Schweitzer v Schweitzer
[2012] VSCA 260
•23 October 2012
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2010 0179 | |
| MARIA SCHWEITZER | Appellant |
| v | |
| HERMAN LUDWIG SCHWEITZER | Respondent |
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| JUDGES | NETTLE and TATE JJA and FERGUSON AJA |
| WHERE HELD | MELBOURNE |
| DATE OF HEARING | 10 October 2012 |
| DATE OF JUDGMENT | 23 October 2012 |
| MEDIUM NEUTRAL CITATION | [2012] VSCA 260 |
| JUDGMENT APPEALED FROM | [2010] VSC 543 (Cavanough J) |
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TRUST AND TRUSTEES — Express trust — Creation — Intention to create trust — Transfer of real property to transferor’s parents in consideration of promise by parents to hold property as to half on trust for transferor — Requirements of writing — Fraud exception — Rule in Rochefoucauld v Boustead [1897] 1 Ch 196 — Bloch v Bloch (1981) 180 CLR 390, referred to — Property Law Act 1958, s 53(1)(b).
Resulting trust — Transfer of real property to parents — Absence of valuable consideration — No presumption of advancement — Napier v Public Trustee (WA) (1980) 32 ALR 153; Calverley v Green (1984) 155 CLR 252, referred to.
Evidence — Witness — Competency — Appellant acting by litigation guardian — Whether appellant’s absence from witness box sufficiently explained by appointment of litigation guardian — Whether court under duty to conduct own inquiries as to appellant’s capacity to give evidence — Goddard v Elliot [2012] VSC 87, referred to and distinguished.
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| Appearances: | Counsel | Solicitors |
| For the Appellant | Mr T North SC with Ms A H Fogarty | O’Donnell Salzano Lawyers |
| For the Respondent | Mr J L Smith | John X Smith |
NETTLE JA:
This is an appeal from a judgment given in the Commercial and Equity Division. The judge upheld a claim by the respondent, Herman Ludwig Schweitzer, that the appellant, Maria Schweitzer, holds her home at 29 Argyle Street, Moonee Ponds on trust as to half for the respondent subject to a life interest in favour of the appellant.
The facts
The respondent was born in 1952 and, at the time of the trial, he was 58 years of age. He is the elder son and fourth of six children of Hermann Schweitzer senior, deceased and the appellant. The Schweitzer family came from Germany to Australia in 1960 and established themselves in Melbourne. In 1969 they returned to Germany but moved back to Melbourne in 1971.[1] In 2002, the respondent was diagnosed as suffering from a malignant brain tumour and since then the tumour has metastasized. The illness has had crippling effects on him. He cannot work and his wife, Wendy, looks after him full-time at home. He receives a disability pension and she receives a carer’s pension.
[1]Leaving behind two adult daughters who settled in Europe.
Conscious of his fragile health, in 2005 he took steps to secure what he claimed to be his entitlement to a half-share in the property. The house had originally been registered in the name of the respondent and the respondent had lived there with his parents and some of his siblings during the 1970s and early 1980s. In 1984, however, shortly before his marriage to Wendy, he executed a transfer of the property to Hermann senior and the appellant.
In September 2005, the respondent obtained from Hermann senior and the appellant a statutory declaration which ostensibly verified the respondent’s claim that Hermann senior and the appellant held the property as to half on trust for the respondent. Later, it emerged that Hermann senior was suffering from severe dementia at the time he executed the statutory declaration.
To further protect his claim, the respondent lodged on title a caveat dated 15 September 2005 which referred to the statutory declaration. The appellant received notice of the caveat in the ordinary course but took no action except to put the notice out of sight.
About two years later in 2007, the plaintiff’s sister, Ingrid, learned of the caveat and set about having it removed from title. At the time, she with another sister, Angelina, held a joint power of attorney for the appellant. Ingrid arranged for the joint power of attorney to be replaced by a sole power of attorney in her favour and, acting under that sole power of attorney, she caused an application to be made on the appellant’s behalf under s 89A of the Transfer of Land Act 1958 for removal of the caveat. In response, the respondent commenced proceedings against Hermann senior and the appellant seeking a declaration that they held the property as to half for him on an express, resulting or constructive trust.
Hermann senior died in June 2009, before trial. The appellant was the sole remaining defendant. At the time of trial, she was still living in the house, having lodged a survivorship application, but Ingrid represented her in the proceedings, as she does on this appeal, as her litigation guardian.
The evidence at trial
The evidence at trial effectively began with the purchase in 1972 of a 10 acre rural property at Christmas Hills (Christmas Hills Property) for $6,000 on vendor terms. The title showed that the registered proprietors were Hermann senior and his sons, the respondent and Albert. The property was purchased on 23 March 1973 for $9,500 and settlement occurred on 24 July 1973. The respondent gave evidence that he and Hermann senior purchased the Christmas Hills Property on a 50/50 basis and made repayments accordingly. By her defence, the appellant denied that the respondent contributed anything to the purchase of the property. But the appellant did not give evidence.
Around the time of the sale of the Christmas Hills property, the respondent and appellant sourced the Argyle Street property. The respondent gave evidence that he and Hermann Senior agreed to purchase the property on a 50/50 basis and that the family would reside in the property. By her defence, the appellant denied that there was such an agreement.
The respondent gave evidence that part of the proceeds of sale of the Christmas Hills property went towards the purchase of the Argyle Street property. By her defence, the appellant denied that was so.
The respondent said that the original intention had been that a loan would be taken out in the name of Hermann senior to fund the balance of the purchase price, but it turned out that Hermann senior was ineligible for a loan because of his age (being then 54 years old). Consequently, the respondent took out a loan from the A.F.T. Keystone Permanent Building Society and executed the transfer of land on 6 June 1973. On 18 June 1973, he was registered as sole proprietor of the property.
The respondent gave evidence that he so held the property as to half for his parents pursuant to the 50/50 agreement and that he and they had contributed equally to the loan repayments to A.F.T. Keystone Permanent Building Society. He said that his salary at the time was such that he was well able to afford the half contribution.Thus, by 1978, the mortgage loan to the A.F.T. Keystone Permanent Building was repaid and, on 3 August 1978, the mortgage was discharged. The respondent also gave evidence that, from 1973 to 1983, he and Hermann senior each contributed equally to the maintenance and repairs of Argyle Street and that they bore the costs of outgoings and maintenance equally.
On 14 November 1978, caveat number H304054 dated 3 November 1978 was lodged on title on behalf of Hermann senior and the appellant. By that caveat, they claimed an estate in fee simple in equity as beneficiaries under a Deed of Trust dated 3 November 1978. By the time of trial, the deed could not be located.
On 20 November 1978, Koltay & Myers, solicitors to the Schweitzer family, sent a letter to Hermann senior stating, inter alia:
We now wish to advise that we have now attended to lodging of the new caveat on the property in accordance with your instructions with [the respondent] to hold one-half of his interest in the said land on trust for yourself and Maria Schweitzer.
In 1983, the respondent moved out of the property to live with his fiancée, Wendy. He gave evidence that, after leaving Argyle Street, he performed maintenance and repair tasks at the property until he was diagnosed as suffering from a brain tumour in 2002.
By her defence, the appellant contended that, although the respondent might have performed some maintenance or repairs at Argyle Street, he did so gratuitously as the son of his parents and in lieu of board, and that otherwise Hermann senior attended to all the maintenance. -
The respondent testified that, in 1984 when he was about to be married to Wendy, Hermann senior raised concerns that the marriage might jeopardise Hermann senior’s and the appellant’s security of tenure of the property; and, in those circumstances, requested the respondent to transfer the title to them as joint tenants. According to the respondent’s testimony, Hermann senior said in the presence of the appellant that, if the respondent would transfer the title to them, one half of the property would be held on trust for the respondent and that he would be well taken care of; meaning that the arrangement would be reflected in Hermann senior’s and the appellant’s wills. The respondent further testified that he agreed to that arrangement and thus on 10 September 1984 executed a transfer of land, as follows:
I HERMAN LUDWIG SCHWEITZER, Pastrycook, ... in consideration of being entitled to a Transfer in equity, DO HEREBY TRANSFER to HERMAN[N] SCHWEITZER, Pastrycook and MARIA SCHWEITZER, Married Woman, … all my Estate and interest in ALL THAT piece of land [being the Argyle Street property].
On 11 October 1984 the respondent married Wendy.
An unsigned copy letter from Koltay & Myers to the Comptroller of Stamps, dated 17 October 1984, was tendered at trial. It stated that:
[W]e enclose copy of the original Trust Deed which appears to show that the Transferees are already the beneficial owners of 2/3 of the interest in the subject land, the Transferor having an interest as to the remaining 1/3. This 1/3 share in the land is to pass as a gift to the Transferees.
On 14 November 1984 Koltay & Myers wrote to Hermann senior and the appellant, that:
We enclose assessment received by us from the Comptroller of Stamps for payment of the sum of $423.15 by way of duty assessed.
As the amount of duty has been assessed at a value of $21,700.00 which by the terms of the trust is one half of the interest in the freehold owned by you and your wife, we recommend payment of the duty as assessed.
On 4 December 1984 Hermann senior and the appellant were registered as joint proprietors of the property.
On 19 April 2001, Hermann senior and the appellant[2] executed mutual wills. Each provided that, in the event of the spouse predeceasing the testator/testatrix, the testator’s/testatrix’s ‘one quarter share’ in Argyle Street was bequeathed to the respondent.
[2]After execution of the new will, Max Ebner, Ingrid’s husband, destroyed the will dated 19 April 2001 contrary to orders for inspection of that document made by Associate Justice Daly on 3 May and 22 July 2009. As a result of a survivorship application, the Argyle Street title was transferred to the appellant solely and, at the time of trial, she still lived there.
In 2002, the respondent was diagnosed as suffering from a malignant brain tumour and underwent surgery.
On 26 April 2003, Hermann senior and the appellant executed enduring powers of attorney appointing their daughters Angelina Schweitzer and Ingrid Schweiter as joint attorneys.
On 8 September 2005, the respondent executed his will prepared by the respondent’s solicitor.
On 9 September 2005 Hermann senior and the appellant signed the joint statutory declaration earlier referred to. It was prepared by the respondent’s solicitor and presented by the respondent to Hermann senior and the appellant and then signed before a pharmacist in Moonee Ponds. It stated that the property was purchased by the respondent and Hermann senior as tenants in common in equal shares, registered in the respondent’s name for convenience and purchased with finance secured by mortgage; that the respondent and Hermann senior had contributed equally to the deposit and mortgage repayments until the mortgage was discharged in 1978; that, due to concerns about the respondent’s marriage in 1984, the appellant and Hermann senior demanded that the respondent transfer the property to them and the respondent agreed to do so; and that the appellant and Hermann senior had thus been the joint registered proprietors of the property since 1984; but that, at all times, the respondent had retained a half interest in the property.
At trial, the respondent’s counsel conceded that Hermann senior was suffering from dementia and incapable of understanding the statutory declaration when he signed it. Contrastingly, the appellant’s counsel conceded that the evidence did not allow him to say that the appellant did not understand the statutory declaration when she executed it.
On 15 September 2005, the respondent lodged a caveat on title claiming an interest pursuant to ‘a declaration in trust dated 9 September 2005’ between Hermann senior and the appellant. When the appellant received notice of the caveat in the usual course, she said that she would hide it because Ingrid would be angry.
On 10 July 2007, Ingrid sent a letter purportedly on behalf of Hermann senior and the appellant demanding the removal of the caveat and, on 16 August 2007, the appellant executed a new enduring power of attorney appointing lngrid Schweitzer as her sole attorney.
On 11 October 2007, Ingrid as attorney for the appellant applied for service of a notice pursuant to s 89A(3) of the Transfer of Land Act 1958. The application was supported by a certificate from the appellant’s solicitor to the effect that the respondent had no interest in the land.
On 12 October 2007, the Registrar of Titles issued a notice pursuant to s 89A(3) of the Transfer of Land Act 1958 to the respondent and, on 19 November 2007, the Writ was issued at the instance of the respondent. Notices of appearance were filed by Ingrid as attorney for Hermann senior and the appellant. Ingrid represented Hermann senior as his litigation guardian until his death on 12 June 2009 and, from 8 September 2008, she also represented the appellant as litigation guardian.
On 1 July 2009 the appellant made a new will which made no provision for the respondent.
The appellant was not present at the trial and did not give evidence. Ingrid was present in court throughout the trial but she did not give evidence either.
The judgment below
The judge found that there was an agreement between the respondent and Hermann senior that each would become a half-owner of the Christmas Hills property and that pursuant to the agreement the respondent made half the payments towards the purchase price of that property.
His Honour also found that there was an agreement between Hermann senior and the respondent that each would become a half-owner of the Argyle Street property; that the respondent contributed half of the $3,800 initial payment for that property; that the proceeds of sale of the Christmas Hills property were used in connection with the purchase of the property; and that the respondent contributed 50% or thereabouts of the payments necessary to discharge the mortgage over the property.
The judge found too, that, until 1983, the respondent contributed approximately 50% of the costs of maintenance and repairs to the property and that, to some further extent about which it was unnecessary to be more precise, the respondent had also performed maintenance and repairs to the property.
The judge was persuaded that, in 1984, Hermann senior told the respondent in the presence of the appellant that, if the respondent transferred the property to Hermann senior and the appellant, the respondent’s half share in the property would be held on trust for him and that he would be taken care of, meaning that the arrangement would be reflected in Hermann senior’s and the appellant’s wills; and, further, that it was upon that basis the respondent executed the transfer in favour of Hermann senior and the appellant.
The judge rejected the appellant’s contention that the respondent executed the transfer in order to align legal interests with what the appellant alleged were the existing beneficial interests or that the respondent executed the transfer by way of gift of his interest in the property to his parents. His Honour also dismissed the appellant’s alternative contention that there was by virtue of a trust deed in 1978 or otherwise an arrangement or agreement under which the respondent held a one-third share, rather than a one-half share in the property.
In the result, the judge held that, by reason of Hermann senior’s undertaking that the respondent’s half share would be held in trust for him and that he would be taken care of, that the appellant held the property upon express trust as to half for herself and as to the other half on trust for herself for life and then for the respondent absolutely.
Grounds of appeal
The appellant’s notice of appeal asserts 20 grounds of appeal but, in the appellant’s written outline of argument and in oral submissions, those were effectively reduced to the following 10 contentions:
1) The 2005 statutory declaration could not be relied upon as evidence of the existence of an express trust.
2) The existence of an express trust was inconsistent with the transfer of land by the respondent to Hermann senior and the appellant.
3) The judge was wrong to rely upon the 1984 declaration by Hermann senior in the presence of the appellant that the property would be held on trust as to half for the respondent.
4) The judge ought not to have relied upon the respondent’s evidence.
5) The judge ought not to have relied upon Wendy Schweitzer’s evidence.
6) There could be no express trust of the kind which the judge found, because the existence of the trust was not sufficiently evidenced in writing.
7) There could be no resulting trust: either because of the operation of s 19A of the Property Law Act 1958; or because the letter from Koltay & Myers to the Comptroller of Stamps dated 17 October 1984 was inconsistent with the existence of a resulting trust.
8) There could be no constructive trust, because there was no evidence of intention to create a trust and because the respondent did not act to his detriment on the basis of any existing common intention evidenced by the 1984 transfer.
9) The judge was wrong to draw an adverse inference from the appellant’s failure to give evidence at trial.
10) The judge was wrong to draw an adverse inference from Ingrid Schweitzer’s failure to give evidence at trial.
The 2005 statutory declaration
The thrust of the first contention was that the statutory declaration could not be relied upon as evidence of an express trust because of Hermann senior’s advanced dementia at the time of signing it and the age and frailty of the appellant at the time of signing it; because it contained errors, inasmuch as it referred to Hermann senior as a retired baker, referred to the acquisition date of the property as being 1975 (when it was in fact 1973), did not refer to the life interest which the respondent was to grant to his parents out of his half share, and asserted that Hermann senior and the appellant had always recognised the respondent’s half interest in the property when there was no evidence of that being so; and because the declaration was not executed until 21 years after the 1984 conversation. It followed, it was said, that the alleged trust failed for want of compliance with s 53(1)(b) of the Property Law Act 1958.[3]
[3]Section 53 of the Property Law Act 1958 provides that:
Instruments required to be in writing
(1)Subject to the provisions hereinafter contained with respect to the creation of interest in land by parol—
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing or by will.
(2)This section shall not affect the creation or operation of resulting, implied or constructive trusts.
Similar arguments were advanced at trial and, in his reasons for judgment, the judge dealt with them seriatim. He dealt with the first as follows:[4]
Counsel for the defendant did not suggest that Herman[n] Senior’s alleged words, if said, could not give rise to an express trust because they were too vague or for any other like reason, but he did rely[5] on s 53(1)(b) of the Property Law Act 1958 and submitted that the plaintiff could not rely on the signing of the statutory declaration in that regard.[6] He did not elaborate on that submission, but I understood him to be referring to the fact, now acknowledged by the plaintiff, that Herman[n] Senior was suffering from severe dementia when he signed the statutory declaration. However the plaintiff submits that Maria is a person who was able to declare the trust and that her signing of the statutory declaration fulfilled the requirements of s 53(1)(b).
It is unnecessary for me to decide whether s 53(1)(b) required the plaintiff to produce written evidence of the trust duly signed by Herman[n] Senior as well as by Maria.[7] Even if the plaintiff has failed to satisfy the requirements of s 53(1)(b), his case falls squarely within the well-known maxim that equity will not permit the Statute of Frauds to be used as an instrument of fraud.[8]
A clearly established category of case to which the maxim applies is a transfer of land on trust where the transferee knows that the land was transferred on trust. If such a transaction is established, the transferee will not be able to rely on the absence of evidence in writing to resist the enforcement of the trust.[9] It is not necessary to decide here whether the trust so enforced is the original express trust or some other kind of trust that arises concurrently with the express trust and is exempt from the operation of s 53 by subs (2).[10]
It follows that if the plaintiff can prove the existence of the alleged express trust, he will be able to enforce it despite any non-compliance with the requirements of s 53(1)(b).
[4]Reasons [16]–[19].
[5]Transcript 403–4.
[6]In para 20 of her Further Amended Defence, the defendant had referred to and relied upon s 53(1)(b) of the Property Law Act 1958, but only as part of an allegation which assumed, wrongly as it now turns out, that the plaintiff relied on the statutory declaration as creating or constituting the express trust.
[7]Cf Equuscorp Pty Ltd v Jimenez [2002] SASC 225, [123]. Neither party made any reference to this case in their submissions. I express no view as to its correctness on this point. It may also be that the signature required by s 53(1)(b) is that of the plaintiff himself as the transferor: W A Lee et al, The Law of Trusts (4th ed, 2010) 6.1050.
[8]See generally Yard v Yardoo Pty Ltd [2006] VSC 109, [352]–[354], relied upon by the plaintiff; W A Lee et al, The Law of Trusts (4th ed, 2010) 6.1070–6.1090; J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (2006, 7th ed) 709–712; I C F Spry, The Principles of Equitable Remedies (8th ed, 2010) 251–253; Gino Dal Pont and Tina Cockburn, Equity and Trusts in Principle (2005) 17.25; and cases there cited respectively.
[9]Ibid.
[10]Cf W A Lee et al, The Law of Trusts (4th ed, 2010) 6.1090, 22.4240, 22.4300; J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (2006, 7th ed) 711; I C F Spry, The Principles of Equitable Remedies (8th ed, 2010) 252; Equuscorp Pty Ltd v Jimenez [2002] SASC 225, [128]; and cases there cited respectively.
With respect, I agree with the judge. As Brennan J said in Bloch v Bloch:[11]
The principle is that ‘the Statute of Frauds does not prevent the proof of a fraud; and that it is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself’ (per Lindley LJ in Rochefoucauld v Boustead).[12] Whatever be the classification of the trust which binds the person entrusted with the legal title to property, his repudiation of the terms upon which he was entrusted with that property ‘is a fraudulent use of another's confidence, and the Statute is not intended to cover fraud’ (per Isaacs J in Cadd v Cadd).[13] Scott LJ said in Bannister v Bannister:[14]
‘The fraud which brings the principle into play arises as soon as the absolute character of the conveyance is set up for the purpose of defeating the beneficial interest, and that is the fraud to cover which the Statute of Frauds … cannot be called in aid in cases in which no written evidence of the real bargain is available.’
[11](1981) 180 CLR 390, 403.
[12][1897] 1 Ch 196, 206.
[13](1909) 9 CLR 171, 187; and see Lincoln v Wright (1859) 4 De G & J 16, 22–3; 45 ER 6, 9.
[14][1948] 2 All ER 133, 136.
It is also to be noted that, although it was suggested in Bannister v Bannister[15] that such a trust is a constructive trust, the better view is that it is an express trust, as the judge found it to be.[16]
[15]Ibid.
[16]Allen v Snyder [1977] 2 NSWLR 685, 692; Avondale Printers v Haggie [1979] 2 NZLR 124, 161–5; Bloch v Bloch (1981) 180 CLR 390, 403, cited in Heydon & Leeming, Jacobs’ Law of Trusts in Australia, 7th Ed, [711].
Consequently, despite such concerns as there may have been about the reliability of the statutory declaration, in the end the judge’s decision was based upon proof aliunde of the existence of the express trust. Hence, the first contention fails.
Inconsistency with the transfer of land
Under the heading of the second contention, it was submitted that the existence of an express trust of the kind found by the judge was entirely inconsistent with the terms of the transfer to Hermann senior and the appellant in that it referred to the transfer being ‘in consideration of being entitled to a Transfer in equity’. Counsel for the appellant also argued that the existence of such an express trust was inconsistent with the contents of Koltay & Myer’s memorandum of costs dated 6 September 1984, and most improbable in view of the respondent’s failure to explain why he did not lodge a caveat in 1984 or thereabouts.
In dealing with those arguments below, the judge said that, although the terms of the transfer were problematic, the transfer had to be seen in the context in which it was executed. Relevantly, that began with the letter of 20 November 1978 from Koltay & Myers to Hermann senior a few months after the mortgage was discharged. As the judge put it:
A few months after the property was paid off and the mortgage discharged, the solicitors Koltay and Myers sent what I regard as a particularly significant letter dated 20 November 1978 to Herman[n] Senior (as their client) as follows:
Dear Sir
RE: Argyle Street
We now wish to advise that we have now attended to lodging of the new Caveat on the property in accordance with your instructions with Herman Ludwig Schweitzer to hold one-half of his interest in the said land on trust for yourself and Maria Schweitzer.
In order to finalize this matter we enclose herewith a memo of our costs and disbursements for your attention in due course.
It was common ground that the caveat referred to in this letter was a caveat dated 3 November 1978 lodged by Koltay and Myers on 14 November 1978 on behalf of Herman[n] Senior and Maria as caveators claiming ‘an estate in fee simple in equity as beneficiaries under a Deed of Trust dated 3 November 1978 by us in ALL THAT piece of land being [29 Argyle Street] standing in the Register Book in the name of HERMAN LUDWIG SCHWEITZER …’. It is true that the caveat itself refers to a claim for ‘an estate in fee simple in equity’ in the land, but this is not inconsistent with the claim being for a half interest only. Otherwise, putting aside a certain letter dated 17 October 1984 to which I will shortly come, there was no evidence directly contradicting the apparent import of the letter of 20 November 1978, namely, that the plaintiff was recognised under the deed of trust of 3 November 1978 as holding a one-half interest in the land. Nor was there any direct evidence to the effect that the deed of trust referred to Herman Senior and Maria as the sole beneficial owners. The caveat of 3 November 1978 lapsed in 1984 in consequence of the lodgement of the transfer to the plaintiff’s parents.
It is true, as the judge acknowledged, that the transfer of 10 September 1984 was oddly worded. On its face, it was not clear whether the reference to consideration was intended to be a reference to the respondent being entitled to a transfer (back) in equity or to his parents being entitled in equity to the transfer to them.[17] It is true, too, that the memorandum of costs of 6 September 1984 was enigmatic in its reference to ‘property registered in the name of Trustee for beneficiaries acting for both Transferor and Transferees’. But, as the judge went on to explain, the uncertainty of it was substantially redressed by the terms of Koltay & Myers letter of 14 November 1984 to Hermann senior, in which they wrote, inter alia:
We enclose assessment received by us from the Comptroller of Stamps for payment of the sum of $423.15 by way of duty assessed.
As the amount of duty has been assessed at a value of $21,700.00 which by the terms of the trust is one half of the interest in the freehold owned by you and your wife, we recommend payment of the duty as assessed.
Would you kindly let us have your cheque for the sum of $423.15 in favour of the Comptroller of Stamps to enable us to finalize the matter.
[17]Reasons [57].
In turn, that was supported by the viva voce evidence of Mr Koltay that the terminology of his letter of 14 November 1984 was ‘entirely consistent’ with the idea that the respondent was ‘to hold one half of his interest in the said land on trust for yourself and Maria Schweitzer’.
The judge dealt at length with why it was that the respondent did not lodge a caveat on title until 2005, and his Honour was satisfied with the explanation. As his Honour found, within one or two years of executing the 1984 transfer the respondent told his wife Wendy that he had been on title for Argyle Street. But it was not until he learned that he was suffering from cancer that he considered that there was a need to secure his interest in the property. At that point, he had a number of discussions with Hermann senior about going back on title, but on each occasion Hermann senior refused without giving reasons. Matters then drifted until 2005 when the appellant asked the respondent what a ‘reverse mortgage’ was. The respondent formed the view that Ingrid was behind the request and that she wanted to ‘take money out of the house’ because she and her husband were in financial difficulties and had lost a house for tax reasons. It was then that he went to a solicitor, Mr Smith, and had the statutory declaration and caveat prepared.
The judge did not think that any of those events was inconsistent with the existence of the agreement for Hermann senior and the appellant to hold the property on trust as to half for the respondent. Nor do I. Taken in conjunction with the respondent’s oral testimony, and the evidence of Wendy Schweitzer, with which the judge was greatly impressed, there was ample reason for his Honour to conclude that there was an agreement for Hermann senior and the appellant to hold the property as to half for the respondent.
The 1984 declaration of trust
The nub of the argument advanced in support of the third contention was that it was not open to the judge to accept the respondent’s evidence as to Hermann senior stating in the presence of the appellant in 1984 that the property would be held on trust as to half for the respondent, because the evidence was not corroborated and was inherently unreliable.
I do not accept the argument. As the judge said, although the respondent was in frail health and his memory was deficient to a significant extent, the preponderance of evidence was strongly in favour of his claim that he had a 50/50 agreement with his father in relation to both the Christmas Hills property and the original acquisition of the Argyle Street property.[18]
[18]Reasons [66]–[68].
The documents alone showed that the respondent’s unaided memory of the Christmas Hills acquisition and sale (including matters of time) was reasonably accurate, despite his health problems and the passage of some 37 years since the events in issue.[19] The likelihood of there having been a 50/50 agreement in respect of Christmas Hills was substantially corroborated by Koltay & Myers’ letter of 20 November 1978.
[19]Reasons [74].
In turn, the probability of there having been a 50/50 agreement in respect of Christmas Hills, coupled with the application of the sales proceeds from Christmas Hills to the purchase of the Argyle Street property; the fact that the respondent was the borrower of the remainder of the funds needed to complete the purchase of the property; the assessment and payment of stamp duty on the transfer from the respondent to Hermann senior and the appellant on one half the value of the property; Koltay & Myers’ letter of 14 November 1984; and the content of Hermann senior’s and the appellant’s mutual wills (before being replaced by the later wills organised by Ingrid), implied that the respondent did have a half beneficial interest in the property at the time of transferring the legal title to the property to his parents.
In turn, the probability that the respondent had a half beneficial interest in the property at the time of the transfer to his parents, coupled with the fact that he was shortly to be married, and bearing in mind that his economic circumstances at that time were hardly lavish, made even more likely the truth of his claim that the reason he finally agreed to transfer legal title to his parents was because his father promised (in the presence of the appellant) that they would hold the respondent’s half interest on trust for him.
Finally, on this point, as the judge said, the probability that Hermann senior gave an undertaking in 1984 to hold the property as to half on trust for the respondent was to be seen in the context that Hermann senior (who was then aged 65) was very concerned about his and the appellant’s security of tenure in the house; the respondent trusted his father; and it was common ground that the Schweitzer family was a ‘traditional’ family of which Hermann senior was very much the head.[20]
[20]Reasons [112].
The respondent’s evidence
The fourth contention was to the effect that the judge should not have accepted the respondent’s evidence, in view of:
a) The judge’s finding that the respondent was in some respects an unreliable witness;
b) The medical evidence of Professor Rosenthal that the respondent was suffering from short-term memory loss and that it was not possible to say that he might not also be suffering from longer term memory loss;
c) Inconsistency in the respondent’s evidence as to who knew of his contribution towards the Argyle Street property;
d) The unlikelihood of the respondent being financially able to make lump sum contributions towards the mortgage over Argyle Street;
e) Inconsistency between the respondent paying board and yet being a part purchaser of the property;
f) Conflicting evidence as to when the respondent opened a bank account;
g) Conflicting evidence as to whether his parents had a cheque account;
h) Inconsistency between the respondent’s evidence and Wendy Schweitzer’s evidence as to discussions about the operation of a reverse mortgage;
i) Inconsistency between the respondent’s evidence and Wendy Schweitzer’s evidence as to whether Hermann senior read the 2005 statutory declaration before he signed it;
j) The inability of the respondent fully to explain what was meant by a trust;
k) Inconsistency between the respondent’s evidence and the evidence of Helen Polley as to whether the respondent admitted to Ms Polley that he did not have an interest in the property;
l) Inconsistency between the respondent’s evidence and Wendy Schweitzer’s evidence as to when he told her that he had an interest in the property; and
m) Inconsistency between the respondent’s evidence about the life interest of his parents in relation to his one half share in the property and his subsequent express provision for such a life interest in his will dated 8 September 2005.
I have dealt in part with the first and second of those points but it remains to deal with two further submissions which were advanced in the course of oral argument. First, counsel for the appellant submitted that it was not open to the judge to accept the respondent’s evidence as to the 1984 agreement for his parents to hold his half interest on trust for him because of the contrast between the apparent certainty with which the respondent gave evidence in chief as to the conversation in which Hermann senior made the promise to hold the property on trust and the respondent’s complete lack of recollection of the act and circumstances of his execution of the transfer of land to his parents. More particularly, counsel pointed to the respondent’s evidence in chief that he signed the transfer in the living room in the presence of his father and mother, and counsel contrasted that with the respondent’s evidence in cross-examination that, although he was able to identify the signature on the transfer as being his signature, he could not remember signing the transfer in 1984 or whether he went to the offices of Koltay & Myer. In counsel’s submission, the degree of disconformity between the respondent’s evidence in chief and evidence in cross-examination created so much doubt as to the circumstances in which the transfer was signed and, therefore, as to the circumstances in which the alleged promise to hold on trust was made, that it was not open to conclude that a promise to hold on trust was made.
I do not accept the argument. It does not present to me as improbable that the respondent had a vivid recollection of Hermann senior agreeing to hold the property on trust and yet only a vague recall of the documents which he later executed to give effect to the agreement. As the respondent said, repeatedly and consistently when pressed in cross-examination, he had a number of conversations with his father about transferring the property to his parents, which to begin with he resisted, and ultimately it was only because his father agreed to hold the respondent’s half share on trust and that he trusted his father that he capitulated. In the scheme of things, one would be likely to recall such an event and yet not remember the incidentals.
Secondly, counsel submitted that, even if there were sufficient evidence from which to conclude that Hermann senior promised that the respondent’s half interest would be held on trust for him, there was no evidence that the appellant agreed to hold on trust for the respondent and, therefore, no basis to conclude that she was bound by the agreement.
I also reject that argument. It was not advanced below. The trial was conducted on the basis that, if the judge found that Hermann senior undertook to hold the property on trust, and the appellant were present when that occurred, she was bound by the trust. I think it is too late now for the appellant to advance a different argument for the first time on appeal.[21] Even if, however, it were open to the appellant to take the point at this late stage, I would reject it. There was sufficient evidence for the judge to find that Hermann senior undertook that the property would be held on trust. The evidence also entitled his Honour to conclude that the appellant was present and acquiesced in the arrangement. Her failure to challenge the respondent’s caveat and her absence from the witness box added strength to that conclusion. In equity, she took subject to the trust.[22]
[21]Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, 438; Coulton v Holcombe (1986) 162 CLR 1, 8; Geelong Permanent Building Society (in liq) v Encel[1996] 1 VR 594, 605–608 (Tadgell JA).
[22]Bahr v Nicolay (No 2) (1988) 164 CLR 604, 632–638 (Wilson and Toohey JJ).
As to the inconsistencies in the respondent’s evidence about who knew of his contribution towards the Argyle Street property, and whether the respondent would have had the financial capacity to make lump sum contributions towards the mortgage over Argyle Street, or whether the payment of rent was inconsistent with ownership of a half share in the property, the judge reasoned as follows:
The plaintiff was asked by Mr Staindl who in the family knew that he was contributing towards the costs of Argyle St. He replied: ‘Most of them knew’. He clarified this to ‘My mother, my father, myself, probably Ingrid … That’s all the people in the house except Albert’. (That was inaccurate, because Angelina was also still in the house at that stage, but she was quite young — about 13 years old in 1973. The plaintiff was not specifically cross-examined about whether Angelina knew). The plaintiff said that he didn’t tell Albert because the subject didn’t come up (although he had claimed that Albert had always known of his ownership of Christmas Hills).
…
Mr Staindl secured admissions from the plaintiff in cross-examination that during the 1973–78 period he had various substantial expenses (putting aside his claimed contributions to the costs of Argyle St). These included board, car expenses, gun purchases, occasional shooting trips and going to entertainments such as movies (sometimes taking Albert and paying for him too). Further, the plaintiff admitted that he went to Europe on holiday for three months in the middle of 1977. He claimed to have obtained an especially cheap air ticket, but could not remember the price. He stayed with his oldest sister, Isabella, in Europe, for a time. He admitted that he also travelled with Anne-Marie, and that he paid some of her travel costs. He said he took and spent $2,000 in travellers’ cheques and $1,000 in cash. He had also bought some turquoise stones to the value of about $500 or $600 to take to one of his sisters.
The three month European trip may have overlapped in part with the 1976–77 financial year in respect of which no tax assessment for the plaintiff is available. The plaintiff took leave for the trip. He conceded that his holiday pay would have covered only the usual four week period.
Despite these expenses, the plaintiff claimed that he was able to pay lump sums of about $1,000 off the mortgage on ‘several’ occasions.
These points do cast some doubt on the plaintiff’s claim that he paid 50% of the mortgage payments, outgoings and maintenance expenses. On the other hand, the relevant events occurred a long time ago and it is simply not possible to say that the plaintiff could not have afforded to make the payments. Mr Staindl did not produce any calculations to show that the claims could not be true. As mentioned in a footnote above, there is no evidence as to whether the interest rate (initially 8.25%) was fixed or variable; or as to the movement of interest rates during the relevant period; or as to whether the amount of the monthly payments was variable at the instance of the lender. In any event, an allowance would need to be made in the plaintiff’s favour for the rent received from the two sets of tenants (including Ingrid, who declined to give evidence). Rent was apparently received for half of the house for up to three of the five years of the loan. Further, the plaintiff’s memory about what he paid in board and what was covered by it may not have done him justice. Albert gave evidence that he initially paid $10 per week board out of a net weekly income of $41. Later, in about 1976 when Albert was earning $100 net per week, he was still paying only $20 or $25 in board. It may be thought unlikely that the plaintiff was required to pay $40, much less $50 or $55, per week out of a similar income for the same domestic services. The plaintiff’s memory is quite faulty generally. It may be that he was paying considerably less in board than he remembered and that the difference went towards the other contributions he claims to have made. Consistently with that, Albert said that the board that he himself paid included his contributions to the costs of utilities, such as electricity, gas, water, insurance and council rates.[23]
[23]Reasons [95]–[99].
With respect, I see no error in that. Nor has any been identified. The
appellant’s argument merely reiterated submissions advanced below without identifying error in the way in which the judge dealt with them.
The points about whether the respondent had a bank account and whether his parents had a cheque account were of no more than peripheral significance. The judge dealt with them thus:
Under cross-examination, the plaintiff insisted that he had made all payments relating to Argyle St to his parents in cash and that he did not have a bank account until 1979 or 1980. He was tested about this by counsel, but the defendant adduced no direct evidence to the contrary. Albert had shared a room at Argyle St with his brother until June 1976 when he married Helen Polley and moved out. It is common ground that the brothers were close to each other in those days, and I accept Albert’s evidence that he himself had had a savings account which had been organised for him at school. However, he could not recall whether the plaintiff had a bank account.[24]
[24]Reasons [93].
The judge also dealt comprehensively with the differences between the respondent’s evidence and the evidence of Wendy Schweitzer on matters of substance. In the result, his Honour preferred the evidence of Wendy Schweitzer. And in substance, it supported the respondent’s claim:
Insofar as the evidence of Wendy Schweitzer differs from that of the plaintiff and from that of Angelina Schweitzer, I prefer the evidence of Wendy Schweitzer. She may have had an unduly optimistic view of Herman Senior’s capacity to function in 2005, but she gave her evidence in impressive, down-to-earth fashion, without exaggeration or embellishment. The evidence she gave rang true to my ear. Plainly her memory for detail was far better than the plaintiff’s. I have limited confidence in Angelina’s evidence, especially in relation to the alleged conversations about the ownership of Argyle St. This is partly because of her extraordinary reaction to the questions about her mother’s new will and partly because her evidence is out of kilter with the bulk of the evidence in the case.
To sum up, I regard Wendy Schweitzer’s evidence as the best guide to the circumstances surrounding the statutory declaration, caveat and wills of 2005.[25]
[25]Reasons [138]–[139].
This is a case where credit and reliability were very much in issue and where the judge’s advantage in hearing and seeing the witnesses give evidence was particularly significant.[26] In the circumstances, I see no reason to doubt the judge’s assessment of the witnesses or the quality of their testimony.
[26]Abalos v Australian Postal Commission (1990) 171 CLR 167, 178–79; Fox v Percy (2003) 214 CLR 118, 127 [26]; cf State Rail Authority (NSW) v Earthline Constructions Pty Ltd (In liq) (1999) 160 ALR 588, 617 [1]–[4] (Kirby J).
The point concerning the respondent’s conception of a trust is without merit. The judge rejected it as follows:
On a later day the defendant’s counsel asked the plaintiff what he understood ‘when someone says that something is being held on trust for you’. The plaintiff replied: ‘I understand if my father said he is holding my land in trust he is holding it in trust for me. The exchange continued:
All right. And can you explain what that means in any other way? — Well, if I own half he will hold my half in trust.
All right? ? — So they keep my half.
You have used the word in trust or the words in trust or on trust? — — — In trust.
On both occasions when you have answered the question. Are you able to explain what holding something in trust or on trust means, without using the word trust? — No.
… I do not agree with Mr Staindl’s submission that the inability of the plaintiff to do more than he did by way of explanation of the notion of ‘trust’ indicates that he had adopted the usage of the word ‘trust’ from somewhere else. I do not think that the exchange about the plaintiff’s use of the word ‘trust’ casts any doubt on the likelihood that the critical conversation occurred. Nor was the plaintiff’s evidence in these respects otherwise shaken by cross-examination.[27]
I agree with his Honour’s conclusion.
[27]Reasons [110]–[111].
In the course of oral argument, counsel for the appellant contended that, because there was evidence that members of the family spoke in German at home, it was highly improbable that Hermann senior would have said something so uniquely English as that the respondent’s half share would be held in trust.
I do not think that argument to be persuasive. The respondent was not cross-examined to that effect and the point was not advanced in argument before the judge. Additionally, it appears that the only evidence about speaking German at home related to a period after 2000 when, as Hermann senior became older, he tended to revert to German. Even if, however, the 1984 conversations were conducted in German, there is no reason to suppose that the idea of holding something on behalf of another[28] is alien to German conceptions or at odds with deutsche idiom.
[28]In German: etw treuhänderisch verwalten.
As Potter[29] said, the idea of giving property to another to employ for the benefit of someone else is inherent in human nature. It is to be observed among children innocent of legal conceptions and, historically, is borne out by examples from the few surviving Bills of Eyre of such transactions among the most illiterate of persons. Maitland considered that the trust was a peculiarly English development derived from the law of agency.[30] But, according to Holmes, the feoffee to uses of the early English law corresponded ‘point by point’ to the Salman [or treuhand] of the early German law; and, just as in English law, the essence of the relation between feoffor and the Salman was ‘the fiducia’ or trust reposed in the ‘fidelis manus who sometimes confirmed his obligation by an oath or covenant’.[31] Admittedly, there is no evidence that the German conception of trust has remained the same. But, in the absence of cross-examination on the point, I would not be prepared to draw an inference adverse to the respondent about it.
[29]A K R Kiralfy, Potters Historical Introduction to English Law, 4th Ed, 605–6.
[30]Maitland’s Equity, 111.
[31]O W Holmes, Early English Equity, Selected Essays in Anglo-American Legal History, Vol 2 [1907], 705, 708.
The argument based on Ms Polleys’ evidence is still less convincing. The judge rejected her testimony as that of a partisan and unreliable witness, as follows:
Ms Polley (through Albert) potentially stood to gain from defeating the plaintiff’s case, and she gave her evidence in a combative, partisan fashion, warming up as she went along. In my view it was significant that Mr Staindl did not squarely put to the plaintiff during cross-examination that he had made the stark admissions later recounted by Ms Polley. The defendant’s legal representatives had apparently conferred with Ms Polley before the plaintiff was cross-examined, because Mr Staindl asked some questions of the plaintiff that related to alleged conversations involving Ms Polley. However, the nearest Mr Staindl came was to put to the plaintiff that there were discussions in which there was ‘never any resistance on your part to transferring the title’. I put to Mr Staindl during his submissions that Ms Polley’s evidence about the alleged admissions ‘came out of the blue’. He disputed that, but on reading and re-reading the transcript I am satisfied that this is a fair description of what happened.
Of course, the allegations of admissions are in direct conflict with a great deal of the documentary and other evidence adduced in this case.
It is entirely possible that Ms Polley misunderstood or misremembered what the plaintiff said in 1983/1984. I do not accept that he made the alleged admissions.[32]
[32]Reasons [149]–[151].
The only thing which I would add is that I respectfully take leave to doubt that it is ‘entirely possible that Ms Polley misunderstood or misremembered what the [respondent] said in 1983/1984’. In light of the documentary and other evidence to which the judge referred, the chance of the respondent having said anything which might reasonably have been so misunderstood appears to me to be remote.
Finally, the judge dealt with the alleged inconsistency between the respondent’s evidence about the life interest of his parents and his subsequent express provision for such a life interest in his will dated 8 September 2005, thus:
The plaintiff was prompted to go to a solicitor in 2005 because his mother asked him what a reverse mortgage was. He said that he was at Argyle St for this conversation. He explained to his mother that it involved borrowing money on the security of the property, with the loan to be repaid only on death. He told his mother that she had plenty of money and did not need to do this. His mother did not respond, but the plaintiff formed the view that Ingrid was behind the matter and that she wanted to “take money out of the house” because she and her husband were in financial difficulties and had lost a house for tax reasons. The plaintiff went to a solicitor, John X Smith, and gave instructions for the drawing up of the statutory declaration and caveat referred to above, together with a will which asserted that the plaintiff held a one half interest in the property as a tenant in common with his parents, and which bequeathed to his parents a life interest in his share with the residue to his wife Wendy Schweitzer. The plaintiff included the life interest because it was never his intention to push his parents out of the house. He signed the will on 8 September 2005.[33]
[33]Reasons [118].
With respect, I agree. As I see it, the respondent’s testamentary devise of a life interest in favour of his parents is not at all inconsistent with the existence of the respondent’s half interest in the property or the respondent’s wish to secure his interest by means of the statutory declaration and caveat.
Wendy Schweitzer’s evidence
Under the heading of the fifth contention, it was submitted that the evidence of Wendy Schweitzer could not be relied upon to corroborate the respondent’s testimony, because of the following:[34]
[34]A further argument, based on non-disclosures to Centrelink and financial institutions was abandoned.
1) She had not met the respondent at the time of purchase of the property and so could not give evidence of that.
2) She had not met the respondent at the time of the mortgage repayments and contributions towards maintenance, rates and legal costs, and thus could not give evidence of that.
3) She was not present when the 1984 declaration of trust was made by Hermann senior.
4) Her evidence about the meeting with the appellant and Hermann senior before execution of the statutory declaration in 2005 was unsatisfactory in view of Professor Helme’s evidence.
5) Her evidence was inconsistent with the evidence of Albert Schweitzer, Helen Polley and Angelina Schweitzer.
6) There was inconsistency between her evidence and that of Angelina Schweitzer as to whether the fact of the statutory declaration and caveat was disclosed to other family members.
The first three points may be dealt with briefly. In point of principle, corroboration may be found in any independent evidence which supports the
testimony of the respondent in a material particular indicative of the existence of the transaction for which he contended.[35] Corroboration may also be found in circumstantial evidence[36] and, for that purpose, the items of circumstantial evidence need not be examined in isolation but may be considered in their totality. To adopt and adapt the language of Redlich JA in Sumner v R,[37] there may be independent facts and circumstances proved in a case which, while incapable individually of providing corroboration, are perceived in combination to be capable of having that effect. Thus, although a particular fact or facts looked at in isolation might not tend towards the establishment of the transaction for which the respondent contended, the combined weight of those facts could do so.[38]
[35]Ridley v Whipp (1916) 22 CLR 381, 392 (Isaacs J); R v Rayner [1998] 4 VR 818, 850–1. That remains so despite s 164 of the Evidence Act 2008.
[36]J D Heydon, Cross on Evidence, Australian Edition, [15175].
[37](2010) 29 VR 398, 406 [31].
[38]Ibid [32], citing R v Tadic & Gibb (Unreported, Court of Criminal Appeal, 31 August 1993); R v Kendrick [1997] 2 VR 699; R v Nanette [1982] VR 81; Conway v R (2002) 209 CLR 203; R v D (1998) 71 SASR 99.
Here, it is true that Wendy Schweitzer could not speak of her own knowledge of the purchase of the property, the mortgage repayments or the 1984 declaration of trust. But for the reasons given by the judge, Wendy Schweitzer’s evidence was credible evidence of circumstances which, when taken in combination with evidence of other circumstances, tended toward the existence of the trust. In that way, it was corroborative of the respondent’s testimony.
Nor did Professor Helme’s evidence stand in the way of that conclusion. The judge dealt with it as follows:
Wendy had not seen the medical report from Professor Helme of July 2004 to the effect that Herman Senior was suffering from severe dementia. She had spoken to Professor Helme, but he had referred to the ‘onset of Alzheimer’s’, not dementia. He had said that Herman Senior’s Alzheimer’s was ‘moderate’. Still, she had not thought that Herman Senior needed to get independent legal advice. She believed that ‘they have good days and bad days’. Herman Senior hadn’t read the documents himself only because he couldn’t find his glasses. The discussion at Argyle St about the documents had lasted a good half hour. Having been told of her husband’s estimate of 10 minutes, she agreed that that was completely wrong. She agreed that Herman Senior much preferred to speak German rather than English as he grew older, but she said that he always spoke English around her.
…
Wendy knew that Herman Senior was taking experimental drugs in 2004 to try to slow down his ‘Alzheimer’s’. His condition had not improved in 2005 but had not deteriorated a great deal. He was needing respite care in 2005. Though previously in charge of family financial decisions, he had contributed nothing to the ‘reverse mortgage’ discussion at Argyle St, but this didn’t suggest to Wendy that he had not understood the conversation.[39]
[39]Reasons [130] and [132].
The judge accepted Wendy Schweitzer as a witness of truth whose evidence, his Honour said, rang true to his ear. Consequently, he regarded her testimony as providing the best guide to the circumstances surrounding the statutory declaration, caveat and wills of 2005. For the reasons, already given, it was open to the judge to take that view of her testimony. As his Honour said, she may have had an unduly optimistic view of Hermann senior’s capacity to function in 2005, but she gave her evidence in impressive, down-to-earth fashion without exaggeration or embellishment.[40] Contrary to the appellant’s contention, there was nothing in Professor Helme’s opinion which required the judge to take a different view of the matter.
[40]Reasons [138].
The fifth and sixth points may be disposed of together. I have referred to the judge’s assessment of Ms Polley’s credit and reliability. It will be recalled that his Honour rated neither very highly. And in the case of Angelina Schweitzer, the assessment was not much better. The judge said that he had limited confidence in Angelina’s evidence, especially in relation to the alleged conversations about the ownership of Argyle St: in part because of her extraordinary reaction to questions about her mother’s new will; and in part because her evidence was out of line with the bulk of the evidence in the case.[41]
[41]Reasons [138].
Express trust
I have dealt with the contention that there could be no express trust because of the absence of evidence in writing. For the reasons given, I reject the argument.
The appellant also relied upon what she said was inconsistency between the existence of such a trust and:
1) The fact that the respondent did not contribute to outgoings after 1983.
2) The absence of documents evidencing his contributions towards mortgage payments and repairs.
3) The absence of any will or other documents consistent with the 1984 declaration.
4) The wills dated 19 April 2001.
5) The respondent’s will of 8 September 2005.
6) The alleged uncertainty of Wendy Schweitzer’s evidence.
Most of those points repeat submissions put in another form and as such have already been dealt with.
The judge expressly considered the absence of documentary evidence as to the respondent’s contributions to mortgage payments and repairs. Its absence was explained by the respondent’s uncontradicted evidence that he made all of his contributions in cash and that his mother attended to their disbursement. Given the socio-economic circumstances of the respondent – at the time he was a pastry cook working in the Four ‘n’ Twenty pie factory – and the ‘traditional’ European nature of the family of which he was a member, the use of cash is hardly surprising. As his Honour said, the probability of it being so was also supported by the appellant’s absence from the witness box.
I have dealt with the suggestion that there was no documentary evidence consistent with the existence of the trust. As I have explained, there was. It included Koltay & Myers’ letter of 20 November 1978; their further letter of 14 November 1984; the assessment and payment of stamp duty on the transfer from the respondent to Hermann senior and the appellant on one half the value of the property; Mr Koltay’s testimony; and the content of Hermann senior’s and the appellant’s 2001 wills (before being replaced with the later wills organised by Ingrid).
I have also dealt with the suggestion that the respondent’s will of 8 September 2005 was inconsistent with the existence of the express trust. In my view it was not.
I have dealt, too, with the supposed uncertainty of Wendy Schweitzer’s evidence and why it was open to the judge to accept Wendy Schweitzer as a truthful and reliable witness.
Resulting trust
It was contended that there could have been no resulting trust the result of the respondent transferring the property to his parents in 1984. That contention does not appear to me to be of any significance. The judge found that there was an express trust and, for the reasons I have given, I consider that his Honour was correct to do so.
I do accept, however, that if there had been any doubt about Hermann senior’s agreement to hold the respondent’s half interest on trust for him, the idea of the resulting trust would have had a role to play. Allowing, as the judge was entitled to find, that the respondent had a half interest in the property before transferring it to his parents, and assuming no undertaking by his parents to hold the half interest on trust for him, it would follow that the transfer was made without consideration. The judge accepted, as his Honour was entitled to do, that the respondent had no intention of making a gift of his interest to his parents; and, plainly, there would have been no presumption of advancement in those circumstances. Consequently, the property would have been held by Hermann senior and the appellant as to the respondent’s half interest or share on resulting trust for him;[42] and now, as successor to Hermann senior, the appellant would hold the property subject to the same resulting trust.
[42]Napier v Public Trustee (WA) (1980) 32 ALR 153, 158 (Aickin J); Calverley v Green (1984) 155 CLR 252, 266 (Deane J); Heydon & Leeming, Jacobs’ Law of Trusts in Australia, 7th Ed, [1210].
Common intention Constructive trust
Under the heading of constructive trust, the appellant advanced an argument to the effect that there was no evidence of a ‘common intention’ constructive trust because the respondent did not act to his detriment in transferring the property to his parents. If and insofar as that submission may be relevant, it rests upon the contention that there was no 50/50 agreement under which the respondent acquired a half interest in the property. For the reasons already given, I reject that contention.
Failure to call the appellant
It was contended that the judge erred in placing any significance on the absence of the appellant from the witness box in light of evidence given by Angelina Schweitzer, Albert Schweitzer and Helen Polley that the appellant was in poor health, had previously suffered from a stroke and had broken a bone.
The judge said this about that:
The defendant failed to provide an adequate explanation for Maria’s absence from the witness box. Mr Staindl did at one point foreshadow that he would be calling Maria’s treating doctor, apparently to explain the defendant’s absence. However, in the end, Mr Staindl did not adduce any medical evidence about Maria’s current mental or physical health.
I have already discussed Angelina’s evidence about Maria’s current mental state. Angelina’s evidence does not suggest, still less prove, that Maria was too ill or incapacitated to give evidence. Nor does Albert’s evidence. Indeed the thrust of his evidence was that his mother’s mental state improves dramatically each day after some initial confusion in the early morning. The plaintiff submitted, and I accept, that incapacity to conduct litigation cannot be equated with lack of capacity to give evidence. The plaintiff himself gave
evidence despite his serious health problems, including a brain tumour, that have significantly affected his cognitive abilities.[43]
I agree with the judge.
[43]Reasons [160]–[161].
Counsel for the appellant argued that the fact that the appellant was represented by a litigation guardian was enough in itself to explain the appellant’s absence from the witness box, or at least enough to put the judge upon inquiry, and thus to impose upon his Honour a duty to make his own inquiries and satisfy himself as to the appellant’s mental state and capacity.
At the outset of the appeal, counsel also sought to tender as evidence of the appellant’s incapacity to give evidence, Ingrid’s consent to act as litigation guardian and counsel’s instructing solicitor’s certificate of belief as to the appellant’s incapacity to conduct the proceeding, which had previously been filed pursuant to Rule 15.03(6).
There are several things to be said about those submissions. First, the argument was not advanced below. To the contrary, in response to repeated questions by the judge as to whether the appellant would be called to give evidence and, if not, what evidence of her capacity to give evidence would be adduced,[44] counsel who appeared for the appellant at trial answered, to begin with, that he would be relying on evidence of the respondent’s siblings;[45] then, later, that he would be calling the appellant’s treating doctor;[46] and then, later again, that he would not be calling any medical evidence about the appellant’s condition and that ‘I shouldn’t say anything more than that, I think’.[47]
[44]T. 152.27-153.15.
[45]T255.3-.9.
[46]T256.26-.30.
[47]T. 381.19-.22.
Secondly, and not surprisingly, counsel was unable to cite any authority in support of the idea that the judge was under a duty to make his own inquiries and satisfy himself as to the appellant’s mental state. Instead, counsel invoked some obiter observations of Bell J, sitting at first instance in Goddard v Elliott,[48] in a case about the duty of legal practitioners to ensure that their client had sufficient mental capacity to settle a family law property proceeding. In the course of a very long judgment on that subject, Bell J remarked that it was the duty of the court to determine whether a party has sufficient mental capacity to engage in litigation and where necessary to adjourn the proceeding and obtain a psychiatric assessment.
[48][2012] VSC 87, [562] and [565].
Assuming without deciding that is so, however, it is irrelevant for present purposes. Bell J’s observations were directed to a case in which the party in question was not represented by a litigation guardian. Here, the appellant was represented by a litigation guardian. Certainly, by reason of that appointment, it might be taken that the appellant was incapable of conducting the litigation. But the question remained, as the judge repeated several times throughout the course of the trial, whether the appellant was so lacking in mental capacity that she was incapable of giving evidence as to events in which critically she had been involved. And, as far as the evidence on that subject went, as the judge said, the indicators were that she was not so lacking in mental capacity as to be unable to give evidence.
Accordingly, as counsel for the appellant at trial effectively acknowledged, it was incumbent on him to call medical evidence to establish that the appellant lacked the capacity to give evidence and, if such evidence were not adduced, the appellant faced the prospect, of which counsel for the appellant was warned, of an adverse inference being drawn. Nothing said by Bell J in Goddard v Elliott bears on that.
Thirdly, as we observed in our ruling to reject the tender of the consent to act as litigation guardian and the solicitor’s certificate, those documents would not have been evidence of anything other than that the litigation guardian consented to act and that, based on instructions, the solicitor believed that the appellant lacked the mental capacity necessary to conduct the litigation. It follows that, even if we had agreed to receive those documents, they would not have made any difference.
Failure to call Ingrid Schweitzer
Finally, the appellant also complained that the judge erred in attaching significance to the failure to call Ingrid Schweitzer, because it was said that she was incapable of giving evidence as to relevant matters.
The judge rejected that submission, as follows:
As for Ingrid, she could have given evidence about:
(a) Any knowledge that she may have had about the plaintiff’s arrangements with his parents with respect to the acquisition and ownership of Argyle St;[49]
(c) Any knowledge that she may have had about the plaintiff’s contributions to Argyle St;
(d) The plaintiff’s involvement in the maintenance of Argyle St;
(e) The alleged ‘reverse mortgage’ conversation between her and Maria;
(f) Whether Maria was attempting to hide the caveat from her and if so why;
(g) Reasons for Maria’s absence from the witness box, including her current mental state;
(h) The circumstances surrounding the destruction of Maria’s 2001 will and the making of her new will in July 2009.
The plaintiff submitted, and I accept, that it is remarkable that Ingrid was not called despite her being present in court throughout the trial. The defendant has not provided any explanation for her absence.
As with Maria, I consider that Ingrid was also a person whom the defendant might reasonably have been expected to call and I regard her unexplained absence from the witness box as a significant omission.[50]
[49]There was no (b).
[50]Reasons [163].
I agree with his Honour’s analysis. Ingrid was undoubtedly a relevant witness and accordingly her absence from the witness box warranted the inference that anything which she might have said on the subjects on which she was able to give evidence would not have assisted the appellant’s case.
Conclusion
I would dismiss the appeal.
TATE JA:
I agree with Nettle JA.
FERGUSON AJA:
I also agree with Nettle JA.
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