Hansen v Registrar of Titles - [2000] WASC 110

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION: HANSEN -v- REGISTRAR OF TITLES & ANOR [2000] WASC 110

CORAM: TEMPLEMAN J

HEARD: 14-16 FEBRUARY & 6-7 APRIL 2000

DELIVERED : 10 MAY 2000

FILE NO/S: CIV 1984 of 1998

BETWEEN: KLAUS HAMMERSHOLT HANSEN
Plaintiff
AND
REGISTRAR OF TITLES
First Defendant
FREDDIE K HAMMERSHOLT HANSEN
Second Defendant

Catchwords:

Equity - Equitable estates and interests - Entitlement to lodge a caveat - Whether caveat lodged with reasonable cause - Whether the defendant or his ex-wife was the beneficial owner of a property of which the plaintiff was registered proprietor - Whether arrangements made between plaintiff and defendant to purchase a property constituted an express trust in favour of the defendant's ex-wife - Whether words used indicated an intention to create an express trust or whether subsequent conduct instead suggested a resulting trust

Legislation:

Transfer of Land Act 1893, s 140

Trustees Act 1962, s 71

Result:

Plaintiff successful on the question of liability and entitled to an inquiry as to damages

Representation:

Counsel:

Plaintiff:     Mr G A Rabe
First Defendant             :     No appearance
Second Defendant         :     Mr P R Eaton

Solicitors:

Plaintiff:     Michael Rogers & Associates
First Defendant             :     No appearance
Second Defendant         :     Galic & Co

Case(s) referred to in judgment(s):

Calverley v Green (1994) 155 CLR 242
Crichton v Crichton (1930) 43 CLR 536
Kuper & Kuper v Keywest Constructions Pty Ltd [1990] 3 WAR 419
Re Australian Elizabethan Theatre Trust (1991) 102 ALR 681

Case(s) also cited:

Adamson v Hayes (1973) 130 CLR 276
Bahr v Nicolay [No 2] (1987-88) 164 CLR 604
Baumgartner v Baumgartner (1987) 164 CLR 137
Chan v Zacharia (1984) 154 CLR 178
Commissioner of Stamp Duties (Qld) v Jolliffee (1920) 28 CLR 178
Muschinski v Dodds (1985) 160 CLR 583
Re Armstrong [1960] VR 202
Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd (1988) 165 CLR 107

TEMPLEMAN J: On 6 December 1991 the plaintiff became the registered proprietor of a property known as 49 Boonooloo Road, Kalamunda. He contends that he held the property upon trust for his mother, Mrs Bente Hansen.
The first defendant is the Registrar of Titles who has played no part in the proceedings.
The second defendant (to whom it will be convenient to refer as "the defendant") is the plaintiff's father, Mr Freddie Kay Hammersholt Hansen. He claims to be the beneficial owner of the property.
On about 7 August 1998 the defendant lodged a caveat on the title to the property. The defendant's justification for so doing was that on 5 December 1991 he had paid the plaintiff the sum of $97,000 towards the purchase of the property and borrowed from him the sum of $10,000 being the balance of the purchase price.
The defendant's caveat prevented the plaintiff from completing a contract for the sale of the property. The purchasers treated that failure as a repudiation of the contract. They sued the plaintiff and their settlement agents: the latter because they had failed to discover the caveat. On 13 August 1999, Master Bredmeyer made an order for summary judgment against the present plaintiff and the settlement agents. He ordered that the plaintiff was to indemnify the settlement agents to the extent of the purchase moneys received by him (the plaintiff).
In the present proceedings, the plaintiff sought an order that the caveat be removed and that there be an inquiry before a Master as to any damage suffered by the plaintiff by reason of the caveat or by reason of the defendant's refusal to remove it. The defendant counterclaimed for a declaration that he was the beneficial owner.
The property has now been sold. All that is left, therefore, is the claim for an inquiry as to damages. However, I am concerned only to resolve the question of liability. In essence, this requires me to determine whether the beneficial owner of the property during the period when the plaintiff was the registered proprietor, was the defendant or Mrs Hansen.

Background

In order to resolve the dispute, it is necessary to put the acquisition of the property into a context. I shall therefore summarise my findings of fact relating to the principal events which preceded the acquisition. These findings are based largely on the unchallenged evidence of the defendant and on agreed documents.
The defendant and Mrs Hansen came to Australia with their family from Denmark in the 1970s.
In Australia, they established a family trust known as the Hansen Family Trust. The trustee was Fransett Pty Ltd. Through the medium of the trust, the defendant and Mrs Hansen operated a business known as the Danish Bakehouse.
In 1984 or 1985, that business was sold and the family returned to Denmark. There was some marital disharmony between the defendant and Mrs Hansen. She returned first, followed by the defendant.
About a year later, Mrs Hansen returned to Australia. She was followed, some 10 months later, by the defendant.
Before the defendant returned to Australia he made arrangements to purchase a property in Baronet Road, Lesmurdie as a residence for Mrs Hansen. In order to purchase the property, the defendant borrowed $85,000 from Ms Ellen Annette Treschow with whom the defendant was then living in Denmark and who has since become his wife.
Mrs Hansen was registered as the proprietor of the Baronet Road property. It is not in dispute that she was the beneficial owner.
In January 1987 the defendant returned to Australia and lived at the Baronet Road property. On 20 March 1987 the defendant and Mrs Hansen were divorced pursuant to a decree absolute made by the Family Court of Australia.
Despite the divorce, the defendant and Mrs Hansen continued to live together at the Baronet Road property. That property was sold in October 1987 because it was too small to accommodate the defendant, Mrs Hansen and her father who had by then come to live with them.
On 26 October 1987, a property at 6 Ledger Road, Gooseberry Hill was acquired as the new family residence. Again, Mrs Hansen was the registered proprietor. She was, I find, the beneficial owner.
In about May 1988, the defendant acquired another business through the medium of the family trust. The business was a small bakery in Kalamunda known as The Bread Crock. That business soon ceased operating as a bakery. It became an outlet for another business which the trust acquired or commenced in Roy Street, Bentley. This was the Danish Patisserie, a wholesale bakery which supplied a number of retail outlets.
The defendant wished to expand the Danish Patisserie business and move it to Adrian Street, Welshpool. The defendant proposed that he or Fransett would borrow money from the Commonwealth Bank to fund the expansion.
According to the defendant, the business was moved to Welshpool on the strength of a commitment from the Bank to an overdraft facility of $100,000. However, the Bank then informed the defendant that the overdraft must be reduced.
In order to alleviate the financial difficulties caused by this reverse, a one‑half share in the business was sold to a Mr Anthony Valve and his wife. For this purpose a new corporate entity was formed or acquired: Denroe Pty Ltd, which acquired the business from Fransett.
According to the defendant, the directors and shareholders of Denroe were Anthony Valve, his wife, and the defendant.
It is not clear what became of Mrs Hansen's interests in the business or previous corporate structure. However, for reasons which will become apparent, nothing turns on this.
Early in 1991, there was a falling out between the defendant and Mr and Mrs Valve. That difficulty was resolved by the Valves selling their interest in Denroe to Ms Treschow. She had returned from Denmark in February 1987. In about October 1988, Ms Treschow, who is a bookkeeper, commenced employment in that capacity at the Danish Patisserie.
Later in 1991, the defendant and Ms Treschow decided to sell the business of the Danish Patisserie. On 15 July 1991 Denroe entered into a contract to sell the business for the sum of $550,000. Settlement was to take place on 13 July 1991. The price was to be paid as to $50,000 at settlement, $30,000 at 30 days after settlement, $47,000 at 60 days after settlement and $73,000 at 97 days after settlement. The balance of $350,000 was loaned to the purchaser. It was repayable over five years with interest at a maximum rate of 14 per cent per annum.
One of the creditors of Denroe at that time was Australian Guarantee Corporation Ltd. AGC had loaned moneys to Denroe against the security of a mortgage granted by Mrs Hansen in respect of the Ledger Road property. As appears from the title, that mortgage was registered on 16 August 1988.
In her evidence, Mrs Hansen described herself as "a silent director" of the business. However, it was clear that she has no knowledge of the various trust and corporate structures through which the business was owned and operated. She said, and I accept, that: "I would never interfere into anything".
By contrast, the defendant has been involved in business activities of one kind or another throughout his working life. I am satisfied that in matters concerning the business, Mrs Hansen did as she was asked or told by the defendant. Indeed, Mrs Hansen said, and I accept, that in the "last year" she did not work in the business because Ms Treschow was involved and the defendant did not want her there at the same time.
The reference to the last year is to 1991. Although the business was sold in July 1991, I find that Mrs Hansen was not told at that time.
It was Mrs Hansen's evidence that in about November 1991 the defendant told her that the Ledger Road house would have to be sold in order to pay AGC. The defendant told her that money would be available eventually, but that she would just have to wait: that she would have another house (Ts 440).
The defendant's evidence was to the same effect. In his examination‑in‑chief, the defendant said he told Mrs Hansen that he would be able to buy another house (TS 186).
It is to be noted that the evidence of both Mrs Hansen and the defendant was ambiguous as to the basis on which the replacement house would be purchased. There is no doubt that Mrs Hansen was the beneficial owner of the Ledger Road property. However, it appears to be common ground that she was told only that a replacement house would be purchased. I have no doubt she assumed she would be the beneficial owner. But she was not told that, expressly.
It is against this background that a crucial telephone conversation of early November 1991 must be considered.
Before turning to the evidence about that conversation, there is one other factor which should be mentioned. That is, the interest which the Australian Securities Commission took in the defendant's business activities. It appears the ASC was concerned to ensure that the unsecured creditors of Fransett and Denroe were paid. I find that the ASC reached agreement with the defendant to the effect that certain of the proceeds of sale of the Danish Patisserie business would be applied to discharging debts, and that only then would moneys be available to the shareholders.
It is not clear when the ASC first became involved. Nor is it clear when moneys were paid pursuant to the contract of sale of the Danish Patisserie business. It will be recalled that a total of $200,000 was to be paid within 97 days of settlement. That would have been by about mid‑October 1991. According to Ms Treschow, those moneys were paid when they should have been. But if that is so, it is not clear why the Ledger Road property had to be sold.
There is no documentary evidence about the receipt of the proceeds of sale of the business. This is a matter to which I shall return when dealing with the defendant's evidence about the purchase of the Boonooloo property.
After the defendant told Mrs Hansen that the Ledger Road property would have to be sold, she located the Boonooloo Road property and, in conjunction with the defendant, decided that it would be an appropriate property to purchase.
Once that decision had been taken, the defendant and Mrs Hansen spoke to the plaintiff by telephone and made arrangements for the purchase of the Boonooloo Road property.

The crucial telephone conversation in November 1991

The contract for the purchase of the Boonooloo Road property was signed on 4 November 1991. It is common ground that the telephone conversation took place on, or shortly before, that date. The defendant and Mrs Hansen were then at Ledger Road. The plaintiff was then at sea somewhere off the Malaysian coast. The plaintiff, who is now a Master Mariner and Tug Master, was then a ship's officer serving on a supply vessel.
The conversation took place a little over nine years ago. There is no written record of what was said. None of the participants professes to have a recollection of the words actually spoken. But each of them claims to have a clear recollection of the substance of the conversation, although their recollections differ.
Initially, it was the defendant's evidence that he had telephoned the plaintiff. However, later in his evidence the defendant said that he had left a message with the plaintiff's shore base, requesting that the plaintiff telephone him, which he did. That was the plaintiff's evidence also.
Mrs Hansen's evidence however was that the call was initiated by the defendant who telephoned to the plaintiff on the ship's telephone.
Although this is a relatively small point, I prefer the plaintiff's evidence. I find it was he who telephoned the defendant, in answer to the message which had been left for him.
The defendant, in his evidence‑in‑chief, said he asked the plaintiff to do him a favour: to lend him $10,000. The defendant said the plaintiff told him that he had $10,000 but he wanted it to buy a house for himself. The defendant then said, according to him:
"I know, but what I in fact will do, I will put the house in your name and you can use it as collateral when you want to buy a house. That way you will save money."
On any view, that must be an inaccurate record of the conversation, because at that stage, according to the defendant, he had not yet spoken about the purchase of a house.
It is common ground that about $10,000 was required to pay the deposit on the Boonooloo Road property. It was put to the defendant that $10,000 would have paid only a portion of the price. He was then asked whether there had been any discussion about how the balance would be paid. The defendant answered:
"Yes, of course. I would pay the lot. I would pay everything and I have had [a] discussion about this with my bank manager at the time in the R & I Bank, what was going to happen and I could do it."
After this digression, the defendant was asked if he could recall what the plaintiff's response had been to the request for a loan of $10,000. The defendant answered:
"Yeah, no problems. There would never be a problem."
This extremely vague evidence was given towards the close of the first day of the trial. On the second day, the defendant was asked again about the telephone conversation. The defendant was asked to recall, as best he could, what had been said. The defendant said he would try again:
"I said to [the plaintiff] 'I need to borrow $10,000 off you. I'm buying a house in Boonooloo Road in Kalamunda'. We did not discuss who was going to live in the house. I just said, 'Can you lend me $10,000. I will put the house in your name and you can use it later as collateral when you want to buy a house yourself, but I do want to - when you come back … I do want a power of attorney, because as soon as I can … get started again I want to be able to use the house, even if it's in your name."
When asked what the plaintiff had said to those proposals the defendant replied: "No problems."
The defendant was then asked whether he recalled any discussion about how the balance of the purchase price would be paid. The defendant said:
"No there wasn't, because I would pay - I said, 'I will be able to pay it all very shortly'. I knew at the time the funds were there." (Ts 188)
In cross‑examination, the defendant was asked what had been agreed between him and the plaintiff in relation to the balance of the purchase price. The defendant said he would pay the balance of the purchase price: and said he had told the plaintiff so at the time (Ts 224). The defendant went on to say he believed at the time that he would have the money available from the sale of the Danish Patisserie business. However, only a few minutes later, the defendant said he borrowed the money from the Bank. He said he had several discussions with the Bank Manager about raising a loan of $95,000 (Ts 225).
The plaintiff's evidence‑in‑chief was that he received a message to telephone home, which he did, and spoke to the defendant. The defendant asked him if he could, or would be prepared to purchase a house for his mother. The plaintiff asked why he had to purchase the house. The defendant said he had some business problems and that his mother would need to sell her house in order to help him out. The defendant said the house had to be in the plaintiff's name because his mother was involved in the business "so it would be better that way". The plaintiff said he agreed. He said there was a discussion about how the purchase price was to be funded. He said the defendant told him that either the defendant and/or Mrs Hansen had no money at that time; so that the plaintiff would have to use his money for a deposit and borrow the remainder. He said the defendant told him he would attempt to pay Mrs Hansen the debt and if that happened, then the plaintiff would "sign the house back over to my mother". (Ts 381‑2)
The plaintiff said he spoke also to his mother because he wanted to know why the house had to be in his name. She told him that the defendant had some problems with "Corporate Affairs" and that he (the defendant) "was a bit worried".
The plaintiff gave evidence to the same effect in cross‑examination.
Mrs Hansen's evidence‑in‑chief was that during the conversation she asked the plaintiff if he would buy a house for her but put it in his name until the defendant had solved his problem in the business and could repay the money. Mrs Hansen said she asked the plaintiff if "we" could borrow $10,000 for the deposit: and that she or they asked the plaintiff if he could borrow the balance of the funds. She said the plaintiff agreed, on the basis that the house was to stay in his name until he was repaid (Ts 440).
Mrs Hansen's witness statement was put to her in cross‑examination. In it, she had said she had been told by the defendant that she should not buy the house in her own name. In her evidence she went on to say that the defendant told her to buy the house in the plaintiff's name and that she could not put it in her own name at that time.
The evidence of Mrs Hansen and the plaintiff was therefore largely consistent. It was submitted by counsel for the defendant that this was a matter of some suspicion: suggesting that the evidence had been the subject of discussion between them. This is not a matter which was explored either with the plaintiff or Mrs Hansen in cross‑examination. In any event, having regard to the way in which they gave their evidence, I do not believe there is any substance in counsel's suggestion.
It is obviously necessary to approach with caution the evidence about a short telephone conversation which took place nine years ago. Having considered the evidence, I am satisfied that none of the participants has a recollection of the exact words used. However, I am satisfied from the way in which Mrs Hansen and the plaintiff gave their evidence, that each has a good recollection of the substance of the conversation.
By contrast, as appears from the summary which I have set out above, the defendant's evidence was vague and contradictory. I prefer the evidence of the plaintiff and Mrs Hansen where it conflicts with that of the defendant.

I make the following findings of fact about the telephone conversation which took place on, or shortly before 4 November 1991 and the relevant events which preceded it.
1.The defendant telephoned to the plaintiff's ship or shore base and left a message asking the plaintiff to telephone him at Ledger Road.
2.The plaintiff returned the defendant's telephone call. He spoke first to the defendant, who asked the plaintiff if he would purchase a house for Mrs Hansen by paying the sum of $10,000 to be used as a deposit, and by borrowing $95,000 or thereabouts from the Bank in order to complete the purchase.
3.The defendant told the plaintiff that the house could not be purchased in Mrs Hansen's name because of her current involvement in the business which made that course undesirable.
4.The defendant told the plaintiff that there would be funds available from the business, or the sale of the business, which could be used to repay the price paid by the plaintiff.
5.The plaintiff agreed to assist in this way on the basis that he would transfer the property to Mrs Hansen if he was repaid in full.
6.The plaintiff then spoke to Mrs Hansen, who asked him to buy the house for her but to put it in his name until the defendant had solved the problems he had with the business and could repay the money.
The arrangements made subsequently gave effect to this agreement. On 15 November 1991, the sum of $9,908.47 was withdrawn from the plaintiff's bank account by the defendant, who had access to it.
The plaintiff completed an application for a housing loan on a standard form employed by the R & I Bank. The Bank wrote to the plaintiff care of Ledger Road on 12 November 1991 approving his application. The plaintiff signed the offer letter signifying his acceptance. He did so on 2 December 1991 in Penang. His signature was witnessed by the Captain of the ship on which he was then serving.
The purchase of the Boonooloo Road property was settled on 6 December 1991. As appears from a letter of that date from the R & I Bank to the plaintiff, settlement was effected with the assistance of a housing loan in the sum of $95,000.
Given that evidence, it is a curious feature of this case that the defendant remains adamant that he paid the balance of the purchase price due at settlement. Although, as I have noted above, the defendant accepted initially in his evidence that the plaintiff had borrowed $95,000 from the R & I Bank, he reverted to his primary contention in cross‑examination. Indeed, so convinced is the defendant that he provided the funds, that he has apparently complained to the Police Service about falsification of bank records. There is no evidence to suggest, however, that there was any irregularity in the Bank's procedures or documentation. Neither party called any witness to give evidence on behalf of the Bank.
The defendant's insistence that he provided the funds at settlement explains another odd feature of the case. It arises from an affidavit sworn by the plaintiff on 27 August 1998 in support of an application for the removal of the defendant's caveat. In his affidavit the plaintiff said:
"The purchase price of the property 49 Boonooloo Road, Kalamunda amounted to $105,000.00 of which I personally paid $10,000.00 and the balance of the money was provided to me by [the … defendant]".
This is an assertion which, on the evidence before me, is clearly wrong: and was accepted as being so by the plaintiff in the course of his cross‑examination.
The plaintiff's explanation for the error is that he believed the defendant had provided the funds at settlement because that is what the defendant told him. The plaintiff said he trusted the defendant and accepted his statement as being true. I accept the plaintiff's explanation. Indeed, it was the defendant's evidence, which I also accept, that the plaintiff told him much more recently of his realisation that he had himself borrowed the funds.
While this may be thought to cast some doubt on the accuracy of the plaintiff's recollection, I have taken it into account in assessing his credibility. I have come to the conclusion, which is reflected in the findings of fact set out above, that although the plaintiff's recollection has been refreshed, it is nonetheless genuine.
In his closing submissions, counsel for the defendant posed what, I understood him to submit was a rhetorical question: "Why would the defendant have agreed to pay for the Boonooloo Road property, to be held beneficially by Mrs Hansen, in the circumstances as he saw them?" Those circumstances were the necessity to provide accommodation not only for Mrs Hansen, but for himself, when they had been living as de facto husband and wife, notwithstanding the earlier divorce: when the funds with which to acquire another property would soon become available to the defendant and when the defendant would undoubtedly wish to have those funds available to him for use in subsequent business ventures.
I do not think the question was rhetorical. The answer to it, in my view, is that the defendant agreed to pay for the property on Mrs Hansen's behalf because he had promised her that he would do so, having caused her to lose the Ledger Road property of which she was the legal and beneficial owner.
Whether or not the defendant and Mrs Hansen were living as de facto husband and wife is, I think, somewhat questionable. It was no doubt convenient for the defendant to live under the same roof as Mrs Hansen, both at Ledger Road and subsequently at the Boonooloo Road property as he did until, as Mrs Hansen put it, she "kicked him out". However, whatever the nature of the post‑divorce relationship between the defendant and Mrs Hansen, I am satisfied that it was not perceived by either of them to be a long‑term stable relationship of a kind which justified the purchase of a quasi‑matrimonial home.

The contract for the purchase of the Boonooloo Road property

On 4 November 1991, Mrs Hansen submitted a written offer to purchase the Boonooloo Road property on a standard offer and acceptance form in which she described herself as trustee for the plaintiff.
It was Mrs Hansen's evidence, which was not challenged, that the property was purchased in the plaintiff's name because of her involvement in the business; and the trouble the defendant had with the ASC and the Tax Department. She said the defendant told her he thought it was safer if the property was purchased in the plaintiff's name (Ts 539).
That evidence was, I think, directed to the circumstances generally rather than to the point at which the contract was prepared. The words "as trustee for Klaus Hansen" have been inserted, apparently as an afterthought, albeit in Mrs Hansen's handwriting. I suspect that was done to avoid stamp duty difficulties, given that the property was to be transferred to the plaintiff. Nothing turns on this for present purposes. It is, however, significant, in my view, that the purchaser was named as Mrs Hansen and not the defendant. Given that he orchestrated the arrangements, that is, in my view, an admission against his interest.

The legal consequences of the arrangements made during the telephone conversation

I am satisfied on the balance or probabilities, and therefore find as a fact, that it was the defendant's intention that the Boonooloo Road property should be purchased by the plaintiff and held on trust by him for Mrs Hansen. It is not suggested by any of the witnesses that the word "trust" was used in the conversation. However, in my view, the arrangements made during the conversation constituted an express trust. That is because it was expressly agreed that the plaintiff would purchase the property for Mrs Hansen and would transfer the property to her if he was repaid. In legal terms, he constituted himself as a trustee of the property subject to a lien in respect of his expenditure pursuant to s 71 of the Trustees Act 1962.
My finding as to the defendant's intention is based on the words he used in the course of the telephone conversation in November 1991. As Gummow J said in Re Australian Elizabethan Theatre Trust (1991) 102 ALR 681, 693:
"The question of the existence of any express trust will always have to be answered by reference to intention … The relevant intention is to be inferred from the language employed by the parties in question and to that end the court may look also to the nature of the transaction and the relevant circumstances attending the relationship between them." (My emphasis)
The intention must be ascertained at the time when the parties enter into the transaction: Calverley v Green (1994) 155 CLR 242 at 251.
The defendant asserted, during his evidence, that he had not intended Mrs Hansen to be the beneficial owner of the Boonooloo property while Ms Treschow was still owed the $85,000 which he had borrowed to purchase the Baronet Road property.
Whether the outstanding loan was of concern to the defendant in 1991 or has become so since then is not clear to me. There is no evidence that the defendant sought to make any provision for repayment out of the proceeds of sale of the business. In any event, even if the defendant had some private reservations in November 1991, about Mrs Hansen becoming the beneficial owner of the Boonooloo Road property, that is irrelevant. I am to be concerned only with the intention manifested by the words he used.
Counsel for the defendant relied on a passage from the judgment of Isaacs CJ in Crichton v Crichton (1930) 43 CLR 536, 548‑549, where it is said that:
"…if, upon a consideration of all the circumstances the Court is of the opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated."
This statement is not inconsistent with the proposition that intention must be gleaned from the words used at the relevant time. Indeed, Isaacs CJ went on to refer to the settlor's "declared intention".
My finding about the parties' intentions effectively determines the question of liability in favour of the plaintiff. The defendant's contention that he provided the funds with which the Boonooloo Road property was purchased, therefore becomes irrelevant.
As I have already noted, it was the defendant's case (as reflected in his pleading down to the day on which the trial commenced) that he had provided $95,000 out of the purchase price at settlement. As I have also noted, the defendant conceded during the course of his evidence that he had not done so. But he then reverted to his original position: a position which is wholly inconsistent with the documentary evidence.
As I understand it, the defendant's case initially was that because he had paid a substantial part of the purchase price of the Boonooloo Road property at settlement, and because the property had been transferred into the plaintiff's name, the plaintiff must have held the property on a resulting trust for the defendant. But even if the defendant had provided the funds, on the facts as I have found them to be, there could not have been a resulting trust. That is because the parties agreed in November 1991 that when the property was transferred into the plaintiff's name, he would hold it on trust for Mrs Hansen.
An alternative submission made by the defendant's counsel, was that because the crucial telephone conversation had taken place so long ago, and because the evidence about it was so vague and contradictory, no finding could, or should be made about what was said. Thus, it was submitted, the fact that the defendant had ultimately paid a substantial part of the price, should lead to the conclusion that, at least from the date of payment, the plaintiff held the property on a resulting trust for the defendant. In the further alternative, it was submitted that a constructive trust should be imposed in order to remedy the injustice which would otherwise arise from the fact that the defendant had become the beneficial owner of the property by reason of that payment.
Again, it is unnecessary to consider those submissions because of my findings of fact concerning the telephone conversations.
However, for completeness, I now set out my findings in relation to payments made in respect of the housing loan of $95,000 which the plaintiff obtained from the R & I Bank in December 1991.
Repayments were made in January, February, March, June, August, October and November 1992. These payments are recorded on a copy of the R & I Bank's ledger sheet relating to the housing loan (Exhibit 3). It is not necessary to refer to them in detail.
There is no evidence about the source of the moneys used to make the repayments. The plaintiff said, and I accept, that he had no knowledge of making any such payments. As he was away at sea for much of the time, I think it unlikely that the payments were made by him: and because the payments were irregular in time and amount, I think it unlikely that they were made pursuant to any standing order or direct debit.
On the balance of probabilities, and bearing in mind my finding that the plaintiff was not to be responsible for making repayments, I find that the repayments recorded in the Bank's ledger were made by the defendant. However, I am unable to make a finding as to the source of the funds.
On about 24 August 1992, Denroe received $280,000.00 which was placed on term deposit with the R & I Bank.
I am satisfied that the sum in question was part of the balance of the purchase price payable on the sale of the business. I accept the defendant's evidence that the purchaser repaid the loan early, in order to be able to resell the business.
It appears that when the deposit of $280,000.00 matured (after 7 days) a lesser amount was re‑deposited. I draw the inference that the balancing amount was used to pay creditors pursuant to an arrangement made between the defendant and the ASC which is recorded in a letter dated 8 June 1992 from Mr Jamie Ogilvie of the ASC to the defendant's then solicitors.
By 26 November 1992 the fund had reduced to $153,214.56. That was re‑invested for 14 days, maturing on 7 December 1992. The account number was 684-441-0.
On 15 December 1992 Mr Ogilvie wrote to the Manager of the R & I Bank, Cannington, where the Denroe deposit was held. He attached a schedule of payments to be made by bank cheque by Denroe on behalf of Fransett. The payments totalled $39,613.58. Mr Ogilvie informed the Manager that the balance of Denroe's funds might then be released.
The schedule included an amount of $21,491.26 payable to "B. Hansen". I assume this to be a reference to Mrs Hansen.
I find that the defendant deducted the amount of $21,491.26 from the total, leaving a balance of $18,122.32.
On 15 December 1992 the defendant instructed the Bank to deal with term deposit "63-6844410" by re‑investing $40,000 and drawing bank cheques "as per attached list" in the total sums of $18,122.32.
The defendant also instructed the Bank to pay $11,051.23 into Ms Treschow's account; and an apparently unspecified amount into the housing loan account. The sum of these amounts is $69,173.55. Deducting that amount from the moneys available on deposit leaves a balance of $84,141.01.
This does not take account of interest which had been earned on the amount deposited. However, that was to be deposited in a nominated cheque account.
According to the Bank's ledger, which I accept as being correct, sums totalling $95,093.67 were credited to the housing loan account on 15 December 1992 in full payment of the amount then outstanding.
Again, there is no evidence about the source of those funds. However, I am satisfied that $84,141.01 was transferred from the term deposit and that the balance was provided by the defendant from an unidentified source.
I make that finding on the balance of probabilities. I accept that the plaintiff has no knowledge of any such repayments.
Although I have based my findings about the defendant's intention to constitute Mrs Hansen as the beneficiary of a trust of the Boonooloo Road property entirely on my assessment of the credibility of the relevant witnesses, there are two subsequent matters to which I should refer. I do so because in my view, they provide additional support for my findings, being admissions made by the defendant against his interest. However, I emphasise that I do not regard these matters as essential to my findings.
The first admission arises from an informal power of attorney executed by the plaintiff and the defendant in the following terms:
"I Klaus Hammersholt Hansen herewith authorise my father Freddie Kay Hammersholt Hansen to act on my behalf in the transfer of the property 49 Boonooloo Road Kalamunda into the name of my mother Mrs Bente Hansen currently of 49 Boonooloo Road Kalamunda."
The document was not dated nor were the signatures of the plaintiff and the defendant witnessed.
It was the evidence of both the plaintiff and Mrs Hansen, which I accept, that the power of attorney was prepared at her request shortly after settlement had taken place. Mrs Hansen was concerned for the plaintiff's safety. She knew that he faced not only the perils of the sea, but that he worked in dangerous or potentially dangerous geographical locations. It was her evidence, which I accept, that she wanted to ensure that if anything happened to the plaintiff, the defendant would be able to transfer the Boonooloo Road property to her.
As a matter of law, the power of attorney would not have afforded Mrs Hansen the protection she sought. Had the plaintiff died or become incapable, the defendant's authority would have been revoked automatically. However, in my view, the fact that the defendant signed the document in the terms set out above and in the circumstances as I have found them to be, constitutes an admission that the plaintiff held the property on trust for Mrs Hansen.
The defendant accepted that he must have signed the power of attorney because it bore his signature. The defendant pointed out, correctly, that the document did no more than authorise him to transfer the Boonooloo Road property into Mrs Hansen's name. However, I consider the admission to arise not only from the fact that the defendant signed the power of attorney but also from the circumstances in which it was signed.
The plaintiff and the defendant executed a formal power of attorney on 3 August 1993. By that document the plaintiff appointed the defendant as his attorney to deal generally with any real property.
The purpose for which that power of attorney was prepared was to permit the defendant to charge the Boonooloo Road property by way of security for loans to be advanced to the plaintiff and the defendant, to enable them to engage in share trading activities. This is a matter which is irrelevant for present purposes, although it will be necessary to make brief reference to it subsequently.
The plaintiff said in his evidence that the Boonooloo Road property was been used as security with Mrs Hansen's consent. That was not a matter about which she gave evidence, but again, it is irrelevant. If she did not consent then any dealings pursuant to the 1993 power of attorney were in breach of trust: but that has no bearing on the existence of the trust. More to the point is Mrs Hansen's evidence, which I accept, that she did not know of the existence of the later power of attorney when it was executed. Indeed, as I understood her evidence, she has only recently become aware of it.
The final matter to which I should refer, relates to a discussion between the plaintiff and Ms Treschow in November 1998, while the defendant was in hospital recovering from a stroke.
It is common ground that during the course of the discussion the plaintiff wrote some figures on the back of an envelope in an attempt to demonstrate to Ms Treschow that he was owed $33,000 by the defendant. This debt is said to have arisen out of share trading and other business activities undertaken by the defendant and the plaintiff utilising funds borrowed against the security of the Boonooloo Road property which had been charged to the Challenge Bank for that purpose.

The defendant relies on the plaintiff's figures as constituting an admission that the payment of $10,000 (or thereabouts) from the plaintiff's funds in November 1991 in respect of the deposit on the Boonooloo Road property was a loan to the defendant.
The figures were as follows:
6000
  20000
  10000
24000
40000
16000
6000
  20000
  10000
    24000
60,000
75000
18000
93000
33,000
I find that the debt due to the Challenge Bank at the material time was $75,000. I find that each block of four figures represented amounts which the plaintiff had been repaid. The sum of $24,000 was made up of $40,000 which the plaintiff had received from the proceeds of sale of the Boonooloo Road property, less $16,000, being the deposit of $10,000 which he had paid in 1991 and interest of $6000. This represented a notional rate of interest of about 8.5 per cent per annum.
The total amount due to the Challenge Bank by way of principal and interest was $93,000. The plaintiff accepted that he had received $60,000 and therefore contended that $33,000 remained due to him.
It was put to the plaintiff in cross‑examination that the figures did not reflect the position as he had represented it to be: rather that the amount of $40,000, which it is common ground the plaintiff received out of the proceeds of sale of the Boonooloo Road property, was a debt owed by the plaintiff to the defendant as the beneficial owner of that property.
That interpretation was denied by the plaintiff. I accept his denial because the proposition that he owed $40,000 to the defendant is inconsistent with the fact that he brought the $40,000 into account as being part‑payment of a loan of $75,000. Thus the $40,000 was owed to the plaintiff: but it had nothing to do with the purchase price of the Boonooloo Road property. The only figure relevant to that matter was the amount of $16,000.
In the course of the plaintiff's evidence, he asserted that he had loaned the sum of $10,000 to Mrs Hansen. In Ms Treschow's evidence, which I accept, she said the plaintiff asserted that he had loaned the sum of $10,000 to the defendant.
The reality is, in my view, that the plaintiff did not lend the sum of $10,000 to anyone. On the true construction of the arrangements made on or about 4 November 1991, the plaintiff paid the sum of $10,000 in order to acquire the Boonooloo Road property in his own name. He did so on the basis that he would be reimbursed by the defendant, either directly, or through Mrs Hansen, out of the business or the proceeds of sale of the business. But that did not result in the payment being a loan either to the defendant or to Mrs Hansen, for whose benefit the property was purchased.
As at October 1998, the housing loan had been discharged but the plaintiff had not been reimbursed the $10,000. The defendant was the source of monies to be used for reimbursement: and the plaintiff therefore looked to him for that purpose. That, I find, is why the plaintiff deducted $16,000 (being the amount of the deposit and notional interest) from the sum of $40,000 which he had received from the proceeds of sale of the property.
In my view, therefore, nothing arose from the discussion between the plaintiff and Ms Treschow which casts any doubt on the findings of fact which I have made in relation to the crucial telephone conversation of November 1991.
For all these reasons, I conclude that the plaintiff should succeed on the question of liability, and that the defendant's counterclaim should be dismissed.
On the findings I have made, I am satisfied that the defendant lodged his caveat without reasonable cause, as that expression is used in s 140 of the Transfer of Land Act 1893 and explained in Kuper & Kuper v Keywest Constructions Pty Ltd [1990] 3 WAR 419. The plaintiff is therefore entitled to an inquiry before the Master as to any damage which he has suffered by reason of the caveat being lodged or maintained.