Plaintiff v Defendant

Plaintiff v Defendant - [2010] VSC 543 - VSC 2010 case summary — Zoe

[10]

8 As advanced in his counsel's final submissions, the plaintiff's principal factual case, in short, is that in 1972, while the family was living in rented accommodation, he and his father, Herman Senior, together bought a 10 acre rural property in Christmas Hills for $6,000 on vendor terms, half each; that they sold this property in 1973 for $9,500; that at about the same time they found the house property in question at 29 Argyle Street, Moonee Ponds; that they agreed to purchase it together, half each; that the price was $15,300; that with the benefit of the net joint proceeds of the sale of the Christmas Hills property they could and did contribute $3,800 between them towards an upfront payment or payments for Argyle Street, while the balance needed to be financed; that no suitable financier would lend to Herman Senior because of his then age (54 years); that the financier with whom they were dealing required that the plaintiff be the sole borrower and the sole registered proprietor; that this proposal was put into effect and the plaintiff became the sole registered proprietor of the property accordingly, although the agreement between the plaintiff and his father remained the same; that thereafter each contributed half of the mortgage repayments until the loan was repaid, early and in full, in 1978 and the mortgage was discharged; that on 14 November 1978 the plaintiff's parents lodged at the Land Titles Office a caveat dated 3 November 1978 which referred to a (now missing) deed of trust of the same date which recognised the 50/50 ownership arrangement; that from 1973 until 1983 the plaintiff and his father each performed significant maintenance and repair tasks at the property and bore the costs of outgoings and maintenance on the property equally; that save for one brief period in 1982 the plaintiff lived in the house with his parents until 1983 when he moved out to live with a woman to whom he was engaged called Wendy McPherson (now his wife); that upon moving out the plaintiff ceased to contribute to outgoings but continued to visit the property from time to time to perform maintenance and repair tasks; that the plaintiff remained the sole registered proprietor of Argyle Street until 1984; that in 1984 the plaintiff was about to be married to Wendy McPherson; that the plaintiff's father disapproved of the proposed marriage and was concerned that it might jeopardise his and his wife's security of tenure of the house; that in those circumstances he requested the plaintiff to transfer the title to him and Maria as joint tenants; that he told the plaintiff, in the presence and with the agreement of the defendant, that if he did so half of the property would be held in trust for him and that he would be well taken care of, meaning that this arrangement would be reflected in his parents' wills; that the plaintiff agreed to this arrangement and executed a transfer of land accordingly; that the plaintiff continued to perform maintenance and repairs at the property until diagnosed with his brain tumour in 2002; that it was always agreed and understood that the plaintiff's half interest was subject to an entitlement in his parents to have the use and benefit of the property as a whole for as long as they lived; and that the defendant acknowledged the trust in writing when she signed the statutory declaration in 2005.

[11]

9 As mentioned above, neither the defendant nor her litigation guardian gave evidence. The following summary of her factual case is based on her pleadings, the (limited) evidence called on her behalf and her counsel's submissions. She denies that the plaintiff actually contributed any money to the purchase of the Christmas Hills property. She denies that any of the proceeds of sale of Christmas Hills were used (by anyone) to purchase Argyle Street. She alleges that her husband provided the whole of the deposit for Argyle Street on behalf of himself and herself and that the only reason why Argyle Street was put in the name of the plaintiff was because her husband was too old at the time to qualify for a long term loan. She denies that the plaintiff contributed to any mortgage repayments. In these alleged circumstances she asserts that between 1973 and 1984 the plaintiff as registered proprietor held the entirety of the property on a resulting trust for her husband and herself.[4] She alleges, in effect[5] that the (missing) deed of trust and the caveat dated 3 November 1978 both asserted that the plaintiff held all, not merely one half, of his interest in the property on trust for his parents. She denies that the plaintiff ever paid any outgoings or maintenance costs and asserts that her husband paid all outgoings and maintenance costs. She says that while the plaintiff may have performed some maintenance of or repairs to the property, he did so gratuitously as the son of his parents and in lieu of board, and that otherwise Herman Senior attended to all maintenance of the property.[6] She says, further or alternatively, that if the plaintiff had any beneficial interest in the property it was an interest as to only one-third, not one-half,[7] and that the plaintiff transferred any such interest to his parents as a gift.[8] She denies that in 1984 (or at any other time) her husband gave any warranty or made any statement to the effect that half (or any part) of the property would be held on trust for the plaintiff. Accordingly she denies that any question of a life interest or the like arose. She contends that the circumstances surrounding the signing of the statutory declaration were most unsatisfactory, having regard to her and her husband's frailty and age, the absence of independent legal advice, and certain statements of comfort made by the plaintiff to induce her and her husband to sign it.

[100]

60 Under cross-examination, after dealing with some separate matters, Mr Koltay was taken to the letter of 20 November 1978 which referred to the lodging of the caveat of 3 November 1978. He said that the signatory of the letter was his then partner, Ted Myers. He agreed that it was probably Mr Myers, rather than Mr Koltay himself, who had handled the 1978 matter generally. He could not explain why the caveat referred to a deed of trust, whereas the letter did not. Turning to the correspondence of 1984, he could not identify the author or the reference details of the document dated 6 September 1984 or of the document dated 17 October 1984. He said that there had been four lawyers and "14 girls" working in the office. Sometimes there were irregularities with reference details. He agreed that the (unknown) author of the asterisked note on the memorandum of 6 September 1984 must have assumed that no stamp duty would be payable because the author apparently thought that the transfer was a transfer of the legal title to the actual beneficial owner. He acknowledged that the author of the letter of 17 October 1984 must have proceeded on a different basis. He agreed that the use of the word "appears" in the letter of 17 October 1984 suggested that the author was uncertain as to the meaning of the trust deed to which reference was being made.[55] He agreed that there must have been a query from the State Revenue Office. He agreed that the sentence which read "This one-third share in the land is to pass as a gift to the transferees" was plainly inconsistent with the letter of 20 November 1978.[56] A theory concerning possible confusion with other Schweitzer land transactions was put to him by counsel as a possible explanation for the author's reference to a ⅓interest. Mr Koltay did not accept that theory, although he later agreed it was one "plausible" explanation among others.[57] He was then taken to the letter of 14 November 1984. He acknowledged that it bore his own signature. He said that he believed he had come into the matter because delicacy was required in dealing with the State Revenue Office. He agreed that the terminology of his letter of 14 November 1984 was "entirely consistent" with the letter of 20 November 1978 to Herman Senior which had said that the plaintiff was "to hold one half of his interest in the said land on trust for yourself and Maria Schweitzer".[58] Mr Koltay then said that there may be a "possible" or "plausible" explanation for the apparent inconsistency with the letter of 17 October 1984.[59] His evidence about this was quite unclear, save that it seemed to involve attributing to someone at Koltay and Myers a decision to accept a ruling of the State Revenue Office that was neither as favourable nor as disadvantageous to the client(s) as it might have been. In final submission, neither side really sought to elucidate or to adopt Mr Koltay's "possible" or "plausible" explanation, whatever it was.

[128]

72 Turning to the acquisition of Argyle Street and the use of the Christmas Hills proceeds for that purpose, the plaintiff's evidence in chief was along the following lines.[71] After the plaintiff and his father sold Christmas Hills they were looking for a family house. In discussions between him and his father it was said that the house had to be big enough for the family and that the two of them were to buy it "50/50". The plaintiff was only free to look for houses on Sundays because he worked Monday to Saturday. On one such Sunday he and his mother, Maria, travelled to Moonee Ponds and found the house at 29 Argyle Street. He had driven there in his own car with his mother. The house was unoccupied. It needed work, especially painting. It was weatherboard. They told Herman Senior (presumably by phone) that they had found a good house and started driving home. They were involved in an accident on the way home. Maria was injured. Afterwards Herman Senior said: "Yes, we will buy it". Herman Senior, alone, handled all of the negotiations with the vendors and the agent. He told the plaintiff about them. The price was $15,300.[72] The plaintiff and his father had verbally committed to the purchase but had paid no deposit and had signed nothing. To fund the purchase, the plaintiff and his father went (physically) to the Keystone Permanent Building Society in the city. Herman Senior wanted to take out the finance in his own name alone. The plaintiff does not know why. Herman Senior was unsuccessful in that regard. So the plaintiff made the application, and got the loan. The plaintiff has no knowledge or recollection of the legal firm Wray-McCann and O'Doherty which was apparently acting for the family in the purchase. Herman Senior handled the legal side of it. The plaintiff does not recall signing a contract of sale.[73] He thinks that his father ensured that the vendor was paid by the Building Society. The amount of the loan was $11,500.[74] The difference between this figure and the purchase price of $15,300 (namely $3,800) was paid from the money that they had left over from the sale of Christmas Hills. That money was "in the bank", meaning a bank account of his parents. The plaintiff himself did not have a bank account at the time. The plaintiff is not sure whether there was any surplus of the Christmas Hills proceeds left after the vendors of Argyle Street were paid. Keystone required the plaintiff to take out a life insurance policy to cover the loan, and he did.[75]

[186]

108 Turning to controversial matters, the plaintiff gave the following further evidence in chief about the circumstances leading up to and surrounding the 1984 transfer.[132] Once the plaintiff commenced making mortgage payments on Busch Street he told his father he could no longer meet the outgoings on Argyle Street and that his father should take in boarders, but that he would continue to help physically with repairs and maintenance. He told his parents about his engagement to Wendy. It was Herman Senior's idea, not the plaintiff's, that the plaintiff should transfer the property to his parents. The reason Herman Senior gave was that Wendy was a gold digger and he wanted to protect his half of the house from Wendy and from the plaintiff. He added that Wendy was Australian (not German) and he didn't like Australians. Herman Senior told the plaintiff several times of his unhappiness with the situation involving Wendy. Maria was present during those conversations, which occurred at Argyle Street. The plaintiff initially refused his father's suggestion of a transfer. He didn't want to take his name off the title, because his half of the house was his "insurance policy for old age". However he ultimately did agree to sign the transfer because Herman Senior said to him: "I will keep it in trust for you, and you will be well taken care of".[133] That conversation took place at Argyle Street. His mother was present as well as his father. A few days later Herman Senior produced the transfer document in the living room at Argyle Street. It had been prepared by a solicitor.[134] Herman Senior also produced his then current will and Maria's then current will. The plaintiff checked his father's will. He was satisfied with it. "Indeed he had protected my half ... ". "He had willed half to me in his will". The will said that Herman L Schweitzer "is a half owner of the house".[135] The plaintiff did not look at his mother's will. Once he had looked at his father's will, he signed the transfer. His relationship with his mother at that time was very good. His relationship with his father was still good. "More so when I signed the paper". His father had been angry that he didn't want to sign it. After he signed it he noticed "relief" in his father. When his father had said that he would hold the property in trust, the plaintiff understood that his half was protected and that he would become entitled to it when his parents were out of the house or deceased.[136] To the suggestion that the transfer may have been a gift to his parents, he said: "No way. No".

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Judgment (355 paragraphs)

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Legislation Cited (2)

Cases Cited (9)