6124/01 DESMOND JOHN LIESCHKE & ANOR V LESTER FERDINAND LIESCHKE
JUDGMENT
1 HIS HONOUR: This is a family dispute about the ownership of farming land. The land is Lot 201 in Deposited Plan 753763, a parcel of 74.56 hectares on Lockhart Road, Walbundrie, called "Welcome West". It was acquired by Ferdinand Andreas Lieschke in 1954.
2 Ferdinand Lieschke's wife was Elvirie Cecilia Lieschke. They had three children, the defendant/cross-claimant Lester Lieschke born in 1943, the first plaintiff/first cross-defendant Desmond Lieschke born in 1945, and the second plaintiff/second cross-defendant Pamela McEvoy (formerly Lieschke) born in 1949. For convenience I shall refer to the members of the family by their first names.
3 Lester claims that in about 1975 his father represented to him that Welcome West would thereafter belong to him, and he says that in reliance on this representation he effected substantial improvements to the land, to his father's knowledge, and thereby acquired an equitable entitlement to it. Desmond and Pamela deny Lester's claim, and say that the ownership of Welcome West passed on Ferdinand's death by his will to Elvirie, and on her death by her will to the three children in equal shares.
4 Ferdinand Lieschke died on 22 April 1997, by his last will leaving his estate to his wife Elvirie, whom he appointed executor. Elvirie died on 26 February 2000, by her last will appointing Desmond and Pamela as her executors and leaving her estate to Desmond, Pamela and Lester as tenants in common in equal shares. Probate has not been granted of either of the two wills.
5 The dispute between Lester and his siblings came to a head in 2001 when Lester made an application for possessory title to Welcome West and contracted to sell the land for $116,000, and on 28 March 2001 Desmond and Pamela lodged a caveat to protect the interest they claim. Lester caused a notice of lapse of caveat to be served upon them, whereupon they commenced the present proceeding, originally seeking only an extension of their caveat. In December 2001 arrangements were made, reflected in orders of this Court, to permit Lester's sale of the land to be settled. Two-thirds of the net purchase money was paid, eventually, into a solicitor's trust account. The amount standing to the credit of that account is now $77,045.61, and the contest is over that money.
6 By a statement of claim filed in March 2002, Desmond and Pamela as plaintiffs seek a declaration that Lester is liable to account to them for two-thirds of the net proceeds of the sale of the property, and an order that Lester pay them the sum of $77,045.61 standing in the solicitor's trust account. By his defence and cross-claim filed in July 2002, Lester admits the contentions of fact in the statement of claim, but alleges that at all material times Ferdinand held the property in trust for him. The cross-claim recites Lester's contentions about his father's representations and his reliance on them, seeking a declaration that he holds the balance of the proceeds of sale of the property absolutely. At the hearing, the only issue was whether Lester could make out the assertions in the cross-claim.
Ferdinand's representation to Lester, and the surrounding circumstances
7 Lester left school in about 1959, aged 16 years, and from that time until recently he has worked as a farmer, initially with his father and from about 1980 for himself. He was married in 1965 and has two children.
8 In about 1961 Lester's grandfather, Paul Herman Lieschke (who died in 1977), transferred to Lester some farming land called Welcome East, which is about 2 km from Welcome West. Lester's uncontradicted evidence is that his father farmed Welcome East from 1961 until he retired from farming in 1980, without paying Lester rent or a share of the revenue or profits from the farming activity.
9 Lester says that his father retired from farming in approximately 1980, about 63 years of age. He says that from the time he commenced working for his father, until the time his father retired, his father did not pay him any wage, nor any share of the proceeds of the farming operation. He says he accepted that position on the basis that ultimately his father would benefit him by transferring farming property to him without requiring payment. He supported himself, and later his wife and family, by obtaining casual work in shearing sheds, by share farming and by truck driving during seasons when farming was relatively inactive. He says he would not have done as he did without the expectation that eventually the land would be his. He was not challenged on that statement in cross-examination.
10 The central part of Lester's evidence is that in about 1975, his father approached him with a Shire of Culcairn rate notice to the land at Welcome West in his hand. Ferdinand handed the rate notice to Lester and, according to Lester's evidence, Ferdinand said "That's yours now. You pay the rates." He understood his father to mean that Welcome West was now his. His evidence is that from the time of this conversation until about five years later when he retired from farming, Ferdinand continued to conduct his farming operations over both Welcome West and Welcome East, and it was only after he retired in about 1980 that Lester was able to farm both of these properties for himself alone.
11 In cross-examination Lester agreed with the proposition that his father told him that Welcome West was his to use. However, observing his demeanour in the witness box, and having regard to the context of the questions, I did not form the opinion that in agreeing with this proposition, Lester was changing his evidence. His intention, in answering the question, was to agree with the proposition that his father told him that the property thereafter would belong to him, to use as he saw fit. It was clear from his evidence as a whole that at no stage did he agree with the proposition that his father said words to the effect that he could thereafter use Welcome West but that Ferdinand would remain the owner of it. Although, at one stage in his cross-examination, Lester gave a slightly different account of the words used by his father, his evidence was at all times consistent on the central point, that his father said words to the effect that the land was his and therefore he should pay the rates.
12 Lester's evidence is that he understood his father would take care of any legalities associated with transferring the land to him. He also said that the first he knew that the land was not registered in his name was when his solicitor obtained title searches for the purpose of selling it in 2001. Counsel for Desmond and Pamela challenged his evidence on this point, and sought to establish that Lester was aware, at all relevant times, that Welcome West belonged to his father and that he had nothing more than the right to use it for farming purposes.
13 Thus, Lester was asked whether he recalled having signed any document when Welcome East was transferred to him, and he said he did not know, but he recalled that the title deeds for Welcome East were given to the bank. He agreed that he had dealt with the bank to borrow money on the security of Welcome East. When asked to explain why he did not follow up his father's representation by seeing to it that Welcome West was transferred into his name, he said he thought the title deeds to Welcome West must have been sent to the bank by his father. He said he did not know whether he had signed any document for transfer of Welcome West to him, but that he sometimes signed documents at the bank without understanding what they were. He said it had never been necessary for him to borrow on the security of Welcome West, because he had enough money from the bank's loan secured over Welcome East.
14 Lester gave evidence that his father transferred a property called Netherby to his brother Desmond, and in approximately 1985 Desmond sold that property and received the full net proceeds of sale. Lester said that in about 1969 he had constructed a house for himself on Netherby, and when Desmond sold the property he had to remove his house. He moved the house, which must have been sufficiently transportable for him to do so, to Welcome East. When asked why he did not move it to Welcome West, he said there was no electricity there.
15 There is evidence before the Court that rate notices were sent to Ferdinand Andreas Lieschke or FA Lieschke care of LF & M A Lieschke from 1981, and there is a handwritten schedule of quarterly payments of rates beginning in 1985 and ending in 1993, prepared by Lester's wife. Lester's evidence is that he knew that Welcome East was in his own name and knew that according to the records of the Shire Council, Welcome West was in his father's name. When asked to explain why, if he was the owner of Welcome West, he did not correct the Council's rates records, he said there was no need to do so until he wished to sell the land in 2001. That is consistent with Lester's evidence that he expected his father to take care of the legalities, and that the title deeds to Welcome West had been given to the bank.
16 Counsel for Desmond and Pamela submitted that care should be taken as to how much of Lester's recollection should be accepted, given that there is no corroboration in crucial respects. He pointed out that no material had been produced with respect to payment of rates before 1981. In my view no significance should be attached to that fact, given the evidence that the Shire Council itself destroyed records after six years. Counsel also drew attention to the fact that in cross-examination, Lester was uncertain as to how the land was used in the period from 1975 to 1980, and could not remember what crops were sown. Again, that seems to me of no real significance. It is not implausible that Lester might have remembered clearly the occasion when his father represented to him that Welcome West was his, but not remember the crops he planted in the five years after the event. He did remember some information about the use of the property during that period, namely that his father grazed about 60 cattle there, which he removed when he retired in 1980.
17 Counsel for Desmond and Pamela drew attention to Lester's evidence that he would not have worked on the farm without payment unless he expected that eventually the land would be his. That, said counsel, is consistent with an expectation that the property would be left to Lester by will, rather than that it had already been given to him. In my opinion the evidence on this point is as consistent with his account of his father's representation as it would be of an expectation to be benefited by will. Lester's point is only that he would not have worked on the land, from about 1959 to 1980, without remuneration unless he expected an entitlement to it in some form or another.
18 Counsel for Desmond and Pamela emphasised that the rate notices issued after Ferdinand's alleged representation to his son were addressed to the father. Particular attention was drawn to the handwritten notes summarising payments, to which I have referred, because the heading of those notes was "FA Lieschke paid by LF Lieschke". I can derive nothing of assistance to the determination of this case from that heading. It does not, in my view, signify that when the list was prepared, Lester and his wife believed that Welcome West was still owned by Ferdinand. The heading may simply reflect what was on the rate notices. Lester's explanation for the rate notices (and therefore the heading to the notes) seems to me to be adequate - that is, he did not do anything about the fact that the rate notices were in his father's name until he decided to sell the property.
19 Lester's credibility as a witness was attacked in two ways, but unsuccessfully. First, when the matter was before the Court on 24 December 2001, he undertook through his solicitor that two-thirds of the net proceeds of sale of Welcome West would be retained in the solicitor's trust account pending determination of the proceeding. In fact, for a while the money was held in an account in Lester's name. It is not clear from the evidence that this was done on Lester's initiative, and in any case the real proceeding began only later, when the statement of claim was filed pursuant to a direction that it be filed by 14 January 2002. I can draw no inference adverse to Lester from these facts. Secondly, when Lester made his application for possessory title he swore a statutory declaration dated 6 August 2001, that he was not aware that anyone other than himself had any estate or interest in the land. His evidence was that he signed this before his solicitor, who read and explained it to him. His case is that, indeed, no one else has any interest in Welcome West. In these circumstances, again, it would be wrong to draw any adverse inference concerning Lester's credibility.
20 I agree with counsel for Desmond and Pamela that care must be taken in assessing evidence in this kind of case, especially where the evidence is given by the person who claims the beneficial ownership on the basis of that evidence, and where the evidence is of a single conversation 28 years ago, which the deponent was asked to recollect only about three years ago. However, Lester gave his evidence clearly and consistently, notwithstanding that he was challenged in cross-examination. Counsel's criticisms of the evidence have been unsuccessful. Lester is a man of the land who, while he has had some limited experience with mercantile transactions (buying and selling second-hand cars for himself, and mortgaging Welcome East), is not a man of any sophistication in legal matters. I regard it as plausible, given his circumstances, that he would have taken his father at his word and acted accordingly, without further exploring his legal position until the need arose to sell the property. I also regard it as plausible that a farmer might make such a representation about farming land to his son, without later getting around to transferring the land, notwithstanding that he transferred Netherby to Desmond. In all the circumstances, I have decided to accept Lester's evidence of the conversation with his father in 1975, in the form given in paragraph 8 of his affidavit.
Lester's improvements to Welcome West
21 Lester's evidence about the improvements he made to Welcome West was not challenged by Desmond and Pamela, and was supported in part by evidence of some neighbours, Robert McClelland, Leo and Bernard Coyle, and Stuart McCall. I accept Lester's evidence on this subject. Conversely, there is no evidence that Ferdinand spent any money on Welcome West after 1975.
22 Lester worked the land at Welcome West and Welcome East with his father for his father's benefit during the period from 1975 to 1980, and for his own benefit thereafter. When his father retired in 1980 he removed all his plant and equipment from the land, as well as his livestock, and did not again enter Welcome West. However, he continued to drive and had reason to drive along Lockhart Road from time to time. In my view it is more likely than not that Ferdinand would have driven past Welcome West fairly often after 1980 and would have seen Lester's improvements to the property.
23 Lester has used Welcome West generally for growing cereal crops, although he has occasionally run cattle and sheep on the land. At no stage did his father ask him to pay rent for the land, or seek to be paid any share of Lester's revenue from his farming operations after 1980. No-one has attempted to challenge his use and possession of the land since 1980.
24 Lester said he began to improve the land immediately upon his father handing him the rate notice. His improvements may be summarised as follows:
· in 1975-76 he cleared about 12 hectares of dead trees and stumps so that this land could be cultivated;
· in 1977 he and a neighbour purchased a pump which they used to draw water from the Billabong Creek, and he laid five kilometres of polythene piping which drew water from the creek into three dams on the land, at a cost of $1,600;
· in 1978 he constructed a 2000 cubic yard dam, and in 1985 he constructed a further 2000 cubic yard dam;
· in about 1982 he constructed a drain which diverted water into dams on the property, and in that year he filled in a "wash out" by carting approximately 100 loads of soil and fill from his other property and then levelling this area with a dozer attachment to his tractor;
· he constructed 600 metres of internal fencing in 1978, and 500 metres of internal fencing in 1987, and 800 metres of boundary fencing in 1990;
· he installed gates at various parts of the property in 1978, 1987, 1990 and 1996;
· in about 1998 he applied 55 tonnes of gypsum to certain low-lying areas of the land at an approximate total cost of $3,300;
· in about 1999 he planted 50 pepper and cedar trees for shade and shelter.
25 This evidence does not deal with the value of the improvements, and puts a cost only on the piping and the gypsum. In my opinion, however, when one considers the general nature of the work in relation to the value of Welcome West as a whole, which was sold for $116,000 in 2001, it is appropriate to infer that the work as a whole amounted to a substantial improvement to the property, rather than merely effort and expenditure on "revenue account" for the purpose of sowing and reaping crops.
The grounds for relief in the cross-claim
26 The cross-claim seeks to derive two representations by Ferdinand to Lester from the conversation in 1975, namely that Welcome West was Lester's, and that at some understated time the property would be transferred to Lester. Having accepted Lester's evidence, I agree that the conversation in 1975 contained an express representation by Ferdinand to the effect that from that point Welcome West belonged to Lester. In my opinion there was no express or implied representation by Ferdinand that he would cause the property to be transferred into Lester's name, but the circumstances in which the conversation took place and, in particular, the handing over of the rate notice, made it reasonable for Lester to expect that his father would attend to the transfer of the land at some time. I accept that Lester did have such an expectation, and eventually a belief that transfer had taken place.
27 The cross-claim asserts an implied agreement arising out of the 1975 conversation, containing an implied term that Ferdinand would attend to all the legal and administrative requirements for transfer of the property within a reasonable period, and it asserts that Ferdinand breached that agreement by failing to attend to the transfer of title. In my opinion the claim based on an implied agreement fails on the facts, quite apart from any issues of absence of writing and part performance. Lester did not give evidence that he said anything at all in response to his father's statement in 1975, let alone anything that might constitute the making of a bargain. On Lester's own evidence, there was no agreement, but only statements by Ferdinand upon which Lester then relied.
28 The only other basis for recovery pleaded in the cross-claim is the making of the two representations to which I have referred, and Lester's reliance upon them and his action to his detriment as a result of them, by making the improvements to which I have referred, and also by paying all rates, taxes and outgoings on the property from 1975 to date (as he did, on the evidence), and by farming the land and carrying out activities on it as if it was his (as he did, on the evidence). The cross-claim asserts that in those circumstances, Desmond and Pamela, as beneficiaries and executors of their mothers will, who in turn was the beneficiary of their father's will, are estopped from denying Lester's entitlement to the whole of the equitable interest in the property.
29 In written submissions, counsel for Lester sought to rely on the principles of resulting and constructive trusts emerging out of such cases as Gissing v Gissing [1971] AC 886, Ogilvie v Ryan [1976] 2 NSWLR 504 and Baumgartner v Baumgartner [1987] 164 CLR 137, but at the hearing reliance was placed on equitable estoppel, corresponding with the cross-claim.
Equitable estoppel