Hale v Hale

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1849/02 SANDRA MARY HALE v TERENCE CHARLES HALE JUDGMENT 1 The plaintiff is the executrix of her late mother's estate. Probate of the will of Mrs Hale senior was granted to the plaintiff on 19 July 2001. By her will Mrs Hale senior devised and bequeathed the residue of her estate to the plaintiff and to her brother, the defendant. 2 Prior to the death of their father, a residence at 5 Talfourd Street, Glebe in Sydney was registered in the names of Mr Hale senior and the defendant as joint tenants. 3 The plaintiff claimed that the defendant's share of the Glebe property was held in trust for Mr Hale senior. Alternatively, she claimed there was a resulting trust of the defendant's interest in the property in favour of Mr Hale senior because he provided the entire purchase price for the property. 4 Mr Hale senior made an informal will. The plaintiff claimed that any interest Mrs Hale senior acquired in the Glebe property through her husband's estate formed part of the residue of her estate and passed equally to her and the defendant. 5 The Glebe property was sold for $360,000.00. The plaintiff claimed to be entitled to half the net proceeds. The defendant paid $55,000.00 to the plaintiff. She claimed the remaining balance of half the net proceeds of sale. 6 Where a purchaser pays a vendor and directs a transfer of the property into the name of someone else without consideration passing from that person, there is a presumption that the transferee holds the property on trust for the purchaser (Napier v Public Trustee (WA) (1981) 55 ALJR 1 at 3). 7 On the other hand, where the legal title is vested in someone to whom the purchaser is under an obligation to support, such as a child, there is no presumption of a resulting trust in favour of the purchaser and, on the contrary, there is a presumption that the property was vested in that person as an absolute gift or as an advancement (Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353). 8 Each presumption can be rebutted by evidence of a contrary intention (Martin v Martin (1959) 110 CLR 297). 9 The plaintiff's alternative claim relied upon the presumption of a resulting trust. The defendant did not rely upon the presumption of advancement. His case was the converse of the plaintiff's primary contention. He asserted that he provided the entire consideration for the acquisition of the Glebe property and Mr Hale senior held his interest in trust for the defendant. 10 The purchase of the Glebe property was settled on 30 April 1971. The purchase price was $14,500.00, $11,496.93 of which was provided by a mortgagee. 11 Richard Arthur Schmidt was the solicitor who acted in the purchase. His statement of account disclosed receipts by him of $1,500.00 on 10 February 1971, $40.00 on 11 March 1971, $711.50 on 24 March 1971 and $1,530.00 on 27 April 1971. The bank account of Mr and Mrs Hale senior showed debits of $1,500.00 on 10 February 1971, $711.50 on 26 March 1971 and $1,530.00 on 28 April 1971. 12 The defendant asserted that he paid the initial $1,500.00 and the $40.00. It was submitted on his behalf that the $1,500.00 charged to the bank account of Mr and Mrs Hale senior on the date of receipt of $1,500.00 by the solicitor must have been for some other purpose as the solicitor's receipt would have preceded the charge to the bank account. That is not necessarily so, of course. The $1,500.00 might have been received in the form of a bank cheque charged to the account on the date of its acquisition. 13 Mr Schmidt addressed the statement of account to the defendant. He said he had no specific memory of the transaction but when he had joint clients, his practice was to write to both. That evidence was innocuous in light of the fact that the title to the Glebe property was taken in the joint names of Mr Hale senior and the defendant. 14 The defendant said he provided $1,500.00 in cash to the solicitor from the sale of a motor vehicle. He relied upon an entry in the flyleaf of a diary for the 1969 calendar year that stated that on 6 February 1971 a Spitfire was sold for $1,500.00 in cash to M & J Wilson. 15 On the opposite flyleaf was an entry for a purchase of a Morris 1100 for $1,500.00 on 8 February 1971. The defendant said that he went with his father to purchase the Morris 1100 for which his father paid a cheque. It was submitted that this accounted for the charge to the bank account of Mr and Mrs Hale senior of $1,500.00 on 10 February 1971. The plaintiff said her father bought the Morris 1100 soon after they arrived in Australia in November 1970. She said that when her brother sold the Spitfire he bought a motorbike. 16 I have difficulty with this evidence of the defendant. The diary entries were too convenient. Why should a sale by the defendant and a purchase by his father be listed side by side in the flyleaves of a diary that had no temporal connection with the dates in question? Why should the defendant record a purchase by his father? In light of my attitude to other aspects of the defendant's evidence and in light of the correlation between the receipts recorded by Mr Schmidt and the charges to the bank account of Mr and Mrs Hale senior, I find that the entirety of the moneys recorded by Mr Schmidt as receipts were paid by Mr and Mrs Hale senior. 17 Mr Hale senior was born in London and worked for an associated company of ACI in Malaysia. The defendant came to Sydney in 1967 to take up a cadetship with ACI. Mr and Mrs Hale senior and the plaintiff spent their Christmas 1970 holidays in Sydney. The plaintiff said her father told her he wished to buy a house in Sydney that would not "blow their budget" if they decided, ultimately, to buy a house in London and she and the defendant could occupy it when Mr and Mrs Hale senior returned to Malaysia. She said her mother said she would return to Malaysia after she was satisfied that the plaintiff had settled in. 18 The defendant denied that his father ever intended to buy a house in Sydney. He was adamant that his father wished to return to London and had no intention of buying a property in Australia. The defendant maintained that it was he who sought to invest in the Glebe property. He was 21 and had difficulty in raising a mortgage and his father agreed to go on the title with him to assist in raising finance. 19 The plaintiff said that in January 1971 she, the defendant and their father started to look around Sydney for a property. The Glebe property was chosen on the basis that it could be bought cheaply, renovated and sold. The plaintiff said her father suggested that as he was to return to Malaysia in March 1971, the defendant should be the family representative and his name should appear on the documents. 20 On 28 January 1971, Stanley Thompson Real Estate Pty Ltd forwarded a valuation of the Glebe property to Mr Hale senior as the person who had ordered it. If Mr Hale senior had no intention of investing in the Glebe property he would not have ordered the valuation. When this conflict was pointed out to the defendant in cross examination, he smirked and ventured the explanation that he had caused his father's name to be placed on the valuation because his father was "starting to back out". In his long and detailed affidavits there had been no suggestion of any reluctance on the part of Mr Hale senior. The report states that it was ordered by Mr Hale senior. If it had been ordered by the defendant and he had asked that it be directed to his father, one would have expected a different form of expression. I reject the defendant's evidence on this issue and find that Mr Hale senior ordered the valuation. 21 Mrs Hale senior and the plaintiff did not return to Malaysia with Mr Hale senior in March 1971. That circumstance supports the plaintiff's contention that the Glebe property was bought as a family residence. 22 The defendant moved into the Glebe property in early May 1971 and commenced renovations. He said the place was then in such a condition that it was virtually uninhabitable. In this evidence he was supported by his best friend Peter Maher. That evidence was in conflict with the Stanley Thompson Real Estate valuation. It stated that the residence was in reasonable condition internally with minor repainting considered to be the only immediate necessary maintenance. However, externally regular maintenance had been neglected and the roof gutter was approaching the need for replacement and the residence required repainting. A section of ceiling and roof removed during the removal of an old brick chimney required replacement. I prefer the real estate valuation to the evidence of the defendant and Mr Maher. 23 The plaintiff said that she and her mother moved into the Glebe property in June 1971. The defendant said this did not happen until mid 1972. He said that the move was the result of a crisis when his father lost his job in Malaysia. 24 Mr Hale senior addressed a letter to the plaintiff at the Glebe address in November 1971. I do not accept the explanation given by the defendant in cross examination, again with a smirk on his face, that the envelope contained cash about which Mr Hale senior did not want Mrs Hale senior to know and hence it was sent to Glebe. 25 The defendant's evidence on this issue was not supported by Mr Maher. He said that when he returned to Sydney from Papua New Guinea in late 1971, Mrs Hale senior and the plaintiff were then living at Glebe. Later in his evidence, Mr Maher said that Mrs Hale senior and the plaintiff were living at Double Bay when he returned from Papua New Guinea and remained there until mid 1972. He was, however, confused. He thought Mr Hale senior was present. Mr Hale senior was in Malaysia. His earlier evidence was emphatic. 26 I find that Mrs Hale senior and the plaintiff moved into the Glebe property in about June 1971. That they did so shortly after its purchase, supports the notion that the Glebe property was acquired by Mr and Mrs Hale senior as a family residence. 27 The monthly mortgage payments on the property of $146.00 were all charged to the joint bank account of Mrs and Mrs Hale senior. When Mr Hale senior returned to Australia he had received a lump sum from his employer and he paid out the balance of the loan to the mortgagee. 28 The defendant asserted that in addition to the $1,500.00 proceeds of sale of the Spitfire motor vehicle, he had saved $1,800.00 in less than 12 months in a scheme of importing and selling Papua New Guinean native artefacts. Mr Maher shipped artefacts from Papua New Guinea to Sydney and when he returned to Sydney in late 1971, arrangements were made to ship artefacts to London. 29 The evidence in this respect was unsatisfactory and inconsistent. The defendant said the London export was a failure as the artefacts in the one shipment were stolen. He said he bought and sold artefacts in Sydney supplemented by those sent to him by Mr Maher. Mr Maher, on the other hand, was not aware of any sales in Sydney. He said they bought artefacts in Sydney to supplement those from Papua New Guinea for export to London. There were at least two shipments, he thought three, the first two being successful, the last being the one in which the artefacts were stolen. 30 Mr Maher gave evidence supporting the defendant's contention that he was saving money to pay for the Glebe property and for its renovation. However, Mr Maher was not privy to the defendant's financial arrangements and drew this conclusion from observation of his living conditions that I regarded as overstated. He gave evidence that the defendant told him that he had found a property in Glebe that was not much but was a start. He also said that Mr Hale senior had said that he had helped the defendant into the property and the plaintiff had said that the defendant's house was too small. 31 In his affidavit, Mr Maher said that both Mr and Mrs Hale senior had told him they were staying in the defendant's house until they found a place to suit them in Sydney or possibly in London. In cross examination he said he was unsure whether they used those particular words. He insisted that the plaintiff had said the defendant's house was too small and unsuitable and that they would be better off in London. With respect to the statement by Mr Hale senior, Mr Maher insisted in cross examination that he thought the statement was made because he knew that the defendant was having trouble initially raising finance and he had the impression that Mr Hale senior had actually talked to him about that and said that he had helped the defendant get into the property. 32 I was not persuaded by Mr Maher's evidence. He was a close friend of the defendant and exaggerated the circumstances where they favoured his case. His description of the Glebe property when compared with that of the valuer, is an example. His evidence in the witness box of events that happened 30 years ago was far too pat to cause me to reject the plaintiff's evidence where it conflicted with his. 33 The defendant maintained that he paid funds to his parents enabling them to make the monthly mortgage payments. There is no documentary evidence to support this assertion save for a deposit slip dated 14 April 1971 for $442.24. The deposit slip accords with a credit of that amount on that date to the bank account of Mr and Mrs Hale senior. On the back of the deposit slip the defendant wrote: "Fullers' cheque to Dad for Glebe". 34 The defendant had been employed by Fullers for over a month at that stage. He said he was in Double Bay where the account was kept and on the spur of the moment he deposited his wages cheque. He discovered the document after receiving the plaintiff's affidavit to which the bank statement of their parents was an annexure. Documents were retrieved by the defendant from a unit in Indooroopilly, Brisbane where Mrs Hale senior resided before she returned to Sydney with the plaintiff. The defendant denied that the deposit slip came from this source. 35 In view of the evidence that supports the plaintiff's case and in light of the view I formed of the defendant as an unsatisfactory witness, I do not regard this piece of documentary evidence as supportive of the defendant's claim that he financed the mortgage payments made by his parents. 36 The defendant moved out of the Glebe property in July 1972 and never returned to it. He said the place was crowded. If the property was his and his father wanted nothing to do with it apart from assisting with its finance, why would the defendant move out and why would he require no payment of rent? 37 Mr Hale senior returned from Malaysia in August 1972 and joined his wife and the plaintiff at the property. He lived there from then until his death. Mrs Hale senior lived there until the property was sold in early 1999. That Mr Hale moved into the Glebe property on his return to Australia is inconsistent with the defendant's claim that his father wanted nothing to do with the property. 38 While Mr Hale senior paid out the balance of the mortgage, the defendant said the payment was made under an agreement that the defendant would repay half the money at no interest and the balance would be regarded as an advance payment of rent by his parents for their occupation of the premises. The defendant said he paid his father his half share of $6,000.00. There was no documentary evidence to support this contention and there were inconsistencies in the defendant's testimony in this regard. 39 The defendant said that in August 1972 his father said he would pay out the mortgage, half of which the defendant could repay when he sold the property in 1975. Yet he said he went to Mt Isa in 1973 to raise funds to pay out his share. When the inconsistency was pointed out to him, the defendant said his father initially required early payment of his half share. Yet it was not until December 1975 that the defendant said he informed his father he had $6,000.00 to repay him. 40 The plaintiff said that her mother raised with her father changing the title to the Glebe property into their joint names but Mr Hale senior rejected the idea on the basis that it would cause needless expense. 41 Mr Hale senior left an unattested will. In it he purported to devise a 50% ownership of the Glebe property to the plaintiff stating that the other 50% was in the name of the defendant. Any possessions or cash were to be shared between the plaintiff and the defendant. That Mr Hale senior thought he had an interest of which to dispose is inconsistent with the joint tenancy under which title to the Glebe property was held. It is consistent with the notion that the defendant held his interest in trust for Mr Hale senior. It is inconsistent with the defendant's case that his father held his interest in trust for the defendant. 42 After the death of Mr Hale senior, a meeting took place at the office of Paul Brown, solicitor on 19 August 1998. Mr Brown explained that the will might be invalid and that Mrs Hale senior had no title to the Glebe property and to change title into her name would be an expensive and lengthy exercise. The defendant indicated that he and the plaintiff were hoping to sell the house and use the money to get Mrs Hale senior a better place. Mr Brown said that the best way of dealing with the Glebe property was to transfer it into the defendant's name, sell it, obtain a new house for Mrs Hale senior and split the balance between the plaintiff and the defendant. The plaintiff said that the defendant then said to Mr Brown: "You are my witness that I promise that I will give my sister an equal share". The plaintiff said that Mr Brown suggested that they should enter into an agreement to ensure that the intentions were known. 43 On 26 August 1998, Mr Brown wrote to the plaintiff and the defendant. The letter contained the following: "Terry we confirm that it is your intention to sell the house in Talfourd Street and with the proceeds to arrange a place for your mother to reside and then the proceeds are to be split 50% to yourself and 50% to Sandra. We would advise that once you have found somewhere for your mother to live, you and Sandra enter into an Agreement to embody your intentions." 44 The defendant denied that he had said he would give the plaintiff half of any surplus. He said that Mr Brown asked him if he would do anything for the plaintiff and he said he would see if he had any spare money after he settled his family and his mother. In cross examination, he said his suspicion was that Mr Brown was fishing for more business because the letter went on to record his services were complete, he enclosed his account and advised on the firm's level of fees if retained in relation to the sale of the Glebe property. This answer did not reflect well on the defendant's credit. 45 I accept the plaintiff's evidence that the defendant said he would share the net proceeds of sale of the Glebe property with the plaintiff. That statement was not itself enforceable because it lacked consideration. It was, however, indicative of an acceptance of obligation arising from the nature of the interest held by the defendant in the property. 46 Following the death of Mr Hale senior, Mrs Hale senior went to Brisbane. A unit in Indooroopilly was purchased for her to live in. It was purchased in the joint names of the defendant and Christine Ellen Hale, his wife. The plaintiff said that the defendant proposed this to her saying that when the Glebe property was sold he would transfer the Indooroopilly unit into the joint names of the plaintiff and himself. 47 The Indooroopilly unit was purchased on payment of $20,000.00 and borrowings of $135,000.00. The plaintiff said she was not told of the borrowing. The defendant denied her lack of knowledge. 48 After the sale of the Glebe property, the plaintiff said she asked the defendant how much she was getting from the proceeds and was told about $30,000.00. She said it should have been over $100,000.00. The defendant said that he and Mrs Hale junior had bought a house in Kenmore and he could not afford to pay more. He said he would give her $55,000.00 and next time she was in Brisbane he would arrange to change the ownership of the Indooroopilly unit and give her a larger share of it. The defendant denied these conversations. 49 The plaintiff went to Brisbane to attend the defendant's 50th birthday party. On driving her to the airport for her return to Sydney, the plaintiff said she asked the defendant when she was getting the $55,000.00. He said she should have asked earlier. He would post it. He said that next time she was in Brisbane, he would arrange for the transfer of the Indooroopilly unit. 50 Shortly after this conversation the defendant wrote to the plaintiff enclosing a cheque for $55,000.00 saying: "Wish you had told me to do the cheque ready for the airport. It would have been a lot easier". 51 The defendant denied he had any conversation with the plaintiff on the way to the airport about money or the transfer of the Indooroopilly unit. In cross examination, however, the defendant agreed that on the way to the airport the plaintiff had asked: "Where is the cheque" and he said she should have asked for it earlier. He would post it the next day. When it was put to the defendant that the letter suggested an obligation on his part to pay the plaintiff, he replied: "Well, I probably said on my birthday I was going to pay her $55,000, but this is what, three days before it". 52 In re examination, the defendant gave a long explanation of his determination to make a gift to the plaintiff of $55,000.00: "Q: You were asked a question in relation to $55,000 and the cheque that you sent to your sister, Sandra? A: Yes. Q: Can you tell the court what that was for? A: Oh-boy. It is a long story but what happened was that - I think we have all agreed that Brown's, I said I concede that I should - not should, let's not say that in court. I felt I ought to - or, no, I felt I might give Sandra some money. The reason for it is because Sandra had been nagging Mum about the joint accounts and I think Sandra expected some money from Dad. I know that I spoke to my father before he died about giving my children I think it was $3,000 a piece for encouraging them to go to university. And I suspect if there was a real will, which I suspect is still around with witnesses - that's probably gone now - it may have had some reference to money to be given to my children, myself possibly and certainly Sandra. When I had all this money and I am earning so much money at Optus, all the rest of it, I was in a generous mood and I felt like giving my sister some money. The negotiations went on. Sandra told me she wanted to do up her kitchen; she mentioned sums of 25 to $30,000. My mother got into a piece of this and she was saying it would be nice to give Sandra some money. She was referring to a mortgage that Sandra still had remaining, which was 25, $30,000. I spoke to my wife about whether we had enough money to give Sandra anything. Then there was my mother coming into the picture again trying to get me to agree to give Sandra some money. Although I was well-disposed we hadn't decided on how much. She said that Sandra would - because she had nobody to pass her estate on to, would pass her estate onto the children and this was something Mum and her were talking about. So I spoke to my wife again. We sat down and over a week or so we hammered and ahhed ( sic ) about how much money we would give. We decided to give - what was it? - $25,000 for the mortgage, $30,000 for the doing up the kitchen, so that Sandra would have her house as good as the place that we were expecting to get when we finished renovating. We had enough money in the accounts to finish the renovations. The renovations were going well. I had a new job starting at University of Queensland with an incubator earning lots of money and was expecting to go a long way with it EFU and everything looked fine and it seemed a perfectly legitimate thing to do at the time. Maybe I've changed my mind. But that's what happened. I don't see anybody at any time in all this say that I was paying off a debt. If somebody was saying I was paying off a debt I would not have given them a sum of anywhere over $10,000 without asking for a receipt. It is also strange the person who claims that they got $55,000 part payment didn't write back to me saying how much more I owed." 53 This garrulous response was typical of the evidence given by the defendant. It was also indicative of snide innuendo against the plaintiff that peppered his evidence. 54 The plaintiff said her mortgage was $55,000.00, she never alleged she owed $35,000.00 and she never said she needed a further $20,000.00 for kitchen renovations. 55 I do not accept the defendant's explanation for the $55,000.00 payment. He had purchased the Kenmore house and paid $20,000.00 on the Indooroopilly unit. Mrs Hale junior confirmed that the Kenmore house was not mortgaged. In my view, the defendant would not have paid his sister unless he felt he had an obligation to do so. Such an obligation was consistent with the plaintiff's case. It was inconsistent with the defendant's case. 56 The plaintiff was an impressive witness and where her evidence differed from that of the defendant I preferred her evidence. It had the backing of the bulk of the objective evidence, little though that was. 57 When Mrs Hale senior was hospitalised in Brisbane, the plaintiff went to visit her. She said it was during this visit that she learned that the Indooroopilly unit was mortgaged. She said she put to the defendant that she wanted an acknowledgment of a debt from him that he could pay off over three years. 58 Mrs Hale senior wrote her will while in hospital. She flew to Sydney with the plaintiff and was admitted to a nursing home. She did not return to the Indooroopilly unit. 59 The plaintiff said she learned that the Indooroopilly unit was mortgaged from Mrs Hale junior. In this she was mistaken. Mrs Hale junior gave evidence that she did not say that the defendant had only paid a deposit on the Indooroopilly unit. There was a discussion in which the plaintiff demanded money from the defendant. Mrs Hale junior said that the plaintiff was angry, agitated and demanding. I had no reason to doubt the veracity of the evidence of Mrs Hale junior. I preferred her recollection of the conversation to that of the plaintiff. But that did not cause me to doubt the plaintiff's evidence overall. The evidence of Mrs Hale junior was confined to one incident and accorded in general terms with the plaintiff's assertion that her claim upon the defendant was discussed with Mrs Hale junior on that occasion. 60 The will of Mrs Hale senior devised and bequeathed the balance of her estate both real and personal, including the entire proceeds of sale of the Glebe property, to the plaintiff and defendant equally. Those gifts were inconsistent with any belief on the part of Mrs Hale senior that the Glebe property belonged to the defendant and Mr Hale senior merely held an interest as trustee for the defendant. 61 Costa Sirris, who lived close by the Glebe property, became friendly with Mr Hale senior. He gave evidence that over a 10 year period from March 1986 on perhaps two occasions, Mr Hale senior said something like: "Terry bought the house" and "Terry owns the house". They were comments made in the course of conversations, the exact terms of which Mr Sirris did not remember. 62 There was nothing to suggest that Mr Sirris was other than a truthful witness. I did not doubt that he had a recollection of Mr Hale senior making observations about the defendant's connection with the Glebe property. That evidence was clearly supportive of the defendant's case. However, the statements were inconsistent with Mr Hale senior's informal will. If Mr Hale senior had said the defendant had bought the house while he was overseas the inconsistency disappeared. Because of the weight of the evidence against the defendant's case, I formed the view that Mr Hale senior said something like "Terry bought the house" but not "Terry owns the house". In my view the latter was a conclusion drawn by Mr Sirris from what was actually said. Understood in this light the evidence of Mr Sirris was not inconsistent with the plaintiff's case. 63 The testimonies of the plaintiff and the defendant were diametrically opposed. I formed an unfavourable view of the credibility of the defendant. His non-responsive, gratuitous comments against his sister during his oral evidence and his embellishment of facts asserted in support of his case, led me to conclude that he was seeking to damage the plaintiff's case and to advance his at every opportunity. More importantly, the objective evidence available supported the case of the plaintiff. I find in favour of the plaintiff and reject the defendant's evidence. In my view the defendant held his interest in the Glebe property on trust for Mr Hale senior. 64 I will make a declaration that the defendant holds the remaining balance of the half share of the proceeds of sale of the Glebe property on trust for the plaintiff and I will make orders in support of that declaration. I will hear the parties on the appropriate terms of those orders and I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons.

Last Modified: 04/16/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.