Collins v Dart
[2022] VCC 1932
| IN THE COUNTY COURT OF VICTORIA AT melbourne commercial DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-21-04051
| GAVIN COLLINS; as executor of the estate of RONALD DENNIS POOLE | Plaintiff |
| v | |
| BRIAN DART | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 6,7,13 September 2022 | |
DATE OF JUDGMENT: | 14 November 2022 | |
CASE MAY BE CITED AS: | Collins v Dart | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 1932 | |
REASONS FOR JUDGMENT
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Subject: LOAN – GIFT
Catchwords: loan – loan agreement – gift – will – executor – resulting trust – money had and received – unjust enrichment – restitution
Legislation Cited:
Cases Cited:Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Gray v Gray (2004) 12 BPR 22, 755; Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd [2015] VSCA 150; Moore v Aubusson [2020] NSWSC 1466
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Segal | Dawes & Vary Riordan Lawyers |
| For the Defendant | Ms J Taylor | RHM Law |
HIS HONOUR:
Introduction
1 On 23 September 2020, Ronald Poole (“Ron”) transferred $150,000 from his bank account into the account of his friend Brian Dart (“Brian”). Ron died on 26 April 2021. The main question in this case is whether, as Ron’s executor and stepson Gavin Collins (“Gavin”) alleges, the money was a loan which was to be repaid on demand after Ron’s death. It is convenient, and no disrespect is intended, to refer to the main parties by their first names.
Background
2 Ron was born in December 1942 in Wolverhampton, England. By the early 1980s he was working and living in Denman, a town about 150 miles west of Newcastle. It was there that he met Susanne Collins (“Susanne”). They were in Denman for a couple of years before marrying in Shepparton in 1985. Ron continued to live there until his death.
3 Gavin was about 14 or 15 when Ron met his mother. He had known Ron from when he was about 5 years old because Ron’s son Christopher was his best friend from kindergarten.[1]
[1]Christopher was Gavin’s best man at his wedding.
4 After their marriage, Ron and Susanne adopted a girl, Paula. As a teenager, Gavin lived with his father in Denman. Gavin said he had a good relationship with Ron. He said this remained the case into adulthood. Gavin said he treated Ron like a father and Ron treated him like a son.
5 Before 2007, when Ron underwent major surgery for bowel cancer, Ron and Susanne used to drive to Denman from time to time and to Cessnock to visit Susanne’s mother. When he was old enough to obtain his driver’s licence, Gavin used to drive to Shepparton to visit his mother and Ron.
6 Gavin works as a truck driver. He now limits his work to local driving but previously, he drove interstate as well. He said that he and Ron would talk on the phone each week or fortnight.
7 In 2018, Susanne’s mother Marie Cousins died in Melbourne. She left Susanne an inheritance of approximately $219,000.
8 In October 2018, Ron was diagnosed with an unusual medical condition, idiopathic pulmonary fibrosis. This gradually hardens the lungs making the victim progressively sicker and less able to breathe easily.
9 In November 2018, Susanne was diagnosed with an aggressive form of cancer.
10 On 15 January 2019, Susanne received the payment of $218,986.17 from her mother’s estate into her account at the Goulburn Murray Credit Union.
11 On 4 February 2019, Susanne transferred $190,560.61 into a joint account which she had with Ron.
12 Susanne died in March 2019. After Susanne’s death, Ron was depressed and upset. Not only was he lonely and sad about the death of his wife of more than 30 years, he also lost a loving carer. Given that Ron had serious health problems, especially after 2007, Susanne spent considerable time caring for him. According to Gavin, after Susanne died, Ron considered moving closer to where Gavin and his wife lived in Foster, a town about 150 kilometres north of Newcastle. Ultimately, Ron decided he did not want to move and preferred to remain in his home.
13 Ron was not a wealthy man. He worked as a farm hand in Denman. After he moved to Shepparton, he sold insurance for some time before moving to the Pental Soap factory. Ultimately, he became an occupational health and safety officer. In September 2020, he had $187,132.77 in his bank account at the Bendigo Bank. This was the account into which his Centrelink Pension payments were made.
14 On 23 September 2020, Ron went to the bank with Brian’s son, Paul, and transferred $150,000 into Brian’s savings account.
15 On 24 September 2020, the day after he transferred the money into Brian’s account, Ron sent an email to Gavin. Given it appears to be the primary contemporaneous document directly relevant to the dispute, I set it out in full:
“Hi Gav & Liz,
I thought that I should bring you up to date regarding my situation.
My health is deteriorating to the extent that any minor exertion by me sees me puffing and panting for air even though I am on oxygen 24/7. I am now becoming dependent on someone else to do things for me. From getting out of bed, going to the bathroom, getting to the kitchen, getting breakfast sitting down can take me as long as I hour some days. A district nurse comes 3 days a week to assist me have a shower. Also now I have a mobile scooter that I can drive to Aldi and do my shopping. I have had one trial with Paul with me to ensure I could cope. 100% pass.As you are aware your mother wanted Brad's wife Jenna to have the Toyota, this is still going to happen but cannot be done until the covid travel restrictions are lifted. My MG is going to Paul as will Bobby my dog. I no longer think it is safe for me to drive a car on the road,
Paul's dad Brian I have just made a loan of $150,000 which is just sitting in his one account and can be transferred back at any time. It will help him pay his mortgage off within three years, If after I pass you can ask for it and he will pay it into your account.
I recently arranged Dobsons.Real Estate to be the selling agents when the house has to be sold, he blew me away when he said the house at the moment he would guarantee would go for $300,000 plus which of course will all go to you. There are a few thousand dollars still in my account which I cannot see me spending, so you will not be short of money, but, if you need the other $150,000 Brian will give it back, Those were the terms agreed on, there is nothing in writing but I would trust Brian to do whatever you ask
.It's not all doom and gloom, Paul and or Brian are coming here at least 3 times a week and are taking me around places or to their farm on weekends.
Gavin as my executor you have the final say on whatever is to happen after my passing, I am only doing these things now to ensure matters will be easy to sort out, I have left plenty of lists which will help you dispersing of my effects etc. which is helping me to know what will happen.
I hope all is going well with you both and your two girls.
Love Ron & Bobby.”[2]
[2]Bobby was Ron’s dog.
16 As his condition worsened, Ron made arrangements to take advantage of the voluntary assisted dying legislation which had become law in Victoria. Brian and Paul assisted in taking Ron to the necessary medical assessments and Brian agreed to be responsible for the deadly medication. Ron planned to end his life on 14 May 2021.
17 Around Easter 2021, Ron admitted himself to a palliative care hospice in Tatura.
18 During the last weeks of his life, Lorraine Liverton (“Lorraine”) moved into Ron’s house to stay with him and assist him at night.
19 Ron died at home on 26 April 2021. Gavin obtained probate of Ron’s will on 26 August 2021. Under the terms of the will, Susanne was to receive the residue of Ron’s estate if she survived him for more than 30 days. Because Susanne predeceased Ron, the residue of the estate went to Gavin. Ron left detailed instructions on how he wished to dispose of various goods which he owned. His list included various gifts which he made before he died. For example, he gave his MG sports car, dog Bobby and Makita power tools to Paul. Brian received Ron’s phone and iPad.
20 On 8 July 2021, solicitors on behalf of Gavin sent a letter of demand to Brian and Paul requiring the repayment of the $150,000 transferred to Brian in September the previous year. The demand stated that Ron had left express instructions that he transferred the money as a loan to sit in Brian’s bank account in order to reduce the interest paid on Brian’s home loan. It was said to be a term of the loan agreement with Ron that the loan would be repaid upon Ron’s death. I infer that Gavin relied heavily upon Ron’s email dated 24 September 2020 in making the demand.
21 Brian has not repaid the $150,000. He claims that Ron transferred the money to him as a gift.
Issues
22 At the conclusion of the trial the parties agreed that the critical issues to be determined by the Court were as follows:
(a) was the sum of $150,000 a loan which the defendant is required to repay to the plaintiff?
(b) alternatively, if the $150,000 is not a loan, is the defendant required to repay the money to the plaintiff by reason of the doctrine of money had and received and/or unjust enrichment?
Legal Principles
23 This dispute raises what the New South Wales Court of Appeal in Gray v Gray[3] described as the “very awkward situation” in which the judge has to adjudicate whether a transaction was a loan or a gift in circumstances where the principal actor is dead and there is limited recording of the transaction. Ron’s death makes it difficult to deal with the conversations which he is alleged to have had with Gavin, Brian and Paul and the other witnesses. The Court hears only one side of the story and is severely hampered in comparing or challenging that account in any detail.
[3](2004) 12 BPR 22, 755 at [14]
24 The position is made worse by the relative absence of contemporaneous written material relevant to the dispute. Without such material, it is harder to assess the truth of evidence given about alleged conversations. Where there are diary notes, emails or other documentation, they often provide a useful context in which to examine oral communication between parties.
25 The courts have noted that evidence of conversations between a living witness and a dead person must be carefully scrutinised. While the evidence may be true, it will not necessarily be so. Issues of credit assume particular significance when the live witness cannot be contradicted in the usual way. As a result, courts look for corroboration of oral evidence.
26 In Moore v Aubusson[4], the trial judge had to consider whether a dead person made certain representations. Ward CJ in Equity said:
[4][2020] NSWSC 1466
“As to the assessment of the conflicting evidence, as the defendant notes, there must be ‘an actual persuasion of the occurrence of any conversation propounded by a claimant’ (the defendant referring to John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94], per Hammerschlag J; and to the summary by Black J of the principles to which a Court should have regard in assessing the affidavit and oral evidence as set out in In the matter of Hillsea Pty Limited [2019] NSWSC 1152 at [16]-[22]). It is noted that these principles include the well-known observation by McLelland CJ in Eq as to the fallibility of human memory over the passage of time in Watson v Foxman (1995) 49 NSWLR 315 (Watson v Foxman) at 319; and that weight should be accorded so far as possible to ‘contemporary materials, objectively established facts and the apparent logic of events’.”[5]
[5]Ibid at [109]
….
“[I]t is nonetheless the case that one must scrutinise carefully evidence as to oral conversations with deceased persons (see Plunkett v Bull (1915) 19 CLR 544 at 548-9, per Isaacs J; [1915] HCA 14), and, as in all such cases, I place relatively more weight on contemporaneous documents and the objective circumstances as a whole over the affidavit and oral evidence of those directly interested in the outcome of the litigation.”[6]
There are ample authorities to similar effect.[7]
[6]Ibid at [111]
[7] See for example Richardson v Armistead [2000] VSC 551 at [36] (per Hansen J) citing Morrissy v
Clements (1885) 11 VLR 13 at 24; In re Hodgson; Beckett v Ramsdale (1885) 31 ChD 177; Tone v
Brolly (1891) 17 VLR 467 at 471; Plunkett v Bull (1915) 19 CLR 544 at 548-549; Thwaites v Ryan
[1984] VR 65 at 78-79; See also Harpur v Levy [2011] VSC 653 at [52] – [53]
Summary of the parties’ positions
27 Gavin’s primary submission was that the monies transferred to Brian’s savings account comprised a loan repayable on demand. This was said to be evidenced by:
· the email from Ron to Gavin dated 24 September 2020;
· the conversation between Ron and Gavin on 26 September 2020 and the later conversations to the same effect thereafter; and
· the list Ron prepared disposing of various assets.
28 Alternatively, Gavin argued that Brian was obliged to repay the money because of the resulting trust which arose in favour of Gavin and the estate. The plaintiff placed reliance on the decision of the Court of Appeal in Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd[8] where Santamaria JA, with whom Ashley JA and Digby AJA agreed, said:
“In the absence of evidence of the intention of the transferor, the law relies on presumptions. Where property has been transferred without consideration to a stranger, the law presumes that the stranger holds the property on trust for the transferor (the so called ‘resulting trust’); where the property has been transferred without a [sic] consideration to a member of the transferor’s family, the law presumes that the transferee is to enjoy the beneficial interest in the property (the so called ‘presumption of advancement’)”[9]
[8][2015] VSCA 150
[9]Ibid at [136]
29 Brian contended that the onus of proof rested upon Gavin to establish that the $150,000 was a loan. Brian argued that the state of the evidence was such that Gavin could not prove Ron lent the monies to Brian. Rather, the weight of the evidence, especially the evidence of the impartial witnesses, indicated the money transferred was a gift. If there were a gift, the plaintiff’s case must fail.
Witnesses
30 In this case, unlike many heard in this division of the Court, there were hardly any important documents produced. Further, the relative absence of contemporaneous documents meant that there was no objective framework created by those documents against which the oral evidence could be assessed and tested.
31 The credibility of the various witnesses in this case was important.
32 Gavin presented as a straight-forward witness. He answered questions directly and gave a reasonably clear account of the facts as he perceived them. However, some aspects of Gavin’s evidence troubled me.
33 First, his explanation for not visiting Ron between March 2019 and April 2021 was not convincing. He intimated that the failure to visit was due to a combination of Covid restrictions and financial pressure. Gavin said that he was only a casual truck driver, so if he did not work, he was not paid.[10] The advent of the Covid virus resulted in the border between New South Wales and Victoria being shut for a period of time. Only people with special permits could cross the border.[11]
[10]Transcript, page 42
[11]Ibid
34 Gavin acknowledged that his work as a truck driver was adversely affected by the Covid restrictions – they “really quietened work down”.[12] So, even though there was significantly less work available for Gavin and he had the opportunity to visit Ron, Gavin did not attempt to visit him when the border was open and he did not apply for a permit to enter Victoria when the border was closed.
[12]Ibid
35 This seems an odd way for a son to behave toward a stepfather when, according to Gavin, they had a good relationship and Gavin knew that Ron was lonely and upset after the death of his wife.[13] Especially is this the case when, after reading Ron’s email of 24 September 2020, Gavin thought Ron’s health was “really going downhill” at the time.[14] Further, Gavin agreed that Ron knew by Christmas 2020 that he was likely to die fairly soon.[15]
[13]Ibid, page 41 and 58
[14]Ibid, page 60
[15]Ibid, page 67
36 Gavin also accepted that:
· Ron spoke to him about Gavin coming to visit him at Easter 2021;[16] and
· Brian and Paul made phone calls to Gavin asking him to visit Ron around Easter 2021.[17]
[16]Ibid
[17]Ibid
37 Gavin suggested that he did not seek to obtain a permit to visit Ron because he was concerned that, if Ron contracted the Covid virus, he would die.[18] Given that Ron was certain to die in the near future due to his serious lung condition, this seems to me a somewhat contrived concern.
[18]Ibid, page 66
38 Secondly, for someone who said he had a very good relationship with Ron and spoke to him regularly every 7 – 14 days, Gavin was unaware of some reasonably fundamental aspects of Ron’s life. When Gavin received the 24 September 2020 email he was not aware that Ron required oxygen 24 hours a day 7 days a week or that Ron could not shower by himself.[19] Nor did Gavin know that a person could not qualify under the Victorian voluntary assisted dying program unless the person had six months or less to live.
[19]Ibid, page 60
39 Further, Gavin did not know that:
· Brian and Paul had driven Ron to the Wheeler Centre in Melbourne to appear at an event with Andrew Denton. Although Gavin said he was aware of a meeting between Ron and Mr Denton in relation to a podcast or some such thing, Gavin had not listened to the podcast;[20]
[20]Ibid, page 72
· Ron reached a point where the motor scooter which he bought was no longer useful to him at home and he could not use it to get from home to the shops;[21]
[21]Ibid, page 64
· Brian and Paul transported the scooter to the farm property they lived on so Ron could move around the place when he visited;[22] and
· unless Lorraine had volunteered to move into Ron’s house to care for him at night after Easter 2021, Ron would not have been allowed to leave the hospice in Tatura to return home.
[22]Ibid, page 64 and 65
40 Thirdly, Gavin gave conflicting evidence about the number of discussions he had with Ron concerning the transfer of funds to Brian. Gavin said that he rang Ron on Saturday, 26 September 2020, after he received Ron’s 24 September 2020 email. He said he asked Ron what he was doing throwing money away.[23] Ron said it was a loan in a one-off account and that it was agreed that if something happened, the money would be paid back. Ron said that he and Brian had agreed that Brian would repay the money when Ron died. All Gavin had to do was ask.
[23]Ibid, page 45
41 Initially, Gavin said that after that first conversation with Ron about the $150,000, he had a couple of later discussions with him about the money before he died. He said that he checked with Ron whether everything was still all right with the loan and Ron told him that nothing had changed.[24]
[24]Ibid, page 46
42 Soon after giving that evidence, Gavin said that he had those discussions with Ron four, five or six times. It seems to me that there is a notable difference between having a couple of discussions about a matter and having five or six discussions.
43 Fourthly, Gavin’s evidence in chief was that when Ron spoke to him about the $150,000, he referred only to Brian as the borrower and no one else.[25] In contrast, the inventory of Ron’s assets and liabilities which formed part of the application for probate of the will included an entry:
[25]Ibid, page 45
“Loan to Brian and Paul Dart $150,000”
Gavin swore an affidavit which, inter alia, said that the statement of assets and liabilities was true and correct.
44 Gavin blamed his solicitors for the error in the inventory. He did not explain how he came to verify a document which he now accepts is inaccurate.
45 These aspects of Gavin’s evidence are not helpful. While none of them is decisive about the main issues in this case, they create doubt about the reliability and credibility of Gavin’s testimony. While I accept that much of Gavin’s evidence is likely correct, I do not have full confidence in his testimony.
46 Brian and his son Paul presented as unsophisticated people. Brian answered questions directly and often not at great length. His answers tended to be short and clear. He was not evasive and endeavoured to give truthful answers to the questions he was asked. He struck me as a reliable witness whose testimony I could accept. In general terms, I consider him to be a credible and truthful witness.
47 Paul is similar to his father in that he seemed to have a genuine commitment to telling the truth as best he could. Paul differed from his father in that he often gave quite long answers. It was notable that, on more than one occasion, he became emotional when speaking of Ron and the time he spent with him. Paul appeared keen to honour Ron’s memory by ensuring the Court understood Ron’s wishes in dealing with his property.
48 The two independent witnesses were Hanspeter Winter (“Winter”) and Lorraine. Winter came across as a no-nonsense individual who said what he thought. He had come to know Ron through the local model plane flying club. As a member of the club, and especially as its treasurer for some time, Winter had plenty of contact with Ron. Winter said that after Brian introduced Ron to the club as its secretary, he straightened out the affairs of the club so that its books and records and consumer affairs compliance were in proper order. Winter acknowledged that until then, the club generally, and he in particular, did not worry too much about these details. Winter said that Ron was pedantic with the club record-keeping. Winter expressed no hard feelings for the various reprimands he received from Ron about his sloppy work. He answered questions directly and stated the truth to the best of his recollection. I accept his evidence.
49 Lorraine presented to the Court as a kind and uncomplicated lady drawn to helping others. She had a background in running foster care accommodation for children. More recently she engaged in personal care assistance work in Echuca and Shepparton. She met Ron through his neighbours who were friends of hers. As a result, she became friendly with Ron and used to visit him on a weekly basis. While at his home, she often did some cleaning. After Ron checked himself into the hospice at Tatura, the doctors would not allow him to return home unless he had someone with him to help him if something happened. On hearing this, Lorraine asked Ron if he would like her to care for him at night. Ron agreed and Lorraine moved in.
50 Lorraine is perhaps the most significant witness because she is the most independent. She did not know Ron until about 12 – 18 months before he died. The defendant’s other witnesses had known Ron for years through the model plane club. Lorraine did not know Brian or Paul until she met them when they visited Ron. Prior to that they were complete strangers. Winter knew Brian and Paul through the club and, although he has now moved to Melbourne, he maintains contact with Brian.
51 Lorraine looked after Ron on an unpaid basis. Ron did give her a couple of pumpkins which he had grown. Also when her car broke down, Ron put money in her bank account so she could replace the radiator and make other necessary repairs. Lorraine needed the car to drive between her home in Merrigum and Ron’s place in Shepparton. Lorraine said that she received a second payment into her bank account from Ron in May 2021 but she was not aware of this until she later received her quarterly bank statement.
52 I am satisfied that Lorraine told the truth and gave honest evidence. The plaintiff’s counsel did not directly put to Lorraine that she was giving false evidence to the Court. However, he did suggest that Ron did not discuss with her his intended arrangements in relation to what he was leaving his children in his will. This appeared to be in response to Lorraine saying that about 3 – 4 months before he died, Ron told her that he was leaving the house to Gavin. Ron said that this was to fulfil Susanne’s wishes and not because he wanted to. In re-examination, Lorraine denied that she was “fibbing” or making up false evidence on the matter. She said that Ron told her Gavin was going to get the house in Shepparton and that Brian was to keep the money which Ron gave him as a gift.
Was the sum of $150,000 a loan which the defendant is required to repay to the plaintiff?
53 In determining whether the $150,000 Ron transferred to Brian was a loan, the Court is faced with contradictory evidence.
54 On the one hand, there is Ron’s email to Gavin of 24 September 2020,[26] the conversations between Ron and Gavin commencing on 26 September 2020 and the list Ron made of goods to be disposed of.[27] These support the notion that Ron lent the funds to Brian.
[26]Court book, page 25
[27]Ibid, page 26 - 28
55 On the other hand, the oral testimony of Brian and the other witnesses supports the proposition that Ron gave the money to Brian as a gift and had no intent or expectation, much less any agreement, that the money would be repaid.
56 For the reasons which follow, I am not satisfied that Ron transferred the monies to Brian pursuant to a loan agreement.
57 First, the oral evidence from the defendants was to the effect that the money which Ron transferred was a gift.
58 Brian said that there was no agreement between him and Ron that the monies were a loan which had to be repaid. Brian said that Ron was out at his farm at least every second weekend and sometimes during the week too at the time that Brian had work done on the house using the money which Ron provided. Brian renovated the kitchen and rebuilt a shed which had caught fire. According to him, Ron said that the money was Brian’s – it was no good to Ron where he was going.
59 Paul said that Ron asked him to obtain Brian’s bank details so he could transfer the $150,000 into his account. Paul delayed in obtaining the bank details. He said that neither he nor his father particularly wanted Ron’s money but Ron was insistent. Paul was nervous that, after Ron transferred the money into Brian’s account, he might end his life. Once Paul confirmed to Ron that he had the bank account details (by surreptitiously looking at the screen when Brian had the account open on the computer) Ron asked Paul to take him into the bank so he could perform the transfer.
60 Paul said the money was spent partly on solar panels, fixing up the kitchen, buying a hedger and some toy planes which reminded them of Ron. He said that Ron visited the house while the works were being done and could see how Brian was spending the money. Paul said there was no conversation between him and Ron to the effect that :
· Brian had to repay the funds; or
· the money was just to sit in Brian’s account for a few years to reduce the interest on his mortgage.
61 Winter said that Ron told him that he intended to give Brian some money to pay his bills and some debts that he had. Ron did not mention the amount. From the discussion between him and Ron, Winter said that Ron realised that once he transferred the money to Brian, he would spend it. Winter said that Ron told him a number of times that Gavin would get the house when he died because that was Susanne’s wish. However, Ron said that he did not agree with this because Gavin had not helped Ron or visited him. Ron explained to Winter that he did not distribute all his goods in his will because he did not want Gavin to challenge the will.
62 I have referred above to part of Lorraine’s evidence. Her evidence was simple and clear. She said that:
· Ron told her several times that the money he gave Brian was a gift – he didn’t need the money back because he didn’t need it where he was going. The money was a gift not to be repaid; and
· Ron was leaving the house to Gavin. This was to honour the wishes of Susanne even though Ron regarded Gavin and the other offspring as vultures for how they behaved towards Ron in taking things from the house after Susanne died.
63 Secondly, when transferring the money to Brian’s account, Ron was keen that it be a surprise for Brian. Ron did not want Paul to discuss the matter with his father. It was for that reason that Paul had to obtain the account details without Brian knowing. This is not how parties would normally arrange a loan. The usual procedure would involve a written and signed agreement. Part of the agreement would specify the date upon which the loan funds were to be advanced. Advancing loan funds to a borrower does not normally happen by surprise. The surprise element suggests that there was no agreement to lend the money. A party that does not know about an alleged loan cannot have asked for and agreed to such a loan.
64 However, the advance was not a complete surprise. Gavin argued that:
· there was a loan between Ron and Brian in relation to the $150,000;
· the only element of surprise was when the funds were placed in Brian’s bank account. Thus, Brian made the loan agreement with Ron and the surprise was limited to the particular date on which the funds were credited to his bank account; and
· if at the time of the advance, the funds were loan funds, then especially in the absence of a pleaded defence or counterclaim which raised some new point, that characterisation of the funds could not be altered.
65 I accept that there was some discussion between Ron and Brian about the transfer of funds before it took place. Brian said Ron raised the matter with him a few months before he made the transfer. Brian said he argued the point with Ron because Ron had a family and Brian thought the transfer was not a good idea as the family would contest such a deployment of the funds. Brian said Ron told him that his will dealt with the family and was “an ironclad thing”. Ron said that what he did with his stuff was his business. Hence, before he died, Ron gave away various possessions including motor vehicles and other chattels.
66 Ultimately, I accept that there was no loan agreement under which Brian was obliged to repay the $150,000.
67 Thirdly, if there were a loan agreement between Ron and Brian in relation to the $150,000 it is odd that it was not reduced to writing.
68 While Gavin says that he had a number of conversations with Ron about the loan, there was no evidence that he asked Ron to formalise the agreement or that they discussed the topic of committing the agreement to writing.
69 The evidence strongly favoured a finding that Ron was pedantic and meticulous in his record keeping. That included both his records at home and others for which he was responsible, such as those at the model plane club. Winter said that given the amount of the transfer to Brian, he would have expected Ron to have had solicitors draw up an agreement if the monies were a loan. Winter said that Ron’s nature and his experience in the Pental Soap business (which had more than 100 employees) meant that he would not allow such an ambiguous situation to arise – unless, possibly, he did it deliberately.
70 Winter made the startling observation that he did not believe Ron wrote the 24 September 2020 email. He identified the basis for his view by reference to the following factors:
· the words used in the email did not sound like Ron;
· the email did not represent the way that Ron would do things. If there were a loan, there would be a written document setting out the important elements such as the loan amount, the repayment date and the interest rate; and
· the email defied practical reality and made no sense. Winter said that Ron was aware that:
o Brian was a pensioner and would not have been able to pay off the bank mortgage and, in addition, repay Ron $150,000. If Brian used the money to pay off his mortgage, then he would have spent the money and would have been able to repay Ron only by selling his property; and
o Brian would spend the money freely after it was credited to his account. Once Brian spent the money he would not be able to repay Ron.
Winter said that if a pensioner like Brian paid off his mortgage, then without any income, he would not be able to re-mortgage the house.
71 There was some evidence about Brian having access to a redraw facility. Brian had at least two bank accounts. The initial transfer from Ron was made into account number 79-405-6427 at the National Australia Bank (“NAB”) at Tallygaroopna. This was an NAB Classic Account, a savings account. On 28 September 2020, Brian transferred $140,000 to his home loan account. This was an NAB Base Variable Rate Home Loan, account number 83-207-4491.
72 The credit of $140,000 reduced the outstanding debit balance in the account from $208,072.84 to $68,072.84. Then between 19 October 2020 and 29 September 2021, a total of about $151,200 was redrawn so that the debit balance on the latter date was $196,227.36. Thus, while initially the funds reduced the outstanding indebtedness and the amount due to the NAB under the mortgage, Brian then increased the indebtedness by an amount greater than the reduction effected by the credit on 28 September 2020.
73 Given the work which took place at Brian’s home in late 2020, I infer that most of the redraw monies were employed for that renovation work. Due to the nature of that expenditure it would be understandable that the only way in which Brian could repay the $150,000 transferred by Ron was by selling his property.
74 The major elements of the plaintiff’s case are the documents which Ron created: the September 2020 email, the disposal of assets list and the undated farewell email.
75 The September 2020 email stated that the monies transferred to Brian were a loan. There was no suggestion from any witness that Ron was other than entirely lucid and in command of his mental faculties at the time of his death. However, not everything written in the email was correct.
76 Ron said that the transferred money was just sitting in Brian’s one account and it would help him pay off his mortgage within three years. The plaintiff opened his case on the basis that the loan to Brian was to help him repay the mortgage sooner by reducing the interest that was otherwise to be paid on the mortgage by using the funds as an offset account which would reduce the total interest payable. Gavin seemed to have the same view of the matter.[28]
[28]Transcript, page 44
77 My understanding of an offset account is as follows. Assume that A borrows $500,000 from the bank. A has a separate account at the bank with a credit balance of $400,000. Due to offsetting the principal amounts, A would pay interest to the bank on $100,000 being the difference between the debit and credit balances.
78 This was not the situation with Ron, Brian and the NAB. The money which Ron transferred went into a savings account for a few days before being moved into Brian’s mortgage account. I have set out in paragraph 71 above what happened thereafter.
79 Ron’s email is internally coherent if the $150,000 transferred was used simply as an offset account. It would make sense that the money remained untouched in an account while simultaneously having the effect of reducing the debt to the NAB and the amount of interest payable on the loan. It would also make sense that money in such an account could readily be repaid on demand.
80 But the underlying basis of this scenario, the offset account, is missing. The money Ron transferred was not deployed in the manner envisaged by the email. I note too that Brian did not know what an offset mechanism was. This suggests that an agreement was unlikely. Brian said that he never understood from conversations with Ron or anyone else that the transferred funds were to be used only to reduce the interest on his home loan. Brian stated that he used the redraw funds to buy kitchen goods such as an oven, stove and dishwasher.
81 Added to this, the defendant’s evidence was that Ron encouraged Brian in 2020 to spend the money on the house. According to Brian, Ron even suggested that Brian install an air conditioner.[29] Ron visited the house regularly and saw the renovation work being done.
[29]Brian refused to do so.
82 Gavin relied upon the disposal list. As I understood the plaintiff’s position, the list was important for what was missing – had the money transferred to Brian been a gift, it would have been listed in the assets already disposed of. This category of goods included the Toyota car, the MG car, Bobby the dog, Makita tools and old records.
83 It seems to me that this is more a debating point than a substantive point. While it is true that Ron might have listed the transfer as a gift if it had been his intention to assist Brian in this way, his failure to do so is not determinative. Both parties accepted that Ron created the list after the transfer of the funds. The list document refers to Ron having only two bank accounts. The defendant could plausibly argue that there was no need to refer to the $150,000 transfer because it had already happened. Gavin was to concern himself simply in withdrawing the money remaining within the two accounts and then closing those accounts.
84 The farewell email appears to have been written on 6 August 2019. Ron explains in the email his death sentence diagnosis, Susanne’s death in March 2019 and the voluntary euthanasia legislation passed in Victoria. Ron says that he has resolved to use the legislation given his medical future.
85 At the end of the email, Ron refers to the family members who deserted him and Susanne, causing them a good deal of heartache after Ron and Susanne had helped them in various ways. Ron said that Gavin was the only exception. Since Ron and Susanne had come together, Gavin had always maintained a good attitude, never forgetting a birthday or mother’s/father’s day and keeping in touch by phone. Gavin’s inheritance was a way of saying how much his behaviour had meant to Ron and Susanne.
86 As noted, Ron wrote this document in August 2019 about five months after Susanne’s death. The evidence suggests that Ron’s attitude to Gavin changed between this time and his death. Witnesses for the defendant commented on how disappointed Ron was that between Susanne’s death and his time at the Tatura hospice in 2021, Gavin never visited him. Indeed, it was common ground that after the death of his mother, Gavin did not see Ron again while he was alive.
87 Gavin relied too upon the conversations he had with Ron in and after September 2020 about the transfer and the notation in the bank document. The initial conversation confirmed that it was a one-off amount to reduce the interest which Brian had to pay on his mortgage. In the later conversations, Gavin said he would ask if everything was still right with the loan and Ron confirmed that it was.
88 These conversations are broadly consistent with the September 2020 email. Both assume the existence of a loan. While prima facie the conversation evidence supports the September 2020 email regarding the loan, I continue to have doubts. Partly I have reservations about the credibility and reliability of Gavin. Partly I cannot reconcile the comments made about the monies advanced with the evidence of the defendant’s witnesses that the monies were a gift from Ron to Brian. Furthermore, there are factual errors in the email.
89 Some of the objectively established facts, or those agreed by Gavin, and the logic of events provide a sound basis for concluding that Ron intended to make a gift of the money to Brian:
· Ron and Brian were good friends and had been for some years. Brian said they were friends for 10 – 12 years;
· Brian introduced Ron to the model plane club. Ron became engaged in the affairs of the club and enjoyed the company and companionship which it offered;
· Brian and Paul helped Ron with the model flying including advising him, allowing him on the home simulator and performing repairs; and
· beyond the club, Brian and Paul helped Ron in a range of ways especially as his health deteriorated. They visited him at his home, spoke to him often on the phone, took him for drives and visits to Brian’s farm. They also shopped for him, did household chores and gardening and took him to appointments.
90 Brian and Paul provided the kind of help and support which a family member might render. Due to the important role which Brian and Paul played in Ron’s life, it is understandable that he might wish to recognise such help in a tangible way. It would be consistent with normal human interaction to express gratitude towards Brian and Paul especially when Ron apparently was not well disposed towards his children and step-children. He spoke of them in a disparaging manner to Lorraine and, in clause 13 of his will, specifically excluded them from receiving anything under his will.
91 Another factor which Gavin relied upon was the notation “mortgage loan” which appeared on the bank transfer. This was said to be significant because it indicated the true nature of the transfer Ron made. Further, it was not recorded as a gift as it might have been if this were the case. According to Paul, when they were at the counter at the bank about to effect the transfer, Ron asked Paul what the transfer should be recorded as. Paul thought this meant what account would the money go into. He told Ron it was a savings or loan or mortgage account. Ron agreed that it had to be one of them. The teller at the bank wrote the description of the advance.
92 As Paul later acknowledged, if he were wrong to refer to the receiving bank account rather than classifying the nature of the payment, he was also wrong in allowing the money to go into Brian’s savings account. Paul said that when Ron asked about the account, he did not know the precise name that his father used for the account and whether it was a mortgage account or a loan account.
93 Regardless of the correct name of the account, I do not regard the teller’s notation as significant. The name of the account into which Ron credited the funds cannot of itself provide any clear characterisation of the funds as a loan from Ron. Further, if the account name is relevant (and I think it is not), it was the teller who wrote the notation for the bank records, not Ron. As the Court accepts the evidence of Brian and Paul about Ron’s delight in disposing of some of his assets to them before his death, I doubt Ron would have been much interested in the teller’s description in the bank statements.
94 In short, the plaintiff’s claim that the monies advanced were a loan to Brian must fail. I am not satisfied on the balance of probabilities that the $150,0000 was a loan. Such a finding depends largely upon the 24 September 2020 email and Gavin’s account of his conversations with Ron. Partly because of my reservations about that email and Gavin’s credibility and partly because I accept the evidence generally of the defendant’s witnesses (in particular Lorraine and Winter), the plaintiff has not satisfied his burden of proof to establish the loan.
95 I acknowledge that this outcome is contrary to Ron’s comments in the September 2020 email. However, given the:
· inability to question Ron;
· concerns expressed by Winter about the September 2020 email; and
· other evidence adduced in the case;
I consider it more likely that the advance was a gift than a loan.
Alternatively, if the $150,000 is not a loan, is the defendant required to repay the money to the plaintiff by reason of the doctrine of money had and received and/or unjust enrichment?
96 Gavin contended that if the Court formed the view that the $150,000 was not a gift to Brian or that there was no enforceable loan and the monies were provided without consideration then the $150,000 should be repaid to the estate.
97 Such a submission recognises implicitly that if Ron transferred the monies to Brian as a gift, then the monies do not have to be repaid. In my opinion, that is the position in this case.
98 However, in the alternative, I will consider whether, if the sum of $150,000 is neither a loan nor a gift, the monies should be repaid.
99 Gavin relied upon the Court of Appeal decision in Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd[30] to contend that:
[30][2015] VSCA 150
(a) where the property has been transferred without consideration to a stranger the law presumes that the stranger holds the property on trust for the transferor (the so called ‘resulting trust’); and
(b) where the property has been transferred without consideration to a member of the transferor’s family, the law presumes that the transferee is to enjoy the beneficial interest in the property (the so called ‘presumption of advancement’).[31]
[31]Ibid at [136]
100 Gavin contended that, because the monies were transferred to Brian without consideration and Brian is not a member of Ron’s family and therefore a stranger, the presumption of a resulting trust applies and supports the implication of a trust in favour of the transferor (which is now the estate).
101 However, Gavin also recognised that presumptions give way to evidence. The presumption of a resulting trust can be rebutted by evidence that Ron intended for Brian to take a beneficial interest. When there is evidence contrary to the presumption, the dispute or legal question would be resolved in accordance with the onus of proof and the sufficiency of the evidence in the circumstances.[32] Therefore, evidence of an intention to gift the money to Brian will rebut the presumption of a resulting trust.
[32]Ibid at [138]
102 I have already outlined why I have found that the monies were a gift and not a loan. The evidence I have relied upon in reaching this conclusion is the same evidence which rebuts the presumption.
103 While I have found that the monies were a gift and that the presumption can successfully be rebutted by the evidence, I will consider whether, in the alternative, Brian could be required to repay the monies to Gavin by reason of the doctrine of money had and received and/or unjust enrichment.
104 A claim for money had and received allowing restitution on the basis of unjust enrichment must fall within a class of ‘qualifying or vitiating’ factors.[33] These factors include duress, mistake, illegality, or failure of consideration. However, the categories are not closed.
[33] Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [150]-[151]
105 For Gavin to recover the monies, it must be found that Brian was unjustly enriched and one or more ‘qualifying or vitiating’ factors was present.
106 Brian admitted that the payment was made for his benefit; and he was enriched by the payment. However, I agree with Brian’s position that there is no evidence of mistake, duress, illegality or other vitiating factor affecting the transfer of funds to Brian.
107 Further, Brian accepts that he did not provide any consideration for the monies. However, this alone does not render the enrichment of Brian unjust. It was submitted that Brian expected nothing in return for his friendship with Ron and that the assistance he provided to Ron should not be treated as consideration. Instead, the friendship and assistance that Brian provided to Ron explains why Ron gifted the monies to Brian. Ron and Brian’s friendship provides context to the transfer of the monies and distinguishes it from a case where monies are accidently transferred to a stranger’s bank account and no consideration has been provided. In this case, the lack of consideration provided by Brian does not render the enrichment of Brian relevantly unjust –Ron intended to make a gift.
108 Accordingly, Brian would not be required to repay the monies to Gavin by reason of the doctrine of money had and received and/or unjust enrichment.
Conclusion
109 For the reasons set out, I find that the money was not a loan and was not to be repaid on demand after Ron’s death. Instead I find that the money was a gift. Subject to hearing from the parties, I propose to order that:
(a) the plaintiff’s claim be dismissed; and
(b) the plaintiff pay the defendant’s costs of the proceeding, including reserved costs, such costs be taxed on a standard basis in default of agreement.
110 I direct the parties to confer about the form of final order and costs in an effort to agree upon orders giving effect to this judgment. If they cannot agree, then by 12.00pm on 21 November 2022, each party is to file with my chambers and serve a written submission setting out the orders sought and the reasons therefor. The submissions are not to exceed five A4 pages, a minimum 12 point typeface, and 40mm margins on either side of the page.
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