as the orders made that day reveal, it was contemplated then that proposed orders giving effect to those reasons for judgment would be brought in by the parties. As it happens, it was not until the making of the orders of 13 October 2022 that substantive effect was given to those reasons in relation to the existence and extent of the beneficial interests in the Helensvale property as between the bankruptcy trustee and Ms Yushkova. It is the order of 13 October 2022 which is the substantive order. Correctly, it is against this order Ms Yushkova has appealed. She is not, in my view, precluded from raising on appeal the correctness of the conclusions reached by Vasta FCJ as to the existence and extent of the bankruptcy trustees’ beneficial interest in the Helensvale property which underpin that substantive order.

26    Ms Yushkova sought to adduce further evidence on the hearing of the appeal. The reception of further evidence is permissible on the hearing of an appeal: s 27, Federal Court of Australia Act 1976 (Cth) (FCA Act), with the applicable practice being found in r 36.57 of the Federal Court Rules 2011 (Cth). Notably, s 27 of the FCA Act refers to “further”, not “fresh”, evidence. Thus, in Gao v Official Trustee in Bankruptcy [2003] FCAFC 84, at [23], the Full Court stated:

The Full Court of the Federal Court in Cottrell v Wilcox [2002] FCA 232, following the judgments of the High Court in CDJ v VAJ (1998) 197 CLR 172, made it plain that the statutory power to receive further evidence under s 27 of the Federal Court Act on appeal is not governed by common law rules governing the reception of fresh evidence. That power is confined only by the requirement that it be exercised judicially and consistently with the judicial process: at 184-186 per Gaudron J.

27    Having referred to this statement, a later Full Court added, in Li Pei Ye v Crown Limited [2004] FCAFC 8, at [158], the even then, with respect, hardly novel proposition, “In general, further evidence should not be admitted on appeal if it was available, or could reasonably have been obtained, at the time of the hearing.” Part of the judicial process is that the trial of issues is, in the ordinary course, to occur in the exercise of original jurisdiction, with the issues of law and fact to be resolved being identified in that jurisdiction.

28    Ms Yushkova’s affidavit material and related submissions disclose that most of what she seeks to adduce either was introduced in evidence at trial or could reasonably have been obtained. She had the benefit of legal representation at trial. Further, at trial, the parties chose to tender a statement of agreed facts. This was supplemented by affidavit and oral evidence.

29    Insofar as she seeks to adduce evidence additional to that adduced at trial, this seems to be related to an issue which now has attraction to Ms Yushkova, but which was not raised at trial. The new issue seems to be that a discretion existed with respect to the appointment of statutory trustees for the sale of the Helensvale property and that such trustees ought not to have been appointed, because Ms Yushkova operated a childcare business, “Helensvale Family Day Care”, on that property. She further claimed that she had not been able to adduce evidence about that business at trial, because that evidence was located in the garage at that property, access to which had been prevented by its being locked by the then bankruptcy trustees.

30    As Ms Yushkova’s submissions disclose, the inspiration for the attempt to raise this issue and introduce related evidence is found in the judgment of Ryan J in Re Bolous [1985] 2 Qd R 165 (Re Bolous). That case concerned an application for the appointment of statutory trustees for sale of the land pursuant to s 38 of the Property Law Act 1974 (Qld). There was evidence in that case that, although the registered proprietors held the subject land as joint tenants, they also conducted, in partnership, a business on that land. Under the partnership agreement, a partner was permitted to give notice of retirement from the partnership. If such notice were given, the remaining partner could purchase the share of the retiring partner. If no notice were given, the partnership would be wound up. The court had before it some evidence that the land was partnership property. Against this background, Ryan J characterised the statutory power to appoint trustees for sale upon the application of a co-owner as discretionary, observing, at 167:

In my opinion, the fact that the property is being used for partnership purposes, and that it may be partnership property, are circumstances which make it inappropriate to make an order for the appointment of statutory trustees for sale of the property.

31    The outcome in Re Bolous turned on evidence that the land concerned was an asset of a partnership and on particular terms which governed the partnership. However, Ms Yushkova seems to have taken from the case that, had there been evidence before the Circuit Court that she conducted a business on the Helensvale property, the court may or would not have appointed trustees for its sale.

32    That a court exercising bankruptcy jurisdiction under the Act has a like discretionary power in relation to whether, in given circumstances, to appoint trustees for the sale of property may be accepted. However, even if there is any substance in Ms Yushkova’s claimed inability to access business records held in the garage, that in no way inhibited either her giving instructions to her then legal advisers as to the existence of such a business on the Helensvale property or, if this were thought to have any forensic ramifications in relation to the appointing of trustees for its sale, from raising it as an issue and giving oral evidence concerning it in the original jurisdiction. She should not now be permitted on appeal to raise this issue or to lead evidence related to it. Raising the issue on the appeal would convert the appeal into a trial of uncertain length, the end result of which may not be any different in terms of the appointment of trustees for sale. It would be a perversion of the judicial process mentioned to permit this.

33    For these reasons, I dismiss Ms Yushkova’s application to lead further evidence and, implicitly, her application to raise related additional issues on the hearing of the appeal.

34    The agreed facts at the trial included the following:

(a)    On or about 27 August 2015, Mr King and Ms Yushkova entered into an REIQ sales contract jointly to purchase the Helensvale property.

(b)    In order to purchase the Helensvale property, Mr King and Ms Yushkova jointly obtained a loan in the sum of $530,000 from Westpac Bank (Westpac loan), being approximately 75% of the purchase price for the Helensvale property.

(c)    On 15 December 2015 the Property was purchased for $710,000.00.

(d)    Queensland Magistrates Court proceedings were instituted against Mr King and Ms Yushkova in 2015 with judgment being entered against Mr King in or about October 2015.

(e)    Immediately prior to the sequestration order dated 13 July 2016 being made against Mr King, he was one of the registered proprietors of the Helensvale property as a joint tenant with Ms Yushkova.

35    The parties also agreed the following issues of law and fact for the purposes of the proceeding in the original jurisdiction:

(a)    Insofar as the court determines that part of the bankrupt’s (Mr King’s) legal interest in the Helensvale property is held on trust for Ms Yushkova (which is not admitted), the trustees accept that their interest would be held subject to a resulting trust, commensurable to the value of the contributions that the bankrupt (Mr King) and the Ms Yushkova each made towards the initial purchase of the property.

(b)    If the court finds that the bankrupt (Mr King) holds any beneficial interest in the Helensvale property, Ms Yushkova accepts that the appropriate orders to make are the orders set out in paragraphs 5 to 7 of the order of His Honour Judge Jarrett (as he then was) on 4 February 2021.

36    There is no reason why both the trustees and, more materially, Ms Yushkova should not be held on the appeal to the positions which by their respective lawyers, they adopted at trial. Necessarily, these agreed facts and issues coloured what fell for resolution at trial and, in turn, the reasons for judgment of the primary judge, Vasta FCJ.

37    A joint tenancy may be severed in one of three ways, by alienation, by agreement or by a course of dealing: Williams v Hensman (1861) 70 E.R. 862. By virtue of s 58 of the Act, the effect of the sequestration order made on 13 July 2016 was to sever the joint tenancy in which the Helensvale property had hitherto been held in co-ownership by Mr King and Ms Yushkova: Paten v Cribb (1862) 1 QSCR 40. That is a paradigm example of severance by involuntary alienation. Although at the time of sequestration the legal estate in the Helensvale property was vested in Mr King and Ms Yushkova, because the land was held under a Torrens system of title by registration and the registered proprietorship recorded them as joint tenants, from the moment of sequestration and as a result of the severance, there existed, in equity, a tenancy in common as between Mr King’s bankruptcy trustee(s) for the time being on the one hand and Ms Yushkova on the other.

38    By virtue of the agreement reached between them as to questions for resolution at trial, one question to be answered was the extent of the beneficial interests in the Helensvale property. It was Ms Yushkova’s position at trial that, although bankruptcy had severed a joint tenancy, the underlying beneficial interest in the Helensvale property was wholly hers. It is not possible to read the reasons of the primary judge other than that his Honour was concerned to answer, and did at [38] of his reasons answer, the question as to whether this position should be upheld.

39    Whatever the respective beneficial interests were in that property, they were subject to the registered mortgage interest of Westpac Bank, which secured the Westpac loan.

40    It was necessary at the trial for the Court to determine the objective intention of Ms Yushkova and Mr King at the time of the purchase of the Helensvale property (or immediately thereafter). A starting point was the objective facts as at that time of purchase (or immediately thereafter). It was also relevant to consider evidence of the parties’ words or conduct at the time of the transaction (or immediately after the transaction) to determine the parties’ objective intention.

41    This is the more appropriate starting point than describing the task at trial to be which of two competing, longstanding presumptions should prevail? One such presumption was a presumption of a resulting trust. That is a presumption that those concerned in the purchase transaction intend that the property purchased be held on and from the time of purchase for the benefit of the contributing purchasers as tenants in common in proportion to their respective contributions. The other presumption was a presumption is a presumption of advancement. That can operate as a counter-presumption to a presumption of a resulting trust. A presumption of advancement can arise where a contributor and a purchaser were in a recognised class of familial relationship, classically that of a contributor husband and a purchaser wife, as at the time of purchase. Where such a relationship exists, there is a presumption that the contributor intended the contribution to the purchase price to have been made and received as a gift, for the purchaser’s “advancement”. There was always in this case an incongruity between any operation in Ms Yushkova’s favour of a presumption of advancement and an evidentiary case for her, reliant on acceptance of her evidence and that of Mr King, which denied any familial type relationship between them and instead asserted an arrangement in which the common intention at the time of purchase was that Mr King’s involvement in the funding of the purchase of the Helensvale property and in his later contribution to repayments of the Westpac loan was nothing more than a preferred alternative to making child support payments in respect of their child.

42    The existence of these presumptions acknowledged, the reason why it is better to regard the starting point as the determination of the objective intention of the parties was given by Gageler J (as his Honour then was) in Bosanac v Federal Commissioner of Taxation (2022) 275 CLR 37 (Bosanac), at [64] – [66]:

64.    The presumption of a resulting trust is a presumption of fact, functionally akin to a civil onus of proof. The presumption will yield to an actual intention to the contrary found on the balance of probabilities as an inference drawn from the totality of the evidence. The weight to be given to the fact of a contribution having been made to the purchase price in drawing an inference as to actual intention will vary according to the totality of the circumstances of the case.

65.    The counter-presumption of advancement is not really a presumption at all. The existence of a relationship within a category recognised as triggering the counter-presumption is no more than a “circumstance of evidence”. Considered alone, the circumstance of such a relationship is enough to negative the presumption which arises from the bare fact of contribution to the purchase price. However, the circumstance of such a relationship will not be considered alone if other evidence going to intention is adduced and will then simply be weighed in the overall evidentiary mix.

66.    Whether any, and if so what, inference is then to be drawn about the actual intention of the contributor and the purchaser falls to be determined as an ordinary question of fact on the balance of probabilities.

[Footnote reference omitted]

43    Prior to the High Court’s judgment in Bosanac, but nonetheless consistent with the just quoted observations made by Gageler J in that case, Ward CJ in Eq (as her Honour then was) considered the relevant principles in Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495, at [161] – [168], which was summarised and cited with approval by Griffiths AJA (Leeming and Mitchelmore JJA agreeing) in Koprivnjak v Koprivnjak [2023] NSWCA 2 (Koprivnjak), at [19]:

(a)    where two or more persons advance the purchase price of property in different shares, it is presumed that the person or persons to whom the legal title is transferred hold the property upon resulting trust in favour of those who provided the purchase price in the shares in which they provided it;

(b)    once the primary fact giving rise to the presumption of a resulting trust is established, the burden falls on the party disputing the existence of a resulting trust to rebut the presumed fact on the balance of probabilities.

(c)    consequently, the presumption of resulting trust is the starting point of a factual enquiry about the intention of the party (or parties) who provided the funds for the relevant purchase;

(d)    the search for the intention of the relevant party (or parties) is as to proof of a “definite”, and not “nebulous”, intention, as opposed to a subjective uncommunicated intention;

(e)    the relevant intention is to be found as at the date of purchase (or immediately thereafter), although evidence of later acts and declarations is admissible as admissions against interest; and

(f)    for the presumption of resulting trust to apply, the purchase price must have been provided by the purchaser in their capacity as purchaser and not, for example, by way of loan.

44    The approval of this summary in Koprivnjak is significant, because that case was decided after the High Court’s judgment in Bosanac and, in voicing approval of the summary, Griffiths AJA expressly took that judgment into account. I respectfully agree with his Honour that the summary is not inconsistent with statements made in Bosanac concerning the presumption of a resulting trust and the presumption of advancement.

45    In the original jurisdiction, the parries were not at odds in relation to such principles. Rather, the difference between them was what was the correct conclusion to be reached on the whole of the evidence as to where lay the beneficial interests in the Helensvale property?

46    Certain objective facts were either agreed or uncontroversial. Ms Yushkova had contributed a substantial sum as both deposit and part payment of the purchase price from her own funds. The balance of the purchase price had come from the Westpac loan. That loan was to Ms Yushkova and Mr King. That loan was a sequel to an application which they had jointly made to Westpac.

47    Other facts found by the primary judge, which were open to find on the evidence, were:

(a)    Mr King was the principal borrower in respect of the loan used to purchase the Helensvale Property and this was reflected in the loan application.

(b)     Although Ms Yushkova claimed that she had no relationship with Mr King, the loan application identified that Ms Yushkova and Mr King shared the same phone number and home address, Ms Yushkova and Mr King treated various outgoings and expenses as combined expenses, and Ms Yushkova and Mr King jointly owned motor vehicles, personal effects and household items.

(c)     The repayments of the loan were made through various bank accounts which were jointly held by Ms Yushkova and Mr King.

(d)    The evidence from the accounts indicated that Mr King was contributing substantially towards loan repayments.

(e)    Mr King had previously brought an action for payment of monies, which he claimed to have been rent monies from the Helensvale property, and which he had asserted should have been deposited into the loan account to pay off the mortgage. This indicated that he claimed an interest in the real property.

48    Some, but by no means each, of these facts depended upon credibility findings which the primary judge made concerning the evidence given by Mr King and Ms Yushkova.

49    Insofar as the relationship between Ms Yushkova and Mr King was, to take up a term employed by Gageler J in the passage quoted from Bosanac, a “circumstance of evidence”, its ramifications in terms of the beneficial ownership of the Helensvale property fell to be measured against the totality of the evidence. The conclusion reached by the primary judge at [38] of his Honour’s reasons for judgment was open on the findings of fact which he made. The resultant orders did nothing more than take up a contingent position put jointly to the primary judge by the parties, as set out above. In effect, that position was what the parties considered would be a sequel to a conclusion that the Helensvale trust was held on a resulting trust.

50    In light of that jointly put position, there is no substance in Ms Yushkova’s contention that the primary judge did not address the subject of a resulting trust. Further, in light of that jointly put position, it is not for me on appeal to delve into the merits of the jointly put, agreed position as to the proportions on which the respective beneficial interests were held on a resulting trust. Further, and contrary to a submission made by Ms Yushkova, it is clear from that joint position and the orders made by the primary judge that she was given credit in the determination of respective beneficial interests for her “deposit”.

51    Ms Yushkova’s grounds of appeal, read fairly, raise two further issues, in my view. Each could be characterised as a procedural fairness complaint. One is an allegation of bias, actual or apprehended, on the part of the primary judge, said to be evidenced by anti-Russian sentiments as well as his Honour’s credibility findings concerning her and Mr King. The other is a complaint that neither she nor Mr King were, as witnesses, afforded an opportunity to explain themselves before adverse conclusions as to their credibility were made by the primary judge. These allegations thus overlap at a factual level.

52    The primary judge undoubtedly did make strong findings about the credibility of Ms Yushkova and Mr King as witnesses. In this, he did not just have an advantage as trial judge of viewing each of them give evidence which an appeal judge does not. Contemporaneous documents in evidence, read in conjunction with his Honour’s reasons for judgment, reveal that he did not misuse this advantage.

53    Thus, in relation to Ms Yushkova, the primary judge, at [24], compared and contrasted her evidence as to an absence of any real relationship with Mr King, notwithstanding he was the father of their child with what was revealed in the jointly made application for the Westpac loan in terms of jointly owned assets. His Honour also made reference to the existence and operation of joint bank accounts. In relation to Mr King, the primary judge made reference, at [32], to his use of an alias for the purpose of pretending not to be the person against whom the sequestration order was made and that it was Mr King, “who brought an action for the payment of moneys that should have been rent moneys so that that would go into the Westpac mortgage account that obtained to this particular property”. As to the latter, his Honour observed, also at [32], “That inability was absolutely telling.” It was open to the primary judge, for the reasons which he gave, not to accept Mr King’s evidence that he entered into an arrangement with Ms Yushkova to meet particular expenses because it would be cheaper than paying child support.

54    Subject to some observations I make below in relation to the “rule in Browne v Dunn (1893) 6 R. 67” (Browne v Dunn), the primary judge employed legitimate forensic reasoning in relation to the making of his credibility findings.

55    It was for Ms Yushkova on the appeal to demonstrate either actual bias or at least a reasonable apprehension of bias.

56    It would be a rare case indeed where actual bias was found via the employment by a trial judge of legitimate forensic reasoning in reasons for judgment. In effect, one would need evidence that this was a mere charade. Although this would only have to be proved on the balance of probabilities, it would be a grave finding indeed, attracting the considerations identified in s 140(2) of the Evidence Act 1995 (Cth). There is just no evidence at all which would support such a finding in respect of the primary judge. Neither is there any evidence of an anti-Russian bias on his Honour’s part. His Honour’s reasons for judgment make but one reference to any Russian feature in the case, which is, at [28], with respect to Mr King’s meeting of expenses for “Russian school” for his and Ms Yushkova’s child.

57    As to apprehended bias, the High Court, in Charisteas v Charisteas (2021) 273 CLR 289, at [11], confirmed, with reference to earlier authority in that Court (see fn 5) that, “The apprehension of bias principle is that ‘a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide’”. The application of this principle, the Court stated, also at [11], “requires two steps: first, ‘it requires the identification of what it is said might lead a judge … to decide a case other than on its legal and factual merits’; and, secondly, there must be articulated a ‘logical connection’ between that matter and the feared departure from the judge deciding the case on its merits”.

58    Putting aside the baseless “anti-Russian” allegation, it may be accepted that, conceivably but in conjunction with other evidence as to the circumstances surrounding the conduct of a trial and resultant reasons for judgment, a failure to afford witnesses an opportunity to meet, in evidence, potentially adverse findings on particular topics in their evidence might reasonably support an inference of an apprehension of bias.

59    At trial, there was a submission put to the primary judge on behalf of Ms Yushkova that there had been a failure on the part of counsel for the trustees to observe the rule in Browne v Dunn. As identified by the primary judge, at [35], the allegation was that counsel for the trustees “had not put directly to either Mr King or Ms Yushkova that this tale that was being told now was something that they had contrived to try and defeat the claim of the trustee in bankruptcy”. The primary judge dealt with that submission, at [36], by stating:

Given the credibility findings I have made, I am of the view that there was really no need for the rule in Browne v Dunn (Supra) to be observed because the credibility of both witnesses was so appalling. There was no unfairness at all in the failure to put those suggestions to the witnesses.

60    It might firstly be observed that, even if this is an incorrect statement of principle, it does not follow from this that it gives rise, reasonably, to an apprehension of bias on the part of the primary judge.

61    Looking at the transcript of Ms Yushkova’s and Mr King’s evidence, and with all due respect to counsel for the trustees, the cross-examination of these witnesses was rather more benign than it might permissibly have been in terms of a case for the trustees that denied the existence at the time of purchase of a joint intention that Ms Yushkova would enjoy the whole of the beneficial interest in the Helensvale property. However, it was put to Ms Yushkova in cross-examination that, at the time that she entered into the Westpac loan, her intention was that she and Mr King intended jointly to own the Helensvale property. Also during Ms Yushkova’s cross-examination, she agreed that this was her intention. Further, Mr King’s statement in his affidavit evidence that “I never intended to have any interest in the Helensvale property” was not unchallenged in cross-examination. During cross-examination, Mr King acknowledged that he was a retired property valuer and that he knew what the title of a property meant. Thereafter in cross-examination, Mr King agreed that his name was placed on the title of the Helensvale property, and that he did not discuss that with Ms Yushkova.

62    Also during cross-examination, Mr King was taken to his affidavit filed on 13 March 2020. He agreed that in that affidavit he stated that everything in it was true and correct. That affidavit contained an admission by Mr King that he was the half owner of the property.

63    In any event, it does not follow in the circumstances of this case that the rule in Browne v Dunn was breached.

64    Aside from the agreed statement of facts, evidence in chief in this case was given by affidavit. Further, it was plain from the very outset of the proceeding that the trustees contested that Ms Yushkova held the whole beneficial interest in the Helensvale property. The rule in Browne v Dunn is essentially one of fairness, requiring that a witness be alerted in advance as to adverse inferences or propositions concerning their evidence so as to provide them with an opportunity to meet these in their evidence.

65    In the circumstances of this case, observations made by Hunt J in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (Cth) [1983] 1 NSWLR 1 (Allied Pastoral) concerning the rule in Browne v Dunn are pertinent. His Honour stated, at 15:

It has in my experience always been a rule of professional practice that, unless notice has already clearly been given of the cross-examiner’s intention to rely upon such matters, it is necessary to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of his evidence, particularly where that case relies upon inferences to be drawn from other evidence in the proceedings. Such a rule of practice is necessary both to give the witness the opportunity to deal with that other evidence, or the inferences to be drawn from it, and to allow the other party the opportunity to call evidence either to corroborate that explanation or to contradict the inference sought to be drawn.

[emphasis added]

Also in Allied Pastoral, at 20 – 21, Hunt J stated, with particular reference to the judgment of the New South Wales Court of Appeal, Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 (Seymour):

Browne v Dunn was also considered by the New South Wales Court of Appeal in Seymour v Australian Broadcasting Commission (Court of Appeal, 3rd June, 1977, unreported). This was a defamation action in which the defendant had successfully justified the imputation that the plaintiff had knowingly been involved as a solicitor with fraudulent land deals. The appeal was concerned not so much with counsel's obligation in cross-examination before making a submission based upon inferences in the evidence as with the consequences on appeal of his failure to do so in a jury trial where the trial judge had taken no or insufficient action to cure the situation.

In his final address, counsel for the defendant had asked the jury to infer the plaintiff's involvement in the fraud (the existence of which not being in dispute) from a number of specific matters in the evidence. Such an interpretation of these matters had not been put to the plaintiff in cross-examination. It was accepted by Glass JA, with whom Reynolds JA agreed, that Browne v Dunn expresses a rule of professional practice and as well a rule of conduct which is essential to fair play at the trial and to fair dealing with witnesses. His Honour said (at p 7):

“If counsel proposes to submit that a witness’s evidence should not be accepted or that a particular construction should be placed on his conduct, the witness should be allowed an opportunity to deal with the suggestion.”

Later (at p 8), his Honour spoke of the necessity for the implications in the evidence to be put to the party against whom the “inference” is to be drawn. Although this had not been done by counsel for the defendant in relation to at least some of the matters upon which he ultimately relied in his address to the jury, a new trial was refused because it was held that, in the particular circumstances of that trial, it should already have been apparent to the plaintiff that his association with the fraud would be suggested by reference to those matters. The third member of the court, Mahoney JA, agreed (at p 18) that there had been no surprise and that there had been ample opportunity for an explanation.

66    In this Court, and also with reference to Seymour, Goldberg J made the following observations concerning the rule in Browne v Dunn in White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169, at 217 – 218:

The significance of the rule is that it requires notice to be given of a proposed attack on a witness or on the witness’ evidence where that attack is not otherwise apparent to the witness. The rule does not require that there be put to the witness every point upon which his or her evidence might be used against him or her or against the party who calls the witness.

… It is apparent, from the judgment of Lord Herschell that notice of the relevant attack need not necessarily occur in cross-examination so long as it is otherwise clear that it will be made.

… The rule does not apply, in the sense that it is not transgressed, where the witness is on notice that his version is challenged or that an inference may be drawn against him and such notice may be found in the pleadings, in an opening or in the manner in which a case is conducted: Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219, 224 - 225, 236; Jagelman v Federal Commissioner of Taxation (1995) 31 ATR 467, 472 - 473; Raben Footwear Pty Ltd v Polygram Records Inc (1997) 145 ALR 1, 15.”

67    The primary judge was, with respect, in error in stating that there was “really no need” for the rule in Browne v Dunn to be observed. There was such a need, but the rule had already been observed in terms of notice prior to either Ms Yushkova or Mr King going into both affidavit and oral evidence. Against this background, whatever obliqueness there was in their cross-examination entailed no transgression of the rule in Browne v Dunn, because that rule had, in the circumstances, already been observed.

68    What remains of the allegations in the notice of appeal is really nothing more than an expression of emphatic disagreement by Ms Yushkova with the conclusions reached by the primary judge concerning her credibility and that of Mr King and of the resultant finding that, to the extent the parties contingently agreed, the trustees had a beneficial interest in the Helensvale property. While I do not doubt that this disagreement is genuine, an apprehension of bias is not to be found in that disagreement.

69    Beyond this, the difficulty Ms Yushkova faces in this appeal is that the conclusion reached by the primary judge flowed from a consideration in combination of the objective facts mentioned and very particular impressions formed concerning her credibility and that of Mr King. The nature of the burden on appeal cast on Ms Yushkova in an appeal to this Court, which is expressed to be by way of rehearing, is that she must satisfy the Court that the order that is the subject of appeal is the result of some legal, factual or discretionary error: Allesch v Maunz (2000) 203 CLR 172, at 180 – 181 [23] (per Gaudron, McHugh, Gummow and Hayne JJ). In relation to alleged errors in fact finding, an appellate court is required to exercise restraint when a primary judge’s findings of fact depend, to an extent, on impressions as to the credibility and reliability of witnesses formed on the basis of observations of their oral evidence at trial: Fox v Percy (2003) 214 CLR 118, at 127 [26] – [27] (per Gleeson CJ, Gummow and Kirby JJ). In this appeal, Ms Yushkova has not been able to demonstrate any “palpable misuse” by the primary judge of that advantage of observation in making credibility findings. Moreover, as I have already indicated, those findings are congruent with objective facts and the statements made by Ms Yushkova and Mr King in their application for the Westpac loan. Examining the evidence led at trial afresh, I see no reason to interfere with the findings made by the primary judge.

70    For these reasons, the appeal must be dismissed, with costs.

Associate:    

Dated:    2 May 2024