Damberg v Damberg - [2001] NSWCA 87

No judgment structure available for this case.

Reported Decision:
52 NSWLR 492

New South Wales

Court of Appeal

CITATION: Damberg v Damberg & Ors [2001] NSWCA 87

FILE NUMBER(S): CA 40636/99

HEARING DATE(S): 3 April 2001

JUDGMENT DATE:
25 May 2001

PARTIES :

Wilfried Robert Damberg (Appellant)
Bruenhild Damberg (First Respondent)
Oliver Damberg (Second Respondent)
Nicole Damberg (Third Respondent)

JUDGMENT OF: Spigelman CJ at 1; Sheller JA at 2; Heydon JA at 3

LOWER COURT JURISDICTION : Family Court of Australia

LOWER COURT
FILE NUMBER(S) : PA 4703/98

LOWER COURT
JUDICIAL OFFICER : Purdy J

COUNSEL: Mr P L G Brereton SC (Appellant)
Mr L P Robberds QC/Mr J A Trebeck (Respondents)

SOLICITORS: Campbell Paton & Taylor (Appellant)
Wilson Fardell & Moore (First Respondent)
Garden & Montgomerie (Second and Third Respondents)

CATCHWORDS: Equity - Implied Trusts - Resulting trusts - Whether rebuttal of presumption of advancement from parent to child of equitable interest in property in addition to legal title - Whether parent possessed "definite intention" to retain beneficial interest - Application of general law of evidence to determine whether "definite intention" proved - Conflict of Laws - Breach of foreign law - Whether Australian Courts will prevent party from enforcing in Australia a resulting trust created in a foreign jurisdiction for a purpose that was "illegal" or "unlawful" in that foreign jurisdiction - Identification of "illegal" or "unlawful" purpose - Necessity to examine provisions of foreign legislation - Ascertainment of "policy" of legislation - Where foreign jurisdiction is Germany - Where foreign law relates to capital gains tax avoidance or evasion - Conflict of Laws - Presumption of identity of unproved foreign law and the lex fori - Whether such presumption should be made - Where foreign jurisdiction is Germany - Where relevant unproved foreign law is likely to be statute-based - Where relevant unproved foreign law relates to capital gains tax avoidance and evasion - Where taxation law is not an area of law that is based on broad principles that can be assumed to be part of any given legal system - D

CASES CITED:
See attached list

DECISION: See para 200

(1990) 171 CLR 167

Adams v Naylor [1946] AC 543

Agbaba v Witter (1977) 51 ALJR 503

Allsopp v Incorporated Newsagencies Co Pty Ltd (1975) 26 FLR 238

(1969) 90 WN (Pt 1) (NSW) 44

Bowden Bros & Co v Imperial Marine and Transport Insurance Co (1905) 5 SR (NSW) 614

[1945] KB 65

[1980] 1 NSWLR 496

Briginshaw v Briginshaw

Bryson v Bryant (1992) 29 NSWLR 188

Bumper Development Corp Ltd v Commissioner of Police of the Metropolis [1991] 1 WLR 1362

Calverley v Green

Casey v Casey

Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353

Chilton v Corporation of London (1878) 7 Ch D 735

Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738

Davies v The National Trustees Executors and Agency Co of Australasia Ltd [1912] VLR 397

Davison v Vickery’s Motors Ltd (in liq) (1925) 37 CLR 1

De Reneville v De Reneville [1948] P 100

Devoy v Devoy (1857) 3 Sim & Giff 403

Devries v Australian National Railways Commission (1993) 177 CLR 472

Donaldson v Freeson (1934) 51 CLR 598

Drever v Drever [1936] ALR 446

Dumper v Dumper (1862) 3 Giff 583

Dunn v Brown (1911) 12 SR (NSW) 22

Elders IXL Ltd v Lindgren Pty Ltd (1987) 79 ALR 411

Ell v The Hunter District Water Supply and Sewerage Board (1927) 27 SR (NSW) 437

Ertel Bieber & Co v Rio Tinto Co Ltd; Dynamit Actien-Gesellschaft (Vormals Alfred Nobel & Company) v Rio Tinto Co Ltd [1918] AC 260

Finch v Finch (1808) 15 Ves Jun 43; 33 ER 671

Florance v Hutchinson (1891) 17 VLR 471

Gannon v Gannon (1971) 125 CLR 629

Government of India v Taylor [1955] AC 491

Gramophone Co Ltd v Magazine Holder Co (1911) 28 RPC 221

Gray v Kerslake [1958] SCR 3

Grey v Grey

Guepratte v Young

Hartley v Hartley

Hartmann v Konig

Hellens (falsely called Densmore) v Densmore

Hussey v Palmer

In Re Kerrigan

ex p Jones

Jabbour v Custodian of Absentee’s Property of State of Israel

Lloyd v Guibert

Male v Roberts

Martin v Martin

Mother Bertha Music Ltd v Bourne Music Ltd

Mount Cook (Northland) Ltd v Swedish Motors Ltd

National Shipping Corporation v Arab

Nelson v Nelson

Norris v Woods

Österreichische Länderbank v S’Elite Ltd

Pavey v Matthews Pty Ltd v Paul

Payne v McDonald

Perpetual Executors and Trustees Association of Australia Ltd v Wright

Peter Buchanan Ltd v McVey

Pickering v Stephenson

Purdom v Pavey & Co

R v Governor of Brixton Prison, ex p Caldough

R v Naguib

Re an Arbitration Between A/S Tank of Oslo and Agence Maritime L Strauss of Paris

Re Parana Plantations Ltd

Re Williamson

Regazzoni v K C Sethia (1944) Ltd

Rosenberg v Percival

Rossano v Manufacturers’ Life Insurance Co

Rothwells Ltd (in liq) v Connell

Royal Boskalis NV v Mountain

Royster v Cavey

Saxby v Fulton

Schnaider v Jaffe

Sedgwick, Collins & Co, Ltd v Highton

Shephard v Cartwright

Sidmouth v Sidmouth

State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq)

Szechter (orse Karsov)v Szechter

Termijtelen v Van Arkel

The Colorado

The Marinero

The Nouvelle Banque de L’Union v Ayton

The Parchim

The Ship ‘Mercury Bell’ v Amosin

The Torni

Tomic v Limro Pty Ltd

United States Surgical Corporation v Hospital Products International Pty Ltd

Re Wakim; ex p McNally (1999) 198 CLR 511

Williams v The Minister Aboriginal Land Rights Act 1983 [2000] Aust Torts R 81-578

Wright Heaton & Co v Barrett (1892) 13 NSWLR (L) 206

Zoubek v Zoubek [1951] VLR 386

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40636/99
PA 4703/98

SPIGELMAN CJ
SHELLER JA
HEYDON JA

Friday, 25 May 2001

Wilfried Robert DAMBERG v Bruenhild DAMBERG & Ors

Equity - Implied Trusts - Resulting trusts - Whether rebuttal of presumption of advancement from parent to child of equitable interest in property in addition to legal title - Whether parent possessed “definite intention” to retain beneficial interest - Application of general law of evidence to determine whether “definite intention” proved

Conflict of Laws - Breach of foreign law - Whether Australian Courts will prevent party from enforcing in Australia a resulting trust created in a foreign jurisdiction for a purpose that was “illegal” or “unlawful” in that foreign jurisdiction - Identification of “illegal” or “unlawful” purpose - Necessity to examine provisions of foreign legislation - Ascertainment of “policy” of legislation - Where foreign jurisdiction is Germany - Where foreign law relates to capital gains tax avoidance or evasion

Conflict of Laws - Presumption of identity of unproved foreign law and the lex fori - Whether such presumption should be made - Where foreign jurisdiction is Germany - Where relevant unproved foreign law is likely to be statute-based - Where relevant unproved foreign law relates to capital gains tax avoidance and evasion - Where taxation law is not an area of law that is based on broad principles that can be assumed to be part of any given legal system

In 1983 the Appellant (“the husband”) transferred pieces of land in Germany to his son and daughter, who were the second and third Respondents respectively. Shortly before doing so, the husband had consulted an accountant in relation to the German capital gains tax implications of transferring land to members of his family. The husband proceeded to construct buildings on these lands at his own expense and through loans. Rental income derived from the properties was declared in the tax returns of the children rather than those of the husband. In 1988 the husband transferred further pieces of German land to his son. The husband funded the construction of buildings on this land also, and the rent therefrom was declared on the son’s income tax returns.

From 1987 the husband and the first Respondent (“the wife”) commenced the purchase of farming properties in Australia. These purchases were funded in part by various dealings by their son and daughter in relation to the aforementioned German lands. Six payments flowed from the son’s pieces of land and one from the daughter’s land.

From 1995 the relationships between the four Dambergs came under strain. The wife returned to Germany and the husband followed her. The husband and his son entered a Management Agreement in 1997, under which the son was to manage the Australian farming properties while the husband was in Germany. The husband attempted to terminate this agreement in mid-1998.

The wife instituted proceedings against the husband in the Family Court of Australia and their children intervened seeking pecuniary relief based on a claim of anterior equitable interests in the property of the husband and wife. The son also claimed monies allegedly owed to him by the husband under the Management Agreement. The Family Court held that although the husband intended to transfer the German lands to the children on trust, he did so to avoid German capital gains tax and therefore they should be treated as outright gifts. As a result, the monies transferred by the children to their parents were loans, requiring repayment. The Family court also allowed the son payment of $2,000 per month from the date of the termination of the Management Agreement until judgment (totalling $7,377.79). The Family Court did not make any explicit order in relation to the costs of the proceedings before it.

The husband appealed from the Family Court to the Court of Appeal, and the children applied for leave to appeal in relation to the costs of the Family Court proceedings.

Held by Heydon JA (Spigelman CJ and Sheller JA concurring), allowing the appeal, and dismissing the Respondents’ application for leave to appeal:

had rebutted the presumption of advancement from parent to child of equitable interest along with legal title.

Calverley v Green

(b) The evidentiary rules applying to the proof of a “definite intention” to retain the beneficial interest, are those of the general law of evidence and the Evidence Act 1995.

husband would not have been estopped from denying that it was not rebutted.

(a) The estoppel argument should not be entertained by this Court since estoppel was not pleaded, but was only raised in final address by counsel for the children. This course can cause unfair surprise and may require the tendering of extra evidence. Supreme Court Rules 1970 (NSW), Pt 15, r 13.

(a) Although the money was sourced from a loan that the son was personally liable to pay, the son took out the loan at the behest of the father against the security of property beneficially owned by the father. Therefore, the money was acquired by the son as a trustee for the father.

from relying on any resulting trust due to his avoidance of German capital gains tax.

(a) For the husband to be so barred, an “unlawful” or “illegal” purpose must be identified.

Martin v Martin (1959) 110 CLR 297 and Nelson v Nelson (1995) 184 CLR 538 applied.

(i) whether an “unlawful” or “illegal” purpose existed;

(ii) whether the “policy” of the legislation was defeated;

Nelson v Nelson applied.

(c) It may be assumed that German capital gains tax law rests on a statute. However, neither the trial judge nor the court of Appeal were taken to any such statute. Therefore, the requisite close examination of the statute did not occur.

lex fori

(i) the limited evidence at trial of German capital gains tax law indicated that it is likely to differ from that in Australia;

that is premised on “great and broad principles likely to be part of any given legal system” (Heydon JA at [162]).

Government of India v Taylor

Peter Buchanan Ltd v McVey

Rossano v Manufacturers’ Life Insurance Co

Bath v British and Malayan Trustees Ltd

Rothwells Ltd (in liq) v Connell

Regazzoni v K C Sethia (1944) Ltd [1956] 2 QB 490;

Regazzoni v K C Sethia (1944) Ltd [1958] AC 301,

distinguished.

5. The son was not entitled to recover $7,377.79 on a quantum meruit notwithstanding the husband’s attempt via letter to terminate the Management Agreement.

(a) To recover on a quantum meruit, the benefit provided must be

requested or accepted. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 applied. In this case, the father did not request or accept the son’s work, but rejected it.

(b) The order of the Family Court that the son continue to operate the farming business was made in order to resolve a dispute on an interim basis and it did not stipulate any remuneration for the son.

the children, the children’s application for leave to appeal in relation to the costs of the trial, was dismissed.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40636/99
PA 4703/98

SPIGELMAN CJ
SHELLER JA
HEYDON JA

Friday, 25 May 2001

Wilfried Robert DAMBERG v Bruenhild DAMBERG & Ors

JUDGMENT

1 SPIGELMAN CJ: I agree with Heydon JA.

2 SHELLER JA: I agree with Heydon JA.

3 HEYDON JA:

Background

Grey v Grey

4 The appeal comes to this Court, rather than the Full Court of the Family Court, by reason of the following matters. The proceedings below were instituted by Bruenhild Damberg (“the wife”), who married Wilfried Damberg (“the husband”) on 22 June 1961. Their son, Oliver Damberg (“the son”), intervened and claimed pecuniary relief based on anterior equitable interests in the property of the husband and wife. The daughter of the husband and the wife, Nicole Damberg (“the daughter”), also intervened seeking similar relief. The jurisdiction of the Family Court to deal with the claims of the son and the daughter rested on s 4(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). That sub-section conferred on the Family Court original and appellate jurisdiction with respect to “State matters” (namely matters in which the Supreme Court of New South Wales had jurisdiction otherwise than by reason of a law of the Commonwealth or of another State). On 17 June 1999, thirteen days after Purdy J’s orders, the High Court delivered judgment in Re Wakim; ex p McNally (1999) 198 CLR 511. That case held that State legislation such as s 4(2) could not confer State jurisdiction on a federal court such as the Family Court. The New South Wales Parliament then enacted the Federal Courts (State Jurisdiction) Act 1999 (“the Act”). Section 4(1) defined “ineffective judgment” as:

“a judgment of a federal court in a State matter given or recorded, before the commencement of this section, in the purported exercise of jurisdiction purporting to have been conferred on the federal court by a relevant State Act.”

Jurisdiction of Courts (Cross-Vesting) Act

Federal Courts (State Jurisdiction) Act

“The rights and liabilities of all persons are, by force of this Act, declared to be, and always to have been, the same as if:

(a) each ineffective judgment of: …

(ii) the Family Court of Australia, otherwise than as a

Full Court of the Family Court of Australia,

had been a valid judgment of the Supreme Court in a

Division constituted by a Judge of the Supreme Court ….”

“(1) A right or liability conferred, imposed or affected by section 6:

(a) is exercisable or enforceable, and

(b) is to be regarded as always having been exercisable or

enforceable,

as if it were a right or liability conferred, imposed or affected by
a judgment of the Supreme Court.

(2) Without limiting section 6 or subsection (1) of this section, the
rights and liabilities conferred, imposed or affected by section 6
include the right of a person who was a party to the proceeding
or purported proceeding in which the ineffective judgment was
given or recorded to appeal against that judgment.

(3) For the purposes of subsection (2), each effective judgment of:
…

(b) the Family Court of Australia, otherwise than as a Full
Court of the Family Court of Australia,

is deemed to be a judgment of the Supreme Court in a Division
constituted by a Judge of the Supreme Court.”

Supreme Court Act

5 Apart from the Notice of Appeal filed by the husband, there is also before the court an application by the son and the daughter seeking leave to appeal. It was filed because Purdy J did not make any order explicitly dealing with the costs of the proceedings before him. It is not entirely clear whether his orders are to be construed as including an order that there be no order as to costs, or whether it is the case that he simply failed to make any order as to costs. The son and the daughter contend that he ought to have ordered the husband to pay all the costs. The husband has from time to time raised the possibility that the application for leave to appeal may not be an adequate vehicle for that purpose, and to cover that possibility, the son and the daughter obtained an order from the Duty Judge of the Common Law Division on 28 March 2001 pursuant to Pt 12 r 2 of the Supreme Court Rules removing into this Court certain common law proceedings (Oliver Damberg and another v Wilfried Damberg and another, CL Div No 12244 of 1999) in which the son and the daughter sought a favourable costs order on the assumption that Purdy J had failed to make one. The order made by the Duty Judge was:

“That pursuant to P 12 Rule 2 proceedings No 12244/99 be removed into the Court of Appeal for determination by it.

That the Court of Appeal determine the Question. ‘Are each of the Plaintiffs entitled to an order for costs arising out of the Judgments entered by Purdy J on 4.06.99.’”

6 Though the wife was joined as first respondent to the appeal, she filed a submitting appearance and took no part in the argument. The contest was between the husband as appellant and the son and daughter as second and third respondents respectively.

The Nature of the Cross-Vested Proceedings

7 So far as they remain live issues in this appeal, the claims in the cross-vested proceedings, and their treatment by the trial judge, fall into two parts.

(a) Transfer of properties to children and payment by children to parents sourced from those properties

8 The son claimed repayment of $522,689 allegedly advanced by him to the husband on various dates between 4 July 1989 and 25 January 1995. The daughter claimed repayment of an advance of $149,615 allegedly made on or about 4 October 1991. These sums had been paid from accounts in the name of or under the control of the son or daughter, as the case may be, into accounts in the names of the husband and the wife. The case of the children was that the monies had been generated by selling or mortgaging properties in Germany which had been given by the husband to them, or which were transferred to the son in recompense for work done by him. The husband, on the other hand, contended that the properties in the children’s names were not held by them on their own account, but on resulting trust for him.

9 The trial judge found that when the husband placed the properties in the names of the children, he did not intend to make an absolute gift, but intended to retain the beneficial interest: that is, the trial judge found that the presumption of advancement operating between father and child was rebutted. However, he also found that the purpose of putting the properties in the names of the children was to avoid German capital gains tax, that the properties had been sold and capital gains tax had been avoided as intended, that the transactions should thus be treated as gifts to the children, and that the court should do what it could to avoid the violation of the revenue laws of a friendly foreign country, namely Germany. Since the monies transferred by the children to the parents were derived from the properties which on this reasoning had been given to the children without there being any resulting trust, and since the trial judge apparently found that they were advanced as loans, the children succeeded.

(b) Management Agreement

10 The son also claimed $7,377.79. He claimed that on a contractual basis as the balance allegedly owing under a Management Agreement pursuant to which he was to receive $2,000 per month for managing certain rural properties. Alternatively, he claimed it as on a quantum meruit, being the reasonable cost of the services which he had rendered and not been paid for. The husband contented himself with a bare denial in answer to the relevant part, paragraphs 14 and 16-20 of the Further Amended Statement of Claim: see paragraph 3 of the husband’s Amended Points of Defence. The trial judge noted at Red 46P-U that the Management Agreement in the form in which it was signed by the husband and the son in Australia on 28 April 1997 was altered by the wife when she signed it on 14 May 1997 in Germany: a clause permitting termination on six weeks’ notice was altered to six months’ notice. Though some arguments were put about this, the trial judge did not deal with them. However, he may have implicitly upheld them, since his acceptance of the claim was apparently on the quantum meruit rather than the contractual basis.

The Primary Facts

11 The trial judge made numerous findings of fact. His task in doing so, and this Court’s task in assessing the criticisms made by the parties of his reasoning, have not been assisted by the fact that the first language of none of the five principal witnesses was English. The husband showed a considerable and reciprocated bitterness towards the other three parties. The affidavit evidence of the husband and the children about the primary transactions is in an unsatisfactory form where it is not actually misleading. Perhaps because of the different locations of the onus of proof on different issues, the affidavit evidence was not prepared or tendered in a coherent order. Various exhibits recording conveyancing and financial transactions have been lost since the trial. The parties did not make copies of those exhibits. Some of the evidence was not closely analysed either before the trial judge or before this Court. To some degree the trial judge’s findings are contradictory. They are scattered throughout the reasons for judgment in a manner which makes a concise statement of them by quotation difficult. And to some degree key facts were not found explicitly, but have to be elicited by processes of inference or implication. Accordingly it is convenient at the outset to set out the primary facts which were not in controversy as an aid to understanding the issues which were in controversy.

(a)

The German background

12 Though the parties have gone to law in Australian courts and have acquired substantial quantities of Australian land, most of their lives have been spent in Germany. The husband was born in 1938, the wife in 1940, the son in 1963 and the daughter in 1967. The husband has had many occupations, but an important one was as a developer of land, and after 1974 he concentrated on this field. His modus operandi was to buy small blocks of land, subdivide them, build on them, and then lease or sell them. The family was based in Hamm, Westphalia, and the properties were in or near Hamm.

(b) The property acquisitions relevant to this appeal

13 In about 1981 the husband acquired the land relevant to this case. The land was at Dillweg Ahlen Dolberg. It was described as “lots 508-515”. It was bought for DM332,010 (Blue 2/215H).

14 In 1983 the husband decided to subdivide it. He consulted an accountant, Mr Dieter Stiegler, whose services he had employed since 1978, about what the tax implications could be of transferring land to the wife and children. According to Mr Stiegler, under German law a land owner might buy and sell three properties in five years without having to pay capital gains tax; but if this number were exceeded, capital gains tax was payable on the profits from sale of all the properties. Following the conference, the husband told Mr Stiegler that he proposed to subdivide and transfer part of lots 508-515 Dillweg to the children (but not to the wife, who already had several properties).

15 Pursuant to a contract dated 19 July 1983, the son received two lots of land, being lots 508 and 509, which were thereafter described as 68 and 70 Dillweg or 68-70 Dillweg (Black 2/304EL). The daughter also received two lots located beside the son's lots, probably lots 510 and 511, which were thereafter described as 64 and 66 Dillweg or 64-66 Dillweg (Blue 1/2J, 2/216R-U and 305R).

16 The husband then constructed residential buildings on the lots transferred. The costs of acquiring, subdividing, transferring and developing the land were paid partly out of the husband’s own resources and partly out of loans (Blue 1/65T-W). The loans were secured on the four lots transferred (and on other security). The rental income was used to meet interest obligations (Blue 1/66B-G) and was declared in the tax returns of the children, not those of the husband (Blue 2/216F; Black 4/809H-J).

17 After further advice from Mr Stiegler, the husband transferred two further lots of the Dillweg land to the son pursuant to a contract of sale dated 14 September 1988 for a price of DM94,000 (Black 2/303R-304J). These were lots 512 and 513, known as 60-62 Dillweg or 60 and 62 Dillweg (Blue 1/66H, 2/305T and 306P). Six flats were built on the land transferred at the husband’s expense (Blue 1/66O-V). There was a mortgage on the land; the rent from the flats was used to meet interest obligations. The rent was declared in the son’s income tax returns (Blue 2/216F and Black 4/809H-J).

(c) The relevant payments sourced from the properties acquired

18 From 1987 the husband and wife began purchasing farming properties in Australia, and spent the majority of their time here (Red 43D). Their purchases caused a need for money, and some of this need was met out of dealings by the son and the daughter in the six lots of land just described.

19 There were six relevant payments generated from the son’s lots, and one from the daughter’s.

20 In 1989 DM200,000 (A$150,086) was borrowed by the son on the security of 60-62 Dillweg and transferred to his parents with a view to them using that sum to assist in the purchase of a property called “Manacumble” (Red 55K-X and 59H). The contract of loan between the son and the lending bank (the Volksbank) was signed on 30 June 1989 by the son and on 4 July 1989 by the bank (Blue 1/39-40). The DM200,000 was transferred to the wife as part of a larger payment on 20 September 1989 (Blue 1/41-42). This increased the debt secured on 60-62 Dillweg (Blue 1/23Q).

21 On 8 January 1991 lot 508, 70 Dillweg, was sold by contract of sale of that date for DM240,000. On 26 March 1991 that sum was paid to the Volksbank at the son’s direction (Blue 2/305B-G).

22 On 26 April 1991 lot 509, 68 Dillweg (Blue 2/306K-N), was sold by contract of sale of that date for DM255,000, which was paid by 2 July 1991.

23 On 28 October 1994 lots 512 and 513, 60 and 62 Dillweg, were sold by contract of sale of that date for DM850,000, which was paid at the son’s direction on 17 and 18 January 1995 (Blue 2/306P-307E).

24 The trial judge found that, in a way which neither he nor the evidence clearly explained, out of the proceeds of sale of 60, 62, 68 and 70 Dillweg the following sums were paid to the parents for the funding of a purchase of Australian land: on 26 March 1991 DM80,000 (A$58,394.16); on 31 May 1991 DM50,000 (A$36,363.64); on 19 June 1991 DM50,000 (A$36,363.64); and also on 19 June 1991 DM80,000 (A$58,394.16) (Red 59P-W).

25 Finally, the trial judge found that on 25 January 1995 the sum of DM250,000 (A$213,087.40) was “sourced” from property in the son’s name (Red 59J).

26 In their detail these findings appear to be inaccurate, because the sale of 60 and 62 Dillweg in 1994-1995 was well after the making of the payments on 19 June 1991. The correct position appears more probably to be that the four payments made on 26 March, 31 May and 19 June1991 were sourced from the sales of 68 and 70 Dillweg in early 1991, and the 25 January 1995 payment was sourced from the sale in 1994-1995 of 60 and 62 Dillweg. The inaccuracy of the findings does not matter, because the parties accepted that the five payments in 1991 and 1995 were sourced from property in the name of the son.

27 On 4 October 1991 the daughter paid DM201,433 (A$149,614.69) obtained from the sale of 64 and 66 Dillweg to her parents (Red 66aP-R).

(d) Later events

28 In the period March 1995-October 1996 relations between the wife and the son on the one hand, and the husband on the other, deteriorated, and the wife returned to Germany (Red 45C-F).

29 In early 1997 the husband and the son had a violent argument about the financial affairs of the family. The husband pleaded guilty to various offences relating to the use of a .22 rifle and was placed on a two year good behaviour bond (Red 46C-J).

30 On 28 April 1997 the husband and the son signed, in Australia, a Management Agreement pursuant to which the son was to manage the Australian farming properties while the husband went to Germany to attempt a reconciliation with the wife. It provided for six weeks’ notice of termination. When the wife signed it in Germany on 14 May 1997, she changed that period to six months without the husband’s consent (Red 46L-V; Blue 1/55).

31 From March 1998 relations between the husband and the daughter became bad (Red 47U-Y).

32 On 30 June 1998 the husband purported to terminate the Management Agreement with effect from 10 July 1998 (Blue 2/265).

33 On 7 August 1998 the husband was served with ex parte orders of the Family Court obtained by the wife on 3 August 1998.

34 On 21 September 1998 the Family Court made an order in the following terms:

“That Oliver Damberg continue to operate the farming business as manager and in relation thereto:

(a) account to each of the parties for the operation of the business on a month to month basis;

(b) pay all monies received by him as a result of his management of the business into the account of the husband and the wife in accordance with Order No 2 above.”

The Issues On The Appeal

35 In outline, the issues on the appeal were as follows.

(a) Was the presumption that the transfer of the German properties by the husband to the children was an absolute transfer rebutted with the consequence that the children only held on resulting trust?

(b) If the presumption of advancement were not rebutted, was the husband estopped from denying that it was not rebutted?

(c) Was the first payment made by the son on 4 July 1989 out of his own property?

(d) Was the husband disentitled from relying on any resulting trust by reason of his avoidance of German capital gains tax?

(e) Were the payments made by the children sourced from the German properties loans?

(f) If the payments made by the children sourced from the German properties were not loans, did the children have an equitable entitlement to recover them or a property interest reflecting them?

(g) Was the son entitled to recover $7,377.79 on a quantum meruit notwithstanding the husband’s letter purporting to terminate the Management Agreement?

(h) Assuming that the appeal were dismissed or substantially dismissed, what costs order should be made in relation to the trial?

Was the Presumption of Advancement in Relation to the German Properties Rebutted?

36 The first main issue considered by the trial judge was whether the German properties acquired by the children in 1983 and 1988 out of which the advances made to the parents were sourced were owned by the children on resulting trust for the husband, or absolutely. The question was whether the presumption that the placing of property in the name of a child where the costs of purchase were paid by the husband, which raises a presumption that the husband intended to make a gift to the child, had been rebutted. The trial judge found that it had been, and the husband accepted this finding before moving to arguments critical of the reasoning about tax avoidance. On the other hand, the children attacked the trial judge’s finding on the presumption of advancement, before moving to arguments defending the trial judge’s reasoning about tax avoidance.

37 Whether the presumption was rebutted is thus a critical issue, for if the children succeed on it, the merits of the trial judge’s reasoning on tax avoidance do not arise.

38 It was common ground between the parties on the appeal that with the exception of the first payment by the son, all payments made by the children were sourced from properties in their names. Whether that was also true of the first payment is issue (c) on the appeal.

39 The trial judge found that the presumption of advancement was rebutted. He said (Red 63H-J):

“The fact is although the husband so far as I can see never told the children point blank that the transfers were anything but gifts he in fact never had the intention of transferring the equitable title to the children.”

“I have a high opinion of the husband in this matter but neither he nor the other two adults involved would have been highly motivated by scruples, if it was possible to avoid any significant taxation.

….

He went through all the motions at the time. He listened to his tax accountant, Mr Stiegler, but he always had strongly in the back of his mind that the whole manoeuvre was merely for tax purposes and had no relevance to real life. It goes without saying that at the time the parties saw Mr Stiegler and got the advice neither they nor Mr Stiegler had the slightest idea that the family would later break up. The view that I have expressed as to Mr Damberg’s lack of intention to pass the full title is confirmed in his inability in the witness box to concede that a certain act either amounts to a gift or does not amount to a gift. English is by no means Mr Damberg’s preferred language but it was plain that he had in his mind, although he would not use such terms, some concept of conditional gift. In other words, his view was that if he made a gift at a point when the family were all on good terms and only made it because they were on good terms he was entitled to revoke that gift later if the family broke up. That is almost exactly what happened.”

“… in general I formed the impression that I would accept the husband’s credit in this matter ahead of Oliver or the wife. In the main I have few objections to Nicole’s evidence. The only thing that I would say is that both Nicole and Oliver gave evidence of father to child conversations which in no way had the ring of truth. Admittedly they had to be translated from German into English and father/child conversations may lose their real flavour under such circumstances but it seems to me that the types of conversations which Oliver and Nicole alluded to with the husband putting his arm on their shoulder and looking out into the wide blue yonder and saying, ‘One day this will all be yours’, was in fact most unlikely to have occurred. I am not sure if it did occur that it favoured the children but they said it occurred and the husband denied it. It did not seem to be like the husband, as I saw him, but more importantly it was impossible for me to reconcile conversations like that with the husband clearly making these gifts as a result of taxation advice.

The only purpose it seems to me in such conversations is to say: Look, I am not going to give you anything at the moment but when I die you will get your reward. As I say, so far as whether those conversations occurred or not I certainly accept the husband’s evidence in preference to the other adults involved. All in all I found the husband a truthful witness but where he did stray was because he confused his motivation and what ought to have happened with what in fact did happen. But in the main, I thought he was trying to tell me the truth.”

40 It cannot be said that the language recording the trial judge’s conclusions about the presumption of advancement was closely reasoned. The trial judge did not, for example, set out in one place the husband’s evidence on his state of mind, the evidence of the children and Mr Stiegler about conversations tending to reveal his state of mind, and objective material bearing on the husband’s state of mind, and proceed to analyse that material. Indeed, to some extent, there were conflicting trends in the evidence not squarely confronted and resolved in the trial judge’s reasoning. Thus he said the following of Mr Stiegler’s evidence (Red 65X-66M):

“I should deal with Mr Stiegler’s evidence. He gave evidence by international telephone hook-up. His evidence was given in excellent English and was extremely believable. He was in no doubt that the whole arrangement was performed on the basis [of what] the husband had said, that is that it was a gift in order to avoid a particular provision of German taxation that if more than three items of real estate are sold in five years then capital gains tax is payable not only on those in excess of three but on the first three and all in excess of three.”

41 The legal background to the attacks by the children on the trial judge’s reasoning in relation to the presumption of advancement is as follows.

42 There is a presumption that where one or more parents convey property to a child, the parent or parents intended to give the child the beneficial interest in the property, not merely the legal title. That presumption can be rebutted by showing, on the balance of probabilities, that the parent or parents did not have that intention. In the present circumstances, where the husband alone transferred the property, it is his actual intention alone which is to be ascertained: Calverley v Green (1984) 155 CLR 242 at 246-251 per Gibbs CJ.

43 It has been said that although the presumption is rebuttable, it does “not … give way to slight circumstances”: Shephard v Cartwright [1955] AC 431 at 445 per Viscount Simonds, quoted in Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 at 365 by Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ. According to Viscount Simonds, the quoted words were uttered by Lord Eldon LC in Finch v Finch (1808) 15 Ves Jun 43; 33 ER 671; in fact they were not, though they appear in the headnote, though the expression “slight circumstances” was used by the losing counsel, Sir Samuel Romilly, in argument (at 48 and 673), and though Lord Eldon LC said that the “presumption is not to be frittered away by nice refinements” (at 50 and 674). There are other authorities suggesting that the standard of proof is higher than the normal civil standard. In Grey v Grey (1677) 2 Swans 594 at 598; 36 ER 742 at 743, Lord Nottingham LC said:

ergo

In Re Kerrigan; ex p Jones

44 However, A W Scott and W L Fratcher, The Law of Trusts (4th ed) vol V para 443 pp 194-196 said:

“It has been said in a number of cases that the presumption of a gift where property is purchased in the name of a relative can be rebutted only by evidence that is strong and clear, or as it is said in some cases by conclusive or indubitable evidence. There is no reason, however, why the payor should be required to produce evidence of this character. The better view is that it is necessary to produce such evidence as is required to establish any other fact. As the court said in one case: ‘It is the intention of the parties in such cases that must control, and what that intention was may be proved by the same quantum or degree of evidence required to establish any other fact upon which a judicial tribunal is authorised to act’.”

Hartley v Hartley

Jacobs’ Law of Trusts in Australia

Briginshaw v Briginshaw

Drever v Drever

45 In Shephard v Cartwright [1955] AC 431 at 445 Viscount Simonds said at 445-6:

“It must then be asked by what evidence can the presumption be rebutted, and it would, I think, be very unfortunate if any doubt were cast (as I think it has been by certain passages in the judgments under review) upon the well-settled law on this subject. It is, I think, correctly stated in substantially the same terms in every textbook that I have consulted and supported by authority extending over a long period of time. I will take, as an example, a passage from Snell’s Equity, 24th ed., p. 153, which is as follows:

‘The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration … But subsequent declarations are admissible as evidence only against the party who made them, and not in his favour.’

I do not think it necessary to review the numerous cases of high authority upon which this statement is founded. It is possible to find in some earlier judgments reference to ‘subsequent’ events without the qualifications contained in the textbook statement: it may even be possible to wonder in some cases how in the narration of facts certain events were admitted to consideration. But the burden of authority in favour of the broad proposition as stated in the passage I have cited is overwhelming and should not be disturbed.”

Charles Marshall Pty Ltd v Grimsley

Calverley v Green

Bryson v Bryant

Snell’s Equity

Lewin on Trusts

Law Relating to Trusts and Trustees

Principles of the Law of Trusts

Jacobs’ Law of Trusts in Australia

Sidmouth v Sidmouth

Davies v The National Trustees Executors and Agency Co of Australasia Ltd

Devoy v Devoy

Dumper v Dumper

Davies v The National Trustees Executors and Agency Co of Australasia Ltd

Drever v Drever

Martin v Martin

Evidence Act

46 The evidence relating to the husband’s intentions in relation to 64-66 Dillweg, 68-70 Dillweg and 60-62 Dillweg, in the order in which it was given, property by property, was as follows.

47 So far as the transfer of 64-66 Dillweg to the daughter is concerned, the daughter’s affidavit dated 29 March 1999 said in paragraphs 3-5 (Blue 1/2G-J):

“3. In or about late 1983 I had a conversation with my father. He said to me, ‘I am going to give you some of the land at Dillweg. We will build two houses on that land. This will give you security, will always be there for you. It will be a substantial asset for you’. I said ‘Thank you’. My father said ‘I am doing the same for Oliver. We will have to subdivide the land and you will have to attend the Solicitors and sign the papers when they are ready’. I said ‘I will’.

4. My father and I went to the Solicitors and my father transferred to me Lots 64 and 66, which were next to the blocks he gave to Oliver (Lots 68 and 70).

5. I went to my bank and borrowed the money to build a house on each block. Oliver and my father’s other tradesman built the house on my blocks and on Olivers. They were constructed at about the same time in about the first half of 1984.”

48 The husband’s affidavit dated 8 April 1999 said that the daughter made no financial contribution to the costs of the lots transferred, or to the costs of construction of a building on them (Blue 1/65P-W). The affidavit was silent as to the husband’s intentions.

49 By an affidavit of the husband dated 3 May 1999 which replied to the daughter’s affidavit (though for some reason it described the daughter’s affidavit as being dated 9 April 1999), the husband denied the conversation she narrated. He said (Blue 2/221L-P):

“I deny the conversation between Nicole and I as alleged. I say that the land at Dillweg was transferred to Nicole upon receipt of certain advice from my accountant. At that time, Nicole was about 16 years old. I asked Nicole to sign documents to effect the transfer of the land into her name. I did not discuss with Nicole or did I have any conversation with Nicole to the effect that the land was to be transferred to her for her benefit.”

50 In cross-examination to which this Court was not taken, the daughter admitted it was not her loan (Black 1/224Q). She gave a somewhat different account of the relevant conversation (Black 1/228F-229C and 229K-M):

“I see and did your father - how did your conversation commence? In direct speech?

Yes, who commenced the conversation? I guess it has been my father.

What do you say he said? He said to me words to the effect, because I was together with a boyfriend and I was - at that time I was really much interested in marry. He told me: look, before you do any such things I will give this to you to make sure that you have your own financial security and that you can stand on your own two feet whatever will happen.

That is what your father said? Yes.

What did you say? That is a really good idea.

Was that the end of it? No.

What happened then or what was said then? He said to me words to the effect or something like that: well, maybe it’s better you do not hurry up with the marriage or just - just wait a little bit more time because that was his opinion at that time. Assets you may receive during the marriage will be separated in a divorce and in case he would have given me some more assets or some more properties or some more houses or whatever, they would have been separated in a - maybe, or whatever called, in a divorce that might have had occurred so he asked me just to tell him before I really want to go to marry, tell me, because I want to give you all the things that you should be given or that belong to me or should be shared by Oliver and me. You know, he just didn’t want to wait until his death to transfer all these things.

Now, you were in 1983, I think, 17 years of age, or was it 16? Yes, something like that, yes.

In ’62 you were born? I what?

Born in March of ’67, I am sorry. The German 7 has floored me again. Born in 1967? Yes, I know it sounds funny but that’s what he told me.

Well, that is highly relevant, isn’t it, if that is what he told you? Yes, that’s what he told me.

And you at all times knew that it was critical to put down exactly, as best you could, what was said? Yes, I know that is important that it’s the truth that I say, I know.

…

You see ma’am, the sworn evidence you gave in paragraph 3 of your affidavit you have now been shown, made no reference to a boyfriend, did it? No, there’s nothing said about boyfriend.”

51 In cross-examination the husband admitted that the contract pursuant to which the land was transferred to the daughter described the transaction as a gift (“schenken”), but said it was not intended as a gift (Black 3/649F-M). He said it was motivated by a desire to reduce taxes after taking advice from Mr Stiegler, and he trusted the daughter to give it back (Black 3/649Q-650K). In cross-examination to which this Court was not taken, the husband denied the conversation narrated in the daughter’s affidavit. His evidence was (Black 3/734N-735E):

“With respect to Nicole I suggest that you had a conversation with her in about 1983 when you said to her you were going to give her some of the land at Dillweg? Never. Forget it, never.

And that two houses would be built on the land and this would give her security? No. I told her: Only I give - you have to sign the contract by the solicitor, I give you two blocks that I can build houses in your name and can sell that a bit earlier, but not for the ---

Well now, that doesn’t appear in your affidavit, does it, that conversation? I told you many times she was seventeen. I have two million mortgage on my head.

Yes, but that conversation - just a minute - that conversation you just gave evidence of doesn’t appear in your affidavit, does it? In my affidavit, no.

You just made that up, I suggest, haven’t you? No.

HIS HONOUR: Tell me again what you said? You said that you told her you’d give her two blocks, is that what you said? I told her she has to go to the solicitor and sign the - the contract. I make the contract that I want to transfer property from my name to her name and then I can build houses on this and have the things, when I want it I can sell that quicker. Only for the tax reduction that I have not - any - any building in my own name. That I make that until 1970 when I give the first block to the other people.”

52 So far as the transfers to the son are concerned, he gave the following evidence in his affidavit of 31 March 1999 about 68-70 Dillweg. He said he assisted the husband in building some units on another block of land, and after the work was finished, his father said (Blue 1/20V-21K and 21Q-T):

“’Instead of you getting your profit from this job now I will transfer to you one of the blocks at Dillweg.’ Dad and I had previously spoken of subdividing the land which was then owned by him at Dillweg. Dad said to me: ‘I think we should subdivide Dillweg into three blocks initially. On the first block we will build a double house similar to the ones we have built a few years ago. I will transfer about a quarter of the land and put it in your name and we will build a double house on that land. That will all be yours and will give you a start to put you on your feet. Are you happy with that?’ I said: ‘Thank you, that is reasonable.’ Dad said: ‘I will also give a block to Nicole and we will build a double house on her block. That way she will be independent.’ I said: ‘I’m happy with that.’

…

At one time before we commenced to build the double houses on blocks of land in my name and the blocks of land in Nicole’s name, my father said to me: ‘If, after we build the houses, you want to live in one house with, say, your girl friend you can sell the other, pay off your mortgage and live rent free.’”

53 The son gave the following evidence about 60-62 Dillweg (Blue 1/24KQ):

“This particular parcel of land being the third parcel subdivided was purchased by me from my father in 1988 after I received a gift of 20,000 deutschmarks from my maternal grandparents. The purchase price of that land was approximately 80,000 deutschmarks. I borrowed the balance from my bank and I paid my father the full purchase price at the time of acquiring title to that parcel of land. I then borrowed the necessary money and built six units on that land.”

54 The husband in his affidavit of 8 April 1999 said of 68-70 Dillweg: “I transferred … two lots to Oliver’s name” and said that the son made no financial contribution to the cost of acquiring the land or constructing buildings on it (Blue 1/65P-X). The affidavit was silent as to the husband’s intentions. In that affidavit the husband said of 60-62 Dillweg (Blue 1/66H-T):

“A few years later namely, some time in or about 1987/1988 upon advice from my accountant, I further transferred 2 lots bearing numbers 62 and 60 to Oliver, and kept the remaining lot bearing numbers 58 and 56 in my name solely. I developed the land by building 6 flats on each of the double lots. I paid or caused to be paid all the construction costs.

I was solely responsible for the work involved in the development and construction of those flats including organising finance with the bank using the block as security and any other property held in my name at the time as joint security. I developed the blocks by putting the floor plan together, designing the building, organising the tradesmen, buying materials, supervising tradesmen, working on the sites with the tradesmen and managing the rental up until they were sold respectively in 1992 and 1995.

At the time when the properties at 62 and 60 Dillweg Ahlen Dolbery were placed into the name of my son, Oliver was working as an apprentice with Sennekamp. His income was approximately DM 1,200 per month.”

55 The husband in an affidavit of 3 May 1999 in answer to the son’s affidavit denied the conversations about 68-70 Dillweg (Blue 2/229P-230P):

“(23) I deny the conversation between Oliver and I as alleged. I further deny that I had any conversation with Oliver to that effect. I say that in or about 1982/1983 I transferred two (2) blocks of land at Dillweg which was owned by me and subsequently subdivided to Oliver and Nicole upon receipt of certain advice from my accountant. At that time Nicole was only 16 years old and Oliver was only 18 years old. I told them to go to the solicitors office to sign some documents in order to effect the transfer of the properties to their name. However, I have never had any conversation with Oliver and Nicole to the effect that I was transferring the property to them for their benefit.

(24) I deny the contents therein and say that Nicole and Oliver did not have any assets except for land which was transferred to them by me. From the best of my recollections, I borrowed 300,000 deutschmark to purchase the whole block of land. After subdivision, the land continued subject to mortgage to Volksbank, Hamm. I then borrowed a further 270,000 deutschmark for construction of two (2) duplexes on the blocks transferred to Oliver and Nicole. The loan was applied for by me from Volksbank, Hamm. As Oliver is the registered proprietor of the said block, all government documents would issue in Oliver’s name such as building certificates. Otherwise, I was responsible for the acquisition, and construction of the buildings. I was also responsible for finding tenants and negotiation of rental payable since completion of the buildings. All rental was deposited into my bank account from which all the mortgage repayments, rates and associated costs and expenses were paid.

(25) I deny the alleged conversation.

(26) I refer to my reply to paragraph 25.

(27) I do not admit the contents therein.”

56 He also denied or did not admit the son’s evidence about the acquisition by the son of 60-62 Dillweg (Blue 2/231R). In particular, he denied receiving approximately DM80,000 in relation to that transfer.

57 In cross-examination to which this Court was not taken, the son’s evidence about the transfer of 68-70 Dillweg was strongly challenged (Black 2/358M-Q and 359D-367Q) but he continued to adhere to it. In cross-examination to which this Court was also not taken, the son was asked about conversations in relation to the purchase from the husband of 60-62 Dillweg but could not remember them (Black 2/390E-391F).

58 In cross-examination about 68-70 Dillweg the husband gave similar evidence to that which he had given about the daughter’s lots, namely that the property was not a gift to the son even though the contract said it was (Black 3/647U-W and 649M), and gave similar evidence about its role in tax reduction and his trust in the son. In cross-examination about 60-62 Dillweg he said he was not aware of the truth of the son’s evidence about funding the DM84,000 purchase price from an inheritance and a loan and gave no distinct evidence about his intention (Blue 2/644B-647T). The evidence about the transfer of 68-70 Dillweg being designed to reduce tax and the husband’s trust in his children was not initially applied to the acquisition of 60-62 Dillweg (Black 3/651T and 652D and H), but then appeared to be adopted (Black 3/653Q-T and 654C).

59 In cross-examination to which this Court was not taken the husband denied receiving the purchase price of DM84,000: Black 2/415F. At Black 3/644H-J he said he was not sure whether he received it. At Black 3/732Q he denied receiving it. He said it was not his intention to sell the land to the son: Black 2/415J.

60 The court was not taken to any cross-examination of the husband specifically on the conversations which the son alleged.

61 Mr Stiegler gave detailed evidence about the advice he gave the husband about the Dillweg transactions. This Court was taken to it in detail and it will be analysed below.

62 One issue that arose on the evidence at trial but which did not arise on appeal was whether the son had contributed work to the improvement of properties. His evidence suggested that he had; the husband said he had not. On appeal the son made no attempt to argue that he had any equitable interest by reason of contributions of that kind. The sole issue was whether the husband had rebutted the presumption by establishing an intention not to give.

63 A resolution of the conflicts of testimony between the husband and his children would ordinarily call for a detailed analysis of that testimony. The trial judge did not record any detailed analysis of that kind. There was a fuller, but not complete, analysis by counsel on both sides before this Court.

64 In effect, the children submitted that the husband’s statements of intention were inconsistent with Mr Stiegler’s evidence. Mr Stiegler was a Chartered Accountant of thirty years’ experience by the time of the trial (Blue 2/213K). He prepared “partnership statutory accounting returns” for the husband and wife from 1978 until 1992 and “statutory accounting declarations” from the husband from 1992, the son from 1983 to 1992 and the daughter from 1984 to 1992 (Blue 2/217J-M). He acted for the husband in relation to the following matters:

“(a) Preparation of statutory annual income tax declarations and lodgment of same.

(b) Advice on capital expenditure evaluations.

(c) Advice on various investment portfolios and planning.

(d) Negotiations with bank with respect to loan applications and to provide information as and when required by the bank to assist with the loan applications.

(e) Preparation of investment plans and budget projections” (Blue 2/213N-S).

“Since 1978, I have been actively involved with Wilfried’s financial affairs in that Wilfried often discussed with me his investment plans before decisions were made and acting on my advice. He made decisions later recorded in the documentation and statutory declarations I prepared on his behalf.

On the basis of my discussions and documents I prepared for Wilfried, I recorded and prepared income tax declarations which confirmed that Wilfried had developed a number of properties in Germany since 1978. Wilfried developed vacant land and sold the same later for profit which was used for further developments together with money borrowed from the bank.

To my knowledge he always improved the land by construction of houses, flats, units or townhouse and then managed them as rental property for a period of time until the sale.

On many occasions, Wilfried was often accompanied by his wife Bruenhild Damberg in my office and consulted me with his business and investment plans before decisions were made.

Wilfried developed many properties some of which were registered in his name and some of which were registered in the names of his wife Bruenhild Damberg, and his children Oliver Damberg and Nicole Damberg.

In the case of Oliver Damberg the following properties were registered in Oliver’s name:

(a) …

(b) 68-70 Dillweg, Dolberg, Germany;

(c) 60-62 Dillweg, Dolberg, Germany.

In the case of Nicole Damberg, the following properties were registered in Nicole’s name:

(a) 64-66 Dillweg, Dolberg, Germany;

(b) …

In the case of Bruenhild Damberg, the following properties were registered in Bruenhild’s name:

(a) 69 Dillweg, Dolberg, Germany;

(b) …

(c) … .”

65 His evidence about the Dillweg properties was as follows (Blue 2/215G-217H):

“… in or about 1983, Wilfried came to my office and sought advice from me in relation to his plans of developing a vacant block of land being Lots 508-515 Dillweg, Dolberg which he purchased in 1981 for 332,010 deutschmark. I recall Wilfried, his wife Bruenhild and I had discussions regarding Wilfried’s development plans and his plans to subdivide the land. Although I cannot recall the exact contents of the conversation, I do recall we had a conversation discussing the following matters:

(a) The source of funds for the development. It was discussed whether to borrow money from the bank or to realise cash from the sale of the property or to borrow part and realise part of the funds.

(b) Any tax liabilities on profit upon realisation of those properties once developed.

(c) Wilfried’s development plan for the land.

(d) The tax implications on the sale of the property if transferred to the wife and the children.

At the time, the applicable taxation law in Germany concerning the profit from the sale of real property was such that if an owner sold more than three (3) properties in 5 years, all the profits derived from the sale of those properties would be taxable.

On the basis of my instructions, I recall advising Wilfried Damberg in the presence of his wife as follows:

(a) It would be my advice to divide the land in Dillweg and transfer some to other members of the family.

(b) It would be better to have some of the subdivided land transferred to the names of the children and to build the house in the children’s names.

(c) Upon receipt of those properties, each of the children have to have income tax declarations prepared declaring rental income from those properties.

After discussions referred to in paragraph 15 Wilfried had further conferences with me and informed me of his decision to subdivide and transfer part of the property to his two (2) children Oliver Damberg and Nicole Damberg. From my instructions, Wilfried’s wife Bruenhild already had a number of real properties registered in her name at that time and the transfer of further property to her was not a commercially viable option in order to utilise the benefits as provided by the then German Tax Laws.

Soon after, I accompanied Wilfried Damberg to the bank for the purpose of raising funds for the development of the land. I recall that Wilfried and I discussed Wilfried’s development plans and transfer part of the land to the children as part of his development plans with the bank manager. The loan was approved to enable Wilfried to complete the construction of two (2) double houses on the lots proposed to be transferred to Oliver and Nicole. The mortgage was applied for by Wilfried and the documents were signed by him.

Subsequent to the subdivision and transfer of the land to Oliver and Nicole, 64-66 Dillweg, Dolberg was transferred to Nicole and 68-70 Dillweg, Dolberg was transferred to Oliver. I was advised the whole of the cash component came from Wilfried Damberg and the bank provided the balance of funds required for the costs of subdivision, transfer and construction.

Prior to the transfer of the Dillweg property to Oliver Damberg, also as part of the financial planning and to utilise the benefits that were provided by the German Tax Law, from my instructions …

Subsequent to those transactions, Wilfried in September 1988 transferred a further block of the subdivided Dillweg property number 60-62 Dillweg, Dolberg to Oliver and developed the land by erecting 6 flats on the said property.

The above transactions were designated to realise benefits provided by the German Tax Law in that it allows an individual to buy and sell three (3) properties in 5 years without having to declare the profit received from the sale of those properties.”

66 At the trial counsel for the husband asked the trial judge to find Mr Stiegler to be “a witness of truth” and said: “No criticism could be attached to any aspect of his evidence and it should be wholly accepted” (Black 4/877U-V; see also 877B). The trial judge said in argument that “he sounded pretty good” (Black 4/877D). The trial judge said in his judgment (Red 65X-66G):

“I should deal more with Mr Stiegler’s evidence. He gave evidence by international telephone hook-up. His evidence was given in excellent English and was extremely believable. He was in no doubt that the whole arrangement was performed on the basis [of what] the husband had said, that is that it was a gift in order to avoid a particular provision of German taxation that if more than three items of real estate are sold in five years then capital gains tax is payable not only on those in excess of three but on the first three and all in excess of three.”

67 Mr Stiegler’s evidence in cross-examination conveyed a rather different impression from that conveyed by his affidavit. In view of the heavy reliance which the arguments of the children placed on it, it is desirable to set it out in some detail. First, Mr Stiegler repeated his evidence about the impact of German law on the taxation of capital gains if the same person sold more than three properties in five years (Black 4/804J-L). He then gave the following evidence (Black 4/804N-805T):

“Does it make any difference if the owner of the property is a trustee? Is a what?

Is a trustee, that is that they hold the property upon trust for somebody else? No.

You understand what I mean by that? Yes, of course, if it is in trust, it is to be paid to.

If the properties are in different names on their title but --- ? No, say it again please.

Different names, names of different people, do you understand? No, say it again please.

If the properties are - if there are say five properties but each is in the name of a different person --- ? Yes, I see.

But those --- ? That was the reason because I gave the advice to Mr Damberg you are four members in your family and give properties, one, two, three to your wife, give one, two, three to Nicole and give one, two, three to Oliver because you have the possibility to sell 12 properties without paying taxes because the properties are in different names.

And to do that did you tell him that he has to give the properties to his wife and each of the children? Yes, that was my advices.

But if what he did was that he transferred the properties into their names but they held the properties upon trust for him so that he was the real owner of all the properties, does that make a difference to the tax consequences. Do you understand? It is not - if you do it in trust for example it is my property but I give it to you but only in trust for me.

Yes? Then he would have paid the taxes and that was what I told him. If you give the properties as a gift to the children and to your wife, they are off and out from you but when they sell it, they will not pay taxes you know, three properties, no taxes. That is what I told him and he made the registrations on the name of his family and that was okay and that if Oliver sold for example or Nicole, there were no taxes all these years for selling it, you know.

Yes? But in trust, it is as I understand a trust is I give my property to you but only in trust. In reality it is mine.

That is right? That is what I understand under trust.

Now is that had of --- ? But he gave it to them and was very - he said this is my family and my children and the whole thing together and therefore I can do that because everything of the money is coming in the family cash.

Yes? That is what he thought, we are one family and I give one, two, three to him, to her and so on.

Yes but if the properties were held on trust for him by the members of the family and they sold more than three in five years, would they have to pay the tax? Yes.

Is that because the real owner is the same person in each case? Yes.”

68 In that evidence Mr Stiegler revealed a clear understanding of the difference between the husband “giving” the children property outright, in which case he lost ownership of it and it was theirs, and the husband “giving it but only in trust”, in which case “in reality” it remained the husband’s. He also stated clearly that capital gains tax could only be avoided by an outright gift; if the transfers were only on trust and three properties were sold in five years then tax would be payable.

69 After being referred to a letter which the wife wrote to him on 20 February 1985 (Blue 2/243), Mr Stiegler gave the following evidence (Black 4/806F-S):

“The letter is in German, but we have been told that, in English, it is tell you that the land at Dillweg had been divided into eight parcels? Yes.

That two were given to Oliver and two were given to Nicole? Yes.

Is that your understanding of the letter? Yes. You know, all coming from my earlier advices I always gave Mr Damberg - you have to count it with your fingers; always three parcels or three properties to your family and count the years, one two three, five years, and now you can, without tax, selling if you want to.

Right? The problems all coming this registration for the children and for Oliver but in trust, as a gift, for the financial offices, it has to be a gift otherwise he would have paid taxes if it was in trust, but what they meant, what Mr Damberg always meant, we are one family - all coming in one spot, and therefore I can do that. They are very good to each other and therefore I will do that.

Did you advise him that for tax purposes he must actually give the properties to the wife and children? Yes.

Is your understand[ing] that that’s what he did? Yes. He just did what I told him. Do that, and he did it, and he always thought it is mine because all the money and so on is coming from my side and we are a good family together. I can do that, and in reality that if I will go Australia, for example, one day, I would have all this money from selling because we are one family and I can buy me a ranch in Australia, or so on.”

70 Here, after reiterating that tax could only be avoided by an outright gift, and that that was what he told the husband, Mr Stiegler said that that was what the husband actually did. He also repeated a point made earlier: that it was the husband’s view that one day he would consolidate all the assets “because we are one family”.

71 The evidence continued (Black 4/806U-807L, 807P-T and 808M-Q):

“Rather than stopping, your Honour, I just thought I’d make a submission later about this. Mr Stiegler, was there any document in your files that you can remember where it was ever indicated to you that these properties would be held by either of the children on trust for Mr Damberg? No, no.

159 In Royster v Cavey [1947] KB 204 the Crown nominated the superintendent of a factory in which the plaintiff was injured as its occupier. Scott LJ said (at 208):

“As a matter of fact …, the defendant so named had nothing whatever to do with the accident; he was not the occupier of the premises; he had not been guilty of any negligence, nor of any breach of statutory duty under the Act. Those allegations, that he did occupy that position and was so guilty, were accepted by the defence to the extent of not raising the question of his personal position.”

“The result is, in my view, that this court cannot pronounce judgment against a defendant when in truth and in fact he is not under any liability at all.”

160 In short, the courts are averse to pronouncing judgments on hypotheses which are not correct. To do so is tantamount to giving advisory opinions and to encouraging collusive litigation. On the other hand, the courts will act on admissions of or agreements about matters of fact where there is no reason to doubt their correctness. But they are reluctant to do so where there is reason to question the correctness of the facts admitted or agreed. A similar caution appears to apply in relation to an assumption or agreement that foreign law is the same as the lex fori.

The present problem considered

161 Strictly speaking the issue of German law arises at two levels. If the parties had never come to Australia and had been litigating in a German court, German law would determine whether the acts of the husband in 1983 and 1987 created “equitable” rights in himself. The relevance of German law at that level cannot be altered by the fact that after those acts were carried out, the parties moved to Australia. The parties in this litigation assumed that German law on the subject of whether the husband’s acts in 1983 and 1987 created “equitable rights” was the same as Australian law. The parties then proceeded to a contest over whether what Australian law calls the presumption of advancement was rebutted, and assumed that Australian law applied. There was some reason to accept the validity of the parties’ assumption that German and Australian law were in these respects similar, since Mr Stiegler appeared to be familiar with the existence in German law of ideas similar to those underlying resulting trusts in Australian law. Even if that process of equating German with Australian law is permissible, a second order problem arises when the children seek to escape the consequences of the trial judge’s finding of resulting trusts by relying on the Martin v Martin line of authorities and on Nelson v Nelson. Those cases compel attention to the precise terms of the relevant prohibition, if any. Those terms can only be found in German law, and in what is probably a statutory enactment by the federal German legislature. The question is whether the assumption that that enactment is to the same effect as Australian enactments can legitimately be made.

162 To state exhaustively when a court will not assume that the unproved provisions of foreign law are identical with those of the lex fori would be a difficult task. It is not necessary to perform it in this case. The issue in this case is whether it should be assumed that German law in relation to the avoidance or evasion of capital gains tax is the same as Australian law. In my opinion it should not. It is to be noted that the relevant law, on the contention of the children, must combine many characteristics which have pointed against the making of such an assumption in past cases. German law on the point must be statutory. German law is not a common law-based system. According to the children, the conduct of the husband was criminal and fraudulent: whether it was criminal depends on the terms of legislation, and whether any fraud had relevant consequences depends on the terms of the legislation also. There is a risk that there may be special machinery and highly individual provisions in German law as there are in Australian tax law: indeed the only evidence of German law, from Mr Stiegler, suggests that it is quite different from Australian law. Taxation law cannot be assumed to be a field resting on great and broad principles likely to be part of any given legal system.

163 Beyond those considerations, however, there is a decisive factor. The resistance of the children to the resulting trusts which the trial judge found depends on showing some aspect of German law defeating those resulting trusts. They appeal to Nelson v Nelson. The High Court majority in Nelson v Nelson called for a close analysis of the relevant German statutory provisions. To substitute for an analysis of relevant German statutory provisions an analysis of irrelevant Australian statutory provisions is simply to fail to carry out the mandate of Nelson v Nelson.

164 For the above reasons the attempt by the children to escape the consequences of the trial judge’s findings of resulting trusts fails. The reasoning of the trial judge on this part of the case is invalid because it does not face up to the anterior question just discussed. The answer to that question makes it unnecessary to consider the validity of the submissions of either the husband or the children summarised above.

Enforcement of a foreign revenue law

165 If the case were to be decided on the basis which the parties assumed was correct, namely that the German and Australian law of capital gains tax are the same, in my opinion the resulting trusts in favour of the husband must still be recognised. Had the transactions all occurred in Australia, Nelson v Nelson would require that Australian tax law be complied with in the sense that the following conditions would be imposed on the husband. He would be obliged to communicate with the Australian tax authorities with a view to ascertaining the amount of tax escaped, and now payable, together with interest and penalties, and obliged to pay the relevant amount. The fact that the evidence before the court does not permit the calculation of what is owing does not matter, because in Nelson v Nelson (1995) 184 CLR 538 the majority granted the parties time to reach agreement on the relevant sum, and in default of agreement contemplated that the matter would be referred to the trial court for an appropriate finding (at 572 and 618-9).

166 But the transactions did not occur in Australia, and any entitlement to unpaid tax lies not with the Australian tax authorities but with the German tax authorities. What conditions are appropriate in those circumstances? Either the German tax authorities have an entitlement or they do not. If they have no entitlement, no condition is appropriate. If they do have an entitlement, the imposition of a condition that they be communicated with so as to permit the calculation of what is owing, and the condition that any sum so calculated be paid, would amount to the enforcement of a foreign revenue law.

167 The relevant principle does not turn on whether the foreign State is actually suing for a tax debt. The German tax authorities are not parties any more than the Egyptian tax authorities were in Rossano v Manufacturers’ Life Insurance Co [1963] 2 QB 352, the Singapore tax authorities were in Bath v British and Malayan Trustees Ltd (1969) 90 WN (Pt 1) (NSW) 44 or the Western Australian tax authorities were in Rothwells Ltd (in liq) v Connell (1993) 119 ALR 538. In Peter Buchanan Ltd v McVey (a decision of the Supreme Court of Eire reported at [1955] AC 516), Kingsmill Moore J said at 527:

“Those cases on penalties would seem to establish that it is not the form of the action or the nature of the plaintiff that must be considered, but the substance of the right sought to be enforced; and that if the enforcement of such right would even indirectly involve the execution of the penal law of another State, then the claim must be refused. I cannot see why the same rule should not prevail where it appears that the enforcement of the right claimed would indirectly involve the execution of the revenue law of another State, and serve a revenue demand.”

Government of India v Taylor

Rossano v Manufacturers’ Life Insurance Co

Bath v British and Malayan Trustees Ltd

Rothwells Ltd (in liq) v Connell

168 Here the children contend that it is their right to prevent the resulting trusts from being recognised by reason of what they allege is non-compliance with German law. Under Nelson v Nelson, the only way in which the children’s right can be vindicated is by imposing a condition that the tax allegedly owing be paid. The “enforcement of the right claimed” by the children “would indirectly involve the execution of the revenue law of” Germany.

169 The children argued that for the prohibition on enforcement of the foreign revenue law to apply:

“there must be a claim by a party which amounts to a direct or indirect claim for the collection of revenue by a foreign country. There is no such claim.

The defendant is seeking equitable relief, namely, a ruling by the court that the properties were held upon [a] resulting trust for him but the court, not a party, if it had capacity to do so would impose appropriate conditions upon the grant of the relief.

If the court concludes that it is appropriate that relief only be granted on terms that he pay the tax interest and penalty to the German government, that is not the enforcement of a claim by a party for collection or payment of taxes.”

170 The reliance by the trial judge on Regazzoni v K C Sethia (1944) Ltd [1956] 2 QB 490 was misplaced. That decision does not contradict the rule against enforcing a foreign revenue law; it holds merely that a local court will not enforce a contract made with the object of breaking foreign laws, including revenue laws. As Denning LJ said at 516:

“if two people knowingly agree together to break the laws of a friendly country or to procure someone else to break them or to assist in the doing of it, then they cannot ask this court to give its aid to the enforcement of their agreement.”

Regazzoni v K C Sethia (1944) Ltd

171 Given that no condition amounting to the enforcement of German revenue law can be imposed, is the consequence that the resulting trusts are unconditionally recognised, or not recognised at all?

172 The husband referred to two passages in Nelson v Nelson (1995) 184 CLR 538.

173 At 563-4 Deane and Gummow JJ said:

Kasumu v Baba-Egbe

Mayfair Trading Co Pty Ltd v Dreyer

Pavey & Matthews Pty Ltd v Paul

Kasumu

174 McHugh J said (at 617):

Kasumu v Baba-Egbe

Mayfair Trading Co Pty Ltd v Dreyer

175 The husband submitted that just as relief could be granted to the wrongdoer notwithstanding the ability to impose terms overcoming the consequences of the wrongdoing (whether it was because of the statutory prohibition on imposing the terms, or an inability to mould them) so it could be granted to the husband here, assuming his conduct had been contrary to German law, notwithstanding an inability to impose terms overcoming the consequences of the wrongdoing arising from the need to avoid enforcing foreign revenue laws. The children offered no answer to that specific submission, and in my opinion it is valid.

176 In short, the children accepted that any unlawful conduct by the husband in relation to German tax law did not automatically invalidate the resulting trusts: they could be enforced provided satisfactory conditions overcoming the consequences of the unlawfulness were imposed. It was, however, necessary to ensure that any condition imposed on the husband as the price of recognition of the resulting trusts in his favour did not amount to the enforcement of a foreign revenue law. It is not possible to say what condition could be imposed, and whether it amounted to the enforcement of a foreign revenue law, unless something is known of German law. But the children contended that the same condition would be imposed in relation to the German tax authorities as would be imposed in relation to the Australian tax authorities if Australian tax law had been contravened. If that contention were correct, the condition would involve the enforcement of a foreign revenue law, and would not be imposed, leaving the resulting trusts operative. Even if the children were wrong in that contention, they have not called evidence of German law to exclude the risk that the doctrine of Nelson v Nelson would result in the enforcement of a foreign revenue law.

Were the Payments Made By the Children Sourced from the German Properties Loans?

177 This question only arises if the properties in the children’s names used to source the payments made by the children to the husband were beneficially owned by them. Since it has been concluded that they were not, and that there is no impediment to the husband relying on his beneficial entitlement, the question does not arise, and accordingly will be dealt with only briefly.

178 The trial judge said the following about the payments out of the properties in the children’s names (Red 65M-S and 66M-Q):

“There were certainly no words of gift at the time Oliver provided those moneys, in some cases, the case of the mortgages, he had himself to pay interest on the mortgages and what language was used was of a commercial kind not gift and there is simply no basis on which to assume or to find that those moneys were gifted by Oliver to his father.

…

The whole problem relates to the purpose of the schemes and the putting into effect of those schemes, the purpose was to avoid taxation and that purpose was put into effect and once that is found then in the absence of the funds being, to the Court’s clear satisfaction, provided back to the family as gifts then they must be treated as commercial advances and I intend to so treat them.”

179 The husband submitted that the trial judge ought to have found that the evidence did not establish that the advances were loans.

180 First, he submitted that the evidence of the children was equivocal and did not reveal an intention to effect legal relations. The children did, however, speak of the husband inviting them to “invest” their money in the Australian assets (Blue 1/3C-E and 26J), and the son attributed the language of the loan to the husband (Blue 1/29M). In cross-examination the daughter said that the husband asked her to “invest” the money in Australia (Black 1/239S). To “invest” money is either to acquire an interest in an asset with it, or to lend it. The evidence-in-chief was not wholly clear, and nor was the evidence of the daughter in cross-examination, but it was more than equivocal. The court was not taken to any cross-examination of the son on his evidence-in-chief.

181 Secondly, the husband submitted that he had denied the children’s evidence, and that the trial judge should have preferred his evidence to that of the children. It is far from clear, however, that the trial judge’s preference for the husband’s evidence to that of the son extends to this particular aspect, and the trial judge had only “few objections” to the daughter’s evidence. In my opinion no contradiction is established between the trial judge’s remarks on general credibility and the findings about the advances being loans.

182 Thirdly, the husband submitted that in the passages set out above the trial judge reversed the burden of proving that the advances were loans - a heavy one given that domestic dealings were involved - and placed it on the husband, not on them. In my opinion the passages on their true construction do not bear out that submission. The trial judge first found that the language was of “a commercial kind not gift”. He then said twice that there was no evidence of gift. That does not suggest that he misdirected himself on the burden of proof.

If the Payments Made By the Children Sourced From the German Properties Were Not Loans, Do the Children Have An Equitable Entitlement to Recover Them Or A Property Interest Reflecting Them?

183 This question does not arise. If it did, it would be very hard to answer it, since it involves making findings which the trial judge did not make in substitution for other findings which he did make in circumstances where the trial judge had to evaluate the precise meaning of conversations described to him by witnesses which he saw but this Court did not. However, the husband submitted that the use of the language of “investment” was “much more consistent with a contribution to the purchase price resulting in some sort of resulting trust than it is with their agreement [for] a loan”. He also referred to the possibility of a constructive trust, citing Hussey v Palmer [1972] 1 WLR 1286; [1972] 3 All ER 744, and the possibility of an equitable charge. The husband recoiled from the view that the court should act on any of these possibilities on the ground that a new trial would be necessary. Whatever the obscurities in the trial judge’s reasoning, he does appear to have held distinctly that the children did not advance the money by way of gift. If both contracts of loan and gifts are excluded as possibilities, there would appear to be force in the argument, if it were necessary to decide on its validity, that the advances must have been made in circumstances creating equitable rights in or in relation to the land. Since “Manacumble” has been sold, there can be no proprietary interest in it, but an order reflecting the rights formerly existing in or in relation to it in money terms could be made if necessary.

Was the Son Entitled To Recover $7,377.79 On A Quantum Meruit Notwithstanding the Husband’s Letter Purporting To Terminate the Management Agreement?

184 It was common ground that the only basis for recovery was on a quantum meruit. There was a tacit consensus between the parties that the change to the Management Agreement as executed by the husband and the son made by the wife rendered the whole Management Agreement void. It was also common ground, in the sense that the husband did not on the appeal, as distinct from at the trial, contend to the contrary, that the work done was not so poor in quality as not to warrant payment.

185 The findings of the trial judge were as follows (Red 66aC-J):

“Finally, as to the question of the management agreement, there is no doubt that Oliver has managed the properties. How well he managed them, I am not in a position to judge but the rate of remuneration is a reasonably modest one, he has, as I say, managed the properties and it seems to me that he is entitled to the sum of $2000 a month during that period. There is an exhibit which sets out the amounts that Oliver has received by his actions of self help and I accept those and it follows that I accept that Oliver’s claim is made out in the sum of $7377.79.”

186 The husband argued that he had made it clear to the son by his purported notice of termination of the Management Agreement dated 30 June 1998, stated to be effective from 10 July 1998, that he no longer wanted the son to perform management services. Whether or not the concession was necessary, the husband conceded that the notice became effective no earlier than 14 August 1998 (since under the ineffective Management Agreement as signed by the husband six weeks’ notice should have been given). The husband submitted that the trial judge was wrong in allowing the son $2,000 per month in the ten months from August 1998 until judgment in June 1999. The husband submitted:

“one cannot recover on a quantum meruit for rendering [services] which are opposed and resisted by the person against whom you bring the claim. The whole concept of quantum meruit is services provided at the request of the parties requesting them for whom they are provided, which was Mr Damberg who says [by] notice of termination, ‘stop, I don’t want you any more’.”

187 The son submitted that it was sufficient that in fact the husband had received the benefits conferred by the son’s labour whether or not he wanted the son to do the work. The son referred to the following passage in the reasons for judgment of Mason and Wilson JJ in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 227:

“Deane J, whose reasons for judgment we have had the advantage of reading, has concluded that an action on a quantum meruit … rests, not on implied contract but on a claim to restitution or one based on unjust enrichment, arising from the respondent’s acceptance of the benefits accruing to the respondent from the appellant’s performance of the unenforceable oral contract.”

188 The trial judge’s reasoning does not deal with the argument advanced to this Court, either because it was not put to him or because it was only put so briefly (Black 4/913K) as not to have been noticed by him. The son took no point that the husband’s argument had not been advanced to the trial judge. The argument would not appear to be one in relation to which there was a possibility that it could have been defeated by the calling of further evidence.

189 The starting point must be that the Management Agreement is void. However, it seems that neither the husband nor the son knew that it was void or why it was void until the change made by the mother came to light at some time after 30 June 1998.

190 The son’s submission that mere receipt of a benefit by the husband suffices is unsound: the benefit must have been requested or accepted.

191 In my opinion it is not possible to describe the husband as having manifested “acceptance of the benefits accruing” to him from the son’s performance of the void contract. Acceptance could be found in a subsequent evaluation of the benefits and the consent to take them; the corresponding non-acceptance would be a refusal to take them. Acceptance could also be found in an expression of willingness to take the benefits before they were provided (i.e., a request that they be provided); the corresponding non-acceptance would be an expression of unwillingness to take the benefits before they were provided (i.e., a request that they not be provided). The husband’s notice of 30 June 1998 was a request that as from 10 July 1998 (or, on the husband’s concession in argument, 14 August), the benefits should not be provided. That negated “acceptance” of them when they were provided.

192 Goff and Jones, The Law of Restitution (5th ed, 1998), in discussing the need to establish that the provision of services benefited the defendant, say (at pp 18-19, omitting footnotes):

services

freely accepts

unjustly

requested

benefit

free acceptance

Pavey & Matthews Pty Ltd v Paul

193 To adopt the language of Goff and Jones, the husband cannot be said to have freely accepted the son’s services, because he took “a reasonable opportunity open to him to reject the proffered services”. The husband may be said to have honestly thought that the son’s services were of no future benefit to him: he “immediately” told the son that. Accordingly it would not be right that he should have to keep paying the son from the time when that intimation became effective.

194 Further, Goff and Jones, The Law of Restitution (5th ed, 1998), in discussing the principle that a plaintiff who acts officiously in conferring a benefit on the defendant cannot succeed in a restitutionary claim, say (p 63, omitting footnotes):

officious

thrust himself

adequate justification

Such expressions as ‘officiousness,’ ‘mere volunteer’ or ‘thrust himself on another’ are simply a ‘form of legal shorthand’ which conceals the conclusion that a defendant should not be required to pay for benefits which the plaintiff knows that the defendant neither solicits nor denies. He takes the risk that the defendant will pay him for the benefit which he conferred on him. The risk is on his head. He has no cause to complain if his hope is disappointed. Consequently, it is irrelevant whether or not the defendant has gained an incontrovertible benefit.”

195 The son advanced a distinct argument to support the trial judge’s conclusion. That argument was that the order made by the Family Court on 21 September 1998 under which the son was to continue to operate the farming business as manager justified the quantum meruit claim. In my opinion the order does not do so. The order was made as part of a resolution of a dispute on an interim basis. It made no provision for the son to be remunerated, and if it were to entitle him to remuneration (for example, as a court-appointed manager), it would have been necessary to stipulate for that outcome.

Assuming That the Appeal Were Dismissed or Substantially Dismissed, What Costs Order Should Be Made in Relation to the Trial?

196 Since the above reasoning leads to the conclusion that the appeal should not be dismissed, but should be allowed on a basis wholly adverse to the children, this question does not arise. The husband advanced a wide array of technical and procedural arguments adverse to the children’s stand in relation to the costs of the trial, and very few arguments going to the substance of the question. However, there is no point in dealing with any of these arguments. The application for leave to appeal and Common Law Division proceedings No 12244 of 1999 must be dismissed.

Orders

197 Though the Notice of Appeal sought an order that the Second and Third Respondents pay the Appellant’s costs of the trial referable to their claims, no written or oral argument was advanced in support of that order. Accordingly it should not be made.

198 Since the appeal succeeds, the Second and Third Respondents should pay the costs of it. Since the application for leave fails, they should pay the costs of that too. The same is true of the application for costs in the Common Law Division. Though the Notice of Appeal also sought an order that the First Respondent pay the Appellant’s costs of the appeal, no written or oral argument was advanced in support of that order. The First Respondent had no interest in maintaining Orders 1 and 2 made by Purdy J, which were adverse to her interests. The Appellant’s success in the appeal is thus favourable to her interests. Her non-participation in the appeal meant that she did not add to the Appellant’s costs. In all the circumstances no order that she pay the Appellant’s costs should be made.

199 The Appellant’s written submissions concluded with a statement to the effect that to the extent that the Second and Third Respondents had been paid pursuant to Orders 1 and 2 made by Purdy J, “restitutionary orders will be required”. If in truth the Second Respondent or the Third Respondent have been paid anything, it should be restored with interest.

200 In those circumstances, I propose the following orders:

1. That the appeal be allowed.

2. That Orders 1 and 2 made by Purdy J be set aside.

3. That there be judgment for the Appellant and the First Respondent on the Further Amended Statement of Claim filed by the Second Respondent on 20 May 1999.

4. That there be judgment for the Appellant and the First Respondent on the Statement of Claim filed by the Third Respondent on 23 April 1999.

5. That the application for leave to appeal be dismissed.

6. That the Second and Third Respondents pay the Appellant’s costs of the appeal, of the application for leave to appeal, and of Common Law Division proceedings No 12244 of 1999.

7. That the Appellant and the Second and Third Respondents file in the Registry within seven days consent orders for the repayment by the Second Respondent or the Third Respondent to the Appellant of any part of the sums ordered by Orders 1 and 2 of Purdy J to be paid; in default of agreement, the Appellant and the Second and Third Respondents are to file within fourteen days written submissions setting out the orders for repayment contended for and why they should be made.

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Citations

Damberg v Damberg [2001] NSWCA 87

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Cited Sections

CITATION:	Damberg v Damberg & Ors [2001] NSWCA 87
FILE NUMBER(S):	CA 40636/99
HEARING DATE(S):	3 April 2001
JUDGMENT DATE:	25 May 2001
PARTIES :	Wilfried Robert Damberg (Appellant) Bruenhild Damberg (First Respondent) Oliver Damberg (Second Respondent) Nicole Damberg (Third Respondent)
JUDGMENT OF:	Spigelman CJ at 1; Sheller JA at 2; Heydon JA at 3

LOWER COURT JURISDICTION :	Family Court of Australia
LOWER COURT FILE NUMBER(S) :	PA 4703/98
LOWER COURT JUDICIAL OFFICER :	Purdy J

COUNSEL:	Mr P L G Brereton SC (Appellant) Mr L P Robberds QC/Mr J A Trebeck (Respondents)
SOLICITORS:	Campbell Paton & Taylor (Appellant) Wilson Fardell & Moore (First Respondent) Garden & Montgomerie (Second and Third Respondents)
CATCHWORDS:	Equity - Implied Trusts - Resulting trusts - Whether rebuttal of presumption of advancement from parent to child of equitable interest in property in addition to legal title - Whether parent possessed "definite intention" to retain beneficial interest - Application of general law of evidence to determine whether "definite intention" proved - Conflict of Laws - Breach of foreign law - Whether Australian Courts will prevent party from enforcing in Australia a resulting trust created in a foreign jurisdiction for a purpose that was "illegal" or "unlawful" in that foreign jurisdiction - Identification of "illegal" or "unlawful" purpose - Necessity to examine provisions of foreign legislation - Ascertainment of "policy" of legislation - Where foreign jurisdiction is Germany - Where foreign law relates to capital gains tax avoidance or evasion - Conflict of Laws - Presumption of identity of unproved foreign law and the lex fori - Whether such presumption should be made - Where foreign jurisdiction is Germany - Where relevant unproved foreign law is likely to be statute-based - Where relevant unproved foreign law relates to capital gains tax avoidance and evasion - Where taxation law is not an area of law that is based on broad principles that can be assumed to be part of any given legal system - D
CASES CITED:	See attached list
DECISION:	See para 200