Paulet v Stewart
[2009] VSC 60
•27 February 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5087 of 2006
| JULIE MARIE PAULET (Who sues in her personal capacity and as executor of the estate of Phyllis May Paulet, deceased) | Plaintiff |
| v | |
| FIONA SUSAN STEWART | Defendant |
---
JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 12-14, 17-20, 24 NOVEMBER and 1 DECEMBER 2008 | |
DATE OF JUDGMENT: | 27 FEBRUARY 2009 | |
CASE MAY BE CITED AS: | PAULET v STEWART | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 60 | |
---
Loan – Whether written loan agreement genuine or sham – Whether debt lapsed on death of lender grandmother – Whether claim for repayment statute barred – When cause of action arose – Whether acknowledgement a deed – Whether there was a further loan agreement
Equity – Claim by plaintiff mother as executor of grandmother’s estate to beneficial interest in property in name of defendant daughter/granddaughter – “Windfall Equity” – Maintenance, improvement and mortgage payments in respect of property made by mother – Whether gifts by mother – Most mortgage payments debited from defendant’s personal account – Whether rental payments – Breakdown in relations – Whether unconscionable for defendant to hold property free of charge.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T.J. McLean with Mr L.E.P. Magowan (on 12-14, 17 | Slater & Gordon |
| For the Defendant | Mr C.D. Johnson | Victorian Legal Aid |
TABLE OF CONTENTS
The Plaintiff’s Pleaded Claims........................................................................................................ 1
The Defendant’s Defence to the Pleaded Claims........................................................................ 3
Issues Not Raised............................................................................................................................... 5
The Relationship between the Parties........................................................................................... 5
Difficulties in the Hearing................................................................................................................ 8
The Factual Background................................................................................................................... 9
The Financial Transactions............................................................................................................ 47
The Plaintiff’s Credit....................................................................................................................... 61
Consideration of the Issues............................................................................................................ 63
The Claim to Beneficial Ownership of the Whole of the Croydon Property..................... 63
The Claim Under the 1990 Loan Agreement for $50,000....................................................... 70
The Claim of a Loan of $25,500................................................................................................. 75
The Claims Arising Out of the Maintenance, Improvement and Mortgage Payments.... 76
Conclusion......................................................................................................................................... 80
HIS HONOUR:
This extremely sad case arose out of a once loving relationship between a generous, but over protective and domineering, mother and her profoundly deaf daughter. The close relationship between mother and daughter broke down completely in about September 2004 when the daughter locked her mother, and her father, out of a property at 7 Blossom Walk, Croydon (“the Croydon property”), and commenced intervention proceedings against them. The row then degenerated into a bitter dispute between the mother and daughter over the ownership of the Croydon property, which is registered in the daughter’s name.
The Plaintiff’s Pleaded Claims
The plaintiff, Julie Marie Paulet, who was also known as Julie Stewart, commenced this proceeding in March 2006, against the defendant, Fiona Susan Stewart, also known as Fiona Susan Emma Paulet-Stewart, who is her daughter. The plaintiff sued in her personal capacity and as the executor of the estate of the late Phyllis May Paulet (“Mrs Paulet”). Mrs Paulet was the mother of the plaintiff and the grandmother of the defendant.
In the order in which they appeared in the prayer for relief in the amended statement of claim, the plaintiff made the following five claims in this proceeding. First, the plaintiff claimed the sum of $50,000 together with interest at the rate of 10% per annum from 7 November 1990. This claim was based on a document entitled “Loan Agreement”, signed by the defendant and her brother, William Hutchins Stewart (“Mr Bill Stewart”), and dated 7 November 1990, which recorded a loan of $50,000 by Mrs Paulet to the defendant and Mr Bill Stewart at 10% per annum commencing on 7 November 1990, which was due for repayment “on sale” of the Croydon property “or to be determined by the lender”.
Secondly, the plaintiff claimed the further sum of $25,500 together with interest at the rate of 10% per annum from 1 December 1992. This claim was based on the allegation that by an agreement made on or about 1 December 1992, Mr Bill Stewart sold his interest in the Croydon property to the defendant for the sum of $25,500, that Mrs Paulet paid the sum of $25,500 to Mr Bill Stewart and that the sum of $25,500 was lent by Mrs Paulet to the defendant on the same terms and conditions as the loan of $50,000.
Thirdly, the plaintiff sought a declaration that the defendant held her interest in the Croydon property on trust for the plaintiff. This claim was based on the allegations that at all relevant times the Croydon property had been purchased and the residence constructed thereon with the intention that Mrs Paulet and/or the plaintiff would have the full beneficial ownership jointly of the Croydon property and would occupy it upon completion of the residence; that the Croydon property had been purchased with $50,000 provided by Mrs Paulet; that the Croydon property had been registered in the names of the defendant and her brother so as to preserve Mrs Paulet’s pension entitlement; that the residence had been constructed in 1991 with funds contributed partly by the plaintiff and partly borrowed from the State Bank of Victoria (“the State Bank”); that the residence was designed and built to meet Mrs Paulet’s specific needs; and that the defendant had full knowledge of all of these matters and agreed with them. As I understood it, the plaintiff’s claim to full beneficial ownership of the Croydon property was as the sole beneficiary of her mother’s estate or as the survivor of the two joint beneficial owners.
Fourthly, the plaintiff sought an alternative declaration that the defendant held such of her interest in the Croydon property, as the Court considered appropriate, on trust for the plaintiff. As I understood it, this claim was based on the allegation that, whereas the defendant had made no financial contribution to the acquisition of the Croydon property or to the costs of holding or making improvements to it, the plaintiff had since 1991 contributed at least $181,928.92 in meeting:
(a)all costs associated with maintaining the Croydon property, including council and water rates, utilities, and other maintenance costs;
(b)the costs of substantial improvements made to the Croydon property; and
(c) mortgage repayments in respect of the Croydon property.
Finally, and alternatively, the plaintiff claimed repayment of the sum of $181,928.92 and loss of use of that sum.
Counsel for the plaintiff said in opening the case that, despite the order of the claims in the prayer for relief in the amended statement of claim, the primary claims were for a declaration of full or partial beneficial ownership by the plaintiff of the Croydon property. It will be noted that the claims based on the alleged loans by Mrs Paulet were inconsistent with the claim that the Croydon property had been held on trust for her, and with the assertion that the Loan Agreement dated 7 November 1990 was simply a device to camouflage Mrs Paulet’s ownership of the Croydon property.
The Defendant’s Defence to the Pleaded Claims
In her amended defence to the amended statement of claim, the defendant pleaded that the plaintiff had controlled her pension income from the time she started receiving it at the age of 18 years until mid 2004 and that the plaintiff had spent the defendant’s pension income without a proper or any accounting of it to the defendant. She further pleaded that the only money she actually received from the plaintiff was in weekly amounts of between $10 and $20 in recent years.
With respect to the alleged loan of $50,000, the defendant denied the allegations, but pleaded that if there was such a loan any claim to repayment was barred by the operation of s.5(1)(a), alternatively s.5(3), of the Limitation of Actions Act 1958 (“the Limitation Act”).
With respect to the alleged loan of $25,500, the defendant did not admit that Mr Bill Stewart had sold his interest in the Croydon property to the defendant for $25,500, and denied that Mrs Paulet had paid that sum to Mr Bill Stewart and that the sum of $25,500 had been lent by Mrs Paulet to the defendant. The defendant further pleaded that if Mrs Paulet did pay Mr Bill Stewart the sum of $25,500 then:
(a)it was to reimburse him for monies he had expended on the Croydon property;
(b)the plaintiff had no entitlement to bring a proceeding against the defendant for payment of the $25,500, whether personally or on behalf of the estate of Mrs Paulet; and
(c)any claim for payment of such sum was barred by the operation of s.5(1)(a), alternatively s.5(3), of the Limitation Act.
With respect to the claim that the defendant held the Croydon property on trust for the plaintiff, the defendant denied that the Croydon property had been purchased and the residence constructed thereon with the intention that Mrs Paulet and/or the plaintiff would have the full beneficial ownership jointly and would occupy it upon completion of the residence; that the Croydon property had been purchased with $50,000 provided by Mrs Paulet; that the residence had been constructed with funds contributed partly by the plaintiff; that the residence was designed and built to meet Mrs Paulet’s specific needs; and that the defendant had full knowledge of any of these matters and agreed with them. The defendant did not admit that the Croydon property had been registered in the names of the defendant and her brother so as to preserve Mrs Paulet’s pension entitlement. The defendant further pleaded that the Croydon property was purchased and the residence constructed for the benefit of, initially, Mr Bill Stewart, and that the defendant went to live at the Croydon property with her brother at the insistence of the plaintiff. The defendant pleaded that if the plaintiff did contribute funds to the cost of constructing the residence on land owned by the defendant and her brother, then it was to be presumed in law that such contribution was an advancement by way of gift from parent to children.
With respect to the alternative claims based on the alleged payments said to total $181,928.92, the defendant admitted that the plaintiff made some payments of the kind alleged but did not admit the quantum thereof. The defendant denied that the plaintiff made any payments acting in reliance upon or induced by the defendant’s conduct. She further pleaded that the plaintiff controlled the whole of her income and that the plaintiff took it upon herself to pay bills as she thought fit, without any claim that the defendant should be under any obligation of reimbursement.
Issues Not Raised
Quite a bit of disputed evidence was given about what personal property belonging to the plaintiff or the defendant’s father, Mr Nigel Stewart, remained at the Croydon property, what had been removed by them either before or pursuant to a court order and whether the defendant or those helping her had prevented the plaintiff and Mr Nigel Stewart from attempting to retrieve their property. There was, however, no claim for any relief in this proceeding in respect of the plaintiff’s personal property. I will, therefore, say no more about this aspect of the ongoing dispute between the plaintiff and the defendant.
The Relationship between the Parties
The plaintiff is a 66 year old pensioner. The defendant was born in 1968, as a result of a de facto relationship between the plaintiff and Mr Nigel Stewart. The plaintiff had two older children by a husband who died when the children were very young. The older of the two children was Mr Bill Stewart, who was a witness in this case. The defendant, who was virtually deaf from birth, learned to lip read and to speak. She attended kindergartens and schools for deaf children from an early age. Letters from the principal of the Glendonald School for Deaf Children in Kew to the plaintiff, written in 1982 and 1986, suggest that the defendant had some social and behavioural problems, including at least one aggressive or violent episode with other students.
Prior to September 2004, the relationship between the plaintiff and the defendant seems to have generally been a loving and supportive one. The family’s solicitor, Mr John De Kever of John C De Kever & Associates (“De Kever & Associates”) said that in his view the plaintiff had, as any parent, an unconditional love for her child and “Julie was very clucky”. He thought the relationship was “a very loving and caring relationship both ways between Fiona and Julie”. He described them as “almost umbilically tied” because they went everywhere together.
According to newspaper reports, in 1983, the defendant and her mother travelled to the United Kingdom as a result of Fiona winning a competition. In 1988, both mother and daughter enrolled in Introduction to Microcomputers at the Outer Eastern College of TAFE. The plaintiff taped the lectures and then transcribed them for the defendant. Subsequently they both enrolled in a business studies course at Wantirna College. The defendant said that she had qualifications in word processing, typing, computers and business. However, apart from a short stint at Target, the defendant has been in receipt of a disability pension all of her adult life.
On 13 April 1988 the defendant signed a general and enduring power of attorney appointing her mother to be her attorney.
Sometime after June 2000 when the plaintiff had purchased a unit in Chirnside Park, the defendant entered the Kellogg’s Backyard Blitz Competition, suggesting that her mother deserved a backyard blitz makeover because:
My mother is the greatest, Mum has been my friend/pal and mate. She deserves a nice garden as she hasn’t got a garden at all, just some pots. I love my mother.
The longer explanation read:
I would like to nomitate [sic] “my mother”. Mum has been the most wonderful mother and friend to me and very patient and loving & caring as I was born severly [sic] deaf and the doctors said I would never talk as my hearing loss was so bad.
My mother taught me to speak with my voice. It took mum a lot of time, effort, a lot of her life and persistant [sic]. Mum took a correspondence course with the John Tracey Hearing Impaired Clinic in Los Angeles, it took years for mum saying words over and over millions of times repeating and repeating. Mum never learnt sign language as she believed this was the easy way so mum tried so hard use my voice [sic], which I did amazing all the specialists. My mum and I went to college and mum spent a lot of effort writing down notes and taping the lessons for me, when we went home, she spent hours explaining the whole lessons to me. Mum and I raise money for Nerve Deafness Appeal and for the Royal Womans Hospital appeal. Mum always helps everyone. Mum can’t do her backyard as now her back is hurting. I love my mother so much. I would really like to do something to show her my appreciation and love to her.
I would like to surprise her with her own garden.
Mr Nigel Stewart described the relationship between the plaintiff and the defendant as “fine” prior to the lock out. He said that they went everywhere together.
However, both the plaintiff and the defendant had a specific complaint about the other’s behaviour. The plaintiff said that the defendant would “belt me up if she didn’t get her way”. She would be left black and blue. The plaintiff said that some of these assaults were unprovoked and others followed if she told the defendant to do something or if the defendant did not get what she wanted. For example, she said that on one occasion when she told the defendant to return a mobile phone that did not belong to her, the defendant struck the plaintiff in the mouth with the telephone and jammed it down her throat, damaging her teeth and cutting her mouth.
Mr Nigel Stewart said that the defendant “got a bit rough with her mother at times … She would belt into her and push her on the ground … It generally ended up in violence”. He said that his daughter “would fly off the handle for no reason”. Mr Nigel Stewart said that he saw “about three or four … maybe more “attacks by the defendant on the plaintiff, between 1994 and 2004. That was “just a rough guess”.
The defendant said that her mother was “a very controlling person … She would arrange everything, she would do everything, and she controlled everything”. The defendant said that she “just put up with it”. She agreed that her mother did things to help her. But eventually after one nasty argument the defendant could put up with it no longer and she asserted her independence by locking the plaintiff and Mr Nigel Stewart out of the Croydon property.
The defendant admitted that on one occasion she had thrown a mobile phone at her mother. She also agreed that once she had punched her mother on the arm. She said that they were arguing and she was angry. She denied ever belting her mother black and blue.
It would appear that since an attempted suicide in 2004, the defendant has been assisted by social workers and/or financial counsellors from Eastern Access Community Health (“EACH”). The plaintiff blamed the employees from EACH for starting the dispute with her daughter.
Difficulties in the Hearing
Real difficulties were created for the plaintiff by the question of payment for her legal representation in the hearing. Initially, the plaintiff retained Hutchinson Legal to act for her but she then changed to Slater & Gordon. She said that she had paid Hutchinson Legal about $70,000 for the legal costs of the intervention orders dispute with the defendant (referred to below) and the work done on this proceeding, and that she had paid Slater & Gordon over $100,000 in costs. I was told at the commencement of the hearing that the plaintiff had only been able to put her solicitors in funds for about three days’ representation, despite the fact that both solicitors and counsel had been working at reduced rates, and that complicated arrangements had been put in place to ensure the plaintiff was represented for as long as possible. At the conclusion of the hearing on the fourth day, Slater & Gordon sought leave to cease acting for the plaintiff and to remove their name from the record. I reluctantly granted that application. As they were no longer briefed, counsel also withdrew from representing their client.
The plaintiff was therefore left in a most difficult situation, despite the fact that she continued to receive some unofficial assistance from her former solicitors and counsel. After I sought help from the Court’s Self Represented Litigant Co-Ordinator, Ms Gray of counsel agreed to appear pro bono for the plaintiff. This involved her in a significant commitment as the hearing continued for a further six days. The Court is extremely grateful to Ms Gray for her selfless action, which was in the finest tradition of the Bar. Her task in picking up this most complicated dispute was not easy and she represented the plaintiff admirably. Nevertheless, there were understandable difficulties in the presentation of the plaintiff’s case at the hearing.
There were also difficulties in presentation on the defendant’s side, despite the fact that she was well represented throughout the hearing as a result of receiving legal aid. Although two Auslan interpreters translated the entire proceedings for the defendant, I was concerned about her ability to follow what was being said in Court. This was particularly the case when she came to give her evidence. Often she replied that she did not understand what she was being asked. This resulted in the course of her evidence being very disjointed and hard to follow. The situation with respect to the defendant is illustrated by the fact that on 27 September 2007, the Victorian Civil and Administrative Tribunal (“VCAT”) appointed an administrator of the estate of the defendant “with all the powers and duties conferred by Part 5 Divisions 3 and 3A of the Guardianship and Administration Act 1986” on the grounds that the defendant had a disability, was unable by reason of that disability to make reasonable judgments about her estate, and needed an administrator.
Apart from these specific difficulties, there was the not unexpected difficulty for the witnesses of trying to remember what events had occurred, and why they had occurred, up to 18 years before the hearing. The documentary evidence was also not complete, despite the plaintiff’s habit of retaining every scrap of paper she could.
The Factual Background
With that lengthy introduction, I turn to consider the factual background to the plaintiff’s claims. There was considerable conflict between the evidence led on behalf of the plaintiff and that led on behalf of the defendant about the circumstances surrounding the purchase of the Croydon property in 1990, the building of a house thereon and how it came about that the defendant became the sole registered proprietor of that property. I therefore propose to refer in chronological order to the tendered documents and then to set out the evidence from the various witnesses relating to the events which led to the documents coming into existence. I will then examine the relevant financial transactions in some detail.
By a contract note dated 17 August 1990 Mr Bill Stewart and the defendant offered to purchase the block of land at Lot 47, Blossom Walk, Croydon for the sum of $50,000, payable by a deposit of $5,000 by 31 August 1990 (of which $500 had been paid) and the balance of $45,000 on 31 October 1990. The contract note was signed by both of them. Originally the contract note named only Mr Bill Stewart as the purchaser, but before signing, the defendant’s name had been added.
The purchase of the Croydon property settled on 7 November 1990 and it was registered in the names of Mr Bill Stewart and the defendant. The balance of the purchase price was, according to a letter from De Kever & Associates dated 1 November 1990 to Mr Bill Stewart and the defendant, funded by an amount of $33,200 received by the solicitors and an advance of $13,482 from the State Bank.
Two receipts issued by De Kever & Associates showed that the sum of $33,200 comprised a bank cheque in the sum of $17,500 from the Melton West branch of Westpac Banking Corporation (“Westpac”) and a bank cheque in the sum of $15,700 from the Ringwood branch of the State Bank. Both cheques were received by the solicitors on 29 October 1990.
A State Bank Term Deposit Maturity Advice dated 17 October 1990 and addressed to Mr Bill Stewart advised him that his investment of $15,394.05 plus interest of $353.01 would be maturing on 29 October 1990. Someone had written these two amounts on the document to come up with a total of $15,747.06. A handwritten note by the plaintiff on the Maturity Advice document suggested that the amount of $353.01 “includes interest on Nans $2000”. The Maturity Advice came from the Croydon branch of the State Bank.
Internal documents of the State Bank showed that the sum of $13,482 was part of the first advance of $15,000, made available at settlement, on a housing loan of $65,000 (no. 1001747469) from it to Mr Bill Stewart and the defendant. The remaining $1,518 was for stamp duty and registration fees. The State Bank’s loan was secured by a mortgage over the Croydon property, which was registered on 15 November 1990. The loan was interest only until fully advanced. Thus, interest totalling $1,901.07 was paid before the loan began to be repaid by monthly instalments of principal and interest.
By the Loan Agreement dated 7 November 1990 Mr Bill Stewart and the defendant purportedly borrowed the sum of $50,000 from Mrs Paulet at an interest rate of 10% commencing on 7 November 1990. The document was signed by the defendant and her brother. The signatures were witnessed by the brother’s former next door neighbour. The loan was said to be due for repayment “on sale” of the Croydon property “or to be determined by the lender”.
A caveat was signed by Mrs Paulet claiming an “Equitable Estate - By way of Loan Agreement”. It was lodged with the Titles Office in January 1991. This may or may not have been prepared by De Kever & Associates. What appears to be clear is that the Titles Office issued a Requisition which was attended to by the solicitors. As a result, the caveat was amended on 20 February 1991 to claim an “Equitable Interest as Chargee - By way of Loan Agreement” between Mrs Paulet as lender and Mr Bill Stewart and the defendant as borrowers. De Kever & Associates billed Mrs Paulet in April 1991 for “taking instructions, attending to stamp Loan Agreement and Lodge Caveat, attending Requisition from Titles Office and generally acting in respect of this matter”.
The plaintiff’s evidence about these initial events was as follows. She said that in 1990 her mother, Mrs Paulet, who was then aged 75, used an electronic wheelchair and a walking frame. At the time Mrs Paulet was living at her house in Melton, but she wanted to move closer to the plaintiff, who was then living in her own house in North Ringwood, so that she could be looked after by her daughter.
The plaintiff said that she, her mother and a friend, Mrs Sue Duval, and sometimes Mr Nigel Stewart, went looking for a flat block of land on which to build a house and a granny flat for the plaintiff. According to the plaintiff, Mrs Paulet decided to purchase the Croydon property and she paid the initial deposit of $500, then the balance of the deposit of $4,500 and then the remainder of the purchase price. The plaintiff said that she took Mrs Paulet to both bank branches to pick up the two cheques. They then went to Mr De Kever’s office and handed over the cheques. The plaintiff said that her mother “had accounts everywhere”, including accounts at the State Bank. She believed that the cheques were her mother’s money.
The plaintiff said that the property was initially to be purchased in Mr Bill Stewart’s name because Mrs Paulet was concerned that she would lose her pension if she owned two properties. However, at the time, Mr Bill Stewart was “going through a very bad break-up with his wife” and divorce proceedings were starting. The plaintiff agreed that at this time, her son was looking “to buy a little old house”. However, he only had $15,000. The plaintiff said that she knew, from later events, that her mother had borrowed $15,000 from her grandson at some time but did not know whether it was before or after the construction of the house on the Croydon property.
According to the plaintiff, Mrs Paulet was “very, very concerned” about her grandson’s ex-wife, Jill, claiming the property and during discussions with Mr De Kever about this issue, the defendant said:
Put my name on it, that will stop Jill getting [the] property.
The plaintiff said that the defendant’s name had been added to the contract note by the defendant: “That’s definitely her writing, definitely”. The plaintiff gave evidence that at this time she heard the defendant acknowledge that the Croydon property was her grandmother’s house and that she, the defendant, was doing this to protect her grandmother. The plaintiff said that it was a matter of “family trust”:
In a family conversation 17 years ago, everyone understood mum was buying the land, everyone understood that mum was drawing the plans up for that house, she was going to live in it. They all understood mum’s feelings of losing the house and losing what she was doing and that she had her house on the market, everyone understood. We are family, we all help each other and we do anything to help each other in that respect that mum was getting old and that was our family tradition, you look after your elderly.
The plaintiff said that at this time her son was out of work and her daughter was on her disability pension. She said that her name was not put on the title because she was on a pension and she would have had the same problem of owning two properties.
The plaintiff gave evidence that she found a copy of the mortgage in her mother’s paperwork. She also said that she believed that the bank’s loan was “bridging finance”. This does not appear to be correct because the State Bank’s letter of offer contemplated repayment “over approximately Twenty Five years”.
The plaintiff said in evidence that she typed the Loan Agreement document after it had been drafted by Mr De Kever. She said that her mother told Mr De Kever that she wanted the Loan Agreement and a caveat to protect her interest in the Croydon property in case the grandchildren “did the wrong thing” by her. The plaintiff said that her mother did not like children and she was “very, very frightened of Fiona”. She said that there was no way that her mother would have given the house to the defendant. The plaintiff also described her mother as “tight” with money. She said that in “no way” could Mrs Paulet be described as “generous”.
When the plaintiff was asked in cross-examination, if the Croydon property belonged to her mother and the $50,000 Loan Agreement was simply a device to cover herself against the grandchildren doing the wrong thing, why was she making a claim under the Loan Agreement, her reply was:
Well, it is a loan now, isn’t it, she’s never transferred it over.
Mrs Duval gave evidence that she, the plaintiff and Mrs Paulet went looking for a block of land for Mrs Paulet to purchase. She said that they looked at three blocks and that Mrs Paulet chose the Croydon property because it was flat and was a big block. Mrs Duval said that Mrs Paulet told her that she was going to build a house and a granny flat on it. She said that she also went with the plaintiff and her mother to look at a couple of the builder’s houses to see what colour bricks and tiles Mrs Paulet wanted.
Mrs Duval said that she had been a friend of the plaintiff for 35 years. She and her husband moved to Queensland in 1992. Before they left, she had seen a sale sign on Mrs Paulet’s Melton property. She also said that her husband had helped Mr Nigel Stewart do some repairs at that house – propping up the ceilings, patching cracks in the wall and painting.
In cross-examination, Mrs Duval said that she and the plaintiff “correspond every week on the phone”.
According to Mr Nigel Stewart, Mrs Paulet bought the Croydon property and arranged for the house to be built on it. He said that at the time he was living at the plaintiff’s house, and he heard her and her mother talking about the property. He thought that the idea was for Mrs Paulet to reside at the Croydon property when she got older and did not want to stay in Melton. Mr Stewart said that he had nothing to do with the selection of the block of land or with the erection of the house on the Croydon property, but after it was completed he planted all the lawns and did the garden, at the request of Mrs Paulet. Mr Stewart said that Mrs Paulet wanted to put a unit down the back for the plaintiff and that he, Mrs Paulet and the defendant were each to have a room in the house.
Mr Nigel Stewart said that he and Mr Duval did some work on Mrs Paulet’s house before it was put up for sale. He said that they “agro-propped all the roofs and plastered everything up and painted all the walls”. The house was on the market two or three times before it was eventually sold.
When he was asked whether he knew anything about the defendant being put on the title to the Croydon property, Mr Stewart said:
It was something to do with her brother, Bill, living at the house, I’m not too sure. … I’m not too sure on the thing but the way it looked, Phyllis bought the house and wanted Billy to move in there because he had just had a split with his wife and I’m not too sure how it happened but he moved into the house so he could have his children over there, you know, somewhere to keep his children when he had them – what do you call it, custody … The idea was they were worried if it was just Bill on his own that his ex-wife would try to claim half the house so it was decided we better put Fiona in with him so Jill couldn’t get anything.
Mr Nigel Stewart said that he thought that Mrs Paulet and the defendant did not get on together, but he did not know why. He said:
I don’t know that Phyllis was really rapt in Fiona.
He said that the relationship between the defendant and her grandmother “got worse as time went on”.
The last witness called by the plaintiff was Mr De Kever. He said that he believed that the addition of the defendant’s name on the contract note was in his handwriting. Mr De Kever gave evidence about the circumstances in which he added the defendant as one of the purchasers. He said:
I don’t recall exactly but I have a recollection that Julie came to see me with Phyllis when this block of land was being purchased and obviously with Bill, Bill was a party to the contract, and for whatever reason, I can’t recall why, I suggested that Fiona’s name be added as a co-purchaser.
Mr De Kever was then asked who attended the meeting to discuss the purchase. He said:
I can’t recall exactly but it certainly would have been Julie. She was the main facilitator and organiser of these matters. Phyllis as well, I believe, and I’m not sure that Bill was at this particular meeting where we discussed the purchaser for the property. I don’t recall actually having much to do with Bill at all, so it may be that Bill – my recollection is Bill wouldn’t have probably been there … Fiona I don’t think was there either at the time. She may have been because she was quite often with Julie, they were inextricably tied, but yes, I don’t recall. I do remember Phyllis and – it’s 18 years ago, Your Honour.
Mr De Kever was then asked what he meant by the plaintiff being the facilitator. He answered:
Julie was the catalyst, she made things happen in the family. She organised the – I assume and I believe from memory, she organised the purchase of this block of land, organised the – came to see me with Phyllis to discuss which entity it was to be acquired in, why we put it in these names, 18 years later I can’t tell you, but we did. Julie was the one that made these things happen.
You mentioned Phyllis also attended at your offices?---M’mm.
Do you recall what role she had?---Phyllis was, as I recall, to be the provider of the funds …
Mr De Kever was then asked what he understood to be the roles of Bill and Fiona. He said:
Well, they were to be the purchasers of the property with – my understanding was they were the buyers, Phyllis was lending them the money and at some point in the future Phyllis was to consider moving over, back from Melton where she was living at the time, back to the eastern suburbs to be closer to Julie and it was their intention, I think, that they do something together and that Phyllis was to live in this property, or live on the property. Obviously it was just a vacant block of land in 1990.
Did you have any understanding why it was going into Bill and Fiona’s names and not Phyllis’ name?---No, I don’t recall that.
Mr De Kever said that he did not prepare the 7 November 1990 Loan Agreement, although it looked like a schedule to one of his loan agreements. In answer to a further question about Mrs Paulet providing the funds, Mr De Kever said:
The funds were to be advanced, as I understood it, by way of a loan to Bill and Fiona to assist them to acquire this property.
Later, when asked who he understood would be living in it, Mr De Kever said that when the Croydon property was purchased it was only a block of land and he did not know what the parties intended. He said that although he was not privy to the ongoing discussions he understood that in the long-term Mrs Paulet was to sell her property in Melton and it was “a possibility” that she would live at the Croydon property. But he said that he was “never really instructed that she was going to live” in the Croydon property.
Mr De Kever agreed in cross-examination that if he had been told in 1990 that it was Mrs Paulet’s intention to have the Croydon property held by her grandchildren on trust for her, he “absolutely” would have drawn a trust document. Mr De Kever also said in cross-examination that at the time he gave his consent to the Titles Office to amend the caveat, he would have been satisfied that the interest claimed was as chargee, and not any form of trust.
Mr De Kever said that he thought there was a reserve about Mrs Paulet’s relationship with the defendant. He said this was represented by the fact that Mrs Paulet wanted the caveat lodged to protect her interest. He thought that it was not the normal loving relationship between grandmother and granddaughter.
The defendant denied that it was her writing, adding her name to the contract note. According to the defendant, she could not remember signing the contract to purchase the Croydon property, or why or how her name came to be on the contract. It was not her idea.
The defendant gave evidence that at this time she did not receive her pension money because “mum organised it”. Her mother would pay for her food, clothing, petrol for her car, repairs to the car, everything. Sometimes her mother would give $5 or $10 cash, but only when she asked for some money. The defendant said that her mother said that she did not have to pay any rent at this stage because her brother was paying the home loan. The defendant said that she did not remember taking out a loan from the bank to help pay for the Croydon property and construction of the house. The defendant said that she and her mother never sat down and looked at bank statements together.
The defendant said that her grandmother never said to her that she wanted to live at the Croydon property. On the contrary, Mrs Paulet said to the defendant that “she wanted to die in her own home where her husband was”. The defendant was living at the Croydon property at this time.
The defendant gave evidence that, before this case had started, her mother had never said that the Croydon property was hers or that she had any rights in that property. She also denied that she had called it “nanny’s house”. She said that she knew it was hers.
In cross-examination, the defendant said that her relationship with her grandmother was good. She said that her grandmother gave her a few things but was not a generous person. Although she agreed that it was her signature on the Loan Agreement, the defendant said that she did not recall signing it or that she and her brother borrowed $50,000 from their grandmother. She said that she did not remember talking with her grandmother about either the Croydon property or the Loan Agreement. All she could remember was her mother asking her to type up the Loan Agreement from something that her mother had written down. She said that she typed it up on the word processor in her bedroom.
The defendant repeated that her mother told her that the house was “half mine and half my brother’s”. That was “definitely” the situation “from the start”. The defendant said that her grandmother never said that she wanted to move into the Croydon property to live close to the rest of the family.
The only other witness called by the defendant was her brother, Mr Bill Stewart, who was a motor mechanic. He was a reluctant witness. He described his current relationship with both the plaintiff and the defendant as one where he did not talk with either of them. He said that originally he, alone, was going to purchase the Croydon property but then he was advised to put the defendant’s name on the title so that his ex-wife could not claim any interest in it. He said that at first he did have objections to the defendant’s name being put on the title, but his mother then explained to him:
that it would be good for Fiona to be there in case my ex-wife wants to put claims on the property or whatever, they can only then claim a half of what the property’s worth because Fiona’s there and they won’t kick a deaf person out on the street, blah, blah, blah. So I thought maybe it’s a good security thing, and it didn’t really worry me.
He said that he found the particular block and built a house on it. He later agreed that his mother had helped in searching for a property because he was working at the time. He said that he made the purchase with the money left over from the settlement of his first marriage. He thought it had been invested with the State Bank. He agreed that the $15,394.05 on term deposit with the State Bank would have been the money from his settlement. He said that he could not recall using anyone else’s money to purchase the Croydon property. He said that there were no discussions with his grandmother about the land. He did not remember her helping with the original purchase. He thought his mother might have helped him organise a loan from a bank and organise the conveyancing. He could not recall discussions with the bank.
Mr Bill Stewart said that he did not remember signing the Loan Agreement or that he borrowed $50,000 from his grandmother. He said that it “could be” his signature on the document but he was not sure. He thought it looked “a bit different” to his signature.
In support of the claim that the Croydon property was initially put into Mr Bill Stewart’s name to protect Mrs Paulet’s pension, the plaintiff pointed to the fact that on 15 August 1990, two days before the contract note was signed, her son signed a will leaving all of his real and personal estate to his mother, provided she survived him for thirty days. He also appointed his mother, or in default the defendant, to be the guardian of his infant children. The will provided that if the plaintiff did not survive the required period then the residuary estate was to be held on trust for his children who survived him and attained the age of 21 years, save and except that $30,000 was to immediately pass to his sister Fiona. If there were no children surviving, then the defendant took the whole of the estate, but if she did not survive him then his estate was to be divided equally between his grandmother and another sister.
A draft of his will had been forwarded to Mr Bill Stewart by Mr De Kever by a letter dated 3 August 1990, which referred to “previous communications” in the matter of the will. The plaintiff said that she was present when her son gave instructions to Mr De Kever to draw his will. She said that he told Mr De Kever that he wanted the will drawn in that way “so that his wife could not touch the property” and so that his grandmother would be covered if anything happened to him, in that his mother would receive the property, which was what Mrs Paulet wanted. When queried, the plaintiff said that the problem of the ownership of two properties affecting the pension did not apply if the second property was “left to you in a will, that’s a different story”. The plaintiff said that she found a copy of her son’s will in her mother’s papers.
Mr Bill Stewart gave evidence that he thought his mother had suggested that he make a will. He said that it was to cover what he then owned and whatever he had, so that his ex-wife could not touch it. He did not recall it being suggested that he make a will to protect his grandmother. He said that he saw no reason for that being the case.
The application for probate revealed that Mr De Kever had received instructions from Mrs Paulet to prepare her will on 15 August 1990 and that a draft will had been forwarded to her on 24 August 1990. It was signed by her on 23 November 1990.
There was, however, no evidence to suggest that the defendant also made a will at the time of the purchase of the Croydon property, which arguably was also required to cover Mrs Paulet, once the defendant’s name was added to the contract note.
A will was prepared for the defendant over three years later. By a letter to the defendant dated 15 November 1993, De Kever & Associates referred to her attending the office on 12 November and being happy with the terms and conditions of her recently drawn will but that she was “not prepared to sign same at that time”. The unsigned will provided that all of Fiona’s real and personal property was to go to her mother if she survived Fiona by thirty days. The plaintiff said that both she and her mother were present at Mr De Kever’s office when the defendant gave instructions about the drawing of her will. The plaintiff said that the defendant did not sign the will because she had “a phobia” that “if she signed a will, she would die”. Mr De Kever agreed that this was why the will was not signed. He said that, although he would not normally “see a client for a will with someone else in attendance”, the plaintiff may have been with the defendant when he took instructions.
A house was quickly built on the Croydon property. Progress payments were made to the builder, which was named as Wynnewood Homes, by drawing down on the balance of the bank loan of $65,000 in the following manner:
Date of Payment
Amount
19 February 1991 $7,729.00 14 March 1991 $7,729.00 5 April 1991 $18,035.00 8 May 1991 $12,882.00 23 May 1991 $3,625.00
$50,000.00
In addition, the builder’s first progress claims certificate recorded that the sum of $1,000 had already been paid to it. According to the first Request for Progress Payment made to the State Bank that $1,000 had been contributed by the borrowers. All five Requests for Progress Payment made to the State Bank were in the name of Mr Bill Stewart and the defendant and the four available receipts from the builder, the first four of the above payments, acknowledged payment by “Mr W & Miss F Stewart”. A certificate of occupancy was issued to the registered proprietors on 20 May 1991.
According to the State Bank’s documents, the borrowers were to contribute $43,000 and the bank $65,000 to the total cost of construction of $108,000. This suggests to me that the figure of $108,000 was the total cost, as far as the State Bank was concerned, of purchasing the land and constructing the house. Thus, the $43,000 to be contributed by the borrowers represented part of the costs of purchase and part of the costs of construction.
Bank records show that there were problems in having sufficient money in the nominated account to pay the April, May, June and July 1991 instalments on the loan of $65,000. The nominated account was no. 149/22949278, which was an account in the name of Mr Bill Stewart with the State Bank at Croydon.
The plaintiff gave evidence that she and her mother looked around to try and find a builder. A quotation was obtained by the plaintiff in August 1990 from the builder, IL & J Rawson Pty Ltd, in the sum of $51,913, excluding painting and floor coverings. The plaintiff said that she organised this for her mother. The plaintiff also said that the two Smith brothers who were eventually engaged were suggested to her mother by Mr De Kever. She said that as the two Smith brothers had credit difficulties, they traded under the name of Vanderberg Constructions. They were to build the house to the lock-up stage. According to the plaintiff:
Mum and I were to supply any extras like the bath, the basin, the hot water service, anything extra to go in that house. We wanted our own choice.
According to the plaintiff, apart from the progress payments from the bank, the builders were paid “either by me or my mother”.
The plaintiff also said that she and her mother sat down and drew up a plan and talked about where Mrs Paulet wanted windows, doors and light fittings. A plan with the plaintiff’s handwriting on it was produced. By reference to photographs of the interior of the house, the plaintiff gave evidence about how it was designed to accommodate her mother’s wheelchair. However, the defendant disputed the plaintiff’s claim that there were special features of the design of the house, and, in my opinion, the photographs were inconclusive in this regard.
The plaintiff agreed that her mother had never lived at the Croydon property. She gave evidence that Mrs Paulet was trying to sell her house in Melton in 1991, but it did not sell because she was asking too much for it. The plaintiff said that Mr Nigel Stewart and Mr George Duval went there to fix up the ceilings and cracking in the walls and do some painting inside. According to the plaintiff, her mother had the Melton property on and off the market a few times.
According to the plaintiff, the defendant moved into the Croydon property in 1991 because, after it was completed and empty, vandals broke the windows. The plaintiff said that Mrs Paulet had said that she would move her furniture in to make it look lived in and that the defendant had said:
I will go and babysit it for us.
Later, the plaintiff gave a different version of what the defendant said before she first moved in. According to this version, the defendant said to her grandmother:
I will house sit your house, nanna, for you.
The plaintiff said that neither she nor her mother were keen on the idea “but it was the only solution at that time”. She said that for about nine to twelve months, the defendant resided at the Croydon property for two days a week. During this period, Mr Bill Stewart brought his two children to the Croydon property for his access visits. According to the plaintiff, he did not move into the Croydon property full time until well after the defendant had moved in.
The plaintiff said that at this stage the defendant did not pay any rent to her grandmother, and that Mr Bill Stewart paid about $60 per week towards “lighting, gas and any extras”. She also thought that her son might have been helping “with a couple” of the bank repayments and that that was why her mother later paid him the $25,500. The plaintiff said that she did not know who was making the other repayments on the bank loan. It was not her, because “it was me mum’s house”.
When asked whether the defendant had, between moving into the house in 1991 and locking her parents out in 2004, acknowledged whose house it was, the plaintiff said the defendant had on many occasions referred to the Croydon property as “Nanna’s house”.
Mr Nigel Stewart said that Mrs Paulet “kept an eye” on the construction of the house and “did all the arranging and said what changes had to be done with the builders and all that sort of stuff”. He said that she was “sort of in charge of the building like, she talked to them, with the builders and that sort of thing”.
The defendant said that her brother moved in “when the house was bought” and she moved in “about two weeks later”. She said that her mother said that it would be better if the defendant moved in too, to keep it safe from her brother’s ex-wife. The defendant said that she told her mother that if she wanted her to move in, she would. That was fine by her. The defendant said that she and her brother lived in the Croydon property full time with the occasional boarder or friend who paid rent to the plaintiff.
Mr Bill Stewart said that the builders he used to build the house were two brothers who were clients of his work at the time. His mother criticised the builder at the end of the job, with the result that one of the brothers would not speak to him. He rejected the suggestion that the house was being built for his grandmother.
The next development was that Mr Bill Stewart decided that he wanted to get out of the purchase of the Croydon property. He said that he did this because:
every night I would come home and Fiona had moved things around and my mother was there moving things around and I just got sick of it and I thought, this isn’t my house any more, it’s their house and I decided to get out, basically, I had had enough.
Mr Bill Stewart said that his grandmother offered to give him some money to get out, look for another property and get on with his life He thought it was around the $20,000 mark. Mr Stewart said that he did not find his grandmother to be mean with money. He had no problems. She had given him the money to buy a new panel van when he was 18 and she helped him to get out of the mess with the house and start his life again.
Mr Nigel Stewart described Mrs Paulet as “pretty miserable” and “very canny” with her money. “She wouldn’t give it away”. However, he described Mrs Paulet’s relationship with Mr Bill Stewart as “pretty good”.
According to the plaintiff, her son told his grandmother that he wanted out of the property. He said that he and his girlfriends did not get on with the defendant. He wanted to buy his own premises, but he could not get a bank loan “with this hanging over my head”. The plaintiff said that:
Bill was to come off the house completely. Bill wanted completely out of it.
The plaintiff said that her mother asked the defendant to leave the house as she was going to move in but the defendant refused to go and she grabbed her grandmother’s wheelchair and tried to tip her out down the back-door steps. The plaintiff said that the defendant’s father came out from the kitchen and stopped it.
Mr Nigel Stewart referred to an incident at the Melton house where Mrs Paulet and the defendant were having an argument and he came into the room just in time to stop the defendant from tipping her grandmother out of her wheelchair.
The defendant denied that she had ever been violent to her grandmother or tried to push her off the verandah. She said that on one occasion her grandmother had said some “nasty words” to her and she had lifted her grandmother’s wheelchair up and down telling her “Don’t say that, that’s not nice”.
The defendant said that her brother decided to move out of the Croydon property after he wanted his girlfriend to move in and the defendant to move out. She said that when she told her mother about this, the plaintiff said to her that it was half the defendant’s house, and she then told Mr Bill Stewart the same thing, that the house was half Fiona’s and half his.
Two identical undated documents, one handwritten and the other typed, both signed by Mr Bill Stewart, record his agreement to “transfer fully my share” in the Croydon property to the defendant. The plaintiff said that the first one was in her handwriting, and that she typed the second one. Mr De Kever had drafted it for her. The plaintiff said that these documents were created “when Bill wanted to walk out on the property”. Mr Bill Stewart said that it was his signature on both documents but he did not remember signing them. When asked whether he would read a document before signing it, he said that if he had “full faith” in the person handing him a document, he would just sign it.
By a letter dated 12 October 1992 De Kever & Associates wrote to Mrs Paulet seeking her instructions about withdrawing her caveat and relodging it after a proposed “restructure of the proprietorship” had been completed. The letter continued:
We would emphasize that this will not effect [sic] your equity in the property as the Mortgage to the State Bank currently standing at approximately $63,500.00 is to remain in place.
Mr De Kever said in evidence that the use of the word “equity” was “an unfortunate choice of words” and that it should have said “interest”. He added that:
“Equity” does not properly reflect what was transpiring.
By a letter dated 26 November 1992, Mrs Paulet wrote to De Kever & Associates inquiring whether the new caveat had been registered. By a letter dated 2 November 1992, De Kever & Associates advised Mrs Paulet that her caveat “was not in fact withdrawn”. Mr De Kever explained in evidence that this had occurred “because the mortgage was not altered”. Mr De Kever also said that from his recollection of his discussions with Mrs Paulet 18 years ago:
She was very concerned at all times that the loan was secured, the loan monies that she had advanced were secured.
By an Agreement dated 1 December 1992 and made between Mr Bill Stewart and the defendant, Mr Stewart agreed to sell all his right title and interest to the defendant on the following terms and conditions:
1.The Purchaser as from this date shall agree to assume responsibility for all payments due under the Mortgage to the State Bank and shall indemnify the Vendor against any claims actions demands or suits made against the Vendor in respect of any default occurring after this date in respect of the said Mortgage advance.
2.The Vendor hereby agrees to remain registered as the joint proprietor of the property with the Purchaser but hereby acknowledges that he does so as trustee for and on behalf of the Purchaser and will when directed by the Purchaser agree to transfer that half share to the Purchaser or such person or persons as the Purchaser may nominate. …
3.The Purchaser shall in addition to the payment of monies to the Bank continue to be responsible and indemnify the Vendor against all rates, taxes and charges associated with the property.
4.The Purchaser acknowledges that the monies advanced to the Vendor and Purchaser to obtain the property from Phyllis May Paulet shall be the responsibility of the Purchaser and again the Purchaser shall agree to indemnify the Vendor against any claims actions demands or suits made by Phyllis May Paulet in respect of the said advance.
5.The Vendor hereby agrees and declares that he shall receive no consideration from the Purchaser in respect of agreeing to transfer all his right title and interest in the property to the Purchaser other than the Purchaser acquire and take over the responsibility for the loans and charges associated with the property and provide him with the appropriate indemnities as set out above.
…
Mr De Kever said that he prepared this document, probably on the plaintiff’s instructions.
The defendant agreed that her signature was on this document, but said that she did not understand it. No-one explained it to her. Her mother asked her to sign it, so she signed it. She could not remember much about the signing.
Mr Bill Stewart said that it was his signature on the document, but he had no recollection of signing it.
Two documents in the handwriting of the plaintiff should be referred to at this stage. The first read as follows:
This is receipt for full payment including interest on outstanding amount for Lot 47 Number 7 Blossom Walk Croydon 3136 Victoria Plan of Subdivision No. 2144705 Title Volume 9898 Folio 587 Loan Commonwealth Bank in Ringwood. Titles in name of Fiona Susan Stewart and William Hutchins Stewart.
Payment made by Mrs Phyllis May Paulet. Total sum twenty five thousand five hundred dollars $25,500.00 to William Hutchins Stewart. Payment being amount contributed with interest for original purchase of above property.
Payment made by Phyllis May Paulet made on behalf of Fiona Susan Stewart to allow titles to be transferred fully to Fiona Susan Stewart on above property as per agreement all above.
The plaintiff said that the documents were signed twice by her son because the first signature was scribbled and was just a squiggle and her mother was not happy with it. Nearly all of the handwriting on the first document, including the scribbled signature, was black, although the second legible signature was blue.
The second document was similar except that it had the following words added at the end of the above passage:
“Titles” to be held in trust to be transferred fully on demand to Phyllis May Paulet.
The plaintiff said that she had added these words. All of the handwriting on this document was black, but the second legible signature was not identical to the one in blue on the first document.
At the foot of both documents the following appeared:
Reference to Ageement [sic]
John C De Kever &
Associates Solicitors
Dated 1992.
W.H. Stewart
and
F.S. Stewart.
It is not clear to me whether the “Dated 1992” refers to the Agreement dated 1 December 1992 between Mr Bill Stewart and the defendant, or to the date on which the handwritten documents were prepared. I prefer the former construction of the above note, which means that the handwritten documents are actually undated.
In response to the question of why she wrote out these two documents, the plaintiff said:
John De Kever drafted it for us and one had to go to the bank because the bank wanted to know about Bill going off it and he was paid out on it, and the other one, mum said, “Fill out the rest and that covers me”.
HIS HONOUR: Sorry, just say that last bit again?---Mum wanted the transfer of the titles to her to cover herself. The bank had to have one letter but on the bank’s letter you couldn’t put that it was going to be transferred back to mum because the loan would have been stopped.
Mr De Kever said that he had nothing to do with the creation of these documents and I accept that evidence. More importantly, I have great difficulty in accepting the plaintiff’s explanation for the creation of these two documents. The typed Agreement dated 1 December 1992 would have been more than adequate for showing to the bank. There was no reason for preparing these other documents, particularly the second version with self-serving words probably added after it had been signed by Mr Bill Stewart. Significantly, neither of these handwritten documents was signed by the defendant, even though, according to the plaintiff, they both affected her interest in the Croydon property.
Mr Bill Stewart said that the legible signatures on these two documents were his, but not the scribble to the left. He said that his mother asked him to sign, but he did not remember anything else. He could not recall his grandmother or mother telling him to sign the document(s) properly. It was not clear to me when the two documents were signed by Mr Bill Stewart.
The plaintiff said that she did not know that her mother had actually paid $25,500 to Mr Bill Stewart, but she understood that her mother had borrowed $15,000 from her grandson and this was to pay him back, with interest, “and for his troubles”.
The plaintiff’s explanation of why she claimed that the defendant owed her grandmother, and thus the plaintiff as sole beneficiary, $25,500 plus interest was as follows:
It would be, I would say, that my mother has an interest in that house and I have now, and if mum paid that to pay William out and get him out of the agreement and get him out of the house, I would be entitled to it.
In either 1992 or 1994,[1] the plaintiff sold her house in North Ringwood and purchased a house in Mt Evelyn.
[1]The plaintiff gave conflicting evidence about this event.
After the initial problems with the repayments on the home loan to Mr Bill Stewart and the defendant, the bank statements for this account show that from August 1991 the monthly payments were regularly paid, initially in the sum of $857.83, reducing to $629 from February 1992, to $580 from August 1992, and then to $564.55 from May 1993 until 18 October 1995 when the debit balance had reduced to $61,125.38.
The evidence did not establish the source of all of these regular monthly payments. What is known from the available bank statements is that from 21 December 1993, at the latest, they came from the defendant’s personal account into which her pension was paid. These bank statements were addressed to the defendant at the plaintiff’s North Ringwood address. By 1994, all of the relevant accounts were with the Commonwealth Bank of Australia (“the CBA”) in place of the failed State Bank.
According to the plaintiff, her mother kept telling the defendant to move out of the Croydon property so that she could move in. She said that Mrs Paulet would not move in while the defendant was living there. The plaintiff said that when the defendant would not move out, Mrs Paulet said that the granddaughter would have to pay rent to her. The plaintiff said that her mother:
worked out the rent and what Fiona was going to pay and when Fiona borrowed on the house to buy herself a brand new car, the rent went up and mum organised to pay more, to pay back the loan on the car.
The plaintiff also said that:
Fiona went to the bank and made a direct debit and asked the bank to direct debit her rent straight from her pension, but the bank were told only to take out the rent but for some reason they took out more, so mum paid her back in cash what was left over.
Copy rent receipts were tendered for the period from 21 October 1995 to 23 September 2004. The plaintiff said that she gave the original of each receipt to the defendant, “as soon as the money was in the bank”. A photocopy document, consisting of many pages, which purported to record entries relating to rent and other matters was also tendered. I will call it “the rent book”. The plaintiff said that all of the writing in the rent book was hers. The entries run from 1 December 1993 to 23 September 2004. The plaintiff said that the earlier date was when rent started to be paid. She said that she had a copy of this document and her mother had a copy.
When asked whether the entries in the rent book were written in different pens, the plaintiff said:
I wouldn’t know now, it’s a long way back. I used to keep a biro at the front of the book, the receipt book and this book altogether and they were kept in a plastic folio.
The plaintiff’s explanation for keeping the rent book was that she learned from being her brother’s power of attorney when he was sick that you “had to account for every cent” and that “anybody can dispute anything”. Her mother also taught her to “always account for what you’re spending”.
The plaintiff’s only explanation for this extraordinary procedure of debiting the whole of the home loan instalment from the defendant’s personal account even though it was in excess of the amount of rent and then either Mrs Paulet or later the plaintiff returning some or all of the extra amount in cash to the defendant was that the bank had some reason why it had to be done that way. She said that nobody ever thought of going to the bank and changing the direct debit instruction.
The plaintiff said that not only did the defendant pay rent, she also received rent assistance with her disability pension. The plaintiff produced a photocopy of a letter from the Department of Social Security to the defendant dated 9 March 1996 which referred to the defendant receiving:
Extra Rent Assistance under special rules that do not apply to most pensioners.
Another document suggested that the rent assistance at this time was $23.30 per fortnight.
The defendant said that she did not know whether she received rent assistance because “my mother organised everything”. She could not remember applying to Centrelink for rent assistance.
The plaintiff said that she did not pay tax on the rent. She said that she “never got income” because the rent money was paid to “the bank”. The plaintiff said that after the death of her mother, she considered that the defendant was “paying rent on that house which would eventually become my house”. When pressed further about not declaring the rental income, the plaintiff then said that she had explained it all to Centrelink and was told that because the house was not in her name, “it made no difference”. Then, the plaintiff mentioned for the first time that she had been asking the defendant to transfer the Croydon property to her “and it was always put off … it never just got done”. Then, the plaintiff said:
Every time I mentioned transferring it over I got beaten up, in the end I just didn’t want to [be] beaten up any more.
The defendant denied that she was ever asked by her grandmother or by her mother to pay rent. She said in respect of her mother referring to these monthly payments that:
She always said it’s about the home loan.
The defendant said that her mother had never shown her the rent book. Nor had she ever given her the original rent receipts. She said that she did not recall being asked to pay rent.
The defendant said that she knew that from at least December 1993 there was a direct debit from her bank account to the home loan account. She said that her mother organised this. According to the defendant, her mother told her that these payments were “paying off the house”.
On 18 October 1995, the home loan, no. 390161503, was paid out in full, by the making of a new loan, no. 303709818, to the defendant in the sum of $80,000, at a fixed rate of interest for five years (“the first home loan variation”). Special repayments were not permitted. Mr Bill Stewart was required to provide security by joining the defendant in giving a mortgage over the Croydon property. Mr Nigel Stewart agreed to be jointly and severally liable with them in respect of the loan. Of the $80,000, $19,090 went towards the purchase of a new Mitsubishi Lancer motor vehicle for the defendant. The defendant gave evidence that it was her mother’s idea that she buy a new car with funds obtained from the housing loan. The defendant said that she agreed, but that she would have been happy with the old car, although she had had problems with it.
In cross-examination, the defendant said she and her mother went to the bank to arrange this new loan.
Initially payments were to be $706 per month, but in December 1995 the arrangement was changed to fortnightly instalments of $353. The plaintiff said that Mrs Paulet paid those instalments “through the rent that Fiona was putting into the account and the rest mum paid for”. After Mrs Paulet died, the plaintiff said that she paid the instalments:
I did, and Nigel, we all contributed.
By a letter dated 12 October 1995, De Kever & Associates wrote to Mrs Paulet, care of the Footscray Hospital. The letter read:
I am sorry to hear that you are in hospital and hope that you will make a speedy recovery.
Your daughter, Mrs Stewart, attended me on the 12th October, 1995 and requested that I write to you to obtain your instructions with regard to the removal of the Caveat that you have placed on 7 Blossom Walk Croydon.
I have prepared an Authority for you to sign in order that the Caveat may be removed so that Fiona can borrow further funds from the Commonwealth Bank in order to complete the acquisition of a motor vehicle.
I do however need your instructions as to whether you wish the Caveat to be relodged after the Commonwealth Bank have increased the size of their Mortgage and furthermore you should give consideration to the Caveat remaining on the property in the event of your death.
I have prepared the appropriate Authority and would ask that you peruse same carefully and execute and return to me.
The Authority read as follows:
TO: John C. De Kever & Associates,
Solicitors,
173 Boronia Road,
BORONIA 3155
I, PHYLISS MAY PAULET care of the Footscray Hospital, hereby instruct you to remove the Caveat you have placed on my behalf at 7 Blossom Walk Croydon in Dealing No. R179186S.
I do/do not wish the Caveat to be removed after the Bank have completed the lodging of their Variation of Mortgage documents.
I do/do not wish the Caveat to be removed in the event of my death.
It was signed by Mrs Paulet on 12 October 1995 in the presence of a Dr Urquhart. Lines had been drawn through both “do/do not” entries and there was a handwritten “Do not” added in both cases with the initials “PP” alongside. The plaintiff said that this was all done by her mother in her presence.
There was a further document prepared by De Kever & Associates entitled “Deed of Acknowledgement”. It was addressed to Mrs Paulet, signed by both Mr Bill Stewart and the defendant in the presence of the plaintiff and dated by hand, probably by the plaintiff, 11 October 1995. As typed, the document read as follows:
TO: PHYLLIS MAY PAULET
WE, FIONA STEWART of 7 Blossom Walk Croydon and WILLIAM HUTCHINS STEWART c/- 7 Blossom Walk Croydon respectively hereby state as follows:-
1.We acknowledge that you have withdrawn the Caveat placed against the property at 7 Blossom Walk Croydon and registered in Dealing No. R179186S in order to enable the Commonwealth Bank to register a further Mortgage in respect of motor vehicle being acquired by Fiona Stewart.
2.We acknowledge that the debt to you has not been paid either in part or in full and that you have agreed not to lodge any further Caveats subsequent to the registration by the Commonwealth Bank of their further Mortgage. We acknowledge that by not lodging a further Caveat that this does not absolve us of our liability to pay the money due to you.
3.We further acknowledge your wish that in the event of your death or your incapacity or inability to utilize the funds that the debt is to be extinguished in full.
However, the photocopy document had clause 3 crossed out, with the initials “PP” at the end of each of the three lines. The plaintiff said that the initials were put there by her mother, who said to her not to lift the caveat. The deletion was not initialled by either the defendant or Mr Bill Stewart.
Mr De Kever said that he would have been instructed to prepare the Deed of Acknowledgement, probably by the plaintiff. He said that clause 3 was not something that was commonly drafted and was inconsistent with what Mrs Paulet had otherwise instructed him. However, he said that he must have received those instructions or he would not have “put the clause in”. Mr De Kever said that he had no recollection of receiving either the Authority or the Deed of Acknowledgement back and neither document was located when a search was made for relevant files. Nor were they found in the deeds room.
By a Withdrawal of Caveat dated 17 October 1995, De Kever & Associates withdrew Mrs Paulet’s caveat over the Croydon property. It was never relodged. Mr De Kever said that it was “indubitably, absolutely” his practice to comply with his client’s lawful instructions. When it was pointed out that he had not relodged Mrs Paulet’s caveat, he replied:
Yes, but that might be because I didn’t receive those instructions.
In early 1996, Mrs Paulet was taking steps to sell her house in Melton. An Exclusive Sale Authority was prepared by a real estate agent in February, and a Section 32 Statement by De Kever & Associates in April. The solicitors’ correspondence was addressed to Mrs Paulet at the plaintiff’s home in Mt Evelyn. According to the plaintiff, her mother lived with her for about 12 months prior to her death.
By a letter dated 21 May 1996, De Kever & Associates wrote to “Mrs F Stewart” at the Mt Evelyn address enclosing a transfer of land and associated documents. By a transfer dated 13 June 1996 the defendant became the sole registered proprietor of the Croydon property. The consideration was said to be $45,000. Mr De Kever said that this figure was put in “for the state revenue purposes”. The transfer was not lodged until November 1996 after stamp duty of $999 had been paid in September 1996.
The plaintiff said that this transfer, which was “originally done back in ‘92” was not allowed by her mother “to go through on the titles”. She said that Mrs Paulet held it back, and refused to transfer it all into the defendant’s name.
The stamp duty on this transfer was reduced from $2,198.80 to $999.00 when, according to the plaintiff, her son and daughter went to another agent and got a lower valuation. She said that she paid the stamp duty.
By a letter dated 7 October 1996 De Kever & Associates wrote to “Miss F Stewart” at the plaintiff’s Mt Evelyn address, advising that the transfer had been handed to the CBA for lodging. The plaintiff claimed that this was sent to her for her mother’s information. It was not meant for the defendant because she was, as Mr De Kever knew, living at the Croydon property.
On 30 November 1996, Mrs Paulet died leaving a will dated 23 November 1990. All of her real and personal property was left to her executor, the plaintiff. In her affidavit of executor sworn on 18 February 1997, the plaintiff stated that the only asset of Mrs Paulet was the house in Melton. The plaintiff said that she was told by Mr De Kever that the Croydon property could not be included:
because it was in Fiona’s name and that the caveat on it was not actually physical in money [sic].
When asked why the two loans of $50,000 and $25,500 were not included, the plaintiff said:
I have no idea. All I was told was that the caveat couldn’t be included. I think it’s been overlooked.
When pressed, the plaintiff said that she “only thought of Melton at the time”. She said that “she was in a lot of upset” and in shock as a result of losing “the dearest person” to her.
Mr De Kever said that the plaintiff was “an anxious person at the best of times” and that she “was extremely upset that her mother had passed away and was also concerned as to the whereabouts of the original will”, which had been lost.
Mr De Kever was asked why the affidavit of executor contained no reference to the Loan Agreement or the Croydon property. He replied:
The reason would be that I prepared the documents and I haven’t been instructed in relation to the loan agreement. Even though I was aware of it, I don’t remember having a recollection of it at the time that I prepared the affidavit … I have a standard pro forma sheet I go through with the client and I ask them about what cattle and shares and crops and liens and all the rest of it, and I go through that at a fairly rapid rate because mostly they don’t have those sorts of items and it may be I’ve gone through this too quickly, it may be my fault, but for whatever reason there’s been no trigger to my memory of the loan agreement and obviously Julie has seen the papers and signed them and she’s obviously not given a consideration to it either. It’s a matter that’s been overlooked.
Subsequently, at the very end of her evidence, the plaintiff said that she did not have the Croydon property transferred into her name after her mother’s death because she already owned a house and thought that she would transfer it over when she sold that house. The plaintiff said that when she sold her Mt Evelyn property and moved into the Croydon property, she asked the defendant to transfer the Croydon property to her, but the defendant would not do it. She said that the defendant started claiming that it was her house, it was in her name. The plaintiff said that she trusted the defendant to transfer the Croydon property “back” to her.
From a handwritten note on a bank statement it would appear that settlement of the sale of the Mt Evelyn property occurred in May 1999 because the sum of $159,818.45 was deposited into the plaintiff’s account on 14 May 1999. There was over $148,000 still in that account on 8 March 2000.
According to the plaintiff, between 1991, when the defendant moved in, and 1999, when the plaintiff moved in, she visited the house every day. She typically:
House kept, cleaned the house, did the washing, ironing, the gardening, whatever needed doing over there.
She stayed at the Croydon property for about eight months.
The defendant described their relationship during this period as “on and off all the time”. She said that “there were arguments quite a lot”.
The plaintiff said that Mr Nigel Stewart moved in sometime in 1994 and lived there permanently until they were locked out in 2004. The plaintiff said that Mr Stewart could cook but the defendant could not and that she had done all the cooking before Mr Stewart moved in. Mr Nigel Stewart said that he lived at the Croydon property between about 1994 and 2004. He said that he had his own room and own television. The defendant disputed that her father lived at the Croydon property permanently from 1994. She said that he only stayed there for one night or at weekends.
Secondly, such a claim is also contrary to the existence of the Loan Agreement allegedly made on or about 1 December 1992. The first of the two undated documents in the plaintiff’s handwriting, which refers to the sum of $25,500 being paid by Mrs Paulet to her grandson, also refers to that payment being made by Mrs Paulet on behalf of the defendant “to allow titles to be transferred fully” to the defendant. If, as the second of these two undated handwritten documents suggests, the Croydon property was to be held by the defendant on trust for her grandmother, then it would be completely contrary to this intention for the payment by Mrs Paulet to Mr Bill Stewart to be treated as a loan to the defendant.
Thirdly, the plaintiff’s evidence about who was the initial beneficial owner of the Croydon property was contradicted by the evidence of Mr Bill Stewart. He appeared to me to be independent of both parties and I generally accept his evidence on this issue. It supported the defendant’s version of events. On the other hand, the plaintiff’s evidence on this issue was to some extent supported by that of Mr Nigel Stewart and Mrs Duval. I accept that Mrs Paulet may have been contemplating, in August 1990, moving closer to her daughter and that she may have even looked at possible blocks of land. But insofar as the evidence of Mr Nigel Stewart and Mrs Duval went further and claimed that the Croydon property had in fact been purchased by Mrs Paulet, then I reject it. Although they were both aligned with the plaintiff’s cause, and Mr Nigel Stewart had a very real interest to support the plaintiff’s case, I do not consider that their evidence on this issue was deliberately false. Rather, I consider that after 18 years their memory of what had occurred was, not surprisingly, vague and that they had become confused between what they actually remembered and what had been discussed in the last couple of years with the aggrieved plaintiff. It was also apparent that Mr Nigel Stewart was suffering from some memory loss resulting from the onset of dementia, as had been conceded by the plaintiff’s counsel in his opening.
Fourthly, I reject the plaintiff’s evidence about how it was that the defendant’s name came to be on the title. In my opinion, it was inherently improbable that the defendant would have volunteered to have her name on the title to protect her brother’s house from claims by his ex wife. I do not consider that the defendant was sophisticated enough to have put herself forward in this way. Mr Bill Stewart’s explanation was far more credible. It also explains why the inclusion of the defendant’s name was, as the plaintiff’s counsel submitted, “an afterthought”. But as events transpired, with Mr Bill Stewart pulling out of the purchase, the defendant was left as the legal and beneficial owner of the whole property.
Fifthly, Mr De Kever’s evidence did not support the plaintiff’s claims that there was an arrangement to hide her mother’s ownership of the Croydon property and that it was discussed with him. Mr De Kever’s evidence was strong support for the conclusion that Mrs Paulet had lent money to her grandchildren, but was very concerned to see that her loan was secured.
Sixthly, contemporaneous writings by the plaintiff treated the Croydon property as the defendant’s and one in which the plaintiff had no equitable interest despite her being the sole beneficiary of her mother’s estate. I refer in particular to the letters dated 26 October and 29 October 2004 from the plaintiff and Mr Nigel Stewart to the CBA and to the three handwritten notes from the plaintiff to the defendant, one undated and two bearing the fax header 31 March 2004. Further, although they may or may not have been that contemporaneous, the way in which payments made by the plaintiff in reduction of the home loan (and to assist in purchasing and improving the Croydon property) were described in notations by the plaintiff as loans to the defendant which had to be repaid indicate that the plaintiff did not see the Croydon property as belonging to her. The deposit slips, at least the three payments of $5,000, all special repayments, are obviously excellent examples of the plaintiff’s state of mind, where she has written once on all of them and twice on two of them, that the money being paid in reduction of the home loan had to be repaid by the defendant. Finally, I consider that Mr De Kever’s brief to counsel dated 15 October 2004 accurately recorded the plaintiff’s instructions.
Seventhly, there was no mention of the Croydon property in the list of Mrs Paulet’s assets in the plaintiff’s affidavit as the executor of her mother’s estate. This was a significant omission, in my opinion. I do not accept the plaintiff’s evidence that she was told by Mr De Kever that the Croydon property could not be included. Nor do I believe that the omission was brought about by Mr De Kever being too hasty. I am sure he would have been careful to ensure that the assets were listed correctly. It is true that there is also no mention in the plaintiff’s affidavit of the debt owed by the defendant to Mrs Paulet’s estate, but as I explain later, in my opinion, that debt lapsed on the death of Mrs Paulet.
Eighthly, as discussed above, the defendant has contributed at least $90,000 and probably more, in reduction of the home loan. Why the plaintiff would arrange for such a large proportion of the defendant’s income to be expended in this way, with the result that the plaintiff had to meet a lot of the defendant’s daily living expenses, if the defendant was not purchasing her own home, was never satisfactorily explained. Further, for the reasons already given, I am not prepared to treat any part of these payments as rent.
Ninthly, there was no consistent evidence from the plaintiff about whose property it was. On some occasions, it was Mrs Paulet’s, on others it was to be for Mrs Paulet and the plaintiff, and once it was even: “my mum told me that the house was going to be for Nigel, nanna and I”.
Tenthly, I do not consider that the fact that the plaintiff spent at least $50,000 on making improvements to the Croydon property at a time when she was contemplating moving to that property assists one in reaching the conclusion that the plaintiff regarded herself as the beneficial owner of the Croydon property. As the plaintiff readily admitted, many of the improvements were essential, or at least helpful, for her own benefit. Moreover, these payments and others, such as those for council rates, utilities and insurance, were equally consistent with a desire on the part of a generous mother to assist her profoundly deaf daughter to live an independent life.
Finally, the plaintiff’s actions with respect to her living at the Croydon property are at best equivocal for her claim. Although the plaintiff said that the initial idea was that a granny flat would also be constructed on the Croydon property for her to live in, this did not occur in the six years between the purchase of the property and Mrs Paulet’s death. Then, the plaintiff did not move to the Croydon property until some 2.5 years after her mother’s death, when she sold her Mt Evelyn property. About eight months after that, the plaintiff purchased the Chirnside Park property and started sleeping there. But she still went to the Croydon property during the day. At no time during the period of nearly eight years between her mother’s death and the lockout did the plaintiff take any step to have the Croydon property transferred into her name. Her explanation for this failure was that if she raised the issue of ownership with the defendant, she would be assaulted by the defendant. I do not accept this evidence. In my opinion, much of the plaintiff’s evidence about her daughter’s violent behaviour was exaggerated. Mr Nigel Stewart’s evidence on this point seemed more credible. That is, there were some instances of the defendant assaulting the plaintiff, which the defendant virtually conceded. But, in any event, it seems to me that if the defendant was always belting the plaintiff up, resolution or clarification of the question of ownership of the Croydon property was all the more pressing.
The Claim Under the 1990 Loan Agreement for $50,000
As stated above, I consider that the Loan Agreement dated 7 November 1990 was a valid agreement and not a sham. It would not be surprising to me that a grandmother would be prepared to give financial assistance to her grandson, who had recently been through a marriage break up by lending him some money to purchase a new property. This was consistent with Mr Bill Stewart’s recollection of his grandmother’s past generosity towards him. I see no reason to conclude that the grandmother’s attitude would have changed when her deaf granddaughter’s name was added to the title.
My only query about the validity of the Loan Agreement is that it was said to be for $50,000. That amount of money was not required to purchase the Croydon property in November 1990, because Mr Bill Stewart had his own funds totalling $15,700 and $13,500 was borrowed from the bank. But, in my opinion, the $50,000 would definitely have been needed to assist in purchasing the land and building the house. The bank records suggested that the total cost was going to be $108,000, of which $65,000 was to be lent by the bank and $43,000 provided by the borrowers. Clearly, that amount was the minimum which the owners of the Croydon property would have to find. In addition, there were the legal costs associated with the purchase and all of the other costs of finishing the fit out of the house. In this respect, I refer to the purchase and construction costs of $33,263.40 itemised in paragraph 186 above. No doubt the loan of $50,000 and Mr Bill Stewart’s own $15,700 would have been very quickly expended. I am, therefore, satisfied that the Loan Agreement accurately records the amount of money lent by Mrs Paulet, even though Mr Bill Stewart had apparently forgotten this initial assistance from his grandmother.
The conclusion that the $50,000 Loan Agreement was not a sham is supported by Mr De Kever’s evidence that Mrs Paulet was very concerned to see that her loan was protected by a caveat. As far as Mr De Kever was concerned, it was a genuine loan transaction.
I previously said that I considered that the debt created by the Loan Agreement lapsed on the death of Mrs Paulet. I base this finding on clause 3 of the Deed of Acknowledgement, which stated that it was Mrs Paulet’s wish that in the event of her death “the debt is to be extinguished in full”. I accept Mr De Kever’s evidence that he must have received those instructions or he would not have “put the clause in”. This is particularly the case as he said that clause 3 was not something that was commonly drafted.
It seems to me that what likely happened was that the letter dated 12 October 1995 from Mr De Kever to Mrs Paulet and the Authority were prepared and forwarded to Mrs Paulet at the Footscray Hospital, probably by giving them to the plaintiff, that Mrs Paulet signed the Authority on that day and twice deleted the words “do not” so that it read that she did wish her caveat to be removed after the CBA had completed lodging the variation of mortgage documents and she did wish the caveat to be removed in the event of her death, and that, on the basis of those instructions, Mr De Kever prepared the Deed of Acknowledgement referring as it did to the caveat not being relodged and the debt being extinguished, amongst other reasons, on the death of Mrs Paulet. This scenario would explain the unusual wording of the Deed of Acknowledgement and why the caveat was never relodged. I am satisfied that Mr De Kever would have arranged for the caveat to be relodged if he had received those instructions.
I am not particularly troubled by the fact that the Deed of Acknowledgement is dated 11 October 1995, that is, the day preceding the date of the solicitor’s letter and Authority. The date could have been inserted in error, especially if it was backdated some days after the instructions were received from Mrs Paulet. In my opinion, the most likely explanation of the reasons for these various documents coming into existence depends on the Deed of Acknowledgement being prepared after the letter and the Authority were forwarded by Mr De Kever.
Implicit in the above conclusion is that the lines through both “do/do not” entries, the handwritten “Do not” and the initials “PP” on the Authority, and the crossing out of clause 3 and the initials “PP” on the Deed of Acknowledgement were all added at a later time. On the balance of probabilities I have concluded that they were, and that they were added by the plaintiff and not by her mother. It is significant, in my opinion, that the crossing out of clause 3 was not initialled by either the defendant or her brother, which one would have expected had the deletion been made and initialled by Mrs Paulet before the grandchildren were asked to sign. As set out above, such conduct would not be out of character for the plaintiff, and the initials “PP” on the Authority and the Deed of Acknowledgement look very similar to the initials “PP” on the letter from De Kever & Associates dated 1 November 1990, which, I have found, were put there by the plaintiff. I reject as unrealistic the submission that Mrs Paulet crossed everything out and then wrote in what she wanted, so that there was no mistaking her intention.
If, contrary to the plaintiff’s evidence, Mrs Paulet agreed in October 1995 that the debt of $50,000 plus interest thereon owed to her by the defendant and her brother was to be “extinguished in full” on her death, then this would explain why no such asset was included in the plaintiff’s affidavit as the executor of her mother’s estate. It was not overlooked. It was no longer an asset of the estate.
Even if this be an incorrect analysis of what occurred in 1995, there is a further problem for the plaintiff in suing on the Loan Agreement in that some 16 years elapsed between the making of the agreement and the commencement of this proceeding and the defendant has pleaded that the claim is statute barred. The loan was expressed to be repayable “on sale” of the Croydon property or “to be determined by the lender”. Obviously, if the former condition stood alone then the loan would not be repayable, and no cause of action would arise, unless and until the Croydon property was sold, which has not yet occurred. If the latter condition stood alone then, in my opinion, the loan would be repayable upon the lender determining that he required repayment and making the appropriate demand. Nevertheless, in that case, the cause of action would still arise from the date the loan was made. In Ogilvie v Adams[2] Fullagar J said:
Where there is a loan of money simpliciter (i.e. with nothing at all said as to repayment), the money is repayable instanter. Where there is a loan of money and the borrower contracts to repay on demand, again the money is repayable instanter. Where there is a loan of money which is recorded or acknowledged by the parties to be a loan repayable on demand, again the money is repayable instanter.
The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor's money, and this whether the creditor brought an action of debt or an action in indebitatis assumpsit. Therefore if A lends money to B, then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation. The courts have long since settled it that a mere statement or agreement that the money is repayable on demand (or request or at call) is not sufficient to contract out of that situation where all else that is known of the terms of the contract is that A has paid money to B by way of loan. The lender's cause of action still arises instanter on the receipt of the money by the borrower, so that the lender's cause of action becomes statute barred at the expiry of six years after the receipt of the money.[3]
[2][1981] VR 1041.
[3][1981] VR 1041, 1043. See also VL Finance Pty Ltd v Legudi [2003] VSC 57, [39]-[53] (Nettle J).
What then is the situation with respect to this loan which was expressed to be repayable both “on sale” of the Croydon property or as “determined by the lender”? Counsel for the plaintiff submitted that the principle stated in Ogilvie v Adams did not apply to this Loan Agreement. She submitted that the dominant date for repayment of the loan was “on sale” of the Croydon property, and that the provision for earlier repayment as “determined by the lender” was simply to protect the lender against a general change of circumstances, such as the property owner coming into money, other than from the sale of the property, so as to be capable of repaying the loan. Counsel submitted that the possibility of earlier repayment did not lessen the importance of the primary repayment obligation, which meant that no cause of action arose instanter. Further, counsel submitted that the provision for earlier repayment meant that the lender’s cause of action would only arise if the lender made a demand for repayment. Thus, time did not run until the plaintiff, as the executor of the estate of Mrs Paulet, made a demand for repayment of the loan of $50,000 by the commencement of this proceeding.
I do not agree. In my opinion, there was no dominant date for repayment. Each of the alternative means of requiring repayment were of equal force. For example, there was nothing to stop the lender from demanding repayment on the day after the money had been lent. Therefore, in my opinion, the inclusion of the words giving the lender the right to determine the loan early meant that the cause of action arose instanter. Thus, in the absence of any later acknowledgement, such a loan would be statute barred in November 1996, being six years after it was made.[4]
[4]Limitation Act, s.5(1)(a).
In fact, there was a later acknowledgement by the defendant and her brother of their indebtedness to Mrs Paulet. It was contained in the document prepared by De Kever & Associates entitled “Deed of Acknowledgment” and purportedly dated 11 October 1995. But unless this document was actually a Deed, then the plaintiff’s right of action is “deemed to have accrued on and not before the date of acknowledgment”.[5] That is, the loan would be statute barred in October 2001, being six years after the date of acknowledgment.
[5]Limitation Act, s.24(3).
Ms Gray submitted that the document entitled “Deed of Acknowledgement” was what it said it was, namely a Deed, and therefore that the relevant limitation period was 15 years from 11 October 1995,[6] which would not have expired when this proceeding commenced in March 2006. However, in order to be a Deed a document must not only be signed[7] and attested, it must also be expressed to be sealed, even though it is no longer necessary for the document to be actually sealed.[8] There must also be delivery of the document in question. Delivery occurs where there are acts or words sufficient to show that the party making the Deed intends it to be presently binding on him or her and to take effect as a Deed.[9] As Tadgell J (as he then was) said in Backstop Nominees Pty Ltd v Goscor Pty Ltd,[10] “after referring to Xenos v Wickham:[11]
The intention, expressed or appropriately to be inferred, with which the instrument was executed and thereafter dealt with is of cardinal significance.
[6]Limitation Act, s.5(3).
[7]Property Law Act 1958, s.73.
[8]Property Law Act 1958, s.73A.
[9]Xenos v Wickham (1867) LR 2 HL 296, 312 (Blackburn J).
[10][1990] VR 468, 470.
[11](1867) LR 2 HL 296, 312 (Blackburn J).
In my opinion, despite the use of the word “Deed” in the heading of this document, there is nothing in its wording or the way in which it was dealt with to support the contention that it was intended that it should be treated as a Deed.
The commencement of this proceeding in March 2006 was clearly more than six years after the making of the $50,000 loan in November 1990 or the signing of the acknowledgement in October 1995. I therefore consider that any claim for repayment of the loan of $50,000 and interest thereon is statute barred.
For all of these reasons, the plaintiff’s claim for repayment of the $50,000 loan plus interest thereon fails.
The Claim of a Loan of $25,500
I turn then to the claim based on the alleged loan by Mrs Paulet to the defendant of $25,500. In my opinion, there is simply no evidence to support the existence of any such loan. Indeed, it was virtually conceded by the plaintiff’s counsel in final submissions that this claim was hopeless.
First, the written Agreement dated 1 December 1992 does not provide any support for the alleged Loan Agreement. Importantly, clause 4 of that Agreement made the defendant solely responsible for repaying the monies advanced to Mr Bill Stewart and the defendant by Mrs Paulet to obtain the Croydon property, and clause 5 stated that Mr Bill Stewart as vendor acknowledged that he was to receive no consideration from his sister in respect of agreeing to transfer his interest in the Croydon property to her. Thus, the allegation in the amended statement of claim that by this Agreement Mr Bill Stewart sold his interest in the Croydon property to the defendant for the sum of $25,500 was simply not correct.
Secondly, the two undated handwritten documents did refer to a sum of $25,500 being paid by Mrs Paulet to Mr Bill Stewart, being the “amount contributed with interest for original purchase of above property”. He thought that she had given him about $20,000, but there is no reason to dispute the figure stated in the documents. More importantly, there is nothing in either of these two undated documents to suggest that the defendant had requested that this payment be made or that she agreed that it was to be treated as a loan to her or that she agreed the terms on which this loan was allegedly made. The plaintiff’s evidence about this claim did not come anywhere near filling the fatal gap.
In any event, in my opinion, the plaintiff again faces the insurmountable hurdle of the plea by the defendant that any such agreement is statute barred six years after it was made in or about December 1992.[12]
[12]Limitation Act, s.5(1)(a).
The Claims Arising Out of the Maintenance, Improvement and Mortgage Payments
Finally, there are the plaintiff’s claims that she is entitled to such beneficial interest in the property as is represented by her contribution of at least $181,928.92 in maintaining and improving the Croydon property and in making mortgage repayments in respect of the Croydon property, alternatively that she is entitled to repayment of that sum. However the claims are framed, I consider that the plaintiff has failed to make out any entitlement.
The primary submission by counsel for the plaintiff in respect of these claims was that the plaintiff was entitled to an equity in the Croydon property proportionate to, or measured by, her maintenance, improvement and mortgage payments. In Muschinski v Dodds[13] Deane J, with whom Mason J, as his Honour then was, agreed, described the equity in the following terms:
… the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so.
[13](1985) 160 CLR 583, 620.
In Henderson v Miles (No 2),[14] this was described by Young CJ in Eq as a “windfall equity” for the claimant in that, if the equity were not recognised, the other party would receive “an unconscionably retained windfall”. In that case there had been “no broken promise by the defendants nor any unfair inducement by them to bring the plaintiff to her present position”.[15] Nevertheless, it was held that the plaintiff was entitled to an equitable charge on the defendants’ property.
[14][2005] NSWSC 867, [19], [93].
[15][2005] NSWSC 867, [94].
In this case, however, there was, in my opinion, no “joint relationship or endeavour” between the plaintiff and the defendant. Rather, I am satisfied that these payments were volunteered by the plaintiff as part of her generous efforts to assist her profoundly deaf daughter to live an independent life or were made at a time when she was contemplating moving into the Croydon property and were for the purpose of making essential, or at least helpful, improvements for her own benefit, without any request from, or agreement with, the defendant for the making of the improvements. In either case, I consider that it was never contemplated by either the plaintiff or the defendant at the time of expenditure that the plaintiff was entitled to, or that the defendant was liable to provide to her, any benefit in the Croydon property by reason of any of that expenditure. In my opinion, there is no reliable or satisfactory evidence that the payments were made pursuant to any agreement with the defendant that, in return for making them, the plaintiff would be able to live at the Croydon property for any agreed period or indefinitely. Nor is there any reliable or satisfactory evidence that they were made pursuant to any agreement with the defendant that they were loans which the defendant would repay at any agreed time or when requested to do so by the plaintiff. In those circumstances, in my opinion, there is nothing unconscionable about the defendant retaining the benefit of these payments.
The dilemma for the plaintiff is that her own actions cast real doubt on the claims she now seeks to make. If, for example, the plaintiff is asserting that the $49,100 of mortgage repayments were made by her because she was the beneficial owner of the Croydon property or because the defendant had agreed that the plaintiff could live there indefinitely, then why did she write on most of the deposit slips that the amount of the payment was “to be paid back on sale of house”, and other notes, indicating that the payments were loans? If, on the other hand, the plaintiff is asserting that the mortgage repayments were loans by her, then why should she be believed when she has clearly added, after writing the initial notes to the effect that the payments were made on the sole condition that they be repaid “on sale of house”, which event may not occur for many years to come, the condition that they are also repayable when requested by the lender? Similar considerations apply to the maintenance and improvement payments.
In my opinion, the appropriate conclusion to draw is that all of these maintenance, improvement and mortgage payments were made by way of gifts from the plaintiff to the defendant, as the plaintiff herself described them on at least one occasion in a contemporaneous communication.[16] I am satisfied that until the relationship between them broke down, the plaintiff was prepared to spend money on meeting the defendant’s daily living expenses and on maintaining and improving the Croydon property and on assisting with the mortgage repayments, knowing that most of the defendant’s pension income was going towards the worthy goal of paying off her home loan. I am convinced that if the plaintiff had been asked, in say 1998, whether she expected anything in return for making these payments or whether she regarded them as loans to the defendant, she would have answered in the negative, and that she would have described the payments as gifts to her daughter.
[16]See paragraph 178 above.
An alternative way of reaching the same conclusion is to find that, as Mr Johnson, counsel for the defendant, submitted, the plaintiff did not rebut the presumption of advancement by way of a gift from a parent to a child.
In Nelson v Nelson[17], each member of the High Court of Australia held that the presumption of advancement extended to the relationship of mother and child, even adult children.[18] Deane and Gummow JJ also said that the presumption of advancement:
… is perhaps not strictly a presumption at all. Rather, the position is that there are certain relationships from which equity infers that any benefit provided for one party at the cost of the other has been provided by way of “advancement”. The consequence is that the equitable estate follows the legal estate and is at home with the legal title; there is an absence of any reason for assuming that a trust arose.
The operation of the presumption of advancement may be rebutted by evidence of the actual intention, at the time of the purchase, of the parent or other person who provided the purchase money. Evidence also may be given to support the presumption of advancement.[19]
Similar views were expressed by the other members of the Court.[20]
[17](1995) 184 CLR 538.
[18](1995) 184 CLR 538, 549 (Deane and Gummow JJ), 576 (Dawson J), 586 (Toohey J), 601 (McHugh J).
[19](1995) 184 CLR 538, 547.
[20](1995) 184 CLR 538, 576 (Dawson J), 586 (Toohey J), 600 (McHugh J).
In Laskar v Laskar,[21] Lord Neuberger of Abbotsbury, with whom Tuckey and Rimer LJJ agreed, stated:
The presumption of advancement still exists, although it was said as long ago as 1970 to be a relatively weak presumption which can be rebutted on comparatively slight evidence: see per Lord Upjohn in Pettit v Pettit [1970] AC 777, 814. I would add that it is even weaker where, as here, the child was over 18 years of age and managed her own affairs at the time of the transaction.
[21][2008] 1 WLR 2695, 2700 [20].
The factors identified by his Lordship as weakening the daughter’s claim in Laskar are not the same in this case. Whilst the defendant is now 40 years of age, as previously stated, in September 2007 VCAT appointed an administrator of her estate. Further, I have found that, until she asserted her independence in 2004, the defendant’s finances were controlled by the plaintiff. In the circumstances, I agree that the plaintiff did not rebut the presumption of advancement by the mother to her daughter, so that the equitable estate follows the legal estate and no trust in favour of the plaintiff arose.
Given these conclusions, it is not necessary for me to embark on the complicated task of deciding what amount the plaintiff should receive by way of a charge over the Croydon property, in order for the defendant’s retention of it not to be regarded as unconscionable. That task is further complicated by the fact that there was no evidence of any increased value in the Croydon property brought about by the improvements. They may have increased the value by significantly more or less than their claimed cost. I simply do not know. This valuation evidence really should have been part of the plaintiff’s case, but given her financial difficulties it is, perhaps, understandable why the expense was not incurred at this stage. Also missing was the evidence required to establish the discounts to be applied to a penultimate figure, in accordance with the approach adopted by McDougall J in Taylor v Streicher.[22]
[22][2007] NSWSC 1006, [60]-[68].
Conclusion
For all of the above reasons, I have concluded that none of the plaintiff’s various claims succeeds. Accordingly, there will be judgment for the defendant.
---
2
2
0