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[2005] VSC 155
Supreme Court of Victoria
2005-05-09
Ashley, J
Original judgment source is linked above.
Trust - Constructive Trust - Jointly owned property - Sale- Improper retention of sale proceeds by one of joint vendors
1 The plaintiff and defendant married in 1971 and divorced in 1980. Part of the property dealt with by orders made in the Family Court of Australia on 25 November 1980 was 145 acres of land (it had on it a house and shedding) at Bacchus Marsh ("the property"). The orders, approving a deed entered into that day under s.87 of the Family Law Act relevantly provided that the property should be transferred into the names of the plaintiff and defendant as tenants in common in equal shares; and that if it was not sold within three years it should be placed for auction without reserve.
2 The property was thereafter transferred into the names of the plaintiff and defendant, but it remained unsold as at February 1997. In the period between late 1980 and mid-1995, I add, the defendant lived and for much of the time worked as a real estate broker in the United States, her main focus being on interior design work to do with sale properties.
3 On her return from the United States in 1995 the defendant instituted proceedings in the Family Court. She had a number of complaints. They were to do with the plaintiff's alleged non-compliance with aspects of the 1980 deed. The defendant at least alleged, as I understand it, that the plaintiff had not made to her certain payments which the 1980 deed had obligated him to make.
4 In the event, both parties being represented, quite detailed orders were made by the Family Court on 3 February 1997. So far as those orders addressed the property they provided that -
5 Further orders concerning the property were made by the Family Court on 3 May 1999 and 2 July 1999. They did not affect the basis upon which sale proceeds, when they eventuated, were to be apportioned.
6 On 3 September 1999 the parties executed a deed[1] which varied, in substance, the orders made by the Family Court on 3 February 1997. The deed was prepared by the plaintiff's then solicitor. The deed by its recitals declared that the defendant was desirous of making further borrowing on the security of the property; and that the plaintiff consented thereto.
7 The substance of the document relevantly provided that
8 Pausing for a moment, by September 1999 the plaintiff had repaid his 50 per cent of the $65,000 borrowing referred to in the February 1997 agreement; and apparently the balance (about $7,000) of the additional borrowing at that time. The borrowings as at September 1999, and the further borrowing contemplated by the 3 September 1999 deed, were borrowings made by the defendant with the plaintiff's consent; borrowings for the repayment of which she alone was to be wholly liable at sale; borrowings in respect of the interest due on which she was responsible save for interest on $32,000. The exception is readily explained. The plaintiff assumed liability to pay interest on the defendant's share, approximately, of the borrowings as at February 1997 as part of the price for his occupation of the property. The balance of the price was payment of rates and other outgoings.
9 The plaintiff remained in occupation of the property until about September 2000. Then he went to live at Bellbrae, near Torquay, in a unit which he had built on a property owned by his third (former) wife, Rhonda Anchen. It is certain that he took with him some furniture, and probably also some rugs, paintings, and light fittings.
10 On 20 February 2001 the defendant wrote to the plaintiff complaining that he had not kept up payment of his (small) share of the mortgage interest. She enclosed also a rate notice and an insurance bill. She further complained that the plaintiff had not been attending to maintenance of the property as was his responsibility. She threatened return to the Family Court if the plaintiff did not abide his obligations.
"At the same time I shall put it to the attention of the Court that you deceived both the Court and me as to your actual financial position at the time an agreement was reached. Several matters include a substantial monetary 'gift' you made to your then wife, Rhonda L. Anchen; the purchase of the property located at 465 Gundrys Road, Bellbrae for the CASH price of $183,000 plus $7,000 stamp duty. This property was purchased on the 4th of February 1997, THE VERY NEXT DAY AFTER OUR FAMILY COURT ORDERS of 3 February, 1997. Also subsequent substantial CASH expenses for improvements of the Bellbrae property AND the brand new residence next to it.
Hopefully we can work things out as we have during the past year and I trust you will take care of the matters above.
As of today, I have still not received any proposal from your solicitor, Andrew Wardlaw regarding your desire for me to buy you out ...? (you suggested $200,000 at 7% interest, all due and payable at the end of a 2 year term) I have not gone ahead with an application for an increase in my loan because of the latter. However, I am still interested in doing so through the party you recommended, but I am awaiting the Second Mortgage proposal before incurring expenses for a new appraisal and solicitors' fees to get the new Mortgage".
12 On 22 and 27 February 2001 the defendant and plaintiff respectively executed an agreement pertaining to the property. The document was typed by the defendant, no doubt after discussion between she and the plaintiff. The gist of the agreement was as follows:
13 I pause for a moment to mention three matters. First, it was common ground that as at February 2001 the defendant was not working. Her only regular source of income was a disability pension of, it seems, a little over $400 per fortnight. Other than that, and any support she was able to obtain from relatives living overseas, her only source of funds was borrowings against her interest in the property. Between February 1997 and the agreement signed in February 2001 the picture was one of the defendant borrowing more and more against her share in the property.
14 Second, the agreement contemplated that the plaintiff would assist the defendant to obtain the new borrowing for reasons both obvious and otherwise. One obvious reason is that a new lender would require documents signed by both owners of the property. Another obvious reason is that the defendant, standing alone, did not have the apparent financial capacity to service a loan of the intended dimensions. Not obvious is the fact, as the evidence showed, that the plaintiff had a history of borrowing from the intended lender, a history which would have given the lender comfort that any liabilities assumed would be met.
15 Third, it was common ground that the plaintiff and defendant believed the property to be worth about $600,000 as at February 2001. The agreement contemplated the sale by the plaintiff to the defendant of his interest for $200,000. That was, though not exactly, the proportion of sale proceeds to which the plaintiff was entitled by the February 1997 orders. So, notwithstanding the defendant's letter of 20 February 2001, which showed her awareness of certain matters now said by her to have led to different and unrecorded agreements later on, the parties then foreshadowed a sale of the plaintiff's interest which did not deviate from that specified in the February 1997 orders. In fact the plaintiff did not thereafter sell his interest to the defendant; but neither party gave evidence that this was a consequence of some later and different agreement between them.
16 Returning to the chronology, a loan was in fact effected with Benefund, in an amount of $260,000. The plaintiff did execute documents as required in connection therewith. On the face of it, understandably, he was a joint borrower. The funds were apparently made available in early September 2001. After the existing mortgage was discharged, the amount remaining was $98,903. This was paid into a bank account established by the plaintiff and defendant in their joint names at the Bacchus Marsh branch of the Bank of Melbourne.
17 The defendant resided at the property from about October 2000 until about September 2003. Within that period of time the property was sold, and the proceeds of sale were received.
18 The contract of sale was dated 14 April 2003. It was prepared by Jillian Thomas, solicitor of Bacchus Marsh. She was initially instructed by the defendant and by a real estate agent who was associated with the purchaser. The agent later retained a different solicitor.
19 According to the contract, a deposit of $70,000, out of a sale price of $700,000, was payable on exchange of contracts, and the balance was payable on 12 August 2003 or earlier by mutual agreement.
20 The deposit of $70,000 was paid, but not as the contract contemplated. On or about 21 March 2003 - that is, before the contract was entered into - a representative of the purchaser gave the defendant $10,000, which she deposited into the joint bank account. The account had been operated upon only by the defendant from the time when it was established.
21 The balance of the deposit was paid by the purchaser to the vendors' solicitor. From the solicitor's trust account it made its way into the joint bank account on 1 May 2003.
22 On about 6 May 2003 the defendant wrote a cheque for $5,000 in favour of the plaintiff. Apparently it was drawn on an account which the defendant had in her own name, and which was used as a repository for her pension moneys. In some way an account maintained by the plaintiff came to be credited with that amount - a circumstance which the plaintiff acknowledged at trial, though not before.
23 Settlement was brought forward to 1 August 2003. That day, an amount of $361,929.65, being the balance of the purchase moneys after allowing for adjustments, discharge of the Benefund mortgage and various legal fees, was paid into the joint account. Also on that day the solicitor sent an appropriate letter to the plaintiff and defendant. It was addressed to "Post Office Box 889 Bacchus Marsh". That was a post office box which the defendant had secured, and which the plaintiff - this was the irresistible inference - never accessed.
24 On about 6 August 2003 the defendant deposited $25,000 to the plaintiff's bank account.
25 Throughout the period when she acted for the plaintiff and defendant in selling the property the solicitor neither saw nor spoke to the plaintiff. She gave hearsay evidence that an employee had spoken to the plaintiff, and had obtained "verbal instructions that he was happy with the transaction".[2] There was no file note of that conversation. The plaintiff gave no evidence about it. Assuming that there was such a conversation, the detail of what the plaintiff said he was "happy with" is unknown.
26 This alleged conversation aside, the solicitor gave evidence of receiving two documents by fax from the plaintiff.[3] Other evidence showed that the two documents were typed up by the defendant and signed by the plaintiff; but that they were not faxed to the solicitor by the plaintiff. More likely, the defendant sent or took them to the solicitor.
27 On 6 August 2003 the defendant transferred $300,030 to the legal firm of Reeves Middleton Young, New Plymouth, New Zealand. The funds were placed on term deposit with National Australia Bank within the firm's trust account.
28 This proceeding was commenced by writ filed 21 May 2004.
29 In the period commencing with receipt of the funds and ending 25 May 2004 the solicitors repatriated the following amounts, expressed in New Zealand dollars, to the defendant:
30 As at 19 July 2004, of an amount of NZ$335,508.81 received at the outset, an amount of NZ$217,416.86 (apparently it included some interest) remained in the trust account.[4]
31 All the circumstances which I have recounted, save where I have indicated a qualification - and excluding, of course, any observations which I made in passing - are undisputed.
32 The plaintiff asserts, in the event, that he was entitled to receive, out of the $700,000 purchase price, $227,097.40, when allowance was made for adjustments and legal fees. But he received only $30,000. So, he says, the defendant wrongly retained, and continues to retain, $197,097.40 of his moneys. She should be held a trustee of those moneys.
33 As a matter of arithmetic the plaintiff's contentions are correct. So also, if the defendant has wrongfully retained an amount of $197,097.40, she should be held a trustee of those funds, the plaintiff being the beneficiary of the trust and entitled to such moneys.
34 A Defence was drawn by counsel and filed in Court. At trial the defendant appeared unrepresented. The detail of the answer to the plaintiff's claim raised on the one hand by the Defence and on the other hand by the defendant at trial did not altogether coincide. That, I think, is a generous description of the situation. Be that as may, the end point of the defendant's case was to contend that in some way the plaintiff agreed, first, to accept responsibility for $130,000 out of the $260,000 borrowing; and second, that he agreed to accept $30,000 from the net proceeds of sale of the property.
35 According to the Defence, the plaintiff orally agreed in August 2001 to be responsible for half the $260,000 loan. According to the defendant's oral presentation, however, the agreement was something which evolved from discussions between she and the plaintiff over a period of months. At other times, to the contrary, she said that it was to be implied from the plaintiff becoming a joint borrower.
36 To this point, were the defendant's case accepted, the consequence would presumably be that the plaintiff's share of 32.5 per cent would be calculated upon the amount of $700,000 less adjustments, legal fees and the amount of $130,000 - rather than being calculated by taking 32.5 per cent of the sum of $700,000 less adjustments and legal fees and then deducting $130,000. But this was not debated. What is clear is that, to this point, the defendant's case could not explain the plaintiff being entitled to only $30,000 of the sale proceeds.
37 The defendant's pleaded case in that connection had two aspects. It was first alleged that on 4 April 2003 the plaintiff orally agreed with the defendant, when at a restaurant, that he would receive $5,000 of the deposit moneys. It was second alleged that on 17 July 2003, again at a restaurant, the plaintiff orally agreed to receive $25,000 of the balance of the purchase moneys.
38 The common thread said by the defendant in her pleaded Defence to explain why the plaintiff would accept a negligible amount in lieu of a quite substantial proportion of the sale proceeds is that she had discovered, progressively after late 2000, a variety of misdeeds engaged in by the plaintiff leading up to the making of the Family Court orders in 1997, misdeeds which had led to the 1997 settlement being effected on a false understanding by her of the extent of the plaintiff's assets. Further, she having become aware of these matters, having put them to the plaintiff, and having told the plaintiff of an intention to return to the Family Court, he had agreed first to assume liability for half the $260,000 loan, and second to accept $30,000 out of the net sale proceeds.
39 This thread also ran through the defendant's oral case. But it cannot be said that the content of the thread was the same. That apart, there was, as will appear, a substantial difference between
40 A matter to which the defendant understandably pointed in support of her case was the plaintiff's failure to commence this proceeding against her until May 2004. The plaintiff's response was that the defendant had caused him to believe that the property settlement would take place in August 2004. Only in April 2004 did he come to understand that settlement had taken place months before.
41 The plain import of the plaintiff's case was that the defendant had deliberately deceived him into believing that settlement was not to occur until August 2004 so that she could dispose of the sale proceeds in the interim. Indeed, he gave evidence that at a meeting in May 2004, before the defendant became aware that he knew that there had been settlement, she had told him that the purchasers wanted a six months' extension on settlement, and asked him if he would agree.
42 The defendant denied any intention to mislead the plaintiff. Why would she have misled him, she said in substance, when the plaintiff had agreed to take that which she gave him? She pointed out, moreover, that she had stayed in Australia throughout; and she denied telling the plaintiff what he had alleged she had said in May 2004.
43 There are a number of odd features about this matter. But in the end I am satisfied, contrary to the defendant's case, that the plaintiff did not agree to be responsible for half the $260,000 loan, nor agree to forego his entitlement under the February 1997 orders as affected by the September 1999 deed and the February 2001 agreement. I consider it very likely that the defendant did form the belief by 2001, and probably the more so by reading documents thereafter, that the plaintiff had cheated her in the property settlement. I further consider it likely that she decided, in effect, to do to the plaintiff what she believed he had done to her. That involved a disposition of the proceeds of sale to her advantage, unknown to the plaintiff.
44 Before going to the considerations which tell in favour of my conclusions, I should say something about two matters: First, a proceeding in the Family Court; second, the witnesses, and the way in which the trial was conducted.
45 As to the first of those matters, there is extant a proceeding in the Family Court by which the defendant seeks relief under s.79A of the Family Court Act on the footing that the property settlement reflected in the February 1997 orders involved a miscarriage of justice by reason of the deficient or deceptive conduct of the plaintiff. That proceeding was commenced in 2004, some time after the proceeding which is now before me. The defendant made application for an order of this Court bringing this proceeding to an end - on the footing that the Family Court alone had jurisdiction to entertain the subject matter of this proceeding. That application was rejected by Osborn, J.
46 My resolution of the substance of this proceeding means, in effect, that subject to the gloss imposed by the September 1999 deed and February 2001 agreement the plaintiff is entitled to receive the proportion of the proceeds of sale fixed by the February 1997 orders. That does not touch the question, however, which the Family Court is seised of - that is, whether the February 1997 orders for some reason worked a miscarriage of justice. Although it may well be that the available funds are shrinking at a rate which would likely make the further prosecution of the Family Court proceeding a sterile exercise, I consider that the defendant should have an opportunity, if she wishes, to seek an order from the Family Court restraining the distribution to the plaintiff by his solicitors of most of the moneys the subject of the orders which I will make. I will therefore order that the solicitors retain the funds for a period after receipt thereof. I said "most of the moneys" a moment ago because the plaintiff has obviously expended a considerable amount, or at least stands to expend a considerable amount, by way of legal fees in connection with the present proceeding. The prospect of him presently recovering his costs from the defendant would seem remote. I think that the plaintiff ought be left with the ability to meet, out of the moneys the subject of my substantive orders, at least part of his likely costs. I will therefore limit the restraint on distribution by his solicitors to an amount of $150,000.
47 I turn to the second of the matters which I mentioned a little earlier.
48 I deal first with the conduct of the trial. The plaintiff was represented by very experienced counsel. The defendant appeared unrepresented. There was thus a gap in conceptual understanding of the trial process, notwithstanding that the defendant impressed me as a person of considerable mental capacity and agility. The gap in conceptual understanding was emphasised because the proceeding derives, as the defendant would have it, upon wrongs done to her over a very long period of time by a person with whom she was once in the closest personal relationship. It was impossible to listen to the defendant and not believe that she has become very strongly focussed, if not obsessed, about those supposed wrongs. That affected the objectivity of her presentation.
49 I turn to the witnesses at trial. There were four only: the plaintiff, the defendant, the solicitor who acted in respect of the 2001 refinancing and in respect of the sale, and a Mr Carson.
50 The last mentioned person, called by the defendant, is a plumber who did maintenance work at the property in the period 2000 to 2002. He also gave a little evidence about the state of the home on the property when it was vacated by the plaintiff in September 2000.
51 I consider that I can confidently accept the burden of the evidence given by the solicitor, Ms Thomas. The reliability of aspects of Mr Carson's evidence, however, was somewhat more problematic. The witness appeared to be favourably disposed to the defendant. His evidence, however, was not of great moment.
52 The plaintiff and defendant were witnesses the reliability of whose evidence was, in my opinion, for different reasons compromised to greater or lesser degree.
53 The plaintiff is a 76 year-old retired surgeon. It seems clear that his financial affairs over a long period of time were quite complicated, and such as would be best understood by lawyers and accountants with expertise in tax minimisation. They were complicated also, it appears, because he married three times, his marriage failing in each instance.
54 It is next apparent that complex arrangements which were in place before and after the plaintiff and the defendant divorced, arrangements which on their face involved the defendant, led to the defendant's attendance being recorded at meetings which she did not attend, and to her nominally participating in or being the beneficiary of a series of transactions which very likely had paper reality only. The plaintiff must have known that some of the paperwork which was created was false. To that extent his credit was impugned. On the other hand, there was a question as to the extent of his understanding of the substance of the many transactions which were apparently conducted over the years. He repeatedly gave evidence that his accountant had assured him of their legality, and cross-examination was insufficiently focussed to give the lie to that evidence.
55 Amongst the plaintiff's financial adventures was his involvement, presumably in the 1980s, in a "bottom of the harbour" tax scheme. According to the plaintiff's evidence, he was caught by retrospectively operating legislation and had to pay, including penalties, well over $100,000 in tax. His involvement in such a scheme can rightly be said to go to his credit; although I think it true to say that there was greater judicial and community tolerance of tax schemes in the 1980s than has been the case in more recent years; and true also that the schemes were essentially lawyer and accountant driven.
56 The plaintiff also revealed in cross-examination that in (?)2001 he was de-registered for three years for illegally prescribing sedatives to drug addicts. Whatever may have been the plaintiff's personal motive in so doing, his action was illegal, and I would assume he knew it to be so. Again, that impugns his credit.
57 Another aspect of the plaintiff's evidence was this: He is now, as I said a little earlier, 76 years old. His memory, particularly in respect of complex financial transactions which occurred long ago, was far from perfect. I should not have expected otherwise. But also in respect of more recent events his memory seemed to be imperfect. I think that the imperfection was real and not contrived; for often enough it concerned matters of no great moment.
58 Turning to the plaintiff's evidence concerning the 2003 contract. A cynic not apprised of all the circumstances might think it improbable that an apparently intelligent and certainly well-educated man would have understood as little about the transaction as the plaintiff averred was case. But the circumstances were unusual. Of this, more later.
59 In all, I consider that the plaintiff's reliability as a witness was compromised to a certain extent - in part because his credit was impugned, and in part because his memory was imperfect. But I also consider that he attempted, in essence, to give me a truthful account of what relevantly transpired between he and the defendant - which is not to say that I accept its accuracy in all respects.
60 I go to the defendant. She is evidently much younger than the plaintiff. She said at one stage in her evidence, I think to deflect any possible criticism, that English was not her first language. I was unimpressed by that piece of evidence. The defendant is evidently a person of considerable intelligence, who used the English language with obvious facility. It was apparent that there was no question which, as a matter of language, she did not understand. Nor did I detect any instance in which she was found wanting in search for a word.
61 There were in my opinion a number of aspects of the defendant's evidence which bore upon its reliability, apart from the unreliable disclaimer just mentioned.
62 First, it was impossible not to conclude, having listened to her cross-examination of the plaintiff, her evidence and her submissions that the defendant has not now become fixated by wrongs allegedly done to her by the plaintiff. That was so strong a sub-text that it seemed to overwhelm any ability she might otherwise have had to give a plain answer to a plain question.
63 Second, the defendant dealt very badly with matters which presented her case with difficulties. For instance,
64 Third, the defendant created a document - I later call it the August 2004 contract - in which she "lifted" a signature page from another contract signed by the plaintiff.
65 Fourth, the defendant's case as developed in her cross-examination of the plaintiff and as she outlined it in evidence-in-chief, did not coincide - quite apart from the fact that neither corresponded with the Defence. Even allowing for the fact that the defendant conducted her own case, the differences were significant. At the most superficial level, the misdeeds which the defendant claimed she had discovered multiplied as the trial proceeded. Often enough it was only after I had reminded her that what could be relevant were matters of which she knew between 2001 and 2003 and which she had taken up with the plaintiff, that she gave evidence that some new matter fitted that template. In some instances other evidence which she gave suggested the improbability of that evidence.
66 Fifth, the defendant undoubtedly accepted $10,000 from the purchaser of the property before the contract was signed. It was paid into the joint bank account. The effect of that deposit was to put the account into credit. By 30 April 2003 that money was gone - but for $9.01. Had the contract not been signed, the plaintiff as well as the defendant would probably have been liable to make repayments. It is very unlikely that the defendant told the plaintiff about that payment. The defendant gave, I add, unsatisfactory evidence as to how it came about that such payment was made. I should think that the defendant asked for it, the joint account then being penniless.
67 I return to my conclusions that the plaintiff neither agreed to accept responsibility for half the $260,000 borrowing, nor to forego his entitlement to the sale proceeds as specified by the February 1997 orders as affected by the September 1999 deed and the February 2001 agreement. The following considerations tend in favour of those conclusions.
68 First, the defendant's allegation that for one or more reasons the plaintiff agreed to bear 50 per cent responsibility for the $260,000 loan which was effected in 2001 stands opposed to the thrust of the February 2001 agreement, which the defendant typed and which both plaintiff and defendant signed. That agreement was made in contemplation of the loan which became the $260,000 loan. It is really inconceivable, when the parties had closely documented previous agreements - against a long background of dispute despite superficially amiable relations at times - that such a profound change from the situation envisaged in a document created by the defendant would have gone undocumented. It was in the defendant's interest to have documented such a change. The plaintiff could always point to the February 2001 agreement.
69 Second, by February 2001 borrowings on the security of the property for which, by a series of agreements, the defendant was alone responsible, totalled over $150,000. The re-financed loan for $260,000 therefore added a little over $100,000 to the existing borrowings. Yet on the defendant's case the plaintiff agreed to bear responsibility for 50 per cent of the overall borrowings.
70 Third, the defendant gave evidence that she and the plaintiff agreed that the loan would be $260,000 and that the plaintiff would take responsibility for $130,000 because, in substance, she had discovered and raised with the plaintiff his giving $130,000 to his third wife - the lady and the plaintiff had by then separated - very soon after the making of the February 1997 orders; and that on him accepting such responsibility she would not be going back to the Family Court.[5] This implies that $260,000 was selected as a multiple of $130,000; and that the plaintiff had reason to be concerned about his gift to his third wife. The plaintiff's evidence has led me to conclude that he did not have reason to be concerned about the gift to his third wife; and I am not persuaded that, save by coincidence, the amount borrowed was a multiple of $130,000.
71 Fourth, the February 2001 agreement was signed shortly after the defendant had sent the plaintiff the letter of 20 February to which I earlier referred. There the defendant had incidentally raised the plaintiff's financial dealings with his third wife. It is notable that by the agreement the plaintiff agreed to sell his interest in the property to the defendant for $200,000 when refinancing was complete. It was common ground that the parties then believed the property to be worth about $600,000. In other words, subsequent to the issue of the plaintiff's financial dealings with his third wife having been raised by the defendant with the plaintiff, they signed an agreement which showed no impact at all of that matter on the status quo.
72 Fifth, at times in her evidence the defendant seemed to suggest that the plaintiff's agreement to be responsible for half the $260,000 borrowing was to be discerned from him signing the loan application and/or other documents as a joint borrower. But as one of the owners of the land he had to sign such documents. Indeed, he undertook to do so in the February 2001 agreement, by which the defendant was to be responsible for all the borrowings.
73 Sixth, the defendant's evidence did not support the plea made by Particular (b) subjoined to paragraph 8 of the Defence.
74 Seventh, the defendant, principally by omissions, made prior inconsistent statements concerning the $260,000 borrowing. In affidavits which she swore on 7 July, 20 July and 17 August 2004 she said nothing, as she admitted[6] about any such agreement - although it must have been relevant to her opposing proceedings for an injunction to restrain disposition of the New Zealand funds. She gave, I thought, unimpressive evidence why she had not thought it to be a relevant matter.[7]
75 Eighth, it was inevitable that much of the balance of funds from the further borrowing, after discharge of the existing liabilities, would be expended on the defendant's upkeep. That seems likely to have been the case in fact, although the defendant estimated that she spent $40,000 on improvements to the property[8] which she claimed increased its value from $400,000 to $700,000.[9]
76 Ninth, the matters which the defendant alleged (at some points in her evidence) had persuaded the plaintiff to bear 50 per cent responsibility for the $260,000 borrowing were not always the same.
The Particulars to paragraph 8 of the Defence referred only to -
But in her evidence the defendant said she had become aware of and had raised a number of other matters with the plaintiff in the period February to August 2001. I set them down, presently without comment, as the defendant described them:
77 The defendant also gave evidence that she and the plaintiff had agreed in 2001, antecedently to him assuming responsibility for half the $260,000 borrowing, that if they sold the property without using an agent she would not take a three per cent commission on the sale price - to which, according to her evidence, she would otherwise have been entitled as the person charged with the conduct of the sale.[20]
78 Tenth, even if the defendant did take up with the plaintiff all or some of the matters which she identified, I consider it unlikely that he would have been moved thereby to accept responsibility for 50 per cent of the $260,000 borrowing. So, for instance,
79 Eleventh, the defendant's evidence has led me to conclude that it is in fact unlikely that she took up with the plaintiff, either before August 2001, or even before settlement of the property sale, some of the matters to which she referred in evidence. It is noteworthy that the matters which she identified emerged progressively through the course of her evidence.
80 Twelfth, the defendant's case with respect to the $260,000 borrowing and the plaintiff's alleged acceptance of $30,000 from the sale proceeds was interconnected. The same matters which allegedly induced the plaintiff to accept responsibility for half the $260,000 borrowing were, on the defendant's account, essentially those which induced him to accept $30,000 out of the proceeds of sale - in each instance the plaintiff's assent going unrecorded.
81 If I was to assume that the defendant raised with the plaintiff, before and after August 2001, the substance of all or most of the matters which she described in her evidence, then depending upon his appreciation of the matters raised the plaintiff might have been induced to do both those things; or neither. But it seems improbable, the threat for non-compliance being the same, that he would have been induced to do one but not the other. In circumstances where I have reached the firm conclusion that the plaintiff did not agree to accept responsibility for half the $260,000 borrowing, that has implications for the disputed question whether the plaintiff agreed to accept $30,000 out of the proceeds of sale.
82 Thirteenth, according to the defendant's pleaded case, she and plaintiff
83 It can confidently be said that the defendant did not give evidence corresponding with those pleas. Insofar as she addressed 2003 at all in her evidence - it was only belatedly, and because, in effect, I insisted that agreements which her Defence pleaded had been reached in 2003 should be raised with her - it was her evidence that, so far as there was any agreement it was reached over the passage of months. I say "so far as there was any agreement" because the defendant's evidence that the plaintiff agreed to accept either $25,000 or $30,000 out of the settlement proceeds was variable. The import of her evidence seemed to be, at times, that agreement was to be discerned from what happened, from the plaintiff accepting what he was given.
84 So, concerning the $5,000, she said that she mailed a cheque to the plaintiff and that "He didn't object to the $5,000, he didn't ask for more".[22] At another point in her evidence she said she had "lent" him that amount;[23] though perhaps she meant "sent".[24] She said, again, that the plaintiff had told her that "he just wanted $5,000".[25]
85 Concerning the $25,000, the defendant variously said that
She had suggested the $25,000 payment some time between April and August 2003, when "in fact [she] paid him the money and he didn't complain".[31]
86 It was evidently the case that the plaintiff and defendant met often enough, at least partly on a social basis, between February and August 2003. Superficially, their relations at the time were amicable. It could be accepted in those circumstances that agreement with respect to the disposition of sale proceeds might have been reached informally between them. But the defendant's apparent willingness to alter the content of her evidence from time to time, and its inconsistency with her pleaded Defence and with accounts deposed to in affidavits does not encourage acceptance of its central theme.
87 Fourteenth, the 2003 agreements as pleaded and the agreement which, let it be assumed, the defendant gave evidence of reaching with the plaintiff were not recorded in writing. The plaintiff was making thereby, as the defendant claimed, a very significant financial concession in her favour. It seems to me extremely improbable, having regard to the history of the plaintiff and the defendant documenting changes in their financial relationship from time to time, that this profound change would not have been mentioned in some contemporaneous document. It is not as if the defendant had previously demurred from setting out her position - witness her letter of 20 February 2001. Moreover, the defendant agreed with me, when making her final remarks at trial, that by 2003 she regarded the plaintiff as being a chronic, habitual liar in respect of their financial dealings. More than ever, I should have thought, some document would have been created which recorded the change in circumstances of which the defendant gave evidence.
88 Fifteenth, the plaintiff accepted that the defendant had told him in February 2003 of her intention to set up a trust in New Zealand; and that he and his daughter would be amongst the beneficiaries. It may be inferred, because a sale of the property was then in contemplation, that the defendant told the plaintiff those things in the context of a likely receipt of sale moneys. The plaintiff's knowledge of the defendant's intentions, however, could not of itself assist a conclusion that he had agreed to accept $30,000 out of the sale proceeds.
89 The defendant, however, gave evidence that she had told the plaintiff of her intention to transfer an amount of $300,000 to New Zealand on "many occasions". One of them was on 17 July 2003, the date on which the plaintiff signed a Transfer of Land.[32] Her reason for not deposing to that circumstance in any of the affidavits which she had sworn in the proceedings (she implicitly accepted that she had not done so) was that she had never prepared an affidavit before.[33]
90 The various affidavits were prepared by experienced solicitors. The conference leading to the preparation of one affidavit, according to the defendant, occupied many hours.[34]
91 In the circumstances described, and having regard to circumstances yet to be detailed, I do not accept the defendant's account of what she told the plaintiff concerning the transfer of a specified amount to New Zealand.
92 Sixteenth, the defendant created several documents which on their face were inconsistent with her case that the plaintiff agreed to accept either $25,000 or $30,000 out of the sale proceeds. Thus
93 On any view those documents were created after February 2003 - that is, after the time when, on at least one version of her viva voce evidence, the plaintiff had agreed to accept $25,000 out of the sale proceeds.
94 Seventeenth, there is no doubt that the plaintiff had no direct involvement in the sale negotiations or in the preparation of sale documents. The defendant alone had contact with the purchasers, and with the solicitor (excepting, on one view of the evidence, a telephone conversation between a member of the solicitor's staff and the plaintiff). Any documents which required the plaintiff's signature were produced for his signature by the defendant, most often if not always on social occasions. Sale proceeds were paid into an account which he did not operate; and in respect of which, from December 2002, it seems likely that he did not receive statements to his own post office box number. The solicitor's settlement letter was sent to the defendant's post office box number.
95 The position was thus one in which the plaintiff might have been misled - whether deliberately or inadvertently - as to the detail of the transaction. I think it likely that the plaintiff was in fact misled into believing that settlement was not due until August 2004; and that this explains - though explanation is strictly unnecessary - his delay in instituting this proceeding.
96 There are definitely factors which militate against such a conclusion. The plaintiff's original signature appears on the operative contract dated (though not by the plaintiff) 14 April 2003. His signature (not, I think, an original) appears also on the s.32 statement attached thereto - which is dated (though not by the plaintiff) 12 March 2003. The plaintiff's signature also appears on a deposit statement made under s.27 of the Sale of Land Act and dated (though evidently not by the plaintiff) 14 April 2003; and on undated Answers to Requisitions on Title.[37]
97 Again, it is apparent from the evidence that the plaintiff signed a Transfer of Land in the course of a day's social and other activities with the defendant on 17 July 2003.
98 Documents signed by the plaintiff apart, it is clear that the defendant made payments of $5,000 and $25,000 to the plaintiff in early May and early August 2003.
99 The document which, on its face, most goes against the plaintiff's argument that he was misled is the operative contract. The other documents which he signed, including the Transfer, would not demand a conclusion that he knew the true settlement date. Likewise, the plaintiff's receipt of moneys - particularly the $25,000 - is not decisive that he knew the true settlement date.
100 The plaintiff denied that he signed the operative contract in complete form. He signed, he said, only one contract; more specifically, the front page of a contract, which page alone was given to him for signature.
101 The plaintiff's signature appears on three contracts - that is, the operative contract, the August 2004 contract, and what I will call the first contract. The last-mentioned document was in the form of the operative contract except that it did not contain special condition 13.1 and 13.2; and that, as produced to the Court, it did not include a s.32 statement.
102 None of the copy contracts provided to the court were bound. It would therefore have been readily possible for the plaintiff to have been presented with, and to have signed, the front page of only one of the three contracts. In my opinion, however, the evidence suggests that the plaintiff in fact signed the front page of two contracts.
103 According to the defendant, the plaintiff signed the first contract - which provided for a settlement date of (on or before) 12 August 2003. Then she prepared the August 2004 contract - having temporarily abandoned the services of the solicitor - in circumstances where the purchasers were looking for a later settlement date. She did so by taking the first contract, deleting the solicitor's name on the front page and using that document as the new contract except for compiling and inserting new Particulars of Sale. On her account, then, she prepared and gave to one of the purchasers, for his signature, a document which on its face but not in truth had been signed by the plaintiff.
104 Comparison of the front pages of the first contract and the August 2004 contract plainly confirms the defendant's account so far as it pertained to the deletion of the solicitor's name and the likely provenance of the signatures of the plaintiff and the defendant. The plaintiff's signature on the operative contract, however, does not appear to be identical to his signature on the first and August 2004 contracts; and, as I have said, the signature on the operative contract is an original. It seems to me then, contrary to his evidence, that the plaintiff must have signed two front pages. The first contract was very likely the first document prepared in point of time. The content of the August 2004 contract, including the plaintiff's signature and the non-inclusion of special condition 13.1 and 13.2 suggests that it was next prepared. It follows that the operative contract was last prepared.
105 The next question is whether the plaintiff was given, as he said, just one page of contract (s) to sign; or the entire documents. I think it likely that he was presented with the entire documents, because I doubt that by April 2003 the defendant had decided to appropriate most of the sale proceeds. Such a decision would have been inconsistent with documents which she created, including the August 2004 contract, in March and April.
106 I therefore consider that it was open to the plaintiff to learn, in April 2003, that the operative contract was to be completed by August that year. I am doubtful, however, whether he ever understood that to be the case. Contrary to the defendant's evidence, I doubt that he was given copies of either the first or the operative contract. In late August or early September 2003 he asked the defendant for copies of relevant documents, including a copy of the contract.
107 I next consider it probable that the defendant deliberately took steps to make the plaintiff believe, at least by the time that she produced the Transfer to him for signature in mid-July 2003, that the contract was to be settled in August 2004. It seems likely to me that the approach of the settlement, which would mark the end of their financial dealings, concentrated in the defendant's mind what she believed was the injustice of the situation; and that, far from causing her to take the matter up with the plaintiff, she decided to deal with things in her own way.
108 True it is that convincing the plaintiff that settlement was to be a year later than was in fact the case would only delay the time at which the plaintiff would become aware of the true situation. True also it is that the defendant did not decamp. But I think that the defendant had considerable confidence in her ability to tell a tale and support it by documents; and it may well be, also, that the defendant believed that within the year she would be able to find documents which decisively made out her grievances against the plaintiff. The plaintiff's account, which was that the defendant told him that there would be a settlement in August 2004, and that the purchasers would lease the property in the interim, seems to me probable when all the circumstances are considered.
109 Now, there is no doubt that there came into the plaintiff's possession a copy of the August 2004 contract; and that he was provided with a copy of the s.32 statement. The latter was dated 18 July 2003, the date having been inserted by the defendant. According to the plaintiff's evidence, he was provided with those documents under cover of a letter from the defendant dated 5 September 2003[38] which commenced by saying
"It has been a long haul, but I'm sure we will get there eventually".
110 The defendant gave evidence that what she relevantly enclosed with the letter of 5 September were copies of the operative contract and the s.32 statement dated 12 March 2003. She explained the first sentence of her letter by saying that what she meant was that there were still things to be collected by the plaintiff from the property, and that there was still cleaning up and other things to be done, she then living at the property under a short-term lease.
111 The plaintiff's evidence seems likely to me to represent the true situation. First, there was no reason for the defendant to have given the plaintiff a copy of the August 2004 contract at any earlier time. It had never operated between the parties. Second, on its face the August 2004 contract suggested that the plaintiff had signed a contract which did not represent the fact. The plaintiff was the more likely to have appreciated that circumstance in March or April 2003 than he was months later. Third, the plaintiff could only have obtained a copy of the August 2004 contract from the defendant. The solicitor did not have a copy. The plaintiff had no contact with the purchasers. Fourth, the August 2004 contract which came into the plaintiff's possession had been annotated by the defendant in a way which would suggest that she was progressively noting its performance. Fifth, the Particular dealing with the time for payment of the deposit gave explanation why the plaintiff had been paid $25,000 in early August 2003 (though it did not explain the earlier $5,000 payment). Sixth, I think it likely that the s.32 statement dated 18 July 2003 was provided to the plaintiff in early September that year. Evidently the defendant had made a copy of the s.32 statement prepared by the solicitor. She had annotated it in a way as might suggest an increase in unpaid rates. It may well be the case also that the document was not signed by the plaintiff, but rather that his signature was 'lifted' by the defendant from some other document. But I make no positive finding in that connection. The potential significance of the s.32 statement dated 18 July was that it might readily sit with a contract which required payment of the deposit by 12 August 2003 and settlement by 12 August 2004. Seventh, the opening sentence of the letter of 5 September seems to me to better fit the plaintiff's version of events. The defendant's version would have been better accommodated by her saying "We are nearly there", or something to like effect.
112 I expressed earlier my conclusion that the defendant set out to mislead the plaintiff into believing that the contract was to be completed in August 2004. I should acknowledge the existence of an alternative explanation of the matter: that the plaintiff came to such a belief without the defendant intending he do so. Such an explanation could possibly obtain in circumstances where the defendant had much, but the plaintiff had little involvement in the course of negotiations, where the defendant at some stage provided the plaintiff with a copy of the August 2004 contract simply as a document which had been created in the course of negotiations, where the defendant dated the s.32 statement 18 July 2003 for some unexplained but innocent reason, where the opening sentence of the defendant's letter of 5 September 2003, though clumsily expressed, intended the meaning described by the defendant, and where the plaintiff misunderstood being told by the defendant that she intended to take a lease-back of the premises. Such an explanation, I consider, would strain credibility. But even if it was the true explanation, it would not gainsay the plaintiff holding the belief of which he gave evidence, a belief which explains - as I have said, strictly unnecessarily - the plaintiff's delay in bringing this proceeding.
113 In the event, the plaintiff is entitled to the relief that he seeks. Subject to anything which either party may wish to say as to form, I will make orders as follows:
(1) Declare that the plaintiff is entitled to be paid the sum of $197,097.40 from the proceeds of sale of the land known as 128 Hopetoun Park Road, Bacchus Marsh in the State of Victoria being the land more particularly described in Certificate of Title Volume 3442 Folio 380 (the property).
(2) Order that the defendant instruct Reeves Middleton Young, Lawyers of 136-138 Powderham Street New Plymouth in New Zealand to pay to the plaintiff's solicitors Coadys by telegraphic transfer a sum equivalent to $A 197,097.40 to the extent that the same is capable of being satisfied by moneys referred to in paragraph numbered 5 of the fax dated 19 July 2004 from those lawyers to Mr Richard Meriene, Exhibit S in this proceeding; and that Reeves Middleton Young make payment accordingly.
(3) To the extent that the amount of - I am not sure of the amount; you find out, Mr Jones, and tell me - held by Taussig Cherie & Associates, Lawyers, of 469 Latrobe Street, Melbourne, on account of the plaintiff's costs in this proceeding is not payable to them after taxation of their bill of costs on a party-and-party basis, and to the extent necessary to satisfy paragraph (1) hereof after payment to the plaintiff's solicitors of the amount referred to in paragraph (2) hereof, order that Taussig Cherie & Associates pay to the plaintiff's solicitors, Coadys, by telegraphic transfer the amount necessary to bring payment to the plaintiff's solicitors for the plaintiff up to $197,097.40.
(4) Judgment for the plaintiff against the defendant in the sum of $197,097.40.
(5) Order that the defendant file and serve upon the plaintiff's solicitors, Coadys, within 14 days an Affidavit stating the whereabouts (including all Account details of any accounts, including account branch and account numbers and branch addresses) of any monies held by or on behalf of the Defendant being part of the proceeds of sale of the Property.
(6) Order that the plaintiff's solicitors retain in their trust account for a period of 14 days after receipt thereof, from moneys received pursuant to paragraphs (2) and/or (3) hereof, an amount of $150,000.
114 I will hear the parties as to interest and costs.
I certify that this and the 3432 preceding pages are a true copy of the reasons for Judgment of Ashley J of the Supreme Court of Victoria delivered on 9 May 2005.
Anchen
Mendes Da Costa [2005] VSC 155