Sykes v Equity Trustees Executors & Agency Co Ltd [1999] VSCA 199

Court of Appeal (Vic)|1999-11-25|Before: TADGELL, PHILLIPS and BUCHANAN, JJ.A.

REAL PROPERTY - Life interest - Oral contract - Failure to discharge burden of proof after death of other party - Resulting trust not established - Mutual wills - No agreement.

I shall invite Buchanan, J.A. to deliver the first judgment.

The appellant and the deceased met in 1970. The appellant was a geologist who owned an oil company called XL Petroleum Pty. Ltd. ("XL"). In 1970 the deceased was engaged by XL as a bookkeeper. In the early 1970s the appellant and the deceased became companions. They discussed having children and according to the appellant they entered into an oral agreement between 1974 and 1975. The terms of the agreement contended for by the appellant were described by the trial judge as follows:

"1. Mr Sykes and the deceased would live together for the purpose of having three children, each child to be born, so far as possible, two years apart. 2. The Alma Terrace property would be the home of the deceased and the first two children of the relationship and when the time came to conceive the planned third child, Mr Sykes would provide the finance for a larger family home to be chosen by the deceased. 3. Mr Sykes would finance the larger family home, in part, by giving to the deceased 5,000 shares in a mining company owned by him known as Jervois Sulphates (NT) Limited. The shares were to be provided on the basis of 4,000 in number thereof to be a gift from Mr Sykes to the deceased and 1,000 thereof to be given to the deceased as a 'staff bonus'. 4. The deceased would have the final say with respect to the children of the relationship, the family home and family assets. Mr Sykes would have the final say with respect to any business matter relating to XL. 5. If Mr Sykes predeceased the deceased she would have a life interest in the larger family home that was to be purchased. If the deceased predeceased Mr Sykes, he would have a life interest in that family home. 6. Upon the purchase of the larger family home, the son of the deceased, Rodney Buthin would be entitled to inherit the Alma Terrace property. 7. Any antique furniture in the possession of the deceased was to be hers absolutely. 8. The deceased would own her motor vehicle absolutely. 9. The deceased and Mr Sykes would be faithful to one another until the death of the other. 10. Prior to the birth of each child, Mr Sykes would change his surname to "de Savery" and after the birth of each child change his surname back to "Sykes". 11. Before the birth of the first child, the deceased would change her surname from "de Savery Buthin" to "de Savery". 12. Mr Sykes would sign the necessary birth certification documents to disclose him as the father of each of the children. 13. Mr Sykes would buy the food for the family and pay for outgoings, clothing, education and home expenses. 14. The deceased and Mr Sykes would execute mutual wills upon the birth of the first child of their relationship that provided: (1) Rodney Buthin was to inherit the Alma Terrace property. (2) Any children of Mr Sykes and the deceased would inherit equally the whole oft the residual estate of each of them subject to each child attaining 28 years. (3) Mr Sykes and the deceased would appoint the other as executor of his or her will as the case may be."

The appellant and the deceased commenced cohabitation in early 1976. Three children were born of the relationship between the appellant and the deceased, one in 1977, the second in 1979 and the third in 1986. By deed poll made on 19 July 1977 the deceased changed her name from "de Savery Buthin" to "de Savery". Each of the children bore the surname de Savery. A birth certificate of the third child discloses the father as "Pierre Henri de Savery". By deed poll made 15 December 1986 the appellant changed his name from "Pierre Henry de Savery" to "Ian Grant Sykes".

On 13 December 1980 the deceased entered into a contract to purchase a property at 3 Rupert Street, Newport, being a double block of land on which stood a large Victorian house in need of renovation, at a price of $53,000. According to the appellant the house was purchased with the proceeds of the sale of 5,000 shares in Jervois Sulphates (NT) Ltd. and the sum of $6,000 given by him to the deceased. The trial judge noted that the appellant said he gave the deceased the $6,000 for the deposit some five months before the house was purchased, and that after the purchase the value of the shares in Jervois Sulphates (NT) Ltd. rose remarkably. In the words of the appellant, "as it turned out the shares very late in December shot up by the most enormous amount and realised far beyond the value of the house". The shares had been given to the deceased in 1976 when they were worth some $600. According to the appellant the deceased told him the property had been purchased in the name of the deceased only as the appellant was away when it was purchased, and he said that the deceased agreed that he would have a life interest in the property.

On 15 September 1977 the appellant made a will leaving his estate to the first child born of his relationship with the deceased and any other children born to her upon each child attaining the age of 28 years. By codicils dated 25 October 1982 and 27 March 1986 the appellant added the names of the second and third children. By a will dated 11 December 1986 the appellant left his entire estate to the three children subject to each attaining the age of 24 years. The deceased left a will dated 17 April 1984. By her will the deceased left all her furniture and articles of personal and household use to be divided between her children other than the child of the deceased's first marriage subject to each child attaining the age of 25 years. The trustee was to convert the residue of the estate into money to be divided between the children other than the child of the deceased's first marriage, again subject to each child attaining the age of 25 years.

In April or May 1986 the appellant and the deceased quarrelled and the appellant left the house, never to live there again. In 1991 the deceased moved to Tasmania with her children, leaving the Rupert Street property empty. It remains so to this day. Upon moving to Tasmania the deceased purchased a house at Wynyard. The appellant alleged that the deceased requested him to lend her $46.000 in order to buy the house, and he did so. According to the appellant the money was to be repaid when the property purchased with the loan was sold.

The appellant claimed that he gave a collection of opals to the deceased to be used by her to pay for the education of the children, and upon condition that if the opals were not sold, the appellant was entitled to recover them upon demand, and, if not so demanded, on the death of the appellant the children would be entitled to the opals in equal shares. The inventory of the estate of the deceased disclosed an opal collection said to be valued at $52,000. The appellant claimed these opals on the assumption that they were the opals, or some of them, which he had given to the deceased.

The appellant's evidence consisted of the oral testimony of himself and a director of the company controlled by the appellant, together with a number of documents which were tendered in evidence. The evidence for the first-named respondent consisted of the testimony of the appellant's daughter and a number of documents tendered as exhibits.

The appellant has conducted the entire proceedings, from the issue of the writ to the hearing of this appeal, without the assistance of a solicitor or counsel. It is not easy to discern causes of action in the amended Statement of Claim prepared by the appellant, and he did not address the trial judge as to the legal consequences of the evidence. In the words of the trial judge,

"Mr Sykes took the approach of providing the Court with what he believed to be all the relevant evidence and left it to the Court to sift through that evidence and determine what, if any, legal basis existed for his various claims."

Accordingly, the trial judge ruled upon all the legal claims that she could discern from the facts alleged in the amended Statement of Claim and those established by the evidence. She extended a similar indulgence to the respondent, for example considering the application of s.126 of the Instruments Act 1958, although the section had not been pleaded in the defence.

The trial judge held that the appellant had not established that an agreement had been made to give him a life interest in the Rupert Street property. In seeking to establish an oral contract after the death of the other party to the contract, the appellant bore a substantial burden. See Thwaites v. Ryan [1984] VicRp 7; [1984] V.R. 65 at p.78 per Fullagar, J. Her Honour, having heard the appellant's evidence, did not accept that the contract which he alleged had been made. In his evidence and correspondence the appellant referred to the transfer of the shares as a gift. There was no written record of or reference to the agreement. The deceased in a letter to the Deputy Commissioner of Taxation said that the shares were given to her by way of an employee bonus. The rise in the value of the shares that provided the funds for the purchase took place long after the transfer of the shares to the deceased.

The trial judge considered and rejected the possibility of a resulting trust in the house in favour of the appellant, for she could not be satisfied that the source of the moneys used to pay the purchase price of the property was not a gift by the appellant to the deceased. Her Honour also considered and ruled against the creation of a constructive trust, for she could not be satisfied that there was the necessary common intention of the parties and it was not unconscionable for the estate to insist upon its legal entitlement. Her Honour held that no claim based on an equitable estoppel was made out. The evidence did not establish that the deceased induced in the appellant any expectation or assumption that he would obtain a life estate and the appellant did not rely on any such expectation or assumption. Finally, the trial judge considered whether there was an enforceable agreement that the appellant and the deceased leave mutual wills. Her Honour was not satisfied that such an agreement had been established, and held in any event that there were no sufficient acts of part performance to take the agreement outside the provisions of the Statute of Frauds.

As to the claim for repayment of a loan of $46,000, the trial judge held that she could not be satisfied that a loan had been made.

The trial judge rejected the claim for the return of the opals, saying:

"There is insufficient evidence for me to determine one way or the other whether Mr Sykes gave opals to the deceased and as to which opals are now in the custody of the first defendant. Secondly, I cannot on the evidence be satisfied that in any event if opals were given they are not otherwise held on trust by the first defendant for the education of the children of the deceased and Mr Sykes. In view of the prevailing uncertainty and doubt I cannot be satisfied on the balance of probabilities with respect to the opals claim."

Finally, the claim for the cost of reinstatement of the Rupert Street property fell as it was dependent upon the appellant establishing an interest in the property.

The notice of appeal contains some 41 grounds of appeal. For the most part they are concerned with the trial judge's findings of fact and take the form of arguments addressed to the statements contained in her Honour's reasons for judgment. For example, the trial judge's reliance upon the absence of any reference to the agreement as to a life interest in correspondence between the appellant and the deceased is met by the argument that the deceased deliberately refrained from mentioning the agreement.

In my opinion, none of the grounds of appeal disclose the trial judge made any error of law or fact. After hearing the appellant's evidence as to the oral agreement, her Honour was not satisfied that any such agreement was made. She also found that the sum of $6,000 and the shares in Jervois Sulphates (NT) Ltd. were given to the deceased and became her property. The appellant could not establish a claim to an interest in the Rupert Street property in the light of those conclusions. Similarly, the claims of the appellant relating to the loan and the opal collection could not survive the trial judge's lack of satisfaction as to the facts upon which the claims were based.

The appellant has not demonstrated that in her Honour's reasons she fell into error. The trial judge's conclusions must have been based to some extent on her Honour's view of the credibility of the appellant's testimony, for after all the claims depended upon the acceptance of his evidence. None of the claims was established by documents or by objective facts. In Devries v. Australian National Railways Commission (1993) 177 C.L.R. 472 AT 479, Brennan, Gaudron and McHugh, JJ. said:

"More than once in recent years this Court has pointed out that a finding of fact by a trial judge, based on the credibility of a witness, is not to be set aside because an appellate court thinks that the probabilities of the case are against - even strongly against - that finding of fact. If the trial judge's findings depend to any substantial degree on the credibility of a witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused his advantage' or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'."

It was not shown here that the trial judge failed to properly use her advantage or acted on any evidence which was inconsistent with any facts otherwise established or which was glaringly improbable.

"The judgment of her Honour is against the idea that a family is defined as in the Family Law Act and breaches the intent of both that Act and the Administration and Probate Act now current in Victoria when considered with the Family Law Act 1975 as at June 1996."

This point was developed in the course of the hearing of the appeal. The appellant submitted that whether or not an agreement was made between him and the deceased, the appellant was entitled to a life interest in the Rupert Street property because it was the family home, he was obliged to bring up and care for the children, and public policy and the spirit of the Family Law Act required that he and the children should be able to inhabit the house.

Unfortunately no such principle in the terms stated by the appellant is known to the law. Property entitlements of those who form partnerships to produce children are derived from statutes such as the Family Law Act and the testator's family maintenance provisions of the Administration and Probate Act and the common law and equitable doctrines canvassed by the trial judge. In my opinion her Honour considered all the possible legal bases upon which the appellant might establish an entitlement to the relief he sought. I am also of the opinion that the appellant's failure to discharge the onus of proving the facts he advanced precluded the establishment of any such entitlement.

The order of the Court is that the appeal is dismissed with costs.

At a glance

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Judgment (30 paragraphs)

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