Have you ever wondered what happens to jointly owned property when one owner goes missing and is presumed dead? In a recent legal case, the Supreme Court had to make a decision on just that.
The case involved a husband and wife who jointly owned a property, with the wife contributing 70% of the purchase price. However, in 2001, the wife left for China and was never heard from again. In 2021, the Supreme Court declared her presumed dead as no will or trace of her could be found.
The couple’s daughter then sought legal action, hoping to claim her mother’s share of the property and a portion of her estate. She argued that her father held the property on a resulting trust for her mother’s estate, meaning that he only owned her share of the property.
However, the Court found that there was insufficient evidence to prove that the couple intended to hold the property as anything other than joint tenants. As such, no resulting trust arose, and the daughter was not entitled to any share of the property.
The fact that the wife had contributed a significant amount to the purchase price was not enough for equity to recognize a different ownership arrangement. However, the daughter was awarded $500,000 from her mother’s estate under family provision legislation.
In conclusion, this case highlights the importance of proper estate planning and the potential consequences of jointly owned property in the absence of a will. Even with a significant contribution towards the purchase price, ownership of the property is determined by legal documentation, and it’s important to seek legal advice to ensure that your assets are distributed according to your wishes.
Contact us today by emailing us at legal@blackstonelaw.com.au or calling us at 1300 070 770 to book a consultation.
Summary
In 2001, Wei Hong Guo disappeared without a trace, leaving behind her husband Yong Wei Gao and their infant daughter Sijia Guo. Wei Hong and Mr Gao jointly owned a property in Carlingford, which became the subject of a legal dispute after her disappearance. Despite extensive investigations, Wei Hong’s whereabouts remained unknown, and in 2012 a state coroner declared her neither dead nor alive. However, in 2021, the court declared Wei Hong presumed dead.
Sijia Guo filed a summons seeking a declaration that Mr Gao holds the Carlingford property on resulting trust for Wei Hong’s estate and a provision out of the estate under the Succession Act 2006 (NSW). Mr Gao counterclaimed, arguing that the property was held on resulting trust for him. However, both causes of action were eventually abandoned, leaving only the issue of whether any part of the Carlingford property was subject to a resulting trust in favor of the estate and Sijia’s claim for family provision.
The court ruled that there was insufficient evidence to prove that Wei Hong and Mr Gao intended to hold their respective interests in the Carlingford property other than as joint tenants. Therefore, no resulting trust arose in favor of the estate. However, Sijia was granted a family provision of AUD 500,000 to assist her in her future living and education expenses.
It’s worth noting that the court used the given names of the individuals involved in the case, and all monetary references are in Australian dollars. This case highlights the importance of estate planning and the potential legal issues that can arise in the absence of a will.
Course of the hearing
During the five-day hearing held in October 2022, both parties assured the Court that they would agree on certain facts after the hearing. These included the net rent received by Mr Gao from the Carlingford Property and the amount of Capital Gains Tax (CGT) payable upon the sale of the property. The Court deemed these factors crucial in determining the value of any notional estate. However, the parties failed to reach an agreement on these matters, which prompted the Court to grant them permission to file further evidence, including updated evidence on costs. An additional hearing was fixed for 10 March 2023. However, Sijia’s final updating affidavit regarding costs was only submitted on 15 March 2023.
Key Players in the Carlingford Property Dispute (Dramatis personae)
The Carlingford Property dispute has been making headlines recently, and as the case unfolds, the key players involved have come to light. Here are the people at the center of the controversy:
- Mr. Gao
Mr. Gao is a 59-year-old man who has lived in Australia since 1992. He holds degrees in English and international marketing. He was once in a relationship with Wei Hong, the mother of Sijia Guo, the claimant in the case. Wei Hong disappeared more than two decades ago, and Mr. Gao is the only witness with direct knowledge of the purchase of the Carlingford Property. During his cross-examination, he elected to give his evidence in English.
- Sijia Guo – Sijia is the only child of Wei Hong and her former husband, Jin Hua Guo. She was only six years old when her mother disappeared, so she could not shed any light on the purchase of the Carlingford Property. Instead, Mr. Morrissey’s cross-examination of Sijia focused on her claim for a family provision order. She gave evidence remotely from China with the assistance of Mandarin interpreters. She attested to the profound impact her mother’s absence had on her life.
- Jin Hua Guo – Jin Hua is Sijia’s father. He was married to Wei Hong from 1994 until their divorce in 1999. Like Sijia, he gave his evidence remotely from China with the assistance of Mandarin interpreters located in Sydney. Jin Hua holds a bachelor’s degree in geology and a master’s degree in economics. In 2002, he founded a company that manufactures car accessories and parts.
- Xian Guo – Xian is the brother of Wei Hong and the uncle of Sijia. He was not required for cross-examination, and the court accepts his evidence, such as it was. Xian’s evidence included conversations he had with Wei Hong and letters between Wei Hong and various relatives around the time the Carlingford Property was purchased. That evidence suggested that Wei Hong may have participated in choosing the Carlingford Property and that she intended for Sijia to come to Australia to reside at the Carlingford Property with her and Mr. Gao.
- Zhi Li – Zhi Li is the solicitor for Sijia in these proceedings. He was admitted to practice in about July 2020, having obtained his law degree from the University of New South Wales. These proceedings were his first estate matter as a junior solicitor (though not his first estate case overall). The gravamen of Mr. Li’s cross-examination was simply to confirm how much, and on what basis, Sijia’s lawyers had been paid in respect of the matter. The evidence of Mr. Li corroborated Sijia’s evidence that legal costs to the October 2022 hearing were approximately $413,000 paid on the indemnity basis.
These individuals are key players in the Carlingford Property dispute, and their testimonies have been instrumental in helping the court make its decision. The case is ongoing, and we will continue to update you as more information becomes available.
Justice Hallen’s decision
In March 2021, the parties involved in a primary dispute made a joint application seeking a declaration that Wei Hong, who had been missing for a substantial period of time, was deceased. The parties agreed that there was “no dispute between them” regarding the appropriateness of making such a declaration. Justice Hallen agreed with their submission and declared that Wei Hong was deceased, died intestate, and that only Sijia and Mr Gao may be entitled to her estate or notional estate.
Regarding costs, Hallen J ordered that “the costs of each of the parties of the determination of the separate question be paid out of the estate or notional estate of [Wei Hong].” The judge also appointed Mr Mark Peoples, the second defendant in the proceedings, as the independent administrator of Wei Hong’s estate. Mr Peoples did not appear during the proceedings and provided an estimate of his costs to finalize the estate.
Resulting trust case
Uncontroversial or otherwise incontrovertible facts
The purchase of the Carlingford Property has been shrouded in controversy, with conflicting accounts of who paid what. However, there are certain facts that have been agreed upon, unchallenged, or supported by documentary evidence.
According to records from NAB, on January 4, 2000, $190,000 was transferred from Wei Hong’s HSBC account in Hong Kong to a joint NAB account held by Mr Gao and Mr Huang. Two days later, $2,200 in cash was deposited into the joint account, and a cheque for $195,700 was signed by Mr Gao and paid out to his brother Yong Yi’s investment account with HSBC. No account statement was produced for the joint NAB account.
On January 18, 2000, Wei Hong’s divorce from Jin Hua was finalized in China. On February 15, 2000, $95,331 was transferred from Wei Hong’s HSBC account in Hong Kong to Yong Yi’s NAB account, which received $94,708 on February 16, 2000.
On December 11, 2000, the transfer of the Carlingford Property was registered, with Mr Gao and Wei Hong recorded as joint tenants. The transfer was signed by Mr Lee on behalf of the transferees. Based on the evidence, the Court finds that the purchase of the Carlingford Property was settled on or about November 14, 2000, and that the $335,000 bank cheque used for the purchase was bought with funds provided by Wei Hong.
On April 11, 2001, Wei Hong was last seen by Mr Gao when he dropped her off at a bus stop in Carlingford. Since her disappearance, Mr Gao has continued to pay for all expenses related to the Carlingford Property, including council and water rates, renovation and repair costs, and leasing it out over the years.
Mr Gao filed an application for possessory title of the Carlingford Property in March 2017, but Sijia lodged a caveat against the property in May of that year, preventing Mr Gao’s application for possessory title. These proceedings were initiated by summons filed on October 1, 2019.
The critical fact that emerges from the evidence is that Wei Hong contributed at least $335,000 (about 70% of the purchase price) for the Carlingford Property, contrary to Mr Gao’s claim that they each contributed 50%.
Legal principles and submissions
The legal principles in relation to resulting trusts were not disputed by either party in the Carlingford Property case. It was agreed that determining how the parties intended their shares of the property to be held was a matter of fact. The High Court recently considered these principles in Bosanac v Commissioner of Taxation (2022) 115 ATR 35; [2022] HCA 34, where a wife purchased a property in her own name and no resulting trust was found to arise.
Initially, Mr Gao had claimed a resulting trust on the basis that he had paid for the entire purchase price of the Carlingford Property. However, he later conceded in cross-examination that Wei Hong had paid for half of the property. As a result, Mr Gao abandoned his claim and Mr Morrisey’s closing submissions focused on the resulting trust claim advanced by Sijia.
Consideration
Consideration is an important aspect of any legal case. In the case of Sijia and Wei Hong, there were significant hurdles to overcome to establish the true intention behind the joint tenancy recorded in the register. This case was unusual due to the considerable amount of time since the purchase and the unavailability of Wei Hong to give evidence. As a result, the evidence was sparse.
However, there were critical primary facts that have been proven. Wei Hong and Mr Guo were the registered proprietors of the Carlingford Property as joint tenants. They bought the property to be their matrimonial home, and with the intention of Sijia coming to live with them. They had a warm and caring matrimonial relationship, and Wei Hong contributed $335,000 (about 70%) of the purchase price.
There were also potentially critical matters that have not been directly proven or about which the Court can make no finding by inference for otherwise proven facts. For example, there was no evidence about who paid the balance of the purchase price. Mr Gao had no corroboration for his evidence that he contributed to the purchase price. On the other hand, it could not be shown that Wei Hong did so. There was also no direct evidence of Mr Gao’s intention underlying the nomination of a joint tenancy.
Furthermore, there was no direct evidence of Wei Hong’s intention at the time of purchase. The fact that she did not sign the contract for sale of the property was sufficient corroboration for the Court to accept, as it does, Mr Gao’s evidence that Wei Hong was not in the country when the contract was signed. Nor was there any direct evidence of what may have been her intention when she advanced the funds that were used in the purchase or when the purchase completed.
Unlike in Bosanac, there was no past history of dealings in property upon which the Court could draw any inference. The Court also considered two conversations upon which Mr Morahan relied. However, the Court found that Wei Hong’s correspondence was too equivocal to be a dispositive consideration in overcoming the prima facie position disclosed by the register.
The letters were written in Chinese, in a Chinese cultural milieu of which the Court knew nothing, and plainly exhibiting a tone of respectful address to elders, being her parents. Given the different language and cultural context, it was not appropriate to engage in uninformed cross-cultural speculation about what significance, if any, can be attributed to her use of the first-person singular in relation to the Carlingford Property in this correspondence. Additionally, in all of the correspondence, the marriage between Wei Hong and Mr Gao was referred to positively by her. There was no indication that she sought to separate from him or to divide their assets. Even where it was alleged in a conversation that Mr Gao was the financially poorer of the two, the evidence indicated that Wei Hong accepted that they should “take care of each other and live a good life.”
Family provision application
The Estate
The recent court case regarding the Carlingford Property and its designation as notional estate has finally been concluded. The court found that no resulting trust over the Carlingford Property arises in favour of the Estate, meaning that the only property that could be designated as notional estate comprised half the value of the Carlingford Property in addition to half of any net rent received by Mr Gao in relation to it. The value of the Carlingford Property was agreed to be $1,700,000.
The parties agreed that an order may be made pursuant to s 78(1) of the Act, and it was also agreed that the Carlingford Property would have to be sold to meet any notional estate order. After subtracting various costs, the available notional estate was determined to be $715,036.
There was a debate about how the parties’ legal costs in relation to the separate question should be treated, with the result that those costs should also be deducted for the purposes of determining the amount that could be designated as notional estate to meet a family provision order in favour of Sijia.
A real contest was foreshadowed about the costs of the present hearing. What costs orders should be made in respect of the present proceedings and whether an order designating property as notional estate to meet those costs will have to be the subject of argument after the parties have had an opportunity to consider these reasons. However, in considering Sijia’s claim for provision, the completely adversarial character of the litigation since the decision of Hallen J was taken into account, and the respective parties’ costs were determined to be $188,672 (Sijia) and $179,000 (Mr Guo).
The parties’ legal costs
In a legal dispute over the notional estate, the parties were unable to agree on the legal costs to be subtracted from it. The costs were described as “unusually large” by both parties and were partly due to the need for them to determine a separate question before Hallen J. The Court was provided with affidavits from both parties’ solicitors, which included the costs of the final day of the hearing on March 10th, 2023.
According to the affidavits, Mr. Z Li estimated the plaintiff’s legal costs to be $131,218.70 on the ordinary basis relating to the separate question before Hallen J, $251,562.57 on the indemnity basis for the remainder of the proceedings, and $188,671.93 on the ordinary basis for the remainder of the proceedings. On the other hand, Mr. G H Smith estimated Mr. Gao’s legal costs to be $30,000 on the ordinary basis relating to the separate question before Hallen J, $238,613 on the indemnity basis for the remainder of the proceedings, and $179,000 on the ordinary basis for the remainder of the proceedings.
It was argued on behalf of Sijia that the higher costs she incurred relating to the separate question were justifiable because her side of the record undertook the bulk of the preparatory work, despite the parties acting jointly. At the conclusion of the proceedings relating to the separate question, Hallen J made an order that the costs of each party be paid out of the estate or notional estate of Wei Hong Guo.
However, Mr. Morahan argued that there was a “conundrum” in the order as to costs. The order did not permit Mr. Gao to have his costs taken out of the notional estate to which Sijia was entitled. It would only be appropriate for Mr. Gao to recover his costs of the separate question from notional estate declared for the purposes of his own family provision case, which was not being pressed due to the Court’s decision on the resulting trust claim. Mr. Morahan submitted that Hallen J’s order should be read as “orders that the costs of each of the parties of the determination of the separate questions be paid out of the estate (if any) or the notional estate (of the respective parties) of Weihong Guo.”
Mr. Morahan relied upon section 78(2) of the Act, which states: “In the context of this case, the court may make any orders it considers appropriate with respect to the payment of costs and expenses incurred in connection with the proceedings, including orders for the payment of costs and expenses out of the estate or notional estate.”
78 Notional estate order may be made only if family provision order or certain costs orders to be made
When dealing with the estate of a deceased person, the court has the power to designate certain property as notional estate, but only in specific circumstances. According to Section 78 of the Succession Act 2006, the court may make an order designating property as notional estate for two purposes: (a) for the purposes of a family provision order, or (b) for the purposes of an order that the costs of proceedings in relation to the estate or notional estate of the deceased person be paid from the notional estate.
However, it’s important to note that the court cannot make an order under subsection (1)(b) unless a family provision order has been made in favour of the applicant. This is to prevent a situation where a party could potentially be awarded costs from the notional estate without any consideration of their relationship to the deceased.
Recently, there was a case where the meaning of a costs order made by Hallen J was disputed. The order stated that both parties were to get their costs of the separate question out of the Estate or notional estate. One party argued that this was an order under Section 78 designating notional estate for the purposes of costs. However, the court disagreed and stated that the order was made in the general costs jurisdiction of the court and did not anticipate the possibility of a family provision order being made in favour of anyone.
The court also noted that, in this particular case, a family provision order had been made in favour of one of the parties. As a result, the limitation in Section 78(2) was not engaged, and the court could designate some or all of the sale proceeds of a property and net rent received as notional estate for the purpose of satisfying Hallen J’s costs order. This notional estate would be considered as part of the costs of proceedings in relation to the estate or notional estate of the deceased person under Section 78(1)(b).
In conclusion, Section 78 of the Succession Act 2006 provides the court with the power to designate certain property as notional estate for specific purposes. However, it’s important to understand the limitations and requirements of the section, particularly with regards to the need for a family provision order before a costs order can be made from the notional estate.
Legal principles
The law recognizes that parents have a moral obligation to provide for their children, both during their minority and to some extent in their adult life. However, community expectations do not generally require parents to provide for their children throughout adulthood and into retirement, especially where there are other persons, such as a spouse, who have obligations to the applicant. Despite this, a moral duty to provide for an adult child may arise depending on the circumstances of each case.
The principles outlined above apply to cases where a child seeks a family provision order from their parent’s estate. This was the case in a recent matter where Sijia, a minor at the time of her mother’s disappearance, sought a family provision order from her mother’s estate many years later.
The law provides that a family provision order may be made if the Court is satisfied that the person in whose favour the order is to be made is an eligible person, and adequate provision for their proper maintenance, education or advancement in life has not been made by the will of the deceased person or by the operation of the intestacy rules. In assessing the adequacy of provision, the Court takes into account a range of factors, including the size of the estate, any competing claims, the applicant’s conduct, and their relationship with the deceased.
In Sijia’s case, it was agreed that she was an eligible person pursuant to the Act as Wei Hong’s only child. Although she was a minor at the time of her mother’s disappearance in 2001, the application was brought many years later, and the principles in respect of adult children applied. The Court considered Sijia’s financial and other circumstances, including her education, work history, and future plans, before making a decision on the family provision order.
It is worth noting that adequate provision for an adult child will generally not include the purchase of a home unencumbered, although there may be exceptions. Adequate provision may be satisfied by the provision of money sufficient for a home deposit in a particular case. The Court should not be inflexible when considering claims by adult children but should take into account relevant factors, as outlined in the Act.
In conclusion, parents have a moral obligation to provide for their children, but the law does not require them to provide for their children throughout their adult life. However, a moral duty to provide for an adult child may arise depending on the circumstances of each case. When planning an estate, it is important to consider the needs and circumstances of adult children to ensure that their proper maintenance, education, and advancement in life are provided for. Similarly, adult children who believe that they have not been adequately provided for in a deceased parent’s estate may seek a family provision order from the Court.
The parties’ submissions
The submissions presented by both parties were reviewed, and Sijia presented evidence addressing the family provision claims of both parties. Mr Gao’s submission indicated that if Sijia’s resulting trust claim were to fail, he would not push his family provision claim. The court found that the estate had no interest in the Carlingford property, and it is necessary for the court only to decide Sijia’s claim for provision. Sijia’s submissions for a family provision order claimed that adequate provision had not been made for her, given that she received nothing from the estate. She argued that Wei Hong would have wanted her daughter to share in her mother’s estate, including money for a residence and contingencies, as she loved Sijia and wished to bring her to Australia. Although Sijia had been helped by her father, she had to repay the debt, and it was improbable that she would receive further aid from him, given that he had other children to provide for and his medical problems. Sijia’s relationship with her partner was also uncertain in terms of his financial support. Sijia was asking for a total sum of about $750,000 to cover her modest needs, including a housing deposit, car, postgraduate education, and buffer. Mr Gao’s competing entitlement was diminished because adequate provision had already been made for him through his share in the Carlingford property, the marriage between him and Wei Hong being of relatively short duration, and because he had failed to provide full disclosure in respect of Shaorong’s finances. Mr Gao’s submissions claimed that Sijia had not been candid about her financial situation and that any award of provision would be fruitless as it would be used to pay down her debt to her father and not for her own maintenance or advancement in life. He also claimed that the evidence showed a happy union between him and Wei Hong, irrespective of the duration of their relationship. Mr Morrissey briefly submitted that Sijia’s case did not overcome the hurdles posed by s 87 of the Act, but this was not elaborated on during oral argument.
The Court found that Wei Hong was Sijia’s mother, and it was evident that she felt a strong bond and affection for her daughter. Sijia has received neither emotional nor economic benefit from the relationship Wei Hong wanted to have with her daughter since her disappearance in 2001. The Court agreed that the intestacy laws’ operation meant that adequate provision had not been made for Sijia, and the only remaining question was what level of provision was appropriate. The Court was not persuaded by Mr Morrissey’s submission that Sijia failed to disclose her financial circumstances adequately. Sijia’s evidence during cross-examination showed that she lived with her partner in a property in his name and shared their household expenses. Although her affidavit contradicted this, she explained that she was uncertain about the relationship’s future when she prepared her affidavit. Mr Gao’s failure to provide details of Shaorong’s financial circumstances was also not considered to be inadequate disclosure. Mr Gao’s evidence was that Shaorong had refused to provide any financial information, and there was no indication that she had changed her mind. Since Shaorong resided in China, it was unlikely that Mr Gao could obtain the necessary information without her cooperation, and it was also unchallenged that the couple had a fractious relationship.
Conclusion
After a legal proceeding, it’s crucial to take care of the administrative details to ensure the outcome is enforced properly. In this case, the parties involved are directed to bring in brief summaries of the order that will give effect to the court’s decision. The order should also include details of costs if both parties can come to an agreement on the matter.
Additionally, the designation of notional estate should consider the costs of each party as ordered by Hallen J during the previous proceedings. This is important because the court wants to ensure that each party’s financial investment in the case is accounted for and taken into consideration. Therefore, the parties need to comply with these directions to ensure a fair and just outcome.
This case serves as a reminder of the crucial role that proper estate planning plays in securing your assets and ensuring that they are distributed according to your wishes. The joint ownership of property can lead to unforeseen consequences in the absence of a will, highlighting the importance of seeking legal guidance to safeguard your interests.
At Blackstone Law, we are committed to providing you with the expert legal advice and guidance you need to protect your assets and achieve your estate planning goals. Don’t leave your future to chance. Contact us today to schedule a consultation by emailing us at legal@blackstonelaw.com.au or calling us at 1300 070 770.
