State of Queensland & Anor v Byers & Ors

REAL PROPERTY - GENERAL PRINCIPLES - INCIDENTS OF ESTATES AND INTERESTS OF LAND - OWNERSHIP - where first respondent transferred title to property to herself fraudulently - where second applicant applied to Court to have Land Register altered to restore ownership of property to former owner - whether order can be made

MORTGAGES - MORTGAGES AND CHARGES GENERALLY - RIGHTS AND LIABILITIES OF MORTGAGOR AND MORTGAGEE - REPAYMENT AND TENDER - REPAYMENT - GENERALLY - where first respondent mortgaged house in 1994 - where the mortgage was assigned by original mortgagee to the first applicant - where notice given of assignment to first respondent - whether mortgage repayable by first respondent to first applicant

EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO THE COURT ON ORIGINATING PROCESS - GENERAL MATTERS - where rental proceeds from property currently held by real estate agent - whether those proceeds are held on trust on behalf of the deceased's estate

SUCCESSION - EXECUTORS AND ADMINISTRATORS - PROCEEDINGS BY EXECUTORS OR ADMINISTRATORS - where first respondent beneficiary under will of deceased - where first respondent convicted of murder of deceased - whether first respondent should benefit under the will

LIMITATION OF ACTIONS - LAND - THE RUNNING OF TIME - WHEN IT BEGINS - when the second applicant and second respondent should have been aware of the fraud of the first respondent - whether their respective applications are statute barred

Evidence Act 1977 (Qld), s 79

Land Title Act 1994 (Qld), s 187, s187(2)(a), s 188

Limitations of Actions Act 1974 (Qld), s 13, s 38

Assets Co Ltd v Mere Roihi [1905] AC 176, cited

Bahr v Nicolay [No. 2] [1988] HCA 16; (1988) 164 CLR 604, cited

Cantrick v Thompson [2004] QSC 341, cited

Friedman v Barrett; ex parte Friedman [1962] Qd R 498, cited

Gibbs v Messer [1891] AC 248, cited

Heron v Broadbent [1919] NSWStRp 62; (1919) 20 SR (NSW) 101, cited

Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, cited

Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407, applied

Re Stone [1989] 1 Qd R 351, applied

Tessman v Costello [1987] 1 Qd R 283, cited

Troja v Troja (1994) 33 NSWLR 269, applied

Waimiha Sawmilling Co v Waione Timber Co [1926] AC 101, cited

Young v Hoger [2000] QSC 455, cited

de Groots Wills & Estates Lawyers for the second respondent

[1] Douglas J: Patricia Margaret Byers was convicted on 6 March 1999 of the murder of Carel Theodorous Gottgens on a date unknown between 2 July 1990 and 7 July 1990 at Yatala. She had been living with him for a number of years before the murder in a de facto relationship in a house at 25 Glen Osmond Road, Yatala. That land was registered in Mr Gottgens's name until 25 July 1990 when it was transferred into the name of Ms Byers.

[2] The main factual issue in this case is whether that transfer was forged by Ms Byers, allowing this Court to correct the freehold land register by replacing her name with his by the power given under s 187 of the Land Title Act 1994. The State of Queensland, the first applicant, also paid out a bank loan incurred by Ms Byers on the security of the land and took a transfer of the bank's mortgage. It seeks judgment from Ms Byers for the amount it paid.

[3] The executor of Mr Gottgens's estate, his daughter Ella Celon, has applied separately for orders excluding Ms Byers from taking as a beneficiary of Mr Gottgens's will and for a declaration that money held by a firm of real estate agents managing the property is held on behalf of the estate.

[4] The transfer was effected by a document dated 18 July 1990 that, on its face, was lodged by Ms Byers, giving her address at 25 Glen Osmond Road, Yatala. It was certified correct for the purpose of registration by her and bore what purported to be the signatures of Mr Gottgens and, as the witness, the signature of Bronwyn Louise Fossey.

[5] Mrs Fossey gave evidence that she could not remember witnessing that particular document and that she did not think that the signature was the same as hers although it was close to her signature. Mr Gregory Marheine, a forensic document examiner, said that the signature purporting to be hers was a "simulated forgery" and that the printing of her name by hand on the transfer was, most probably, not written by her.

[6] Mr Marheine also gave evidence that the signature purporting to be that of Mr Gottgens on the transfer was most likely to be a simulated forgery and unlikely to be a genuine signature. That opinion was qualified because it was based on a microfilm reproduction of the document, the original having been destroyed in accordance with the current practice in the Titles Office.

[7] This is another example of the potential problems for the proof of fraud both in criminal and civil proceedings by the failure of the Titles Office to retain original documents, at least for a reasonable period after transactions have been entered on the computerised land register now used; see Young v Hoger [2000] QSC 455 at [56]- [57]. These facts illustrate that it may cause difficulties of proof not only where the fraud alleged arises in civil cases about title to land but also in criminal cases where greed can lead not just to fraud but to murder.

[8] Mr Marheine also expressed the opinion that the signatures of Mr Gottgens purporting to appear on three original documents proved by a Mr Stewart of "The Pergola Centre" were simulated forgeries in that an attempt had been made by their author to reproduce a signature bearing a pictorial and structural likeness to the genuine signature of Mr Gottgens. Further, he said that all the simulated forgeries displayed an internal consistency in their design and form, indicating that they had been written by the same writer. The evidence of Mr Stewart was important because he was able to identify Ms Byers as the person who had written the signatures "C. T. Gottgens" on those three documents in his presence. She had negotiated with him for the construction of a pergola at the Yatala property in late November 1990. The documents included an American Express docket, a contract and a work order used in his business.

[9] Evidence was also given by Mr Gottgens's former wife, Philippa Grayburn, and his daughter, Ella Celon, the second respondent and executor of Mr Gottgens's will, that the signature on the transfer was not that of Mr Gottgens.

[10] There was no contrary evidence as Ms Byers chose not to enter the witness box. She criticised the evidence of Mr Stewart as having been shaken in cross-examination when she asked him to identify a receipt dated 27 November 1990 and asserted to him that she had taken the American Express docket away from Mr Stewart's home on 26 November and returned it signed on 27 November.

[11] His version was that he did not issue the receipt until he had checked with American Express on 27 November as to whether it would accept the charge. He did this because Ms Byers had signed using her de facto husband's name. Nor did he have access to a receipt form at his home where he says the documents were signed. The receipt book was kept at his office and it was when he went there on 27 November that the receipt was issued, apparently as the first new job entered for that day, something verified by the record in the job book his business kept. That evidence rang true. It was also significant that this version, that Ms Byers had taken the American Express docket away on 26 November 1990 and returned it signed to his office on 27 November, was not put to him previously during Ms Byers' criminal trial. Nor was it suggested by Ms Byers that the other two documents were taken away and returned signed.

[12] In my view Mr Stewart's evidence was not shaken. Rather, he was a credible witness willing to make concessions when appropriate. There was no reason suggested why he would lie about these issues and he appeared to me to be careful and accurate in his evidence. I believe that he saw Ms Byers on 26 November 1990 and that she then signed the three documents that he produced in his evidence, using Mr Gottgens's name and attempting to copy his signature.

[13] When Mr Stewart's evidence is coupled with the opinion of Mr Marheine that the same writer had written Mr Gottgens's signature both on the transfer and on the documents produced by Mr Stewart, a view based on the internal consistency of the simulated forgeries he had identified, the only conclusion available is that Ms Byers did forge the signature of Mr Gottgens on the transfer document.

[14] Ms Byers needed to obtain the certificate of title to the Yatala property to register the transfer dated 18 July 1990 lodged by her at the Titles Office. Whether she lodged the documents personally, by an agent or by mail could not be concluded on the available evidence.

[15] The legitimate inference is that Ms Byers had obtained the certificate of title from the National Australia Bank at Sunnybank by writing a letter, purporting to be one from Mr Gottgens and to be signed by him and dated 3 July 1990, to a Mr Hunter who was then the manager of that branch of NAB. The letter asked that Mr Hunter forward the certificate of title to the Yatala address. He did that on 9 July 1990. Mr Marheine also expressed the opinion that the signature purporting to be that of Mr Gottgens on that document was a simulated forgery, again displaying an internal consistency with the other signatures he concluded had been simulated forgeries.

[16] The principal relief sought by the State of Queensland, the Registrar of Titles and Ms Celon, is that directions be made to the second applicant, the Registrar of Titles, that he correct the current particulars in the freehold land register in respect of the land at Yatala by removing the name of the first respondent, Ms Byers, as the owner of the parcel and restoring or inserting as the name of the owner, the former registered proprietor, Mr Gottgens. The object is that the correction of the register to achieve that end will then allow his estate to deal with the property. Section 187(2)(a) of the Land Title Act permits that relief to be ordered by this Court where there has been fraud by the registered proprietor.

"187 Orders by Supreme Court about fraud and competing

interests

(1) If there has been fraud by the registered proprietor or section

185(1)(c), (d), (e), (f) or (g) or (1A) applies, the Supreme

Court may make the order it considers just.

(2) Without limiting subsection (1), the Supreme Court may, by

order, direct the registrar--

(a) to cancel or correct the indefeasible title or other particulars in the freehold land register; or

(b) to cancel, correct, execute or register an instrument; or

(c) to create a new indefeasible title; or

(d) to issue a new instrument; or

(e) to do anything else."

[18] The land was registered under the Real Property Act 1861 and the forged transfer to Ms Byers was registered when that Act was still in force. Under that Act, fraud by the registered proprietor created one of the exceptions to indefeasibility under s 44; see Assets Co Ltd v Mere Roihi [1905] AC 176, 210; Breskvar v Wall (1971) 126 CLR 376, 384-385, 390-391, 397, 399, 400, 401, 412; Bahr v Nicolay [No. 2][1988] HCA 16; (1988) 164 CLR 604, 613, 630, 653. Her forgery was designed to cheat Mr Gottgens's estate of its existing rights and is a clear example of the fraud referred to in the Act; see Waimiha Sawmilling Co v Waione Timber Co [1926] AC 101, 106-107; Bahr v Nicolay [No. 2] at 630-631 Heron v Broadbent [1919] NSWStRp 62; (1919) 20 SR (NSW) 101, 105-106; Friedman v Barrett; ex parte Friedman [1962] Qd R 498, 512 and cf also Gibbs v Messer [1891] AC 248, 257-258.

[19] Under the Real Property Act a registered proprietor fraudulently deprived of land could bring an action of ejectment under ss 123 and 124. The Court could as part of the relief available under s 124 order the alteration of the certificate of title. There were also possibly more limited rights than exist now under s 187 available to the Registrar-General to correct errors under s 11(4), to seek the opinion of this Court under s 14, to summon and examine persons by whom a certificate of title had been fraudulently obtained under ss 130, 131 and 132 and to issue a fresh certificate under s 132.

[20] These rights were, in my view, accrued rights able to be enforced, in a case like this one, by the current procedure under s 187 of the Land Title Act; see Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, 267. The procedure under s 187 does not require the bringing of an action of ejectment but was otherwise apparently intended to do the work previously done by s 124; see Queensland Law Reform Commission Report No. 40, Consolidation of Real Property Acts at pp 51-52. It is appropriate to use that section to provide the remedy sought here.

Registration of the mortgage, its assignment and recovery of the debt secured

[21] In September 1994 a mortgage was registered over the land at Yatala to secure debts owed by Ms Byers to Australia and New Zealand Banking Group Limited. The then current Titles Office procedure required the mortgage to be lodged with the certificate of title, which was previously unencumbered.

[22] The first applicant, the State of Queensland, later, in June 2006, obtained a transfer of the mortgage from ANZ, having previously entered into a deed of settlement and release with that bank dated 5 July 2004, pursuant to which it paid $54,044.35 to the bank in satisfaction of the debt owed by Ms Byers under the mortgage. The bank had been threatening to realise the security.

[23] Notice of that assignment was given to Ms Byers on 10 July 2006 by service at the prison where she is incarcerated, although the applicants submitted that such notice was not necessary in the circumstances because the specific provisions in s 62 of the Land Title Act, giving the assignee of a mortgage the right to recover a debt under it, overrode the general provisions dealing with notice of an assignment in s 199 of the Property Law Act 1974. Reliance was placed on the decision to that effect of Mackenzie J in Cantrick v Thompson [2004] QSC 341 at [71]- [73] where his Honour also referred to the discussion in Tessmann v Costello [1987] 1 Qd R 283. It seems to me to be a correct conclusion.

[24] There was no challenge to the amount of the debt claimed. Ms Byers was, instead, critical of the fact that these negotiations occurred without her knowledge. The State of Queensland claims payment of this sum, therefore, on the basis of its rights as an assignee of the mortgage and there seems no reason to me why judgment should not be given for the amount claimed on that basis. There was no claim for interest on that sum.

[25] The cross-application by the second respondent, Ms Celon, seeks a declaration that money held in the trust account of Lang Realty, the firm of real estate agents managing the Yatala property, is held on behalf of the estate of Mr Gottgens. She also seeks the same relief under s 187 of the Land Title Act as is sought by the State and the Registrar of Titles and, as well, declarations that a gift to Ms Byers in clause 2 of the last will of Mr Gottgens fails, and falls into the residual estate, and a declaration that clause 3 of that will should be construed as if there was no reference to Ms Byers where the words "and Patricia Margaret Byers" appear at line 13 of that clause.

[26] In seeking to prevent Ms Byers from continuing to have rights as a beneficiary under the will Ms Celon relies upon the forfeiture rule expressed, for example, in Troja v Troja (1994) 33 NSWLR 269, 299. It establishes that where a person who would otherwise obtain a benefit by the death of another has brought about that other's death by violent means, she shall not be entitled to take that benefit. The policy and history of the rule is referred to briefly by McPherson J in Re Stone [1989] 1 Qd R 351, 352.

[27] Section 79 of the Evidence Act 1977 makes a conviction by a court of an offence admissible in evidence in a civil proceeding for the purpose of proving that the person committed that offence. By s 79(3) the person convicted shall, unless the contrary is proved, be taken to have committed the acts and to have possessed the state of mind (if any) which at law constitute that offence. There was no evidence from or for Ms Byers to contradict the effect of her conviction for the offence of murdering Mr Gottgens and no reason, therefore, to go behind the evidence of that conviction.

[28] Miss Treston, for the second respondent, also relied upon the decision in Rasmanis v Jurewitsch (1969) 70 SR (NSW) 407, 411 to seek the declaration that the money held in the trust account of the firm of real estate agents called Lang Realty is held on behalf of and forms part of the estate of Mr Gottgens. The argument is that equity requires an "interest taken by a felon to be held by him upon a constructive trust which will ensure that the interest be held in the same way as it would have been held if there had, on the slaying, been no enlargement of the interest of the felon." She also relied upon the discussion of such an approach by Professor Malcolm Cope in his work, Constructive Trusts (Law Book Co. Ltd, 1992), at 554. See also the discussion by McPherson J in Re Stone at 352-353.

[29] Again, in my view, it is appropriate to grant that relief as well as the relief sought in respect of the will. Miss Treston did not pursue a claim in the cross-application for compensation under s 188 of the Land Title Act.

[30] Although Ms Byers did not give evidence, she had attempted to file a defence which I have treated as a pleading by her. It does not plead a defence under the Limitation of Actions Act 1974 but does complain that the State of Queensland has delayed for 11 years in proceeding with any action "whilst stifling any dealings on the property by the maintaining" of a caveat on it.

[31] The nature of the relief sought by the State and the Registrar of Titles under s 187 of the Land Titles Act is, as I have discussed, correction of the freehold land register because of fraud by the registered proprietor. If that relief is equated with an action to recover land under s 13 of the Limitation of Actions Act then the limitation period would be 12 years. I do not need to decide whether that is the appropriate characterization of the relief sought here. Such a right of action does not accrue, however, unless the land is in the possession of some person in whose favour the period of limitation can run pursuant to s 19 of the Limitation of Actions Act. Under s 19(2) where a right of action to recover land has accrued and, thereafter, before the right is barred, the land ceases to be in adverse possession, the right of action shall no longer be deemed to accrue unless and until the land is again taken into adverse possession.

[32] It seems that Ms Byers has been in prison since 22 September 1994 when she was sentenced to 12 years imprisonment for having attempted to murder another man with whom she had formed a relationship after the disappearance of Mr Gottgens. There was evidence that the rents payable in respect of the lands were currently being received by Lang Realty on behalf of Ms Byers and a suggestion, not in evidence, that the firm was refusing to account to Ms Byers for the money and holding it in their trust account with a balance, as at 10 August 2006, of $13,685.42. Mr Clarke submitted that, in those circumstances, any right of action had not accrued as there had been no continuing possession of the land by Ms Byers adverse to that of the true owner.

[33] The evidence as to the capacity in which that money is being held on trust was, however, not clear. It was not an issue in the case whether Ms Byers had acquired title in the land by adverse possession and the principles used to resolve that question were not the subject of evidence; see the useful collection of relevant principles by Santow J in Cooke v Dunn (1998) 9 BPR 16,489.

[34] Although the question whether Ms Byers was in adverse possession of the land was not in issue, it is also relevant to any question of delay that s 38 of the Limitation of Actions Act operates to postpone a period of limitation in an action based on the fraud of the defendant until the plaintiff has discovered the fraud or ought with reasonable diligence to have discovered it.

[35] The earliest possible date by which the State and the Registrar of Titles, the second applicant, might have been alerted to the possibility of any fraudulent transfer of the land was 14 October 1994. That was when a facsimile was sent by the Legal Aid Office (Queensland) to the Registrar of Titles alerting him merely to an investigation into the possible fraudulent transfer of the land at Yatala. The Legal Aid Office was then acting on the instructions of Ms Celon. That date was less than 12 years before the institution of these proceedings on 7 July 2006.

[36] Ms Celon's cross-application commenced on 14 August 2006 and was amended on 23 October 2006 to claim orders under s 187 of the Land Titles Act. Because there was no issue in the proceeding about the limitation period there was no evidence from Ms Celon as to when she ought with reasonable diligence have discovered the fraud. There would be a good argument, in any event, that the earliest date by which any of the applicants could have discovered the fraud with reasonable diligence would have been the date of conviction of Ms Byers in 1999 as the evidence about the forgery of the transfer document was a significant part of the circumstantial case that was led against her at her criminal trial. An earlier possible date was when the contents of Mr Marheine's report became available to the applicants. It was dated 2 May 1997 but there is no evidence as to when the applicants became aware of its contents.

[37] Even if a limitation point had been taken properly, the evidence is compelling that it could not have succeeded.

[38] Accordingly the applicants are entitled to the relief they seek. I shall grant the following relief:

1. I direct the second applicant, Registrar of Titles, in respect of the current particulars in the Freehold Land Register in respect of all that piece and parcel of land at 25 Glen Osmond Road, Yatala, in the Shire of Albert, in the State of Queensland more particularly described as Lot 72 on registered Plan 207732, in the County of Ward, Parish of Darlington, being title reference 16864137 (formerly being the whole of the land described in certificate of title Volume 6864, Folio 137, issued under the provisions of the Real Property Act 1861), to correct the said current particulars by removing the name of the first respondent, Patricia Margaret Byers, as the owner of the said parcel and by restoring or inserting as the name of the owner, the former registered proprietor, Carel Theodorus Gottgens;

2. I order that the first respondent, Patricia Margaret Byers, pay to the first applicant, State of Queensland, the sum of $54,044.35 and that judgment in favour of the State of Queensland be entered against the first respondent in that amount.

3. I declare that any money held in the trust account of Lang Realty of Coomera Shopping Centre, Dreamworld Parkway, Coomera in the State of Queensland, relating to the property at 25 Glen Osmond Road, Yatala, aforesaid is held on behalf of and forms part of the estate of Carel Theodorus Gottgens deceased ("the deceased").

4. I further declare that the gift to the first respondent in clause 2 of the last will of the deceased dated 8 September 1988 ("the will") fails and, therefore, falls into the residual estate of the deceased;

5. I further declare that clause 3 of the will should be construed as if there was no reference to the first respondent, by deleting the words "AND PATRICIA MARGARET BYERS" where they appear at line 13 of clause 3 of the will;

6. I further order that all costs and outlays incurred by the second respondent be paid out of the estate of the deceased on an indemnity basis.

7. I further order that the first respondent pay the first and second applicants' costs of and incidental to this application, including the costs ordered to be paid by them to the second respondent, to be taxed on an indemnity basis.

8. I further order that the first respondent pay the second respondent her costs of and incidental to the cross application on an indemnity basis.

9. I further order that the first and second applicants pay the second respondent's costs of and incidental to the principal application and to the relief sought in paragraph 2 of the second respondent's amended cross application on an indemnity basis.

10. I give liberty to apply to all parties and to Lang Realty on two days' written notice to the other parties.