Maxworthy v Maxworthy - [2023] NSWSC 927 - NSWSC 2022 case summary — Zoe

NSWNSWSC

Maxworthy v Maxworthy

[2023] NSWSC 927

Supreme Court of NSW|2022-04-21|Before: Richmond J

View original source

At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2022-04-21

Before

Richmond J

Catchwords

[2001] NSWCA 61 Briginshaw v Briginshaw (1938) 60 CLR 336
[2011] HCA 26 Ciaglia v Ciaglia [2010] NSWSC 341 Cope v Keene (1968) 118 CLR 1
[1968] HCA 53 Georgopoulos v Tsiokanis [2022] NSWSC 563 Hodgson v Marks [1971] Ch D 892 Jin v Yang (2008) 13 BPR 25,523
[2008] NSWSC 754 Jones v Dunkel (1959) 101 CLR 298

Source

Original judgment source is linked above.

Catchwords

[2001] NSWCA 61 Briginshaw v Briginshaw (1938) 60 CLR 336[2011] HCA 26 Ciaglia v Ciaglia [2010] NSWSC 341 Cope v Keene (1968) 118 CLR 1[1968] HCA 53 Georgopoulos v Tsiokanis [2022] NSWSC 563 Hodgson v Marks [1971] Ch D 892 Jin v Yang (2008) 13 BPR 25,523[2008] NSWSC 754 Jones v Dunkel (1959) 101 CLR 298[1959] HCA 8 Kallin Pty Ltd v ACN 107 851 847 Pty Ltd [2018] NSWSC 124 Nelson v Nelson (1995) 184 CLR 538[2011] NSWCA 97Savage v Lunn [1998] NSWCA 203 Spelson v George (1992) 26 NSWLR 666[1992] NSWCA 254 Toll (FGCT) Pty Ltd v Alphapharmm Pty Ltd (2004) 219 CLR 165

Judgment (16 paragraphs)

[1]

Background facts

I summarise the factual background to the dispute as follows noting, where necessary, areas of relevant factual dispute.
John and Eileen married in 1992, and each have children from a previous marriage, but do not have children together.

On 18 May 2004 John and Eileen went to the office of Robert Locke, a solicitor practising in Tamworth, and met with Ms Johanna Gleeson, to provide instructions for the transfer of the Watsons Creek property to Chris. Ms Gleeson is the same solicitor who acted for John and Eileen on the purchase of the Watsons Creek property and was now employed by Mr Locke. Two days later they went back to Ms Gleeson's office where she handed to them a letter in the following terms: Dear John and Eileen RE: INTER-FAMILY TRANSFER TO SON I refer to your attendance at my office on 18th instant to provide initial instructions as to the transfer of your property at Bendemeer to your son, Christopher. I confirm my understanding of the Agreement between yourselves and Christopher:- 1. Your rural block comprised within Certificate of Title Folio Identifier [xx] is wholly owned by yourselves, free and unencumbered. 2. You are transferring the land to your son Christopher James Maxworthy, with no residual obligations, money, property benefit or advantage remaining or to be obtained by you in respect of such transfer. 3. That all costs associated with this transfer of title will be borne by Christopher. 4. The parties hereby acknowledge that all land and water rates, any land tax payable and appropriate insurances relating to the property will be the sole responsibility and obligation of the new owner as at the date of transfer and that any adjustments required with respect to the same will be made between the parties on a mutually acceptable basis. 5. There is no written Contract of Sale between the parties to the transfer referred to herein. Assuming that the foregoing correctly evidences the transaction, I would request the signing of the copy letter herewith and the return of same to my office for filing and safekeeping. You may also retain a copy for your personal file purposes. I also enclose for due signature by yourselves and Christopher, the Transfer document in order to effect the transfer of the land with the Land Titles Office in due course. I confirm receipt of your original Certificate of Title from Messrs Newman & Pengilley and have arranged for Messrs Tremain Prowse, Registered Valuers of Tamworth, to contact you as to the valuation of the property at first opportunity. Once I am in receipt of the valuation report, signed letter and Transfer, I will be in a position to stamp and register the Transfer. Please contact me in the event of any queries. Yours faithfully ROBERT LOCKE ……………….………………. Encls. John and Eileen Maxworthy ………………………………. Christopher James Maxworthy

[3]

The alleged pension belief

John says that in early 2004, he had a conversation with Angela, Eileen's daughter, in which she said to him and Eileen: If you own over five acres of property, you may no longer be entitled to receive the pension. Someone I know had 10 acres, and they were on a pension, and when they found out about them having that much land, they took their pension.
It is not in dispute that at the time of this conversation, John and Eileen were already in receipt of the aged pension, and the only land that he and Eileen owned (apart from the vacant block at Manilla referred to at [40] above) was the Watsons Creek property which was their home. John accepted in cross-examination that from the time he commenced receiving the aged pension in around May 2003, he thought that he could do so while continuing to own the Watsons Creek property. Angela was not called to give evidence and the plaintiffs accept that it should be inferred that her evidence would not have assisted their case: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.
Under the assets test for the aged pension as it applied in 2003, a married couple owning their own home were entitled to the full pension if the value of their assets (excluding the principal home) did not exceed $206,500, and this amount increased to $212,500 from 1 July 2003 and to $217,500 from 1 July 2004 (Ex J).
The "principal home" was excluded from the assets taken into account for this purpose by s 1118(1)(b) of Social Security Act 1991 (Cth) (Social Security Act 1991) which in its form as at May 2003 (and May 2004) provided as follows: (1) In calculating the value of a person's assets for the purposes of this Act … disregard the following: … (b) if the person is a member of a couple--the value of any right or interest of the person in one residence that is the principal home of the person, of the person's partner or of both of them that: (i) is a right or interest that gives the person or the person's partner reasonable security of tenure in the home;
The expression "principal home" was not defined in the Social Security Act 1991 in its form at the relevant time, but former ss 11(5) and 11(6) indicated what that expression would include, as follows: (5) A reference in this Act to the principal home of a person includes a reference to: (a) if the principal home is a dwelling-house - the private land adjacent to the dwelling-house to the extent that the private land, together with the area of the ground floor of the dwelling-house, does not exceed 2 hectares; or (b) if the principal home is a flat or home unit - a garage or storeroom that is used primarily for private or domestic purposes in association with the flat or home unit. Note: for private land see subsection (6). (6) A reference in subsection (5) to private land adjacent to a dwelling-house is a reference to land that is adjacent to the dwelling-house and that is used primarily for private or domestic purposes in association with that dwelling-house.
The expression "reasonable security of tenure" was defined in former s 11(8) as follows: (8) If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.
Applying these provisions in the present context, as the Watsons Creek property was the place where they lived from May 2003, the effect of s 1118(1)(b) is that the residence on the Watsons Creek property and the adjacent land not exceeding 2 hectares (approximately 10 hectares) would be excluded from the assets test, but the value of the remainder of that land would be included.
It follows that in order to determine whether John and Eileen met the assets test in early 2004 it was necessary to value the land comprised in the Watsons Creek property (excluding the residence and the 2 hectares adjacent to it) and the other assets they owned (and not excluded by s 1118). Bearing in mind that the Watsons Creek property was valued at $110,000 in May 2004, it is not self-evident that in early 2004 the value of their assets exceeded $212,500.
It follows that the words attributed to Angela were inaccurate in referring to 5 acres as the relevant threshold, incomplete and, further, at their highest, merely indicated a risk ("you may no longer be entitled") that John and Eileen would lose their entitlement to the aged pension because the Watsons Creek property exceeded 5 acres.
John's evidence was that as a result of this conversation with Angela he became worried that because the Watsons Creek property was in excess of 5 acres, he and Eileen might not be entitled to continue receiving the aged pension. However, he did not contact Centrelink to confirm his eligibility for the pension, although he accepted in cross-examination that it was possible for him to have done so, as it clearly was. Nor did he seek legal advice from his solicitor, Ms Gleeson, when he met with her on two occasions in May 2004 to discuss the transfer of the Watsons Creek property to Chris. John says that he came up with the idea, without discussing it with anyone else, that he would avoid the problem simply by putting the Watsons Creek property in Chris' name. His evidence about this in cross-examination was as follows: Q. Your evidence is that you thought you could still receive the pension, and still maintain an interest in the land, but you just put it in someone else's name. That's correct? A. Correct, yes. Q. You'd never put a property in someone else's name prior to this time, had you? A. No. Q. Are you suggesting that you personally came up with the idea to put this property in Christopher's name? A. Yes. Q. Your evidence also is that you spoke to no-one else about this personal plan of yours? A. That's right. Q. Including no lawyer; correct? A. Correct.
I regard this evidence as implausible. If John had a concern in early 2004 that he and Eileen might lose their pension due to ownership of the Watsons Creek property, it is likely that he would have sought confirmation of the position before taking the step of transferring the property to Chris.

[4]

Improvements to the Watsons Creek property

At the time John and Eileen purchased the Watsons Creek property, Chris was living at Thelma's Woolbrook property (opposite John's Woolbrook property). Chris visited the Watsons Creek property a week after John and Eileen purchased it. He says that over the ensuing two years he assisted John in the two significant improvements made to the property which were the construction of the woolshed and the renovation of the tin shed into a residence.
Chris gave evidence (which was not disputed) that at the time of the purchase of the Watsons Creek property, he worked at Auswide Interiors and Kingston Interiors in Sydney and that in the course of this work he did plastering and would drive a truck with plaster materials in it; later, instead of staying on the tools, he started a transport business carting building materials for Auswide Interiors and Kingston Interiors and various building suppliers. In the course of these roles, he came into possession of various construction materials, including gyprock, roofing materials (including tin sheets), plaster board, steel frames, and setting compounds.
Chris gave the following evidence of his contribution to the improvements to the Watson Creek property: 1. He said that every second weekend he would drive up to the Watson Creek property from Woolbrook with the second-hand construction materials he obtained during the course of his work and stayed in a caravan on the property. He says that John, Eileen, and Thelma would drive over from Woolbrook to see his children while he laboured and did works on the house and buildings. 2. He said that he constructed the woolshed, which is approximately 10 metres by 10 metres, on the property himself using his own labour and materials he obtained from his workplace or otherwise purchased, such as screw and nails. He estimates spending about $200 on materials. He says that the posts for the woolshed were constructed from timber cut from the property itself. From time to time, John gave him some physical help along with Mr Allen Waters (Eileen's son in law from a previous marriage) and estimates that he spent approximately 100 hours on this over a period of about 6 months. Once the woolshed was completed, John and Eileen kept ewes in the woolshed. 3. He says that John said to him several times while visiting Chris at the Watsons Creek property: "You will get it all back one day son". He says that the corrugated iron for the woolshed was supplied by him which he sourced from damaged roofing iron obtained during the course of his work on renovation of the Horton Pavilion in 1999. 4. In relation to the renovation of the tin shed into a residence, he says that he did significant physical labour on the residence and had some help from time to time from visitors such as Mr Waters. He identifies the works that he undertook as including the installation of the suspended ceilings in the lounge room, replacing the wooden frame with the steel frame, insulating the walls, installing gyprock to make the walls in the extension, putting in wiring for lighting, installing architraves, skirting boards, light switches, down pipes, and laying and installing the tiles in the kitchen, laundry and bathroom. He recalls that Mr Waters assisted with setting the piers for the extension as well as Mr Gavin Noone. 5. He also attended to outside work on a regular basis, including slashing the grass, grading the road with his tractor, undertaking fencing repairs and felling trees on the property which were used for the poles for the woolshed. 6. He says that his father gave very limited assistance, even with very basic tasks, required for the work to both the woolshed and the residence, and would frequently complain about his bad back when it came to trying to help Chris. 7. He says that he and Raelene supplied a lot of the materials and furnishings for the Watsons Creek property including bedding, linen and furniture from Raelene's previous house in Sydney. 8. He says that he attended to farming activities, including drenching, dehorning and marking of cattle, and the neighbours sheared the sheep. 9. Apart from the assistance provided by Mr Waters on two occasions, he says that he never observed John and Eileen's neighbours or Eileen's sons assisting with renovations to the Watsons Creek property.
John's evidence on the matter of improvements to the Watsons Creek property in the period from 1998 to 2000 can be summarised as follows: 1. While Chris attended the Watsons Creek property in the period from 1998 to 2000 on "a couple of weekends a month or maybe one weekend a month" (T69.16), and had access to the building materials identified in the previous paragraph in the course of his work, and stored building materials at the Watsons Creek property including gyprock, tin sheets and steel frames, the only contributions which Chris made to the improvements to the Watsons Creek property in that period were putting in a ceiling to the residence which was defective as it was only 5 feet 8 inches high and helping to put some tiles in the kitchen. 2. John was 60 years old when he and Eileen acquired the Watsons Creek property and had been in receipt of a disability pension since his mid-forties. He was in receipt of that pension because he was considered unfit to perform physical work, as a result of a back condition he identified as spondylosis. However, he did not accept that this condition prevented him from performing physical work required to make the improvements to the Watsons Creek property. 3. He received assistance in the renovation of the shed into a residence from Mr Waters, who helped with the installation of the piers (which were required because the shed was on a sloping site), the building of the frame and the veranda. He said that his neighbours, Collin and Geraldine Stuart, helped to renovate the shed by installing the gyprock and the ceilings.
I do not accept John's evidence regarding Chris' limited involvement in the improvements to the Watsons Creek property. First, I find John's evidence that despite his physical condition he was able to perform significant physical work inherently improbable given that he had been in receipt of a disability pension for some 15 years by the time the relevant work was done. Second, John's evidence as to the help he received from others is not corroborated by evidence from those persons and their absence is not explained. I draw the inference that their evidence would not have assisted the plaintiffs' case. Third, Chris had both experience in building work and access to raw materials needed for the work, and his evidence as to work he undertook on the Watsons Creek property from 1999 (when Raelene first visited the property) is corroborated by Raelene's evidence. While she is not an independent witness, her evidence that from 1999 she observed Chris grading the driveway, renovating the residence (particularly in putting the extensions on for a laundry, a living room and a bedroom), and fixing driveways, gates and water pumps on a regular basis was not challenged in cross-examination. Fourth, I formed the impression that John's answers to the questions in cross-examination on this topic were designed to downplay Chris' involvement so as to advance John's case because of a concern that if he gave credence to Chris' evidence that he did make a significant contribution to the improvements to the property this would undermine the plaintiffs' case that the transfer was not a gift.
For these reasons I prefer Chris' evidence on this issue as summarised in [81] above.

[5]

Issue 1: Did John, Eileen and Chris enter into the Arrangement?

The evidence relied on by the plaintiffs to support their contention that they entered into the Arrangement with Chris is based on two conversations which John says he had with Chris. In addition, there are two further conversations John says he had with his solicitor which are relevant to the signing of the Letter. The first conversation with Chris relied on by the plaintiffs is one which John says occurred in about April 2004, when he and Eileen were at Chris' property at Wingham. John says in his first affidavit that he and Chris had a conversation to the following effect: John: Chris, we could lose our pension because we've got too much land. As you know its useless, and we cannot do anything with it. If we put the property in your name, would that be alright? You'll be minding it for us. Chris: No problem, anything is alright with me. John: I'll get it all fixed up with a solicitor. Chris: Whatever.
The second conversation with Chris relied on by the plaintiffs is one which John did not mention in his affidavits, but introduced it for the first time in his evidence in chief at the hearing. He said that it occurred at the Watsons Creek property a couple of weeks after the conversation referred to in the previous paragraph. His evidence was as follows: Q. In that second conversation can you recall what you said to Christopher concerning the transfer of the property? A. Yes. I said that, "You would hold it in ‑ you know ‑ for us and then," how do we say it ‑ "It will still always be ours, of course, but, do you mind?" and he said, "No, I don't mind anything like that." Q. Who said, "I don't mind anything like that"? A. Yeah. He said, "Dad, you just do what you have to do and everything will be fine." Q. What, if anything, did Eileen say to Christopher at that second conversation? A. Probably, "Thank you, Chris." Q. Is there anything else you recall being said, apart from what you've just said, concerning the transfer of the property? A. Not really. As he said, "Just do what you want to do and it will be all right."
Chris denies that these two conversations with him occurred. He said that he had a conversation with his father regarding the transfer of the Watsons Creek property to him in around November 2003 (T343.42) at Chris' home in Wingham to the following effect: John: I think we should transfer Watsons Creek into your name now. [Thelma] wanted us to put it in your name. You are back and forth all the time and helping with the property. We want you to have it. It will be in your name and you will have it for the kids. Manilla is closer to hospitals and medical facilities for us. Chris: Dad, I agree. As long as it is all done legally. John: I've got a good solicitor in Tamworth, Robert Locke. He will do the conveyancing.
Chris also said that he had another conversation with John which may have been in April 2004, in which John said to him words to the effect: "You have the Watsons Creek property, and we will build a new home in town at Manilla so that we can have closer access to hospital and medical facilities".
Chris said that if his father had proposed that the Watsons Creek property would be transferred to him "in name only" to preserve his father's entitlement to the pension he would have rejected it because he would not want to be part of "a scam to cheat the government", and would have told him to check the matter with Centrelink. John's evidence is that he did not check the matter with Centrelink or anyone else, including the lawyer he retained to document the transfer to Chris in May 2004.
The third conversation the plaintiffs rely on is one that John says occurred on 18 May 2004 with a female solicitor employed by Robert Locke, a solicitor in Tamworth. He accepted in cross-examination that this solicitor was most likely Ms Johanna Gleeson. He says the conversation was to the following effect: John: I want to transfer a property to my son because I'm gonna lose my pension otherwise. I want to live in the house and still have control over it, but have it under his name. Ms Gleeson: Not a problem, we can do this for you. A lot of people do the same thing.
I do not accept this as an accurate record of the conversation. First, in his affidavit John could not recall the name of the solicitor he dealt with. It was only in cross-examination that he identified that it was likely to have been Ms Gleeson. Given that he had previously dealt with Ms Gleeson on the purchase of the Watsons Creek property, it is surprising that he could not identify her when he prepared his affidavit but could nevertheless recall the detail of what he said to her.
Second, it is implausible that if Ms Gleeson (who was not called to give evidence) had been told by John that he "wanted to live in the house and still have control over it, but have it under [Chris'] name" that she would have said the words attributed to her and then prepared the Letter. It is apparent from the letter referred to at [33] above. Ms Gleeson was a solicitor with a law degree who had been in practice for at least six years by the time of this meeting and was also a registered tax agent. If John had made the statements he alleges he made a competent solicitor would have raised a number of questions for further discussion: would John's pension really be lost unless he transferred the property to Chris?; what did John mean when he said that he wanted to "live in the house and still have control over it"?; and if the property was transferred to Chris with John retaining control, would this give him an interest in the property with some value which needed to be taken into account in the application of the assets test for the pension? On any view the Letter does not reflect either a right to live in the property or a retention of control. Third, the failure to call Ms Gleeson was not explained and I draw the inference that her evidence would not have assisted the plaintiffs' case.
The fourth conversation the plaintiffs rely upon is one what John says occurred in Mr Locke's office on 20 May 2004, when he and Eileen met with Ms Gleeson who handed him the Letter. John says they had a conversation to the following effect: Ms Gleeson: We need you to sign these. You can read them if you want. John: No, if its right, I'll sign it. Ms Gleeson: It is right. John: OK, I trust you. Ms Gleeson: Can you have Chris sign it as well? John: Yes, I'll have him sign.
I do not accept John's evidence that Ms Gleeson said the words attributed to her. Nor do I accept John's evidence that he and Eileen did not read the Letter before they signed it. First, Eileen's evidence in her first affidavit was that she could not recall whether she read it. Second, John said in cross-examination about this meeting that "I can't remember back then" (see [97] below). I am not satisfied that he can remember whether he did or did not read the Letter around the time he signed it. John accepted in cross examination that his usual practice in the case of a legal document included reading it before signing it (T52.37), ensuring he had a discussion with the solicitor prior to signing a document (T53.1), and reading it after the solicitor has spoken with him about it (T52.47). He also accepted that he had instructed his "lawyer to confirm his instructions in writing" (T108.42-43) and at the time he signed it he knew the Letter was an "important document" (T114.47)). In view of this evidence, it is implausible that John would not have read (or caused to have read to him) the very document he had instructed to be written.
Third, John gave unsatisfactory evidence during cross-examination regarding the circumstances in which he signed the letter. For example (T114.1-23): Q. You had a reasonable apprehension that the letter would contain some legal words; is that correct? A. Yes. Q. Because you knew that your solicitor had put it together for you? A. Yes. Q. So if you had a reasonable apprehension that it would contain some legal words, you would have known to have taken extra care to understand that document, wouldn't you? A. Well, I don't think it worked like that. Sorry. Q. No, I'm asking you the question. A. No. Q. You would have known to have taken care in understanding that document because you had a reasonable apprehension that it would contain legal terms; correct? A. No.
Similarly (T114.41-50-T115.1-2): Q. I take it you started to read it; is that right? A. No. Q. But you knew it was an important document, didn't you? A. Can I explain? Q. No. You knew it was an important document, didn't you? A. Yes. Q. You shouldn't sign a document unless you understood its content; correct? A. Yes. I know I shouldn't have, but I did.
Despite maintaining that he absolutely did not read the Letter (including not even "start[ing] to read it" (T114.41-42)), John's recollection of the balance of the (second) meeting with his solicitor is difficult to accept. In particular, he could not recall what the solicitor said to him (T115.14-32): Q. What else did your solicitor say to you at that particular moment? A. What - what - what's wrote down here, I'd imagine. I can't - I can't remember back then. Q. If you said, "I trust you", to your solicitor-- A. Yeah. Q. --you must have - sorry. What was the basis of you saying to your solicitor, "I trust you." A. Well, I did. She's a solicitor, and she was a nice lady. Q. Mr Maxworthy, there are plenty of nice people, but it doesn't mean that you necessarily trust them; that's right, isn't it? A. Well, I did. Q. I suggest to you that the reason you were happy to sign the document, and that you trusted the solicitor, is that you had the document explained to you; that's right, isn't it? A. No.
It seems to me likely that John cannot remember what he said to Ms Gleeson or what she said to him at either of the meetings.
Shortly after this cross examination, John's evidence completely changed to the Letter being signed in front of a justice of the peace, and not his solicitor, a matter that had not featured in any of his three affidavits (T115.42-50 - T116.1‑2): Q. Do you have a positive recollection of the solicitor being in the room with you as you signed that document? A. No. But actually left there. She had to go away. They were left on a table, and handed to me by their - what do call them? JP or something? And they said, "Sign these. She's already done it." Q. Mr Maxworthy, there's nothing about documents being left on a table with a JP for you to sign in your affidavit, is there? A. I don't think so. I don't think I mentioned it. I didn't think it was necessary. Q. You're mentioning it now. I suggest you're making it up. A. No. I'm not. I don't make things up.
This evidence has the appearance of a recent invention. I regard it as implausible that Ms Gleeson would leave the conference with her clients after leaving the Letter on the conference table and expect them to sign the Letter without any explanation of its contents or being satisfied that the clients had read the Letter which they were being asked to sign as confirmation of their instructions. I also note the reference to a justice of the peace being present is not mentioned in any of the plaintiffs' affidavit evidence and appears to have been invented by John in the witness box. In my view this evidence was an attempt by John to bolster his position that he did not know what he was signing despite the fact that the Letter was intended, at his request, to record his instructions as to the transaction and he attended upon his solicitor for a second conference in which the Letter was handed to him.
John also says that after both he and Eileen signed the Letter, they each signed the transfer, which he also says that he did not read.
John says that a day or so later, he and Eileen drove to a location halfway between Wingham and Nundle where they met Chris on the side of the road, and he then signed both the Letter and the Transfer.
Chris has a different recollection of the circumstances surrounding the signing of the Letter and the Transfer. Chris says that Mr Locke rang him early in the process and said words to the effect "because this is a transfer between related people, the property will need to be valued by a registered valuer, for stamp duty purposes".
Chris recalls going to Mr Locke's office on one occasion in the presence of John and Eileen and signing the Letter, and that Mr Locke said words to the effect "You can all have a copy of this for your records, as you have all signed". He also recalls signing another document at the Watsons Creek property which he believes was the Transfer.
Chris also recalls that after the meeting with Robert Locke he, John and Eileen went to lunch at the nearby Tamworth Hotel.
Chris accepted in cross-examination that he attended Mr Locke's office in November 2008 to sign a general power of attorney in favour of John and Eileen. It is apparent from this document that it was signed by Chris in the presence of Ms Gleeson on 24 November 2008 and that both John and Eileen also signed it on the same day. In view of this, it is likely that Chris' recollection that he signed the Letter in Mr Locke's office on 20 May 2004 is incorrect, and that he has conflated the signature of that document with the later attendance at Mr Locke's office in November 2008. Similarly, it is likely that the lunch he recalls having at the Tamworth Hotel with John and Eileen was immediately after the meeting in Mr Locke's office on 24 November 2008. However, nothing turns on this matter of detail as to where Chris signed the Letter.
Similarly, nothing turns on whether Chris signed the Transfer at the Watsons Creek property (which is his recollection) or beside the road at a location between Wingham and Nundle (which is John's recollection). Given that these events occurred over 18 years ago, it is not surprising that his recollection of them may be unclear.
The plaintiffs submitted that there are two reasons why the Court should prefer John's evidence to that of Chris on the question whether the Arrangement was entered into.
First, reliance is placed on the fact that Chris in cross-examination used precisely the same expression "putting the property into my name" as John did in his evidence as to the conversation he had with Chris in 2004, referred to in [85] above. In cross-examination, Chris gave the following evidence: Q. Mr Maxworthy, your father, says that in or about April 2004, Eileen and he had a conversation with you in Wingham; was there another conversation in 2004 you might be thinking about? A. 2003. Q. You only ever had one conversation? A. There was only one conversation about putting the property into my name, and then in about 2004 it was all started to get legalised.
Later in his cross-examination: Q. But you've described in answer to one of my questions that the property was being put in your name; you agreed that's what occurred, didn't you, that occurred, the property was put in your name? A. It was gifted to me, yes. … Q. My question was do you understand that there is a difference between the property being gifted and put in your name? A. Yes, I understand the difference, but it was gifted.
It was submitted that this evidence is consistent with John and Chris being of one mind that the Watsons Creek property was simply going to be "put in Chris' name" and that this is more consistent with John and Eileen retaining beneficial ownership than with a gift.
In my view, this submission involves giving more significance to the phrase "put into my name" than is justified. It is not uncommon to refer to property being transferred into a name of a family member, by way of gift, as "putting the property into that person's name". True it is that Chris' answer at [110] involved him drawing a distinction between the two, but in my view, there is no necessary distinction and, in light of the other circumstances which I refer to below, any slight nuance in meaning of the expression "put into my name" is not material.
Second, it was submitted the only support for the explanation which Chris gives for the transfer to him of the Watsons Creek property as a gift are his assertions as what Thelma said to him before she died. The plaintiffs submit, and I accept, that the Court should treat with caution statements attributed to a deceased person given that their accuracy cannot be tested by cross-examination: Georgopoulos v Tsiokanis [2022] NSWSC 563 at [75].
Third, the plaintiffs submit that the evidence does not establish that Thelma's money was used to purchase Watsons Creek and that, rather, the inference should be drawn that the proceeds of Eileen's property in Richmond, which sold for $127,000 and Eileen received a net amount of $114,667.25 after expenses, is most likely the source of the purchase price of the Watsons Creek property which was $85,000.
For the following reasons I do not accept John's evidence as to the words allegedly said in the two conversations with Chris set out at [85] and [86] above. First, I am not satisfied that he has clear recollection of these conversations which occurred in 2004. He acknowledged in cross-examination that he had difficulty recalling his conversations with Ms Gleeson around the same time. I do not have an actual persuasion that his recollection of the conversations is accurate: see [98] above.
Second, there are a number of difficulties with John's evidence as to the two conversations on which the Arrangement is based. First, John's explanation for why he put forward the Arrangement to Chris (and Eileen) is that it was his idea as the way to overcome the concern that he had, based on a conversation with Angela, that both he and Eileen would lose the aged pension because Watsons Creek was over five acres. At its highest, John's evidence is that Angela said that they may not be entitled to the pension and that he was worried that he would lose his pension. Recognising this, the "pension belief" as pleaded is merely that John and Eileen believed that if they remained the legal owners of the Watson Creek then they may not be entitled to receive the aged pension. There is no suggestion that Chris contributed to the "pension belief". Angela was not called and I infer that her evidence would not have assisted the plaintiffs' case.
It is highly implausible if John had this worry that he would not seek to confirm whether Angela's statement was correct. John had ample opportunity to do this, either by contacting Centrelink (which had an office in Tamworth) or by asking either Mr Locke or Ms Gleeson for their advice on the issue, particularly as John did have a conference with Ms Gleeson on this very topic in May 2004 before he signed the Letter and the Transfer. Neither Mr Locke nor Ms Gleeson were called to give evidence and their absence is unexplained. In particular, it seems implausible that if Ms Gleeson was told that the reason for the transfer of the Watsons Creek property to Chris was to overcome a risk of losing their pension, that Ms Gleeson would not have advised John and Eileen as to the true position regarding their eligibility for the pension: see [92] above.
Third, in my opinion, the best and most reliable evidence of the intention of the parties to the Transfer is the Letter: see [15] above. It states in clear terms that John and Eileen are not intended to retain any interest in the Watsons Creek property following the Transfer.
For a number of reasons the plaintiffs have failed to establish the Arrangement as pleaded. First, I am not satisfied that there was an agreement between the plaintiffs and Chris in the terms of paragraphs [10(b), (c) and (e)] above. The basis for those pleaded terms is the two conversations referred to at [85] and [86] above which I have rejected.
Second, as the High Court said in Toll (FGCT) Pty Ltd v Alphapharmm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [47] (footnotes omitted): The importance which, for a very long time, the common law has assigned to the act of signing is not limited to contractual documents. Wilton v Farnworth was not a contract case. The passage from the judgment of Latham CJ quoted above is preceded by a general statement that, where a man signs a document knowing that it is a legal document relating to an interest in property, he is in general bound by the act of signature. Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief.
In my view, the Letter is clearly a "legal document" as it was signed for the express purpose of recording the parties' understanding of the agreement between the plaintiffs and Chris regarding the Transfer, which accompanied the Letter. The Letter contradicts the Arrangement.
Third, the Arrangement as pleaded constitutes a contract to transfer the Watsons Creek property to Chris on certain terms, including that Chris will hold the property on trust for the plaintiffs. Post-contractual conduct of the parties is admissible on the issue of whether a contract was entered into: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 at [25]. When the plaintiffs met Mr McHugh in April 2017, they accepted that Chris was entitled to receive and keep the proceeds of sale of the Watsons Creek property, and they did not claim any interest in those moneys: see [56] above. That, at the very least, confirms the conclusion I have reached that it was not a term of any "arrangement" between the plaintiffs and Chris that he would hold the property, or the proceeds of sale, on trust for the plaintiffs.
For these reasons the answer to Issue 1 is no.

[6]

Issue 2: Was the transfer of the Watsons Creek property a gift to Chris?

It is clear that a transfer by way of gift of land registered under the Real Property Act 1900 (NSW) will be effective at law and in equity where the donor delivers the instrument of transfer to the donee, the delivery of the transfer to the donee is done with the intention of "there and then parting with" the donor's interest in the land and the transfer is registered: Cope v Keene (1968) 118 CLR 1; [1968] HCA 53 at 6-7; JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (Lexis Nexis, 5th Edition, 2015) at [6-075]-[6-155]. Given that the Transfer was registered, the critical issue in the present case is whether the plaintiffs had the necessary intention of "there and then parting with" their interest in the land.
In my view this requirement is satisfied as a result of the statement in the Letter that "[the plaintiffs] are transferring the land to your son Christopher Jones Maxworthy, with no residual obligations, money, property benefit or advantage remaining or to be obtained by you in respect of such transfer". I have already said that I do not accept John's evidence of the conversations relied on by the plaintiffs to support their case that they did not have the intention to make a gift. I regard the more reliable evidence of what the plaintiffs intended at the time of the Transfer to be what is recorded in the Letter.
I have given consideration to why John and Eileen would make a gift to Chris of what was then their home. There is no evidence of what the financial position of the plaintiffs was at May 2004, but the evidence establishes that they owned a vacant block of land at Manilla which cost $8,000 and any remaining cash realised on the sale of the other properties they had previously owned; see [39] above. I infer that they did not have significant wealth, as reflected in the fact that they were receiving the aged pension. Nevertheless, they may have had the financial capacity to build a modest home on the block of land at Manilla they had purchased in 2003.
I think the explanation is to be found in three matters. First, it is possible that John was concerned about preserving the pension entitlement of himself and Eileen. That concern would be allayed by a gift to Chris. Second, John and Eileen had acquired a vacant block of land in Manilla in August 2003 and a plausible explanation for this acquisition is that they intended when they acquired it, and still intended in May 2004, that they would build a house on this land to live in once the Watsons Creek property became too much for them to look after. As noted above, Chris gives evidence that John had told him that this was their intention. It is quite possible that there was an understanding between John and Chris (which is confirmed by subsequent events) that John and Eileen would continue to live at the Watsons Creek property until they were no longer able to manage it and when that occurred, they would relocate to Manilla. This informal arrangement would be no more than a licence and therefore would fall short of an interest in the land.
Third, I infer that at the time of the Transfer in May 2004 John and Eileen had love and affection for Chris based on their close relationship at the time and this, together with the contribution which Chris made to the improvement of the Watsons Creek property would justify a gift of the property to him in circumstances where there was an understanding of the kind referred to in the previous paragraph for John and Eileen's continued occupation of the property until they relocated to Manilla.
For these reasons, the answer to Issue 2 is yes.

[8]

Express trust

In relation to the first ground, the plaintiffs' contention that an express trust arose here is put as follows: 1. The critical element for the existence of an express trust here is the existence of an intention to create a trust. An intention to create a trust can be inferred from the full range of relevant circumstances, including the nature of the transaction and the construction of the words used. The plaintiffs rely on John's words to Chris "You'll be minding it for us" in the conversation referred to at [85] above as demonstrating John and Eileen's intention to transfer the Watsons Creek property to Chris for him to hold it on trust for them. It is said that John and Eileen's stated intention was not to place themselves in a position of homelessness by transferring the Property absolutely to Chris, but rather, to transfer the title to him on trust. 2. Chris's statements of assent in the same conversation demonstrate his consent to receiving the Watsons Creek property and holding it on trust for John and Eileen. They also demonstrate his consent to holding any proceeds of sale of the Property on trust for John and Eileen. 3. The defendants cannot rely on s 23C(1)(b) of the Conveyancing Act 1919 which requires there to be some writing signed by John and Eileen to manifest the trust, in circumstances where he knew that the Watsons Creek property was conveyed to him on trust for John and Eileen. Section 23C(1)(b) does not prevent the proof of a fraud, and it is a fraud on the part of a person to whom land is conveyed as a trustee to deny the trust and claim the land himself. The same applies to an undertaking to recognise an interest. 4. Even if s 23C(1)(b) does apply insofar as the trust alleged is an express trust of the Watsons Creek property, there is no writing required to establish the trust in respect of the proceeds of sale of the Watsons Creek property. Both John and Eileen's affidavit evidence makes clear that not only was Chris required to hold the Watsons Creek property on trust, he was separately required to hold any proceeds of sale of that Property on trust. Further s 23C(1)(b) does not affect the creation of resulting trusts (see s 23C(2) of that Act).
This argument falls down at the first hurdle as I have not accepted John's evidence regarding that the conversations referred to at [85] and [86] above, and the existence of an express trust is negatived by the Letter which is a clear statement of John and Eileen's intention not to create a trust.

[9]

Resulting trust

In relation to the second ground, the plaintiffs' contention that a resulting trust arose here is put as follows: 1. A presumption of resulting trust arises where, among other things, one person (or several persons) provide the purchase price of property, which is then conveyed into the name of another person: Ciaglia v Ciaglia [2010] NSWSC 341 at [79]; Business Finance Pty Ltd (receiver and manager appointed) v Partner Invest Pty Ltd (in liquidation) [2022] NSWSC 1 at [74]. 2. This situation applies to the transfer of the Watsons Creek property to Chris. The matters set out at [85] and [109]-[111] above demonstrate John and Eileen's intention was not to transfer their beneficial interest in the Watsons Creek property absolutely. Rather, Chris was to hold the Property on trust for John and Eileen. 3. Moreover, it is not in dispute that the purchase price for the Property was contributed entirely by John and Eileen, and that Chris made no contribution to it. Chris made no contribution to the Property at any time thereafter. Any work that Chris performed in relation to the renovation of the shed or construction of a woolshed is equivocal - he did not give evidence that he performed this work because he owned the Watsons Creek property, or that he expected to own the Watsons Creek property. 4. This is sufficient to establish a presumption of a resulting trust. The Court should find that the Watsons Creek property, and subsequently the proceeds of sale of the Property, was held by Chris on resulting trust for John and Eileen
A resulting trust arises in essentially two kinds of case. The first is where a settlor has transferred property to a trustee but has not disposed of, or not wholly disposed of, the beneficial interest and the second is where a purchaser of property directs that it be transferred into the name of another person and there is nothing to indicate an intention that the transferee is to take the property beneficially: JD Heydon, MJ Leeming, Jacobs' Law of Trusts in Australia (Lexis Nexis, 8th ed, 2016) [12-01]. In my view the second kind of resulting trust, which the plaintiffs' submission recorded at [133(a)] above appears to rely on, does not apply here because the purchase of the Watsons Creek property was completed in May 1998 some 6 years before the Transfer was executed. In any event, such a resulting trust is rebutted here because there was an intention that the transferee take the property beneficially by reason of the Letter.
The first kind of resulting trust is, however, potentially relevant. Relevantly for present purposes, where a person transfers property to another without an intention to make a gift there will be a resulting trust in favour of the transferor: Hodgson v Marks [1971] Ch D 892 at 933; Lynton Tucker, Nicholas Le Poidevin, James Brightwell, Lewin on Trusts (Thomson Reuters, 20th Edition, 2020) at [10-006]. However, for the reasons already given, such a resulting trust does not arise due to the conclusion I have reached on Issue 2.
Finally, I note that there is authority for the proposition that the presumption of a resulting trust which would otherwise arise from a transfer of Torrens System land without consideration to a third party is precluded by s 44 of the Conveyancing Act 1919: Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273 at 280-1; Bhana v Bhana (2002) 10 BPR 19,545; [2002] NSWSC 117 at [15]-[27]; JD Heydon, MJ Leeming, Jacobs' Law of Trusts in Australia (Lexis Nexis, 8th ed, 2016), [12-20]. However, nothing turns on whether a presumption in favour of a resulting trust arose in the present case because based on my conclusion on Issue 2, the presumption (if any) would be rebutted by the actual intention of the transferors.
Hence, the answer to Issue 3 is no.

[12]

Issue 6: Are John and Eileen estopped from asserting their equitable interest in the Proceeds?

The defendants plead that John and Eileen are estopped from asserting their entitlement to the proceeds of sale of the Watsons Creek property, arising from any or all of three representations, being (a) a representation in May 2004 that John and Eileen would transfer the Property to Chris as an absolute gift; (b) a representation culminating in about 2020 that John and Eileen had abandoned their claim to the Watsons Creek property or the proceeds of sale; and (c) a representation by John and Eileen's conduct in failing to stop the defendants from using the proceeds of sale of the Watsons Creek property to construct a residence on the Moore Creek property.
It is not necessary to deal with this defence in light of my conclusions on the other issues but for completeness I will deal with the estoppel claim briefly. I accept that the first of these representations was made but I do not accept that either the second or third representations were made.
However, it is necessary for Chris to demonstrate that he and Raelene acted or abstained from acting in reliance on the representation that the Transfer was a gift: Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428 - 429; [1988] HCA 7. I am not satisfied that this reliance is established. In around June 2017 Chris made an offer to John to apply the proceeds of sale of the Watsons Creek property to purchase a property for John and Eileen to live in. Chris said in paragraph 69 of his second affidavit that "As nothing came of my offer to my Father and Eileen, I used the sale proceeds of the Farm for our home build at Moore Creek". The rejection of Chris' offer was around the same time (7 July 2017) that John and Eileen first claimed an interest in the Watson Creek property and before the completion of the sale of the Watsons Creek property and receipt of the proceeds of sale. Hence, Chris was aware that the John and Eileen had resiled from the representation in the Letter before he used the sale proceeds to build a residence on the Moore Creek property.

Parties

Applicant/Plaintiff:

Maxworthy

Respondent/Defendant:

Maxworthy

Legislation Cited (5)

Conveyancing Act 1919(NSW)

Evidence Act 1995(NSW)

Uniform Civil Procedure Rules 2005(NSW)

Social Security Act 1991(Cth)

Real Property Act 1900(NSW)

Cases Cited (36)

Approach to the evidence

The evidence in this case involves disputed conversations and events which occurred almost 20 years ago. I note the following principles as to how such evidence should be approached.
In Kallin Pty Ltd v ACN 107 851 847 Pty Ltd [2018] NSWSC 124 at [42], Hammerschlag J (as his Honour then was) said: Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the Court, which means that the Court must feel an actual persuasion of its occurrence or its existence. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362, [1938] HCA 34; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.
In Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34, Dixon J emphasised that when the law requires the proof of any fact the Court must feel an actual persuasion of its occurrence or existence before it can be found, and "it cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality" (at 361).
In Watson v Foxman (1995) 49 NSWLR 315, McLelland CJ in Eq made the following well known observations regarding the fallibility of human memory (at 319): … human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
See also the observations of Leggatt J (as his Honour then was) as to the fallibility of human memory to similar effect in Blue v Ashley [2017] EWHC 1928 (Comm) at [66]-[69].
Hence, in commercial disputes the contemporaneous documents, objectively established facts and the apparent logic of events are likely to be the most reliable sources of evidence: Et-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128 [2021] NSWCA 24 at [25]-[29] (and cases there cited).

[1968] HCA 53

[2000] TASSC 160

(2001) 53 NSWLR 153

(1938) 60 CLR 336

(2011) 243 CLR 253

(1968) 118 CLR 1

(1959) 101 CLR 298

(1995) 184 CLR 538

(1997) 42 NSWLR 273

(2011) 80 NSWLR 594

(1992) 26 NSWLR 666

(2004) 219 CLR 165