I shall commence by setting out those aspects of the factual background which are not in dispute. In doing so I shall refer to the members of the family by the Anglicised first names they adopted after arriving in Australia.
The father, Michael Fedorow, was born in Russia in 1909, and died in the family home in O'Connor on 8 July 1995. The mother, Anna, was born in Russia in 1913 and died in October 1986 at the then home of one of her sons, Peter, at Burra, near Canberra but in New South Wales.
The four sons of Michael and Anna were all born in Russia, in an area near St Petersburg (then Leningrad) where their father worked as a farm labourer. George was born in 1935, Alan in 1937, Peter in 1939 and Victor in 1941. George is now 74, Alan 72, Peter 70 and Victor 68.
The family migrated to Australia in 1950. They lived in migrant accommodation near Albury and later Cowra before moving to Canberra in 1952. During that year they were allocated a government house at 11 Coolibah Crescent, O'Connor on a rental basis. Tenancy documents were signed, Michael Fedorow being the tenant, and the family moved in in July 1952.
The family lived in the house until 2007 when it was sold.
Michael Fedorow worked as a labourer with the Department of Interior of the Commonwealth, which was in those years responsible for the administration of the Australian Capital Territory. He worked initially with the Roads and Bridges section of the Department and subsequently with the Parks and Gardens section.
Canberra was still quite a small place in 1952, and O'Connor was an outer northern suburb. Michael Fedorow kept a dairy cow in a paddock close to the house. The family planted fruit trees and a vegetable garden and kept chickens and ducks. They were close to self-sufficient and sometimes sold excess produce. Nevertheless life was frugal and there was never much spare money.
George became a painter after completing an apprenticeship. He left home to get married in 1963 but returned in 1972 after separating from his wife and generally seems to have lived at the O'Connor house thereafter until it was sold.
Alan became a boilermaker. Early in 1964 he married and left home. Ultimately his marriage failed. In early 1996, after his father's death, he returned to the house and lived there with George until it was sold.
The third brother, Peter, married in about 1961 and left home. Peter became a carpet layer and started a successful business at Fyshwick with a number of employees and contract layers. The business expanded to surrounding areas including Cooma and the south coast of New South Wales. Peter separated from his second wife and moved back to the house at O'Connor where he lived with George and Alan for about six months. This was some time between 1999 and 2003, well after the death of both of the parents. At some point Peter bought a house in Blackall Avenue, Queanbeyan, where he was living when these proceedings were instituted in June 2006. During 2005 he suffered a stroke. I was unable to detect any particular symptoms by way of aftermath of the stroke while he was in the witness box but as I had not seen him before his stroke I am unable to form a view as to whether he may have presented differently prior to the stroke. I note that in an affidavit sworn in May 2008 Peter Fedorow gave his address, without any explanation, as an address at Pascoe Vale South, Victoria. He swore a further affidavit in August 2008 giving an address at Forster on the mid-north coast of New South Wales and this was the address he gave when giving oral evidence.
The youngest brother, Victor, qualified and worked as an insurance agent. He married and left home in June 1964, the last of the brothers to do so. He remained in the Canberra region until 1989 when he moved to Queensland. He moved back to Canberra at the end of 1999 with his family. He was by then a disability pensioner.
In May 1962, Michael Fedorow asked the Housing Branch of the Department of the Interior to provide him with a valuation of the property, presumably because he was thinking about buying it. He was provided with a valuation and informed that he was entitled to purchase the house by paying a deposit of 10 percent of the valuation, followed by monthly instalments over a period of forty years. The instalments at that time would have been rather less than the rent. Mr Fedorow did not proceed with the purchase: I expect that the required deposit would have been quite a significant amount to him at that time. It is very doubtful, having regard to the other evidence, that he would have had access to the amount of money required.
He asked for a further valuation in February 1965, but again decided not to proceed with the purchase.
In 1973 a further valuation was conducted. A standard form of application to purchase a government house from the Commonwealth was completed and signed by Mr Fedorow on 14 June 1972. The form included a section worded "mortgage documents should be drawn up in the following names:". It is apparent that this was initially completed with the names Anna Fedorow and Michael Fedorow. At some point the name Anna was deleted and replaced with the name Peter Fedorow.
In accordance with the procedure in place at that time, the form then went to the chief valuer's office. The valuation was not completed until 2 March 1973 when a valuation of $10,400.00 was recorded. Interestingly the valuer estimated the remaining life of the house at thirty-five years, a period of time which has now elapsed although my understanding is that the house is still standing and occupied.
The form then went to another section of the Department where calculations were set out as to the deposit payable ($520.00) leaving $9,880.00 to be secured by mortgage and paid off at 6.25 percent interest over thirty five years, by monthly repayments of $58.00. This part of the form was completed on 5 March 1973.
On 8 March 1973 a letter was sent to Mr Michael Fedorow by the Commissioner for Housing within what had become the Department of the Capital Territory, offering to sell the house to him for $10,400.00 on a deposit of $520.00 with the balance payable over thirty five years as set out in the calculations.
On 6 April 1973 the calculations were amended in an attachment to the form, showing a deposit of $6,000.00 leaving $4,400.00 to be paid over fifteen years at $37.73 per month.
On 20 September 1973 the Commissioner sent a letter addressed to Mr and Mrs M Fedorow, asking for "the full names to be written into the Crown lease and mortgage". The letter pointed out that if their son's name appeared on the lease as a joint tenant, he would not be eligible for a government housing loan in the future. On 10 October 1973 Peter Fedorow replied to this letter, saying "please make contract out in the names of Peter Fedorow and Michael Fedorow".
A Crown lease and mortgage were prepared and Michael and Peter Fedorow attended the office of the leasing section of the Department on 17 July 1974 to sign those documents. The lease was formally granted on that date, for a term of ninety nine years commencing on 6 April 1973.
On 6 April 1973 a receipt was created, evidencing payment of $5,995.80 ($6,000.00 deposit less a valuation fee of $4.20) from M. Fedorow. The receipt does not record the manner of payment.
The monthly repayments were approximately the same as the rent.
Michael Fedorow retired at the age of 65, in August 1974. By that time George had moved back to live at home with his parents.
In January 1986, Peter asked the Department for a payout figure for the mortgage. The amount then owing was $1,025.08. In mid-1986 Anna Fedorow, who was unwell, moved to Peter and his wife's home at Burra, where she died in October 1986. In September 1987 Peter Fedorow asked again for a mortgage payout figure. The payout by then was down to $402.78, and Peter paid this amount on 2 October 1987, and obtained possession of the Crown lease and discharge of mortgage, which was registered on 9 October 1987. Peter paid some, and perhaps all, of the mortgage repayments from 1985 until the discharge.
In November 1996, after Michael Fedorow's death but before the lodgement of a notice of death, Victor Fedorow lodged a caveat on the title. He withdrew the caveat in May 1999 at Peter's request. At some time after that, a notice of death must have been lodged, and Peter Fedorow was thereafter recorded as the sole registered proprietor. On 1 August 2003, a mortgage over the O'Connor property in favour of Adelaide Bank Limited was registered. In April 2006 Alan Fedorow lodged a caveat when he became aware that Peter was intending to sell the house.
On 30 June 2006, Marshall J ordered by consent that Alan's caveat be removed, that Alan and George vacate the house on settlement and that the net proceeds of the sale be invested pending the making of final orders in the action. On 29 September 2006 the orders were varied to provide for Alan and George to vacate by 30 November 2006.
It is not clear from the evidence precisely when contracts were exchanged or when settlement took place, but it is apparent that Peter contracted to sell the house through a firm of estate agents to an arms-length purchaser for $420,000.00 in the second half of 2006, and that settlement had taken place by the end of the year. Peter deposed, in an affidavit of 20 June 2006 in support of his application for removal of the caveats, that he had a loan from Adelaide Bank with a then balance of $312,347.00, secured by a mortgage over his Queanbeyan house and the house at O'Connor. The loan was repaid on settlement leaving a net balance of about $90,000 which I understand has been invested pending my decision. I infer that since that settlement Peter's house at Queanbeyan has been unencumbered.