Schmidt v Watkins [2002] VSC 273

Supreme Court of Victoria|2002-07-24|Before: HARPER J

The application for a pension was successful. Although it was assessed on 10 March 1995, it nonetheless became effective as of 9 February that year. It was based upon documentation completed at least in part by the plaintiff, and signed by him opposite the note: "There are penalties for deliberately giving false or misleading information." Yet if the plaintiff did tell the truth when he submitted his application for a pension, he did not tell the truth at the trial. For he insisted in his oral evidence that he and Ms Quinn had remained in co-habitation as man and wife throughout the period from 1989 until her death 10 years later.

The conclusion that no de facto relationship existed between Mr Schmidt and Ms Quinn receives support from two relatives of the deceased. The first of these is Anthony Kennedy, who was a first cousin. The second is Mr Kennedy's wife, Geraldine Kennedy. Each on 24 March 2001 swore an affidavit in this proceeding. Each subsequently gave oral evidence. Each swore that they visited the deceased at the Austin Hospital shortly before she died. Each affidavit gives the date as Wednesday 27 October, although Mr Kennedy refers to what is obviously the correct year (1999) and Mrs Kennedy to what is equally obviously that which is incorrect: the year 2000. This difference in the affidavit material was not explored in oral evidence, and I do not suggest that it should have been. I cannot but remark, however, that the error was of a kind which, despite its obviousness, appeared throughout the affidavit material prepared on both sides for this case.

According to Mr and Mrs Kennedy, the plaintiff arrived at Ms Quinn's bedside while they were still present. He left at about the same time as they, and in the hospital corridor the three paused to speak. Mr Kennedy gives the following account of what happened next. Mrs Kennedy corroborates that account:

"The plaintiff spoke generally about the history of the deceased's illness. He then said 'I don't want you to think that Mary and I have been living together in an intimate relationship. Certainly not. We were only ever business partners. Now she has her own business - Mary Quinn Real Estate'."[45]

Despite the plaintiff's denial that he said anything of the sort, I accept the truth of this account. Both Mr and Mrs Kennedy gave oral evidence at the trial. Both were cross-examined. They were not shaken in their evidence, and were in my opinion impressive witnesses. They are, moreover independent: they have no interest in the outcome of this proceeding. It is true that they were vague about the context in which the statement was made, but that is not surprising. Nor is it surprising that they did not question Mr Schmidt about his relationship with Ms Quinn.

Apart from the evidence of Mr Fyffe, perhaps the strongest point in favour of the plaintiff on this issue is to be found in a document prepared by the second defendant (Mr Ian Watkins) when arranging for Ms Quinn's funeral. In that document there is listed a number of "contacts", including (as I understand it) the names of all those who might have been expected to participate in the service itself. John Schmidt and Ralph Schmidt, the plaintiff's brothers, are separately described - under the heading "relationship" - as "friend"; the plaintiff himself, on the other hand, is described as "step family" - as is the plaintiff's daughter Pamela and his granddaughter (Pamela's daughter) Morwen (as the name is spelt in the document). This seems to me to be a clear indication that the defendants characterised the relevant relationship as more than simply one of friendship.

In this context, the plaintiff also relies upon the fact that he was occasionally entrusted with the care of the defendants' children. They, like Morwyn (as the plaintiff spells her name) were regarded by the deceased as her foster grandchildren. It is submitted that the proper inference is, accordingly, that the plaintiff was not only far more than merely a business partner of the deceased, but indeed lived with him as his wife. Reliance is also placed upon the undoubted fact that Ms Quinn was very fond of Morwyn. Again, I am asked to infer that such affection would not have arisen unless the relationship between Mr Schmidt and Ms Quinn was as the plaintiff described it.

I am not prepared to draw either inference, although I do conclude that the plaintiff was more than a mere friend of the deceased. This is hardly surprising. They lived under the same roof for a lengthy period, and were also business associates on friendly terms. I accept, too, that they frequently dined together at the Taverner's Royal Hotel in Ferntree Gully. They also had a mutual interest in Morwyn, to whom the deceased seems to have become a surrogate grandmother.

There is a deal of support for the proposition that the deceased regarded Morwyn as a member of her "family". In providing in her will for a gift of $25,000 to Morwyn, the deceased included a request that "my trustees take a personal interest in Morwyn and ... advise Morwyn's mother Pamela Schmidt as to Morwyn's schooling and welfare". Moreover, in a document (Exhibit "RS-6" to the plaintiff's affidavit of 31 October 2000) in which Ms Quinn gave the defendants instructions to be carried out after her death, she said:

"I have a photo album for Morwyn, please take photos each year and add to it but keep it safe until Morwyn is 25 ... Remind Morwyn regularly that her Nan loved and loves her!"

Mr Watkins was cross-examined about the document prepared by him for the funeral. As counsel for the plaintiff subsequently submitted, his answers were not altogether satisfactory. He did, however, say that the plaintiff's relationship with Ms Quinn "was somewhere different from just being a friend, because of the relationship between Morwyn and Pam". This is consistent with my own view. The probability is that the deceased regarded Morwyn as a de facto grandchild. And if Morwyn was "family", so in a sense was her grandfather. In my opinion this, more than Ms Quinn's direct relationship with the plaintiff, explains Mr Watkins' document.

In combination, the factors referred to above could not but result in that special relationship which comes with a wealth of shared experience. It is thus almost inevitable that the plaintiff and the deceased became more than mere friends; but that does not make them the equivalent of man and wife - and it does not necessarily evidence a relationship which has given rise to the duty upon which the plaintiff relies. It is a duty, be it remembered, allegedly placed upon Ms Quinn, to make adequate provision in her will for Mr Schmidt's proper maintenance and support.

For all the reasons set out above, I find that there was no relationship of man and wife between Mr Schmidt and Ms Quinn. I also find that whatever relationship did exist between them was not such as to create in the deceased the relevant duty.

I have come to this conclusion after accepting that the plaintiff assisted the deceased to fulfil her duties as vice president, and then president, of the Outer Eastern Branch of the Real Estate Institute of Victoria. I also accept that, for about six months before her death, the plaintiff prepared all the deceased's meals, nursed her (including assisting with her toileting), changed her bed and did the washing. He also took her on outings.

I further accept that, between May 1988 and August 1997, the plaintiff directed to Ms Quinn large sums of money from the business they conducted under the name "Mary Patrick Real Estate". But it was, on the plaintiff's own case, their business, not his. Ms Quinn contributed to the generation of its income. As I understand his evidence, the plaintiff accepts that the deceased acted both as solicitor for the business and also in some capacity which was directly related to that of an estate agent. He also accepts that she was entitled to a share of the profits. Each party contributed to those profits, although the relationship between contributions made and profits received is unclear.

In this context, Exhibit "RS-4" to Mr Schmidt's affidavit of 30 March 2001 is relevant. If it is accurate, it shows that in the period beginning 19 May 1988 and ending on 16 September 1996, Mr Schmidt made payments to Ms Quinn personally, or at her direction, in an amount exceeding $245,000. A portion of this sum, according to the plaintiff, subsidised Ms Quinn's business. The inference is that this was her conveyancing practice; but Mr Schmidt fails to explain the financial relationship between that practice and the estate agency. To the contrary, the only "business" to which specific mention is made in Mr Schmidt's evidence covering this period is that operated under the name "Mary Patrick Real Estate".

Exhibit "RS-4" is not a convincing document. In the first place, it purports to show that between 27 October 1994 and 10 February 1995 Mr Schmidt paid Ms Quinn at least $6,791.66. This, however, was at a time when, according to the information given by him to Centrelink, he derived no income from the business. Indeed, in February 1995 he informed Centrelink that he had derived no income from the business over the last year; and he supplied to Centrelink a letter dated 22 February 1995 from his accountant which contained the following paragraph:

"During the previous 12 months, after attaining 65 years of age, [Mr Schmidt] has to the best of my knowledge, allowed the business to wind down to the extent that income derived from this source is below what he would be entitled to earn and still qualify for the age pension."

In his evidence before me, Mr Schmidt maintained that Exhibit "RS-4" "does not include expenses paid between 30 November 1993 and 25 October 1994 as I cannot locate records for this period."[46] The inference is that throughout that period his payments to her continued more or less at their normal levels. He said nothing to verify his accountant's letter, still less his statement to Centrelink on 17 February 1995 that he had "not had any income" from the estate agency "in the last year."

It remains the plaintiff's case that Ms Quinn received very much more of the profits of Mary Patrick Real Estate than, on a strict application of whatever provisions regulated their distribution, she was entitled to receive. This, it is clear, is what the plaintiff would have me infer. He says that he:

"... started to give Mary extra money from my business. I paid expenses such as quarterly mortgage payments ... utility bills and Mary's secretary's wages. I also paid all of the household expenses ... By approximately 1994, I was dividing the commission I earned three ways. I kept one third of my income for myself, gave one third of my income to Mary and used the balance to pay our business expenses. My income essentially subsidised Mary's business as she used most of her income to pay her secretary."[47]

This passage follows the plaintiffs' account (summarised in paragraph [28] above) of the registration of the business name "Mary Patrick Real Estate", and his reference to the operation of "our business" from her home in Upwey. It precedes the statement that:

"As time went on, Mary became more and more interested in the real estate aspect of the business and did less conveyancing work. By 1997, Mary had obtained her real estate licence. Eventually Mary only did conveyancing for my clients who were purchasing or selling a property and friends or relations."[48]

No explanation is given for the reference, in the preceding paragraphs of the affidavit, to "my business" and "my income" as if they were the exclusive property of the plaintiff. Nevertheless, in cross-examination of Mr Schmidt the following appears:

"Q. So the arrangement you had with Mary Quinn, in relation to Mary Patrick Real Estate, was that you would receive one third of the income? A. Correct. Q. She would receive one third of the income? A. Correct. Q. And a third of it would go to paying the expenses of the business? A. As near as possible; correct. Q. Yes. And I suggest to you that the amounts paid to Mary Quinn and detailed in this exhibit RS-4 ... represent nothing more than her entitlement pursuant to that arrangement? A. Correct."

I accept this evidence. Given its truth, it settles the issue. Even without it, however, I could not accept that Ms Quinn was paid more than she was entitled to be paid. The funds with which she was provided came from a business which she was, with the plaintiff, instrumental in setting up and operating. Its profits were generated, in part, by her. In these circumstances, the plaintiff cannot rely on this point unless he first establishes that the deceased received more than her entitlement. Any evidence to that effect must be examined carefully by the court because the deceased cannot respond to it, and because the applicant is putting forward a serious allegation: that the deceased is in breach of her duty to him. In my opinion, the evidence relied upon by Mr Schmidt falls short of the requisite mark. More to the point, his own evidence is incomplete, conflicting, imprecise and very difficult to follow. It is quite unable to sustain the burden of proof that, if he is to succeed, he must discharge.

For the reasons I have endeavoured to give, the plaintiff has failed to establish either the relationship or the financial contribution on which his case depended. The result is that detailed consideration of the other matters to which s.91(4) of the Administration and Probate Act refers is unnecessary. It also follows that the application must be dismissed.

[1] Hardingham, Neave and Ford Wills and Intestacy in Australia and New Zealand (1st ed. 1983) at 452

[4] Blore v Lang [1960] HCA 73; (1960) 104 CLR 124 at 135 per Fullagar and Menzies JJ.

[6] Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-209 per Mason CJ and Deane and McHugh JJ.

[7] See, e.g., Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-209; White v Barron [1980] HCA 14; (1980) 144 CLR 431 at 456.

[8] Bosch v Perpetual Trustee Co Ltd [1938] AC 463 at 478 (PC).

[11] Grey v Harrison [1997] VR 359 at 365, per Callaway JA.

[15] Second Reading Speech by the Attorney-General (Hon Jan Wade) on the Wills Bill, Legislative Assembly, 9 October 1997, Hansard at 436; see also the Second Reading Speech on the same Bill by the Minister for Small Business (Hon Louise Asher), Legislative Council, 12 November 1997, Hansard at 449.

[16] Hansard (Assembly) at 436; Hansard (Council) at 449-450

[17] Introduction to the first edition (1975) of Meagher, Gummow & Lehane Equity Doctrines & Remedies at vii.

[22] Statute Law Amendment Relationships Act 2001, s.1(2)

[24] Affidavit of Richard Schmidt sworn 31 October 2000, at para.40

[26] Affidavit sworn 31 October 2000, at para.41

[28] Affidavit sworn 31 October 2000 at para.41

[29] Affidavit sworn 31 October 2000 at para.67

[30] Affidavit of Catherine Watkins sworn 11 December 2000 at paras.3 and 4; affidavit of Ian Watkins also sworn 11 December 2000 at paras.1 and 2

[31] Affidavit sworn 31 October 2000 at para.42

[32] Affidavit of Richard Schmidt sworn 30 March 2001 at para.2(a)

[33] Affidavit of Les Fyffe sworn 25 July 2001, para.7

[35] Affidavit of Derek Blackley sworn 7 September 2001 at para.5

[36] Affidavit of Ian Finnigan sworn 7 September 2001 at paras.3 and 4

[37] Affidavit of Gerda Klaver sworn 24 March 2001 at para.3

[38] Affidavit of Geraldine Kennedy sworn 24 March 2001 at para.3

[40] Affidavit of Teresa Giancola sworn 25 March 2001 at paras.2 and 3

[41] Affidavit of Leah Frances sworn 4 April 2001 at para.6

[43] Affidavit sworn 31 October 2000 at para.46

[44] Other examples may be found in the affidavit of Richard Schmidt sworn 31 October 2000 at para.46 of Teresa Giancola sworn 25 March 2001 at para.3; and of Derek Blackley sworn 7 September 2001 at para.5.

[45] Affidavit of Anthony Kennedy sworn 24 March 2001 at para.8

[46] Affidavit of Richard Schmidt sworn 30 March 2001 at para.7

[47] Affidavit of Richard Schmidt sworn 31 October 2000 at paras.45 and 46

I begin with the trite statement that this is a civil case. Each element of the plaintiff's claim must therefore be proved on the balance of probabilities. The first such element is whether the plaintiff is a person for whom Mary Quinn had responsibility to make adequate provision in her will for his proper maintenance and support. The plaintiff claims that he is. He will succeed on this issue if I am satisfied on the balance of probabilities that the allegation is true - or, in other words, that it is made out to my "reasonable satisfaction": see Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362, per Dixon J. "But" (as his Honour continued):

"It is obvious ... that a substantial burden is shouldered by a plaintiff who seeks to establish, after the death of the other party, an oral contract which is said to have been made between the plaintiff and the other party in the absence of any other persons, and by which it is said that the now deceased party agreed to leave valuable property by will to the plaintiff or to transfer property to the plaintiff and others. In the first place, it is impossible in such a case to hear what the other party to the alleged conversation has to say either as to its existence or its terms. Secondly, it is possible for the plaintiff ... with or without dishonesty to give of events occurring many years ago a reconstruction which accords with later events but which the other party is in no position to deny or correct. It is obvious that, in all such cases, the evidence must be very carefully examined, not only from the point of view of arriving at some conclusion as to its honesty and reliability and probability, but also from the point of view of arriving at its proper construction and significance. In Plunkett v Bull [1915] HCA 14; (1915) 19 CLR 544, the High Court drew attention to the dangers inherent in accepting accounts by witnesses other than the plaintiff of alleged declarations against interest by a now deceased person, and in that case Griffith CJ at 547, said that the trial judge 'ought not to have allowed his mind to be influenced by what was, at best, a casual observation made to a person having no interest in the matter, and having no reason to remember the exact words used'. In Birmingham v Renfrew [1937] HCA 52; (1937) 57 CLR 666, a case of alleged agreement to make mutual wills, the court stressed the necessity for clear and convincing evidence not merely to show that an agreement was made and what were its terms, but also to show that (if made) it was made with intent to enter legal relations. Dixon J at 681-682 said: 'Such an agreement can be established only by clear and satisfactory evidence. It is obvious that there was a great need for caution in accepting proofs advanced in support of an agreement affecting and possibly defeating testamentary dispositions of valuable property'."

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