Lyon v Howard

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2012 5895

NOELENE ANN LYON	Plaintiff
v
PETER RICHARD HOWARD	Defendant

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JUDGE:	DALY As J
WHERE HELD:	Melbourne
DATE OF HEARING:	3-4 December 2013
DATE OF JUDGMENT:	2 June 2014
CASE MAY BE CITED AS:	Lyon v Howard
MEDIUM NEUTRAL CITATION:	[2014] VSC 84

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TRUSTS – Resulting trust – Contribution to purchase price of property – Whether “gift” or “investment” – Relevance of non‑disclosure of beneficial interest to government authorities to the grant of discretionary relief - Quantification of beneficial interest.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. W. Lithgow	Maddocks
For the Defendant	Mr B. McCullagh	Trueman Dawson

HER HONOUR:

The plaintiff and the defendant in this proceeding, Noelene Lyon and Peter Howard, are brother and sister. Noelene, born in 1947, is twelve years older than Peter, with Noelene and Peter being the eldest and youngest respectively of four siblings. Noelene has a family of her own, including her husband David Lyon and three adult children, Katie, Christian and Ben. Noelene and Peter’s other siblings are Gary Howard and Jacqueline (“Jackie”) Davison.

Noelene and Peter were, until the estrangement between them which culminated in this proceeding, very close. Their mother died in 1982, but for many years before that Noelene, and later Noelene and her husband David, had assumed a quasi-parental role with respect to Peter. Both Noelene and Peter remained close to their father, Noel Howard, who lived in the family home at 7 Alcon Court, Langwarrin (“Langwarrin property”) until his death in November 2001.

Noel Howard made a will on 20 June 1986 (“Will”). In the Will, Noel appointed Noelene and Jackie as executors of his estate. The Will provided that Noel’s estate be distributed as follows:

(a) one sixth of the value of the Langwarrin property to Gary Howard in repayment of a debt owed by Noel to Gary; and

(b) the residue to be divided equally between Noelene, Jackie, Gary and Peter in equal shares.

The Will also included a clause providing that Gary Howard was to be given first option to purchase the Langwarrin property at a price to be determined by two local valuers, with any option to be exercised by Gary providing written notice to the executors within three months of the date of Noel’s death.

In 1994 a family meeting was held at the Langwarrin property, attended by Noel and each of Noelene, Jackie, Gary and Peter, to discuss how Noel’s estate was to be distributed upon his death. The minutes of the meeting, which were typewritten and signed by each of the attendees, state as follows:

The following is a summary of points discussed and agreed upon by all concerned:
1.The house at 7 Alcon Court and all other assets owned by Noel Ralph Howard are to be valued.
2.Due to the fact that Gary Howard has a financial interest already in the house, he is to firstly receive one sixth of the value of the house.
3.Peter Howard is to receive $4,140 being for interest on money lent to Noel R Howard prior to March 1985.
4.In addition, Gary Howard must be given $20,000 (twenty thousand dollars) out of the whole estate in compensation for purchasing Noel Ralph Howard’s car for him.
5.The remainder of the estate is to be divided 4 (four) equal ways between Noelene Lyon, Jacqueline Davison, Gary Howard and Peter Howard.
6.Gary Howard is to have the first option on purchasing the above said property.

The minutes annexed a schedule showing a calculation of the interest payable to Peter referred to above. The matters discussed and agreed at the meeting, to the extent they were not already recorded in the Will, were not formally incorporated in a new will or a codicil to the Will, but were given effect to by Noelene and Jackie after Noel’s death.

Noel became ill in mid-2000, suffering from lung cancer, and required assistance and care between that time and his death in November 2001. While there is some dispute between both Noelene and Peter regarding their respective contributions to their father’s care, it appears that the lion’s share of the responsibility for caring for Noel fell to both Noelene and Peter, rather than being equally shared between each of the four siblings. From the period between mid-2000 to late 2001 Peter lived with his father at the Langwarrin property, with Noelene visiting very frequently, having retired from the teaching profession as a result of her own ill health in April 2000.

While the intentions of the parties and the timing and the terms of the discussions between the parties are disputed, with the resolution of these disputes being critical to the outcome of this proceeding, the following matters are not in dispute:

(a) Noel died in hospital on 12 November 2001;

(b) at the time of Noel’s death, Peter was unemployed, and had no assets of substance;

(c) in order to give effect to the terms of the Will, the Langwarrin property would need to be sold;

(d) in a report dated 15 March 2002, a local valuer informed Noelene and Jackie that the value of the Langwarrin property was $185,000;

(e) on 28 March 2002 Gary wrote to Noelene and Jackie informing them that he did not wish to exercise his option to purchase the Langwarrin property;

(f) during a meeting on or about 1 May 2002 when the Will was read, Peter offered to purchase the Langwarrin property for $180,000;

(g) probate of Noel’s estate was granted to Noelene and Jackie on 31 May 2002; and

(h) on the assumption that the value of the Langwarrin property was $180,000, Noel’s estate was distributed as follows:

(i) to Gary, $50,833.00, being the sum of $20,000 owed to him by Noel plus one sixth of the value of the Langwarrin property;

(ii) to Peter, $22,015 agreed to have been owed by Noel to him at the time of Noel’s death; and

(iii) the balance of $104,595.58 (after costs) to be shared equally between the four siblings, that is, $26,788 each.

As noted above, Peter offered to buy, and Noelene and Jackie on behalf of Noel’s estate agreed to sell, the Langwarrin property for $180,000. However, his share of the estate was only $48,803. In order to fund the balance of the purchase price, Peter and Noelene agreed, without the knowledge of their other siblings, that Noelene would provide the balance of the purchase price by foregoing the right to receive her share of Noel’s estate in cash, and by transferring the sum of $100,000 to Peter, the latter being the bulk of the superannuation account accumulated during her career as a school teacher. The critical issue in this proceeding is whether Noelene’s contribution to the purchase price of the Langwarrin property was for the purpose of an “investment”, as contended for by Noelene, such that she retained a beneficial interest in the Langwarrin property, or whether it was a gift from Noelene to Peter, as contended for by Peter.

Peter is the sole registered proprietor of the Langwarrin property. He has lived at the Langwarrin property since the transfer was completed in July 2002. He has paid all expenses and outgoings associated with the property (rates, insurance, utilities and other services). He has expended money and labour on repairs and improvements to the Langwarrin property. He has never been reimbursed by Noelene for any of his work or his outlays. Neither has he paid any rent for his occupation of the property.

In her statement of claim dated 19 October 2012, Noelene seeks the following relief:

(a) a declaration that Peter holds the Langwarrin property on trust for himself and Noelene in interests proportionate to the purchase price of the Langwarrin property or in such amounts to be determined by the Court;

(b) an order directing the Registrar of Titles to amend the register with respect to the Langwarrin property by registering Noelene and Peter as tenants in common in shares calculated in accordance with (a) above;

(c) further or alternatively to (b), an order that Peter execute and deliver to Noelene an executed transfer of that part of his legal interest in the Langwarrin property necessary to give effect to any declaration made in accordance with (a) above; and

(d) the costs of this proceeding.

In his defence dated 29 November 2012, Peter contends that Noelene gifted her share of Noel’s estate and the sum of $100,000 to him to enable Peter to purchase the Langwarrin property in order for him to have a place of his own to live in, in appreciation of the role Peter had played in caring for Noel in the last period of his life. In support of his contention that Noelene’s contribution to the Langwarrin property was a gift to him, Peter relied upon the following matters:

(a) the contents of a conversation between him and Noelene after Noel’s death;

(b) the absence of any documentation of any agreement between him and Noelene in the terms asserted by Noelene, that is, that she was making an “investment” in the Langwarrin property;

(c) the fact that, after the death of Noelene’s father-in-law, George Lyon, in April 2002, Noelene’s husband David Lyon stood to inherit a substantial sum of money, such that Noelene could afford to make a substantial gift to Peter; and

(d) shortly after the transfer of the Langwarrin property to him in July 2002, Noelene sent Peter a congratulatory card which stated: “Wishing you a very happy satisfying life in your first ever real home of your own”.

At trial, the following persons gave evidence:

(a) Noelene;

(b) Noelene’s husband David Lyon;

(c) Noelene’s son Christian Lyon;

(d) Peter; and

(e) Neal Collin, the solicitor who acted for the parties in the administration of Noel’s estate and the transfer of the Langwarrin property to Peter.

During the course of her examination in chief, Noelene gave evidence regarding the following matters:

(a) her position and role within the family;

(b) her close relationship with Peter, stating at one point: “I considered us to be soul mates”;

(c) the occurrence of the family meeting in 1994;

(d) her father’s diagnosis with lung cancer in 2000. She gave evidence that Peter had called her to find out the results of the tests Noel had undertaken. Upon learning of his father’s diagnosis, Peter, who was on his way to Queensland, asked “do you think I should come back?” and, indeed, did return to live with his father and brother Gary at the Langwarrin property;

(e) while Peter lived at the Langwarrin property, he would spend a few nights a week staying at his previous residence in West St Kilda;

(f) Noel’s health was progressively deteriorating over the course of 2000 and 2001, and he was receiving chemotherapy and radiation treatment. On 23 October 2001 Noelene was told that there was nothing more that could be done for Noel, and he died in hospital on 12 November 2001, some three weeks later.

Noelene gave evidence about a conversation held between her and Peter sometime between 23 October 2001 and Noel’s death on 12 November 2001, at which her husband David was also present. The discussion took place in the lounge room at the Langwarrin property. Noelene’s version of this conversation (noting that Peter disputes that this conversation ever took place) is as follows:

(a) Peter said that he would really love to buy the Langwarrin property and improve it but he did not have sufficient funds;

(b) David made the suggestion that he and Noelene mortgage their house at Newport and invest in the Langwarrin property with Peter;

(c) Noelene’s evidence regarding her response to this suggestion was as follows:

I wasn’t happy about that because it had taken us so many years to pay it off, working really hard, long hours and I made an offer of — I said — a suggestion that my superannuation would become available about April the following year and I would be prepared to access that and invest that in the property and leave my share of the property.

(d) as Noelene was no longer working owing to ill health, she knew that she would soon have access to her superannuation, and she was prepared to:

Invest it, along with my inheritance, to enable Peter to have enough money to obtain the First Home Owner’s Grant and I was like the bank and he would have a place to live because he had always rented.

(e) Peter’s reaction to Noelene’s suggestion was one of delight. He then talked about renovations he would like to undertake on the Langwarrin property; and

(f) there was little further discussion about the proposal at this time, with both Noelene and Peter preoccupied by their father’s care and subsequent death.

Noelene gave evidence that Peter continued to live in the Langwarrin property after Noel’s death. The reading of the Will was delayed for some time, in part because of Noelene’s ill health. The Will was read on or about 1 May 2002 at the offices of Mr Neal Collin in Frankston, with all siblings in attendance. However, the Will contained no surprises, and by this time Gary had told the executors that he did not wish to exercise his option to purchase the Langwarrin property.

Noelene gave evidence that during the course of the meeting in Neal Collin’s office, Peter made an offer to purchase the Langwarrin property for the sum of $180,000. Jackie and Gary initially protested, as the executors had received a valuation of $185,000 for the Langwarrin property, but Peter made it clear that it was his final offer. After this meeting, Noelene and Peter returned to the Langwarrin property in Noelene’s car. During this trip, Peter asked Noelene whether she was still willing to go ahead with what she had discussed prior to Noel’s death, and she confirmed that she was. When asked what she actually said during the course of this discussion, she responded as follows:

That I was still willing to invest my moneys into that property because I knew that he would do a really good job at improving it.

At the time of this discussion, Noelene was still yet to receive her superannuation payout, but expected to receive it shortly (the funds were actually paid to her on or about 15 May 2002).[1] She knew how much the beneficiaries, including herself and Peter, were likely to receive under the Will. In response to a question as to whether there was going to be enough to put Peter in a position that he could pay out the other beneficiaries and acquire the Langwarrin property, she responded: “I really didn’t do exact calculations at the time but Peter figured that it would work”.
[1]See exhibit 9.

Noelene gave evidence that after she received her superannuation payout she told Peter that she had received it and would be sending him a cheque for $100,000, which she in fact did.[2] Also, while she cannot directly recall the transaction, she believed she would have received a cheque representing her share of Noel’s estate from Neal Collin that she signed over to Peter.
[2]Peter insisted that the payment was made to him by EFT, but it is difficult to see what turns on this particular factual dispute.

Noelene did not recall any further discussions with Peter specifically about the arrangement they had entered into regarding the Langwarrin property, but they spoke on a regular basis, and she knew he was very happy to be able to stay in the house.

In response to a question as to whether she and Peter had a discussion about what Peter was proposing to do with his will, she responded:

Not at that stage, but a few months later he suggested that he would change his will and leave the house to my three children as a gesture of gratitude.

Over the next few years Noelene and Peter continued to have a strong relationship. Peter often expressed how happy he was and told Noelene about the plans he had for the Langwarrin property, and while she rarely visited there, she was “amazed” at what he had done when she did.

When asked whether it became an issue about acknowledging her contribution at any point, Noelene responded: “Not until he began to change”.

Noelene gave evidence that she and Peter had a very good and strong relationship until Peter started to speak critically about members of her family. While she was used to Peter speaking critically of their brother and sister, he started to criticise her husband and two of her three children. Peter described her husband as living like a “big fat happy spider” off his late father’s money, that her daughter Katie and her daughter-in-law Carmen were “little princesses” and her son Ben was a “spoilt brat”. What particularly disturbed her was:

When he accused Ben or implied that Ben was being dishonest or there was something strange about Ben not wanting to take the job at the hotel where it involved poker machines.

Noelene produced a letter she said had been written by her and mailed to Peter. The letter produced to the court was typed, not signed, and was dated 17 December 2008.[3] Peter denies receiving the letter, which raises various concerns about Peter’s statements about Ben, Peter’s angry response to David’s refusal to lend him money on one occasion, and Peter’s apparent “distancing” himself from the family. Among other things, the letter states:

The fact that we have nothing documented about Alcon Court has caused problems for me as you know. I totally trust you, but would like you to do this just for everyone’s peace of mind.

[3]This letter was only located by Noelene two weeks prior to the trial.

Noelene received no response to this letter, if indeed she had sent it. She and Peter still maintained a reasonably good relationship after that time, but their relationship deteriorated after Peter attended Katie’s wedding in October 2011. Noelene gave evidence that Peter put “play money” in the wishing well, didn’t give the couple a card, and was fairly antisocial. He placed himself into photos he shouldn’t have been in, and he left early, without saying goodbye, and without thanking anyone. Some days later he telephoned her, and she expressed her disappointment to him.

Noelene gave evidence that not long before the wedding, in August 2011, she visited the Langwarrin property. She gave the following evidence.

I had gone over to Langwarrin because Peter wanted to cull some of the items that he had been storing on behalf of David, that had belonged to David’s family, and that was in preparation to move. He told me that he would like to sell up and build something in northern New South Wales.

When asked whether she replied to that, Noelene said:

I said, “would it impinge upon your plans if you repay that money?” and he said “I couldn’t just repay it, I would have to give you more than that because the property has improved in value,” and I said I would only expect the money that I invested initially, plus bank interest, perhaps … He said “That wouldn’t be fair” and he never mentioned about moving again, selling up and moving”.

When asked whether anything else was discussed about what might happen at this stage, Noelene responded:

No. After he realised that I would want my name on a title — well, I did not want that house sold and him having the money to go off and buy a potential property that he may or may not do and I may not have any interest in and it be recognised legally. So he stopped talking about moving, selling up and moving.

After the telephone conversation where Noelene expressed her annoyance at Peter’s perceived misbehaviour at Katie’s wedding, she had three further telephone conversations with Peter, all within days of each other in January 2012. When asked whether she could recall what was being discussed during these telephone conversations, Noelene responded as follows:

My name going on the title and each time I got firmer and firmer. The final time he said to me “It was a gift, I have proof. I have a card that you sent me saying ‘welcome to your very first home of your own’ and I’ve had legal advice”.

In response to a question about what Peter said about Noelene’s name being on the title of the Langwarrin property during their last telephone call, Noelene said that Peter told her: “It will never go on the title, over my dead body”.

Finally, Noelene gave evidence that this last telephone call (they have not spoken since, save for a brief exchange at the mediation) was the first time that Peter had ever referred to Noelene’s contribution to the Langwarrin property as being a gift.

Under cross-examination, Noelene gave evidence that she was an aged pensioner, and had received a pension since the age of 64. Prior to that time, she and her husband lived off the income from a self-managed superannuation fund. She had been a director of a company controlled by her husband and prior to that by her father-in-law since 2003, which derived income from share investments, and was the trustee of the self‑managed superannuation fund referred to above. However, she had little involvement in the management of that company or its investment activities.

Noelene gave evidence that as part of the agreement she reached with Peter in late 2001 Peter was to prepare a will leaving the Langwarrin property to her three children. Peter told her that he was changing his will to leave the property to her three children, and the purpose of that was to give her security. She confirmed that she had sighted this will. She believed this proposal was made by him in or around June 2002.

Noelene also gave evidence about the arrangements for caring for Noel. She said she stayed at Langwarrin “quite a bit of the time”, and that Peter was “back and forth” to his residence in Canterbury Road, West St Kilda. She said:

I was there all the time for Dad except when I had to have my treatment at Melbourne Private.

When asked about the conversation she had with Peter about purchasing the Langwarrin property, she said it was not on the day that her father received his terminal diagnosis, but it was between that date and the date of his death. The transcript shows as follows:

Peter denies that you ever spoke to him between those two dates about him buying the property, you know that?---I wasn’t aware of that. We definitely did discuss it before Dad died.
Peter will say that is not true and that it was not discussed?---Is he able to prove that?
You say that it was discussed?---I am emphatic.
You rely upon your word and that of your husband?---Yes.
No-one else?---There was no-one else present.
You are aware that Peter says that you did not invest in this property, that you gifted him this money?---He only used the word “gift” during our telephone conversation on 9 January 2012.
But you are aware, are you not, that in this case that is what he is saying?‑‑‑I have been aware since the date that that is what he is saying and maybe believes it, has talked himself into that, using the card that was a gesture of goodwill that I sent to him as proof.

Noelene confirmed that she did not want to mortgage her house to help Peter purchase the Langwarrin property.

Under cross-examination, Noelene was asked a number of questions about her father‑in‑law’s death, the size of his estate, and what she did and did not know about how much her husband was likely to inherit and when. She gave evidence that she knew her father‑in‑law (George Lyon) owned a house which he said was worth about a million dollars (an accurate prediction, as it turned out), and that she knew her husband would probably be the sole beneficiary of his father’s estate. However, George Lyon’s death was unexpected, and she was not aware of the details of her father‑in‑law’s estate. After persistent questioning from counsel for Peter and the timing of various events and the coincidence with certain transactions concerning the Langwarrin property, Noelene stated:

That transfer was stamped by the stamp duty office on 17 July 2002?‑‑‑Right. The dealing I had with Peter with Dad’s house had absolutely nothing to do with what my husband inherited from his father’s estates.
That’s what you say?---That is the fact, that is the truth. I have sworn to tell the truth, the whole truth and nothing but the truth and I’m suggesting that you are trying to tie these two things up because Peter has claimed that I made a statement that we were to inherit a substantial amount of money, therefore, giving him $100,000 was absolutely nothing. I never, ever made that statement. Never would I think of stating anything to do or pre‑empting my father-in-law’s death on top of all the other deaths that we had experienced so closely in succession. I don’t think that way. Peter obviously thinks that $100,000 is nothing. It was all we had in the world when I invested that money to help him have a secure place of residence.
That’s what you say?---That is the truth. That is the fact.
He’s going to give contrary evidence?---Of course he will.
You say of course he will?---That’s why we are here.

Noelene was asked questions about her reluctance to disclose her financial position during the course of the proceeding. She agreed she was reluctant to disclose her financial details to Peter, as she had not asked him to disclose his. She agreed that she had not disclosed her alleged interest in the Langwarrin property in her application for the aged pension, which necessitated her making a statutory declaration regarding her assets, because she did not have a legal interest in the property. She stated:

What you are now telling this court is, is that because you did not have a legal interest, you did not have to disclose it?---Because I and my husband were never going to benefit from that interest in that property at Langwarrin, it was for our children.
Can you recall if there was – are you saying that this property was – that you put money – you transferred funds to Peter for and on behalf of your children?---To safeguard my superannuation from being frittered away.

When asked about why she did not put her name on the title, she replied as follows:

Way back in 2002, why didn’t you put your name on the title then?‑‑‑Because Peter, number one, didn’t want anyone to know that he had help to buy the property and he wanted the First Home Owner’s Grant.
So if your name had gone on the title as a co-owner, for example, are you telling this court it was your understanding that he would be unable to get the First Home Owner’s Grant?---I didn’t even consider it. I now know it would have been fraudulent had I realised that getting the First Home Owner’s Grant and having an interest in that property would have been fraud on my behalf against the Commonwealth but my name was not on the title, I was just purely acting like a bank. When somebody borrows money from a bank, the bank’s name doesn’t go on the title and the person can apply for the First Home Owner’s Grant.

She said she was also happy to keep it quiet because of the falling out she had with Gary and Jackie in relation to their lack of assistance with their father, and other matters which post‑dated their father’s death. She did not take any action later to have her interest recognised on the title, because she trusted Peter right up until she saw a change in his behaviour. She finally lost faith in him on 9 January 2012, when he said, “It was a gift”, and he had proof, being the card from her congratulating him on his first home of his own. He told her he had sought legal advice, and that was when she decided that she should obtain legal advice also.

Noelene’s evidence regarding which of Peter’s wills she saw and what she knew about their contents and when was a little confusing. She was adamant that she had not seen the version of Peter’s will which excluded her son Ben, although she did agree that in 2002 Ben was to some extent estranged from the family.

Noelene was asked about how she came to distrust Peter. She said it occurred gradually over time, as she became worried about Peter’s behaviour, what he was saying about her family, his slight paranoia about being ostracised from the family and about security. He told her he was happy to be known as a “vexatious litigant” by the local council because of all the complaints he had made to it about various matters.

Noelene gave further evidence about her’s and David’s financial affairs, both before and after the death of her father‑in‑law, and various property transactions she and David entered into. It was evident that after the sale of their property in Newport and their purchase of a property in Ocean Grove, and the receipt of the proceeds of David’s father’s property and shares, that David and Noelene had a “nest egg” of over one million dollars.

Counsel for Peter put the following to Noelene:

You see, Peter will say that you gifted him this money because he was so good to your late father?---I find that quite disgusting that anyone would expect to be rewarded for looking after their sick father. I found it a privilege to look after him. I didn’t expect a reward and I never used the word “reward” to Peter. I don’t think anyone should be rewarded for taking care of their father who had looked after all of us all his life and been a mother and father to us.

Noelene was asked further questions about the inconsistency between her statements to Centrelink about not having an interest in the Langwarrin property and her claims in the proceeding. Once again, she said that she had no legal interest in the Langwarrin property, but rather, that she and Peter had an understanding (at Peter’s suggestion) that the Langwarrin property would be left to her children after he died, and that Peter would be able to live there for the term of his natural life. She said:

My children, I had two children paying off mortgages, they are still paying off mortgages, another one was renting. There is no way I would give Peter or anyone else a house.

She said further:

I allowed him – I enabled him to obtain a home for himself to give him security.

Noelene agreed that after Peter became the registered proprietor of the Langwarrin property he undertook renovations at the property, including spending $76,000 on materials, and changing the floor plan of the house. However, this further contribution was not taken into account in any arrangement, because she never expected him to repay anything. He was free to do as he wished with the property, and she considered he had a real flair for renovating on a shoe string, and it would improve the property and give him something to do.

In response to a question that

All that’s changed is you now have a fear that he will not leave this house to your children?

Noelene replied:

I had a fear he was going to sell and take off with the money and, yes, my superannuation and inheritance would have disappeared with him.

According to Noelene, the “last straw” was during her conversation with Peter on 9 January 2012, when Peter threatened to change his will to exclude her children. However, she was also concerned when, in August 2011, he began talking about selling the Langwarrin property and moving to northern New South Wales, as she said that

our understanding was that he was going to live in that house for the term of his life, not sell it and move, so I suggest that he changed the terms.

Noelene was asked about the assistance both she and Peter provided to their father prior to his death. She agreed that she expressed appreciation for Peter’s assistance, and that she told him that he need not worry about a place to live. However, she rejected the suggestion that she had told him that she would give Peter her share of the Langwarrin property, or give him $100,000 from her superannuation money. She said:

… I never used the word “give”. As I mentioned before, it just makes no sense for me to give someone that sort of money when I had two children paying off a mortgage, another one paying rent …

and, notwithstanding her husband’s inheritance from his father,

When we invested in the house at Langwarrin, when we invested with Peter, we didn’t have any other money in the world.

When taken to the greeting card sent by her to Peter where she wrote, “Wishing you a very happy and satisfying life in your first real home of your own,” Noelene said that Peter was misinterpreting this statement for his own benefit. She said

it was a goodwill gesture because he wouldn’t have to move or be subject to increasing rents as he had been all of his life.

David Lyon, Noelene’s husband, gave evidence that he has known Peter since Peter was about five years old. He gave evidence that some time shortly before Noel’s death, he was present at a conversation between himself, Noelene and Peter at the Langwarrin property. He believed it would have been at the weekend, because Noelene was staying at the Langwarrin property during the week, and David was visiting there at the weekends. He said that Peter told them that he was interested in buying the Langwarrin property, and David suggested that he and Noelene could possibly mortgage their home in Newport to fund the balance of the purchase price. However, Noelene said she did not want that because they had worked for too long and too hard to purchase and own their own property, and that under the circumstances it would be better for her to invest her superannuation in purchasing the house to help Peter to buy the house, and that he (David) accepted that. When asked, “Did Peter say anything about that?” David replied, “Peter was happy to go along with anything that was going to make him part owner of the house.”

David gave evidence that on later occasions, on dates he could not recall, that he had had discussions with Peter to the effect that Noelene’s name should have been registered on title, and that the percentage, being 70/30, should have also been registered as Noelene’s investment in the property. When asked about Peter’s response, David gave the following evidence:

Peter just kept saying that, no, he didn’t want Noelene’s name on the property and that he wanted only his name on it and that he would leave the property in the will to my three children, and “My word is my bond” was always something that he kept saying to us and that was one of his sayings that he has used for many years, “My word is my bond”.

David believed these conversations took place after the Langwarrin property had been purchased, and he recalls being quite upset about Noelene not being registered on the title, and having heated conversations with Noelene about that matter. However, after Noelene repeatedly said that she trusted Peter, and that everything would be all right, David told her that he would “just stay out of it”.

David also gave evidence regarding other aspects of his relationship with Peter. While it is not necessary to go into any great detail about this evidence, I gained the impression that while David had his reservations about Peter and some of his conduct and statements, he had helped him out on regular occasions, and indeed, had bought Peter his first set of tools when Peter commenced his apprenticeship as a carpet layer.

Finally, in the course of his examination‑in‑chief, he was asked about the circumstances of his father’s death. George Lyon died on 21 April 2002. Prior to that time, he had been diagnosed with emphysema, and had surgery for bowel cancer 10 to 20 years prior to his death. According to the transcript:

He wasn’t terminally ill?---He wasn’t terminally ill, no.
How did he, in fact die, do you know?---Yes, he was driving home from a shopping trip on his own in his car and he had an aneurysm burst on his thoracic artery and the car careered across the road and into a bus shelter and he did at the spot. The coroner’s report was that he died of a massive blood loss due to the aneurysm.
Is it fair to say that his death was unexpected on that day?---Yes, it was totally unexpected.

In the course of cross‑examination, David denied that Noelene’s contribution of her share of her father’s estate and $100,000 from her superannuation money was a gift to Peter. Instead, he said

What do you say, in fact, it was?---Well, it was an investment in the property at Langwarrin, her father’s property, and it was at the time the only money we had available rather than – other than in just our living expenses and she wanted to invest that money in the property to help Peter have somewhere to live because he had never owned or never had the money to purchase a property.

When asked whether Noelene’s contribution was an investment or a loan, he said an investment, as it was not a term of the agreement that Noelene would be paid back. The investment was to be realised upon Peter’s death, when the proceeds of the sale of the Langwarrin property would go to David and Noelene’s children. He believed these discussions took place at around the time of or after Noel’s death, as the conversation between the three of them in October/November 2001 was more focussed on how to fund the purchase price of the Langwarrin property, not what was to happen later. However, it is not entirely clear whether he was actually present during any conversation where Peter and Noelene discussed the terms of Peter’s will.

David was asked about his entitlements under his father’s will, and his directorships of various companies associated with his father and his self‑managed superannuation, and the discrepancies between his evidence about that and the inventory of assets and liabilities sworn to by him when making the application for probate for his father’s estate. What emerged from that was that David received approximately $1,340,000 after his father’s death, either directly from his estate, or indirectly through companies previously controlled by his father. These funds were placed in a self‑managed superannuation fund for him and Noelene, the value of which declined about five years ago. David receives a carer’s pension for caring for a family member. He did not inform the Commonwealth Government that Noelene had an interest in the Langwarrin property because her name was not on the title, and neither he or Noelene would benefit from the property. David said:

Our children will benefit from it and if anything should happen that we do receive any money from that property, then obviously our pensions will be affected.

Finally, Noelene’s son, Christian Lyon, gave evidence on Noelene’s behalf. He gave evidence that he had a conversation with his mother in late 2001 or early 2002, after Noel had passed away, whereby Noelene told him:

that she was going to invest her superannuation and her share of the inheritance into the property, grandpa’s property.

Under cross‑examination, Christian gave evidence that his mother did not tell him about the terms of the investment, but that she used the term “investment”.

Counsel for Peter objected to the admissibility of Christian’s evidence on the basis that it was hearsay. I admitted the evidence on the basis that it was only admissible for the purposes of evidencing that such a statement was made, not as to the truth of the contents. After all, even if Noelene’s contribution to the Langwarrin property was a gift, Noelene may well have had reasons why she might not want to disclose such a gift to her children, if she had not been equally generous to them.

Peter gave evidence himself, and also called Mr Neal Collin, a solicitor, to give evidence on his behalf. Mr Collin identified various transactional documents on his file concerning the distribution of the estate under the Will, and the conveyance of the Langwarrin property to Peter, but otherwise had no direct recollection of the relevant events.

Peter gave evidence that he lives at the Langwarrin property and that he is a disability pensioner. He gave evidence that his sister Noelene called him on 26 June 2000[4] to tell him that Noel had been diagnosed with lung cancer and that she was worried about Gary’s ability to look after him. Peter asked her whether she wanted him to return to Langwarrin to look after Noel, and Noelene was pleased that he had said he would come back. He was in Queensland because he had hoped to live there, but returned to the Langwarrin property on 6 July 2000.
[4]Peter was able to pinpoint the date by reviewing his telephone records.

Peter and Gary lived together with Noel at the Langwarrin property for about a year, when Gary left. During this period Noel had an operation to remove his right lung. Gary worked “on and off” during the course of that year. Peter did not work or attempt to look for work, as he was his father’s primary carer. He disputed Noelene’s apparent contention that she was their father’s primary carer, saying that while she visited the Langwarrin property when she could, there were a lot of things going on in her family at that time. He disputed Noelene’s evidence that he regularly returned to stay in a previous residence in St Kilda West, saying he did so “rarely”. He did agree that Noelene would occasionally take Noel for appointments to give him a break. He and Noelene were in regular telephone contact, perhaps two or three times per day, about their father’s health and condition.

Peter gave evidence that by the time his father returned from a caravanning holiday in Queensland in mid‑September 2001, Noel was very ill. While he could not specifically recall the date upon which Noel was informed that his prognosis was terminal, he did not dispute Noelene’s evidence that the date was 23 October 2001. He denied that there was a conversation between him and David and Noelene regarding Noelene “investing” in the Langwarrin property, or that there was any conversation of any such nature, because at that time they were all aware that Gary had first option to purchase the property.

Peter gave evidence that he was aware of the contents of the Will, and that he had calculated his entitlements under the Will and discussed them with Noelene. There was no dispute between the siblings about their respective entitlements under the Will. He said Noelene instructed him to arrange for a sworn valuation of the Langwarrin property, which resulted in a valuation of $185,000. When asked by his counsel how the purchase price came to be $180,000, Peter replied as follows:

Because in the lawyer’s Neal Collin’s office in Frankston, Noelene had already decided to give me the funds to buy the other beneficiaries out, Jacqueline and Gary, and I said to her, “Are you going to tell them”, and she said, “No, they don’t need to know”, because she wasn’t very happy or conversing well with either of them at the time and I made the offer to purchase the property for $5,000 less because I knew it was in disrepair and I knew there would be no agents involved.

Peter gave some evidence about how and when he transferred funds to pay Gary and Jackie their entitlements under the Will, and that there was a shortfall of $4,409 he had to meet. He gave evidence that when he telephoned Noelene to thank her for transferring the money to him he told her it was not enough to pay out the other beneficiaries, but she replied, “That’s all I can give you.”

Peter was taken to the Will he made in January 2002, prior to his offer to purchase the Langwarrin property, in which the main beneficiaries were two of Noelene’s three children, Christian and Katie. He gave evidence that he made that Will because he knew that he was going to receive an inheritance under the Will, he did not want to die intestate, and he wanted it to go to his closest family, who were Christian and Katie. In response to a question regarding Noelene’s allegation that Peter had promised to make her children beneficiaries under his Will, he stated:

I didn’t, there were no conditions put upon one when she gave me – transferred money to my account.

Peter gave evidence that he did not include Noelene’s son Ben in his January 2002 Will because he was estranged from the family at the time. He did not show this Will to Noelene but he let her know that Christian and Katie were beneficiaries, but not Ben because of the lifestyle he was leading at the time.

Peter’s counsel put to him Noelene’s evidence that she certainly would not have given him this amount of money given that two of her children had mortgages and the other was renting, and asked Peter what reasons Noelene gave him for giving him the money. He responded:

I deserved it, I had done a wonderful job of caring for Noel and she wanted me to have my very own home of my own.

Peter gave evidence that after 28 March 2002, when Gary informed the executors that he was not going to exercise his option to purchase the Langwarrin property, Noelene kept telling him that he did not need to worry about having a place to live, that everything would be all right, and that she said on one occasion, “not to worry, that I would be rewarded.”

Peter gave evidence that he did not discuss money with Noelene, but that Noelene obtained her superannuation money and told him on or around 28 April 2002 that she was going to transfer it into his account to enable him to pay out the other two beneficiaries and wind up the estate. By that time, her father-in-law had passed away (although only days earlier), and Peter believed that Noelene and David were quite well off. In the context of the discussions he had with Noelene regarding her assisting Peter to purchase the Langwarrin property, she said that David intended to sell the house inherited by him from his father on the Esplanade in Williamstown and invest the money, and that at some time David told him there were money or shares worth about $350,000 in his father’s estate, but that there was a lot more missing.

Peter gave evidence that he continued to reside in the Langwarrin property after his father’s death, and that while Gary and Jackie were anxious to get their inheritances, Noelene was less keen to wind up the estate and kept breaking appointments with the solicitor until the family all met at Neal Collin’s office on 1 May 2002. That was the meeting at which Peter offered to buy the Langwarrin property for $180,000. By that time, he knew how he was going to fund the purchase, as by that time he had had a conversation with Noelene about the matter. This conversation took place after Noelene’s father-in-law had died, at the Langwarrin property, and only he and Noelene were present. Noelene said words to the effect that she was happy when she received her superannuation to give it to Peter to enable him to buy the other two beneficiaries out, rather than have to fix the house up and put it on the market. In response, Peter indicated his desire to stay in the Langwarrin property, and he gave evidence that he was happy to stay there and have an opportunity to live there and renovate it. He gave evidence that he did not realise until after he had offered to buy the property for $180,000 he would need an additional amount of $4,409 to pay out Gary and Jackie.

Peter gave evidence that he did not tell either Gary or Jackie that Noelene was assisting him, at Noelene’s request. He did not tell the solicitor, Mr Collin, or anyone else. The purchase was not dutiable by reason of him being in receipt of government benefits, and he applied for and received the First Home Owner’s Grant of approximately $7,000. As well as giving evidence about the events and conversations leading up to and including the purchase by him of the Langwarrin property, Peter also gave evidence regarding the following matters:

(a)he never received a letter dated 17 December 2008 which Noelene said she sent to him;
(b)the first conversation he had with Noelene where she asserted that the money she had contributed to the purchase of the Langwarrin property was not a gift was on 9 January 2012;
(c)in response to his counsel putting to him Noelene’s contention that Peter was distancing himself from the family and saying untoward things about her children, Peter stated that he believed Noelene’s family were resentful of the gift she had given him in 2002. He had on occasion said things to her about her children, as he has always been very open in giving criticism where it was needed, but the level of criticism did not increase over time;
(d)in addition to the $76,000 the parties had agreed he had spent on materials for repairs and improvements to the property, he had put a lot of labour into carrying out a range of works on the Langwarrin property;
(e)Noelene knew that Peter was doing work on the property, never said he should not do that work, and said that what he had done was wonderful;
(f)in his view, he and Noelene had a very good relationship, as evidenced by the many cards she sent him and the sentiments expressed in those cards, and the relationship only started to sour after their telephone call of 9 January 2012 when Noelene demanded to be put on the title of the Langwarrin property; and
(g)while he did not feel comfortable at Katie’s wedding in late 2011, and left the wedding early, he did not feel that he had not conducted himself properly. He agreed that Noelene criticised him for leaving early, but did not consider this to be a relationship souring event.

Finally, Peter gave evidence about what he said were three telephone conversations between him and Noelene in January 2012. He believed the first telephone conversation was on 6 January 2012, when, for the first time, Noelene told him she wanted her name on the title to reflect her interest in the property, and gave him a few days to think about it. On the second occasion, he said that he was still firm on not being prepared to move on what was already in place and had been in place for nearly a decade. On the third occasion, the conversation became quite heated, and Peter told Noelene that it was not going to happen. In response, Noelene said, “It will so happen”, and the conversation ended. Since that time, they have not spoken, having been in at least weekly telephone contact prior to that time.

Under cross‑examination, Peter re‑affirmed his evidence that in the period between 21 April 2002 and 1 May 2002, his sister decided to give him a substantial sum of money, plus her entitlement under the Will to him because she wanted him to have his first very own home of his own to live in. He said that it had been a bit of a struggle moving between rented houses over the years. He said it was a wonderful gesture, and he thanked her for it on the evening Noelene transferred $100,000 to his account. He was very appreciative of what she had done, and that is why he decided to make a will leaving the Langwarrin property to Noelene’s three children.

Peter agreed that at the time that he purchased the Langwarrin property he already had made a will leaving his estate to two of Noelene’s three children, as at January 2002 he had an expectation of an inheritance from his father, and did not make a will including all of her three children until 2008. He also gave evidence that he did not tell Noelene, at the time she told him she would give him the money to him to buy the Langwarrin property in April 2002, that he was going to change his will in favour of her three children. He gave evidence that his second will was made in 2008, after Ben had come back to the family. He asked Noelene whether she wanted him to change his will to put Ben back in, and she returned to him and agreed.

Peter confirmed his earlier evidence that Noelene first suggested that she would give him $100,000 plus her share of the estate in the period between her father‑in‑law’s death on 21 April 2002 and the reading of the Will on 1 May 2002. However, prior to that time Noelene had indicated to him after their father’s death that he would not need to worry about having a place to live and everything would be all right. He did not know how she was going to achieve this, but he believed that Noelene and David were quite affluent at the time, at least after George Lyon’s death on 21 April 2002. He was not aware of how affluent Noelene and David were prior to David’s father’s death.

Peter remained adamant in his evidence that there was no discussion between him and Noelene regarding the Langwarrin property prior to the last week of April 2002. However, he said:

She had been assuring me that not to worry about having a place to live, that everything would be all right without divulging what she had in mind and I didn’t ask her.

He denied having a conversation in late October or November about the possibility of Peter buying the Langwarrin property. He said:

We certainly weren’t sitting around at Langwarrin talking about purchasing my father’s house when he was on his death bed
and
How could Mrs Lyon have known that [there might be an opportunity for Peter to buy the house] when my brother had first option to purchase the house and didn’t decline his option to purchase until 28 March 2012?

Peter did not accept the proposition that by the end of 2001 everyone expected that Gary would not want to buy the Langwarrin property, and said Gary’s decision in March 2002 not to purchase the Langwarrin property came as a complete surprise to him.

When questioned further about the conversation alleged by Noelene and David to have taken place in October/November 2001, Peter gave some rather surprising evidence: surprising in that it had not been led in evidence‑in‑chief, nor was it the subject of any cross‑examination of David. According to the transcript:

David says that the initial suggestion that was raised by him was that they would mortgage their house in Newport to obtain some funds to assist you, do you recall that?---No, David mentioned he would mortgage his house in Newport to buy Langwarrin for me because of the wonderful way I had looked after the boss, as he referred to my father, and he said that to me on the rear patio of the house in September, late September of that year, 2001.
…
To do what?---He said to me he would mortgage his house in Wilkins Street, Newport, to buy Langwarrin for me because of the way I had looked after – the fantastic job I had done looking after my father.
…
You didn’t say thanks very much or this isn’t the right time?---It’s not appropriate.
Why didn’t you say to him, “hang on David, let’s not talk about this while Dad’s inside dying”, you just remained silent about it?---Didn’t take much notice of it really because it didn’t mean anything to me anyway. Dad was dying, that was the most important thing at the time, to look after Dad. Conversations that would have taken place between 23 October and 12 November would have been conversations along the lines of, how we were going to pay household accounts which I had been paying for a long time and the registrations on the cars, the caravan and the trailer which I had been paying and also was going to pay for the funeral and arrange it and I organised the funeral with Tobin’s and paid for it.

Upon further questioning, Peter reiterated his position that Noelene left her share of the inheritance in the Langwarrin property, and gave him $100,000 to buy out the other beneficiaries, to enable him to have his first home of his own, because they were very close, and that Noelene was very appreciative of the care Peter had given to their father during his illness.

While Peter generally gave his evidence in a direct and confident manner, at one point, when questioned further about his contention that Noelene’s contribution was a gift to him, his evidence was somewhat non‑responsive and evasive:

The simple fact of the matter is it had been discussed since before your father died the possibility of you acquiring the house with Noelene or David’s assistance?---No, it hadn’t. That is incorrect.
…
She was going to give it to you to avoid the sale of the house?---She gave – she was going to give me the money to buy the other two beneficiaries out.
But not her, you are not buying her out?---She was leaving her $26,788 in there, so I only had to pay the other two beneficiaries, Jacqueline Davison and Gary Howard, out to allow her to sign the transfer papers and the contract of sale to enable the house to be transferred into my name.
The fact of the matter is she was leaving her portion of your father’s estate in the estate because that would assist you and she was providing the $100,000, which was her superannuation, as an investment to help you?---To buy – for me to buy the other two beneficiaries out to enable me to have my first home of my own.
But you weren’t buying her out?---No, but I needed – she put the money in my account to enable me to pay out the other two beneficiaries who were anxious to have their money.
But she’s never suggested that she was just going to give all that money of hers away to you, it was being left to help you buy the house?---When the money went into my Commonwealth Bank account I rang her up that evening and when I had worked out the figures, I told her it was not enough money to pay out Jacqueline Davison and Gary Howard. There was another $4,409 required which I didn’t have. I had to get – I had to get a cash advance to obtain that.

Peter was questioned about Noelene’s evidence that he had become increasingly distant from Noelene, David and their family since 2002. He gave evidence that he believed Noelene’s family were not happy about what she had done for him. In particular, Katie Lyon was not happy about it, and her father had to give her $100,000 to buy her a unit in Williamstown. However, he believed that the gift was a matter between Noelene and him, and did not concern her family.

Peter did not accept that he had become gradually estranged from Noelene and her family over time. He considered they were still very friendly up to the time of Katie’s wedding in October 2011. He did agree that was very annoyed about Noelene’s son Ben declining a job at a Byron Bay hotel that Peter had arranged for him, and that he was very disappointed when David refused to lend him money to pay off his credit card in order to avoid interest charges. He was surprised that Noelene and David had re‑established contact with Jackie and her husband, but it had nothing to do with him. He agreed that he had made remarks to Noelene about her family, but that he did not consider them derogatory, and in any event, Noelene did not raise any concerns with him.

Peter gave evidence that the first he knew that there was a problem and that Noelene was saying that the money she had contributed to the Langwarrin property was an investment rather than a gift was during a phone call on 6 January 2012. That was the first occasion upon which she had asked for her name to be on the title. When asked whether he had sought legal advice prior to that call he responded:

I felt that I needed to get advice because something was going on when she stayed with me for two nights at Langwarrin on 30 and 31 August 2011, I felt something within their family had changed because she came down to Langwarrin [and collected personal effects which had been stored there since 2002].

After Peter gave further evidence regarding the source and nature of personal effects stored at the Langwarrin property, he gave evidence as follows:

You just gave evidence, and I asked you this twice, that the first time there was a problem between you and Noelene was in February 2012?---In relation to her wanting her name on the title of Langwarrin.
But then you said you thought there was a problem in August of 2011?‑‑‑Dealing with the Lyon family over the years, there were often quite a few problems but most of them were storms in a teacup and we got over our problems like most families would.
Instead of just getting over the problem, you went and got legal advice, is that correct?---I wanted to know my position, yes.
But you didn’t even know what the problem was?---Well, I wanted to know my position.
The actual fact is that it was in August of 2011 that you raised the issue about wanting or thinking about moving to northern New South Wales and selling the house?---I was always told the house was mine to do with what I wanted.
Is it true that in August 2011 you raised with Noelene the prospect or the interest that you had in moving to New South Wales?---I did say to Noelene I was thinking of downsizing and selling and moving to northern New South Wales, yes.

So she’s quite correct when she says that issue was raised with her and that’s when she said to you, “Well, I either want you to repay the loan or if you buy another property, I want my name on the other property”, do you recall that?---She didn’t say that, no. She told me she was quite happy with things the way they were, the house was wonderful.
She says that she said to you, “You’ve either got to repay the loan, or if you buy another house, you’ve got to make sure my name’s on it”, do you recall that?---I’ve read that she said that but she certainly didn’t say that to me.
Then she said you said to her, “Look, if I have to repay you, I couldn’t afford it”?---That’s not true either.
You couldn’t afford it, could you? If you had to repay her the loan, you couldn’t afford to buy another property?---She didn’t ask for me to repay anything. She told me she was quite happy with things the way they were.
That’s providing you didn’t sell the house or move to northern New South Wales?---That’s come out now but she didn’t say that to me.
She says she did, she’s mistaken about that?---They are mistaken about a couple of things.
You didn’t mention anything about moving to northern New South Wales in August, you said it was all about her coming down and staying for two nights at Langwarrin?---She came down to Langwarrin to pack up some of the items that had been there since 2002 that had belonged to David’s late parents.
Why did she come down after six years, what prompted that?---I have no idea why she wanted the items back then. I thought it a bit strange.
You don’t think it was more about the fact you had suggested you were going to sell up and move to northern New South Wales?---I wouldn’t have wanted to take all those things to northern New South Wales, no.

The legal principles applicable to the current case are accurately and helpfully summarised in the written outline of submissions filed on behalf of the defendant. While Noelene’s claim for an interest in the Langwarrin property was put on the basis of either an express trust, a resulting trust, or a constructive trust in her favour, the lack of precise evidence regarding the terms of any express trust, and the difficulty in identifying with any great precision the common intention of the parties when the relevant transaction was entered into (such that could give rise to a constructive trust), the best characterisation of Noelene’s claim is that, by making a contribution to the purchase price of the Langwarrin property, there is a presumption of a resulting trust, such that the legal owner of the property and the contributing party are, in equity, tenants in common in shares proportionate to the parties’ respective contributions to the purchase price of the property.

In the current case, there is no dispute that Noelene contributed $126,788 to the purchase price of $180,000, with Peter funding the balance through his share of the estate and some cash. Accordingly, the presumption of a resulting trust arises, unless the evidence establishes that presumption should be displaced by either a countervailing presumption of advancement, or rebutted by evidence of a contrary intention or agreement of the parties.

It was not pressed on behalf of Peter that the presumption of a resulting trust should be overborne by some “presumption of advancement”. In Calverley v Green,[5] the High Court held that:

The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support.

[5][1984] 155 CLR 242, at 250.

The High Court declined to limit the categories of relationship which might be said to give rise to such a relationship as described above. In the current case, there was some evidence that the relationship between Noelene and Peter was distinguishable from the “usual” sibling relationship. Noelene was twelve years older than Peter, and, owing to their mother’s relatively early death and difficulties prior to her death Noelene had adopted a quasi-maternal role with respect to Peter. They were particularly close, and her husband had provided material support to Peter, for example, in providing small loans to Peter, and buying him his first set of tools when he started his apprenticeship. However, such evidence does not go so far as to give rise to a presumption of advancement, although it is relevant to evaluating the plausibility of Peter’s assertion that Noelene’s contribution to the purchase price of the property was a gift.

Accordingly, as the undisputed evidence of Noelene’s contribution to the purchase price of the Langwarrin property gives rise to a presumption of a resulting trust in her favour, with the evidence being insufficient to give rise to a countervailing presumption of advancement, the onus rests with Peter to establish that Noelene’s contribution was by way of a gift.

In determining whether Peter has discharged his onus of proof in establishing the contribution was a gift, it is necessary to resolve a relatively small number of factual disputes between the parties. The task of determining whether Noelene’s contribution was a gift, or an “investment” is complicated by the fact that much of the evidence, both disputed and undisputed, is consistent with the claims of both parties. Of course, in circumstances where the contents and meaning of conversations and documents are ambiguous, which is often the case in financial transactions between family members, it is critical to keep in mind the party which bears the onus of proof. In the current case, the burden was upon Peter to resolve such ambiguities and uncertainties in his favour.

The main factual disputes between the parties are as follows:

(a)the extent of the respective contributions of both Peter and Noelene to their father’s care in the period between July 2000 and his death in November 2001;
(b)whether there was a conversation between Noelene, Peter and David between mid-October 2001 and Noel’s death of the nature contended for by David and Noelene, or, as is contended for by Peter, no such conversation took place;
(c)whether, in fact, the conversation that did take place was the conversation in late April 2002, whereby Noelene said she would give her share of Noel’s estate and $100,000 of her superannuation to Peter to enable Peter to buy the Langwarrin property;
(d)whether it was part of any agreement between the parties that Peter would leave the Langwarrin property to Noelene’s children in his will, and, if so, if and when that agreement was implemented; and
(e)whether Noelene requested Peter to take steps to “put her on title” prior to February 2012, consistently with her assertion that she had never made a gift to Peter.

Turning to the question of credit, each of the parties gave evidence confidently and, in some respects, dogmatically, despite the fact that, in relation to each of the critical matters above, someone must not be telling the truth. As such, this was not one of those cases where the demeanour of the relevant witnesses was particularly helpful in determining whether a party was giving evidence truthfully. In many cases, this difficulty may be overcome by testing the evidence of the relevant witnesses against the contents of contemporaneous documents. No such advantage was available to me in the current proceeding. The relatively small number of documents which are in evidence either record or evidence transactions and matters which are not in dispute, are of doubtful provenance (in the case of Noelene’s letter to Peter dated December 2008), or are ambiguous in their terms and effect (such as the greeting card sent by Noelene to Peter in respect of his “first ever real home of his own”.)

Accordingly, it is necessary to assess the plausibility of the evidence of the parties about disputed matters in the light of established facts, the circumstances in which the relevant transactions were discussed and entered into, and, ultimately, with regard to the question of the onus of proof.

Turning first to the question of which of Peter and Noelene played the greatest role in caring for their father, it should be noted that while this might be a significant matter within the family, it is not determinative of the issue of whether Noelene’s contribution to the Langwarrin property was by way of a gift. If Peter is correct, and he was in truth the primary carer of Noel, this would be merely supportive of the proposition that the contribution was a gift, not conclusive.

While both Peter and Noelene sought to downplay each other’s role in caring for their ill father, there is no real dispute that each of their contributions was substantial, and significantly exceeded the contributions made by their other siblings. Peter returned from the northern states to care for his father, in circumstances where he was considering relocating to Queensland permanently. Noelene spent substantial time away from her own home and family, at a time when she was unwell herself, to be at the Langwarrin property with her father. It is not entirely clear whether this commitment prevented either of them from undertaking paid employment; I suspect not.

In my view, the most sound conclusion to draw is that Peter was the primary carer of his father, but it is not precisely clear what that involved. There is no evidence as to whether Noel was bedridden, or required assistance with bathing and toileting. He was well enough to drive to Queensland for a holiday not long before his death, so it is unlikely he needed intensive nursing care. Further, I accept that Noelene was a frequent visitor to the Langwarrin property, and that those visits provided Peter with some respite from his role as carer. Accordingly, while Peter’s role in caring for his father was significant, it is not entirely clear how onerous that role was, and it is clear that he did not shoulder the burden alone.

As for whether a conversation took place between Noelene, Peter and David in late 2001 in the terms described by Noelene and David in their evidence, Peter asserts that he would not have had such a conversation while his father was terminally ill, and in any event, everyone knew Gary had first option to purchase the Langwarrin property. In my view, those assertions can be easily answered. It is entirely plausible that such a conversation would take place once the family knew that Noel’s death was imminent. Noelene and Peter were close, and Noelene well knew of Peter’s financial and living circumstances. It is quite likely that Peter would have confided in her his desire to stay in the Langwarrin property. They both knew, in general terms, the contents of the Will and approximately how much each of them would receive. Notwithstanding the fact that under the Will, Gary had first option to purchase the Langwarrin property, both Noelene and Peter at that time would have had grounds to believe that Gary would not exercise the option. In any event, even if they thought he might, that would not prevent Noelene and Peter discussing what might occur if Gary chose not to exercise the option.

Another matter which supports my conclusion that it is more probable than not that this conversation did take place at the time Noelene and David said it did was that there was no particular forensic advantage to Noelene in giving evidence about the conversation and its contents in this proceeding. Apart from the reference in the conversation to Noelene making an “investment” in the Langwarrin property, and providing some background to the later transactions which took place, the fact that the conversation occurred and the substance of the conversation were consistent with both scenarios: that is, Noelene’s contribution being made in the expectation that she would hold an interest in the property, or was made as a gift. The fact that Peter rejected the proposition that the conversation took place (albeit admitting under cross-examination that he had a conversation with David alone some months earlier in somewhat similar terms) undermines the credibility of his evidence on disputed matters generally.

I disagree with the submissions of counsel for the defendant that a financially unsophisticated layperson such as Noelene would not have used the term “investment” to characterise her contribution to the purchase price of the Langwarrin property. The term “investment” is widespread in use, and would not be generally considered to be an overly technical term. The use of the term “investment” may cause some doubt as to whether the moneys advanced by Noelene were by way of an equity contribution or by way of a loan. However, in no way could the term “investment” be confused with the concept of a “gift”.

I also did not agree with the submissions of counsel for Peter that Noelene’s use of the term “investment” seemed somewhat contrived. Indeed, Christian Lyon’s evidence, which was not seriously challenged as to its veracity, referred to his mother talking about “investing” in her late father’s property. While, as I have previously noted, this does not of itself mean that Noelene’s contribution to the Langwarrin property was an investment rather than a gift, it does indicate that Noelene was familiar with, and used the term “investment” in a normal conversational context.

The dictionary definition of “investment” is, relevantly:

the investment of money or capital to secure profitable returns, especially interest or income.

In the current case, Noelene would have had no expectation of receiving interest or income, but merely the security and capital growth generally associated with the purchase of residential property. I agree with the submissions made by counsel for Noelene that Noelene’s “investment” of her share of the estate and her superannuation money in the Langwarrin property made sense: she already had funds invested in a superannuation account which she did not require immediately. It would be reasonable for her to expect solid returns from investing in property, and her investment in the Langwarrin property had the added benefit of securing a permanent residence for her much loved but financially insecure brother Peter.

This conclusion is also consistent with the evidence of Noelene that first, for whatever reason, she did not want to invest in the share market; secondly, she did not want her superannuation to be “frittered away”; and thirdly, she had a great deal of admiration for and confidence in Peter’s renovation abilities. The relevance of the latter statement is consistent with a belief that the property was likely to increase in value over time.

Indeed, Noelene and David’s evidence regarding the timing and content of various conversations is overall much more plausible than Peter’s version of events. I accept that prior to David’s father’s quite unexpected death, Noelene and David did not have much in the way of spare liquid assets, apart from Noelene’s superannuation. Indeed, Noelene’s again unprompted rhetorical question about why would she give someone all of that money to buy a house when she had two children paying mortgages and another one renting makes perfect sense, even if she was close to her brother and appreciated his assistance with their father’s care.

It is clear from the thrust of the cross‑examination of Noelene and David regarding George Lyon’s death and its impact upon their financial circumstances, that the objective of that line of questioning was to lead me to a conclusion that Noelene’s contribution was likely to be a gift, because at the time Noelene offered to provide Peter with the funds for the purchase of the Langwarrin property, George Lyon had died, and Noelene and David knew that they were about to inherit a substantial sum of money, such that they could afford to be generous to Peter. This is consistent with the allegations advanced in paragraph 12 of the defence, that:

12. (a)….
(b)The Funds and the Plaintiff’s share of the estate were gifted to him in order to enable him to purchase the Property for himself from the estate of the deceased.
(c)The Plaintiff had orally told the Defendant that her husband’s father was unwell, and that upon his death her husband would inherit a significant sum of money.
(d)On 21 April 2012, the father of her husband died. Thereafter the plaintiff told the defendant that her husband had inherited about one million dollars and that she could readily afford to make such a gift and that she wanted to make such a gift in appreciation of him caring for [Noel].

Significantly, while Peter gave evidence that Noelene had told him that David would sell his father’s home and invest the proceeds, and that David had told him that he received money or shares in the amount of $350,000, Peter did not give direct evidence that Noelene made the statements as set out in his defence. However, as the evidence emerged, and there is no reason to doubt this evidence, George Lyon’s death resulted from a catastrophic incident, and not as the inevitable result of a long decline, despite his advancing age. Further, while I expect the size of George’s estate would not have come as a great surprise to David and Noelene, it would not be finally quantified for some months after his death. And, while David’s inheritance substantially bolstered Noelene and David’s asset position, it has hardly catapulted them into great wealth, as is evident from the fact that, despite the inheritance, they are both currently eligible to receive government support. Finally, and while this is a relatively minor matter, Peter gave evidence that after Noelene transferred the sum of $100,000 to him, he was still $4,409 short of the funds required to pay out Gary and Jackie their entitlements. He gave evidence that when he told Noelene this, she said, “that’s all I can give you”. Surely, if it had been the case that Noelene was able to provide a generous gift to Peter because she and David had received, or at least knew they would receive over a million dollars from George Lyon’s estate, then it is unlikely that another $4,000 on top of the $126,000 already provided would not have mattered.

Accordingly, Peter’s contention that in the days between the date of George Lyon’s death and the reading of the Will, Noelene offered to give Peter the sum of $126,000, which represented at the time more than a quarter of her total assets,[6] has the ring of convenient reconstruction. This, along with Peter’s belated concession that in September 2001 David had spoken to him about mortgaging their Newport home to raise funds for the purchase of the Langwarrin property, tends to support my conclusion that, to the extent that there is a conflict between Noelene’s and Peter’s evidence, I should prefer Noelene’s version of events. After all, if the proposition that Noelene would donate funds which were surplus to requirements to help her favourite but impecunious brother purchase a home has at least a faint ring of plausibility, the contention that a couple nearing their retirement years would mortgage their home to make such a substantial gift has none.
[6]Noelene gave evidence that the Newport home that she and David owned was sold in 2003 for $675,000, so her half share would be valued at approximately $335,000.

It is not clear from the evidence about discussions between Noelene and Peter regarding the terms of Peter’s will as to whether there was an agreement between Noelene and Peter that Peter would leave the house to Noelene’s children, or whether it was simply a unilateral decision on Peter’s part. The evidence was unclear as to the timing of any such discussions. In respect of that matter, I suspect David’s evidence is closest to the mark: that is, it was not raised during the initial discussion in October or November 2001, but that it was discussed between Noelene and Peter closer to the time of the transfer of the Langwarrin property to Peter in July 2002. This discussion may have taken place in the context of discussions about whether Noelene’s interest would be recognised on the title, or possibly not, although it is clear that Noelene considered the inclusion of such terms in Peter’s will as her “security”. In any event, not much turns on this matter, as, again, the terms of Peter’s wills are consistent with Noelene’s contribution being either an investment or a gift. Peter leaving the property to Noelene’s children could have been agreed as a mechanism by which Noelene’s investment would ultimately have been realised, given that Noelene was many years older than Peter, and Noelene trusted Peter. Alternatively, Peter making a will in those terms could equally be construed as a gesture of gratitude for Noelene’s gift to him. But in the end, the issue does not bear to any great extent upon the final conclusion.

Neither does the inscription on the greeting card referring to Peter’s very first home of his own, upon which Peter placed much reliance, and indeed, he told Noelene it constituted “proof” of a gift. In my view, the language of the greeting card, in the absence of other corroborative evidence, does not rise to that level. Once again, it is consistent with both parties’ versions of events. Even though, as I have found, Noelene’s contribution was by way of an investment, it still was Peter’s first home that he had owned, notwithstanding he had an undisclosed co‑owner. Noelene was adamant that he could do whatever he wished with the Langwarrin property, in terms of renovations and alterations, and he could live there for the rest of his life. Long term housing security, and the ability to make improvements and alterations without seeking permission, are both indicia of “a home of one’s own”.

While the relevance of later events, including the telephone conversations in January 2012 which led to the final estrangement of Peter and Noelene, are not of overwhelming relevance to the intentions and conduct of the parties in 2001 and 2002, I do consider that the evidence of Noelene about what transpired in the years up to and including 2011 in particular to be more plausible than Peter’s suggestion that the telephone discussions between them in January 2012 were completely “out of the blue”, and that evidence is more consistent with Noelene having a beneficial interest in the Langwarrin property. While Peter downplayed Noelene’s concerns about his conduct and remarks, he did not specifically deny those matters, except in respect of minor details. Again, while his evidence in relation to some of those matters did not go to the heart of the dispute, it did detract from his credibility generally: after all, his contention that calling a young woman a “princess” was not derogatory was frankly absurd.

One can see how, and why, against this background, Noelene became concerned about the conversation she had with Peter in August 2011, when he raised the possibility of selling the Langwarrin property and moving to northern New South Wales. Peter agreed that such a conversation took place, but rather gave evidence that it was never any condition of any agreement between him and Noelene that he would not be permitted to sell the Langwarrin property. While they did not discuss the matter again, it is apparent from Peter’s evidence that sometime between that time and January 2012 he sought legal advice because he was concerned about his “position”. When and why he sought that advice is not apparent from the evidence. That he sought legal advice is not conclusive evidence of his belief that Noelene had or may have had a beneficial interest in the Langwarrin property, but it is consistent with him being concerned that there was sufficient ambiguity in the situation. Again, Noelene’s conduct in seeking legal advice, lodging a caveat and issuing this proceeding is more consistent with that of a person seeking to regularise and enforce her legal entitlements in circumstances where her trust in Peter had understandably evaporated, rather than with that of a person who made a gift and many years later changed her mind for vindictive or capricious reasons. Of course, the fact that someone brings a proceeding cannot be evidence, of itself, of the validity of that claim, but in the circumstances of the current case, being a dispute between family members who had formerly been very close, it is conduct at least consistent with the existence of a valid claim, and the belated realisation that what she considered to be her “security” (the terms of Peter’s will) was not real security at all, once Peter threatened her on 9 January 2012 to change the terms of his will to exclude her three children.

One issue which arose at the end of the trial, presumably out of the evidence, as the matter was not the subject of pleadings, was whether Noelene, on her own case, was not beneficially entitled to an interest in the Langwarrin property, but was the mere “settlor” of a trust in favour of her children. As such, counsel for Peter submitted that Noelene did not even have standing to bring the claim.

I reject these submissions, on the following bases:

(a)first, as previously indicated, the evidence of how and why Noelene’s children came to be beneficiaries under Peter’s will is not terribly clear, and, in particular, it is not clear whether this was done by agreement, or by Peter acting unilaterally;
(b)secondly, even if Noelene’s ultimate intentions were that her children would eventually benefit from the Langwarrin property, the evidence does not establish that Noelene made an irrevocable declaration of trust in favour of her children. First, the evidence of her discussions with Peter when he was contemplating selling the Langwarrin property and moving to New South Wales is not consistent with there having been such a declaration. Testing the proposition in another way: it would be difficult, based upon the evidence in this proceeding at least, for Noelene’s children to maintain an entitlement to the share of the Langwarrin property representing Noelene’s contribution in the event Peter pre-deceased Noelene; and
(c)in any event, accepting this submission would lead to a practically absurd outcome. If Noelene is a mere settlor of the trust in favour of her children, the only trustee would be Peter, who would deny the interest of the beneficiaries.

Accordingly, based upon the evidence before the Court, Noelene is prima facie entitled to a declaration that she has an interest in the Langwarrin property in proportion to, or substantially in proportion to, her contribution to the purchase price of the property.

Of course, the jurisdiction of the Court to make declarations is discretionary. In the current case, there is one issue which arises which is relevant to the Court’s discretion: that is, the extent to which both Peter and Noelene have financially benefited, at the expense of the taxpayers of the Commonwealth and the State of Victoria, from Noelene’s interest in the Langwarrin property being undisclosed.

Noelene gave evidence that at least one of the reasons she did not “go on the title” of the Langwarrin property was to enable Peter to obtain the First Home Owner’s Grant from the State Government, and while she did not think of it at the time, she now realises that was a fraud. Peter gave evidence that he did apply for, and received, the First Home Owner’s Grant. However, the terms of the relevant scheme were not before me, and there was no evidence before me as to what Peter represented or declared to the relevant authorities regarding the terms and circumstances of his purchase of the Langwarrin property. However, one can suspect he received a financial benefit that he may not have been entitled to had the true position been known. However, there were other, plausible reasons for keeping Noelene’s interest in the property secret, and in any event, this is not a reason to deprive Noelene of her interest in the property. As for Peter, given there is no conclusive evidence that he has committed a “fraud”, the matter should perhaps lie where it falls, noting that this judgment will be a matter of public record.

The position is a little different for Noelene, with her failure to declare her interest in the Langwarrin property to the relevant authorities, given that she is the party seeking the relief from the Court. It may well be that since 2011 she has been receiving the aged pension at a higher rate than she would otherwise be entitled had she declared her interest, although again, there is no direct evidence of those matters. However, it was not put to Noelene, and there was no basis for concluding that one of the reasons Peter and Noelene structured the transaction the way they did was to enable Noelene to shield her interest in the Langwarrin property from any assets test. After all, this arrangement was first made some ten years prior to Noelene applying for the aged pension in 2011.

While neither counsel made submissions in relation to those issues, it is not the role of the Court to facilitate, or impliedly approve conduct of parties which has the purpose or the effect of conferring public benefits upon parties to which they are not entitled. But, again, for the Court to exercise its discretion in a manner which deprived Noelene from her rightful entitlements would be unduly harsh, and would unjustly enrich Peter.

One example where the Court had to grapple with these issues is the case of Nelson v Nelson.[7] In that case, a mother paid the purchase price for a house which was transferred into the names of her adult children. The purpose of the transfer was to enable the mother to later apply for a subsidised loan available to widows of defence force personnel to purchase a further home, which she did in fact do. After the first property was sold, one of her children resisted an application by her mother that she held the beneficial interest in the subject property. As well as relying upon the presumption of advancement as between parent and child, the daughter also submitted that equity will not enforce a trust which is designed to carry out an illegal purpose.
[7](1995) 184 CLR 538.

The High Court held that there is no general proposition that equity will let the loss lie where it falls in a case of illegality consisting of contravention of the policy of a statute. Rather, as stated by Deane and Gummow JJ:[8]

equity is equipped to attain a result which eschews harsh extremes.

[8]Ibid, at 559.

In that case, the majority of the High Court found that equity would not permit a result which enriched the daughter at her mother’s expense, notwithstanding the illegal purpose of the trust, but rather that the declarations made in favour of the mother were to be subject to the mother providing restitution of the sum she had improperly received by way of subsidy, thus ameliorating the impact of the illegality.

In the current case, consistently with the approach of the Court in Nelson v Nelson, I would make the declarations sought, subject to undertakings by Noelene that she will, at the first reasonable opportunity, take steps to inform the relevant authorities of her interest in the Langwarrin property, and of the estimated value of that interest. How she does that, and what further information she provides, will be a matter for Noelene and her legal and financial advisors.

Having dealt with the question of appropriate undertakings, the issue remains as to the precise quantification of Noelene’s interest in the Langwarrin property. It is agreed that the purchase price of the Langwarrin property was $180,000. There is no evidence that Peter was required to incur any additional costs: rather, the evidence shows that no stamp duty was payable, and it is like that the conveyancing costs were borne by Noel’s estate. Accordingly, Noelene’s contribution to the purchase price of $126,788 represented 70.44% of the purchase price. Applying that to the current agreed value of the Langwarrin property of $400,000, this equates to $281,751.08.

The question arises as to whether there should be some adjustments to the respective shares of Noelene and Peter to reflect Peter’s contribution of labour and materials (the latter was agreed to be in the sum of $76,000) for the renovation and improvement of the Langwarrin property. To these payments can be added the amounts paid by Peter with respect to rates and insurance: a countervailing factor is the fact that he has had rent free accommodation for more than a decade while only having a 30% interest in the property. In my view, while it would be open to the Court to make an appropriate adjustment in the event I found that Peter held Noelene’s interest on trust by reason of there being a constructive trust by reason of the common intentions of the parties, the scope for such flexibility is more limited in circumstances where the proper conclusion is that a resulting trust arises in favour of Noelene by reason of her contribution to the purchase price of the Langwarrin property, with the value of her interest to be in proportion to her contribution to the purchase price.

In Calverley v Green, the High Court observed that the quantum of a party’s beneficial interest under a resulting trust where there has been the contribution to the purchase price of a property corresponds to that direct financial contribution as a proportion of the total purchase price.[9] The authorities also confirm that money spent by one party on improvements to the property does not alter the beneficial interests of the parties affected by a resulting trust, in the absence of an agreement, or statements or conduct which might give rise to an estoppel. Further, as previously indicated, there is insufficient evidence for me to ascertain the existence and nature of any “common intention” of the parties, and in particular any common intention that Peter would be rewarded for any work he did on the property. Indeed, the scant evidence that there was, was to the effect that Noelene expected to ultimately reap the benefits of Peter’s renovation talents. Accordingly, in the absence of any agreement that Peter would be compensated for work done and monies expended on the Langwarrin property, or any evidence that Noelene made any representations to that effect which would give rise to any estoppel, I will make declarations that Peter holds the Langwarrin property on trust for Noelene as to 70.44% of the value of the property, and hear further from counsel as to the form of orders and the question of costs.
[9](1984) 155 CLR 242 at 246, 258.

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[2014] VSC 84

2 June 2014