Schweitzer v Schweitzer

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2007 09526

HERMAN LUDWIG SCHWEITZER	Plaintiff
v
MARIA SCHWEITZER	Defendant

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JUDGE:	CAVANOUGH J
WHERE HELD:	Melbourne
DATE OF HEARING:	15–16, 19–23 October 2009. Last submission received 9 November 2009.
DATE OF JUDGMENT:	30 November 2010 (substantive judgment) and 9 December 2010 (form of order and costs)
CASE MAY BE CITED AS:	Schweitzer v Schweitzer
MEDIUM NEUTRAL CITATION:	[2010] VSC 543	[Revision No 2, 17 December 2010]

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TRUST – Express trust – Writing requirements – Resulting trust – Presumption of resulting trust arising from provision of purchase money – Presumption of resulting trust arising from voluntary transfer of Torrens land – Common intention constructive trust – Multiple factual disputes about family contributions, agreements and arrangements – Defendant as registered proprietor found to hold half interest on trust for her plaintiff son, subject to life interest – Property Law Act 1958 ss 19A, 53(1)(b)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr JL Smith of counsel	Millars Lawyers
For the Defendant	Mr DJ Staindl of counsel	O’Donnell Salzano Lawyers

HIS HONOUR:

Overview

This is a sad case. It concerns a dispute that has divided a hard-working, formerly close, migrant family. The plaintiff, Herman Ludwig Schweitzer, was born in 1952. He is now aged 58. He is the fourth of six children, and the elder son, of Herman Schweitzer (Senior) (now deceased) and the defendant, Maria Schweitzer. The Schweitzer family migrated to Australia in 1960. They established themselves in Melbourne. In 1969 they returned briefly to Germany. They moved back to Melbourne in 1971, except for two daughters, Isabella and Anne-Marie, who had settled in Europe. The plaintiff has a serious brain tumour which was first diagnosed in 2002. Other cancers have developed more recently. Needless to say, the plaintiff’s ill-health has had crippling effects on him. He cannot work. He is on a disability pension. His wife looks after him full-time at home. She is on a carer’s pension.

In 2005, conscious of his fragile health, the plaintiff became concerned to secure for himself and his wife what he claims is his entitlement to a half-share in the house in Moonee Ponds in which he had lived with his parents and some of his siblings during the 1970s and early 1980s while he was in his twenties and early thirties. The house had been registered in the joint names of his parents, Herman Senior and Maria, since 1984. The plaintiff obtained from both of his elderly parents a statutory declaration dated 9 September 2005 apparently verifying his claim, although it is now clear that Herman Senior was suffering from severe dementia at that time. To further protect his claim, the plaintiff lodged a caveat dated 15 September 2005 which referred to the statutory declaration. His mother Maria received notice of the caveat in the ordinary way, but took no action except to put the notice out of sight. About two years later, in 2007, the plaintiff’s sister Ingrid discovered the existence of the caveat. At that time Ingrid held an enduring power of attorney for her mother jointly with another sister, Angelina. Ingrid then arranged for it to be replaced by a sole power in her favour. Acting as attorney for her mother, Ingrid then caused an application to be made on her mother’s behalf under s 89A of the Transfer of Land Act 1958 seeking removal of the caveat. In response, Herman Ludwig Schweitzer commenced this proceeding against his parents. His father Herman Senior died in June 2009, before trial. Maria is the sole remaining defendant. She still lives in the house, alone now. She has lodged a survivorship application. Ingrid represents her in this proceeding as her litigation guardian.

The plaintiff claims that in equity, subject to a life interest in his mother’s favour, he owns a half share of the house as the beneficiary of an express, resulting or constructive trust.[1]
[1]See Second Amended Statement of Claim dated 22 July 2009, para 14.

The main events in question happened decades ago. The plaintiff’s memory and ability to give evidence have been adversely affected by his illness. Relevant contemporaneous documentary records are incomplete. The plaintiff’s version of events has been challenged. Evidence has been given against him by his brother Albert Schweitzer, his sister-in-law Helen Polley and his sister Angelina Schweitzer. Isabella and Anne-Marie have taken no part in the proceeding.[2] Ingrid did not give evidence, but it is obvious that she opposes the plaintiff’s claim. However it is not clear whether the plaintiff’s mother, Maria, the defendant, has ever really done so.
[2]It appears that Isabella remains in Europe but that Anne-Marie now lives in Victoria.

Numerous parts of the plaintiff’s evidence are difficult to accept, at least as to ancillary detail. Due at least in part to his ill-health and his related memory problems, he was not a particularly good witness. However, his case gains very considerable support from the surviving contemporaneous documentation. In addition, the plaintiff’s wife, Wendy Schweitzer, whose evidence I regard as generally reliable, was able to corroborate certain aspects of the plaintiff’s story, particularly as it relates to more recent events. Moreover, if the statutory declaration is reliable, it confirms his case.

The evidence called on behalf of the defendant was limited and in parts unimpressive. Further, although no reliance can be placed on the signing by Herman Senior of the statutory declaration by reason of his severe dementia at the time, counsel for the defendant (Maria) now acknowledges that the evidence does not enable him to submit that she did not understand what she was doing when she signed the statutory declaration.[3] Indeed, Maria has given no evidence at all in this case. Her absence from the witness box has not been satisfactorily explained. Nor has Ingrid’s.
[3]Transcript 469, 550.

In all the circumstances I am satisfied that, in equity, the plaintiff is a half owner of the property, subject to a life interest held by his mother.

The plaintiff’s factual case in summary

As advanced in his counsel’s final submissions, the plaintiff’s principal factual case, in short, is that in 1972, while the family was living in rented accommodation, he and his father, Herman Senior, together bought a 10 acre rural property in Christmas Hills for $6,000 on vendor terms, half each; that they sold this property in 1973 for $9,500; that at about the same time they found the house property in question at 29 Argyle Street, Moonee Ponds; that they agreed to purchase it together, half each; that the price was $15,300; that with the benefit of the net joint proceeds of the sale of the Christmas Hills property they could and did contribute $3,800 between them towards an upfront payment or payments for Argyle Street, while the balance needed to be financed; that no suitable financier would lend to Herman Senior because of his then age (54 years); that the financier with whom they were dealing required that the plaintiff be the sole borrower and the sole registered proprietor; that this proposal was put into effect and the plaintiff became the sole registered proprietor of the property accordingly, although the agreement between the plaintiff and his father remained the same; that thereafter each contributed half of the mortgage repayments until the loan was repaid, early and in full, in 1978 and the mortgage was discharged; that on 14 November 1978 the plaintiff’s parents lodged at the Land Titles Office a caveat dated 3 November 1978 which referred to a (now missing) deed of trust of the same date which recognised the 50/50 ownership arrangement; that from 1973 until 1983 the plaintiff and his father each performed significant maintenance and repair tasks at the property and bore the costs of outgoings and maintenance on the property equally; that save for one brief period in 1982 the plaintiff lived in the house with his parents until 1983 when he moved out to live with a woman to whom he was engaged called Wendy McPherson (now his wife); that upon moving out the plaintiff ceased to contribute to outgoings but continued to visit the property from time to time to perform maintenance and repair tasks; that the plaintiff remained the sole registered proprietor of Argyle Street until 1984; that in 1984 the plaintiff was about to be married to Wendy McPherson; that the plaintiff’s father disapproved of the proposed marriage and was concerned that it might jeopardise his and his wife’s security of tenure of the house; that in those circumstances he requested the plaintiff to transfer the title to him and Maria as joint tenants; that he told the plaintiff, in the presence and with the agreement of the defendant, that if he did so half of the property would be held in trust for him and that he would be well taken care of, meaning that this arrangement would be reflected in his parents’ wills; that the plaintiff agreed to this arrangement and executed a transfer of land accordingly; that the plaintiff continued to perform maintenance and repairs at the property until diagnosed with his brain tumour in 2002; that it was always agreed and understood that the plaintiff’s half interest was subject to an entitlement in his parents to have the use and benefit of the property as a whole for as long as they lived; and that the defendant acknowledged the trust in writing when she signed the statutory declaration in 2005.

The defendant’s factual case in summary

As mentioned above, neither the defendant nor her litigation guardian gave evidence. The following summary of her factual case is based on her pleadings, the (limited) evidence called on her behalf and her counsel’s submissions. She denies that the plaintiff actually contributed any money to the purchase of the Christmas Hills property. She denies that any of the proceeds of sale of Christmas Hills were used (by anyone) to purchase Argyle Street. She alleges that her husband provided the whole of the deposit for Argyle Street on behalf of himself and herself and that the only reason why Argyle Street was put in the name of the plaintiff was because her husband was too old at the time to qualify for a long term loan. She denies that the plaintiff contributed to any mortgage repayments. In these alleged circumstances she asserts that between 1973 and 1984 the plaintiff as registered proprietor held the entirety of the property on a resulting trust for her husband and herself.[4] She alleges, in effect[5] that the (missing) deed of trust and the caveat dated 3 November 1978 both asserted that the plaintiff held all, not merely one half, of his interest in the property on trust for his parents. She denies that the plaintiff ever paid any outgoings or maintenance costs and asserts that her husband paid all outgoings and maintenance costs. She says that while the plaintiff may have performed some maintenance of or repairs to the property, he did so gratuitously as the son of his parents and in lieu of board, and that otherwise Herman Senior attended to all maintenance of the property.[6] She says, further or alternatively, that if the plaintiff had any beneficial interest in the property it was an interest as to only one-third, not one-half,[7] and that the plaintiff transferred any such interest to his parents as a gift.[8] She denies that in 1984 (or at any other time) her husband gave any warranty or made any statement to the effect that half (or any part) of the property would be held on trust for the plaintiff. Accordingly she denies that any question of a life interest or the like arose. She contends that the circumstances surrounding the signing of the statutory declaration were most unsatisfactory, having regard to her and her husband’s frailty and age, the absence of independent legal advice, and certain statements of comfort made by the plaintiff to induce her and her husband to sign it.
[4]Further Amended Defence dated 21 October 2009, para 4(b).
[5]Ibid, paras 9 and 10.
[6]Ibid, para 7(c).
[7]Ibid, para 5(c).
[8]Ibid, para 16A.

The main issues: short findings

Hence the main factual issues that the parties raised at the trial may be stated as follows:

(a)Was there an agreement or arrangement between the plaintiff and his father under which each was to become a half-owner of the Christmas Hills property?
(b)Did the plaintiff make half of the payments towards the purchase of the Christmas Hills property?
(c)Were proceeds of sale of the Christmas Hills property used in connection with the purchase of the Argyle Street property?
(d)Did the plaintiff contribute half of the sum of $3,800 paid initially towards the purchase of Argyle Street?
(e)Was there an agreement or arrangement between the plaintiff and his father from 1973 under which each was to become a half-owner of Argyle Street?
(f)Or, as the defendant alleges, did the plaintiff’s father contribute the whole of the upfront amount of $3,800 and undertake sole responsibility within the family for all moneys payable under the mortgage?
(g)To what extent, if any, did the plaintiff pay moneys payable under the mortgage?
(h)To what extent, if any, did the plaintiff pay the costs of outgoings, maintenance and repairs on the property?
(i)To what extent, if any, did the plaintiff himself perform maintenance and repairs on the property?
(j)Was there, by virtue of the 1978 trust deed or otherwise (as the defendant alleges in the alternative) an arrangement or agreement under which the plaintiff held a one-third share, rather than a one-half share, in the property?
(k)In 1984, did the plaintiff’s father tell the plaintiff, in the presence and with the agreement of the defendant, that, if he signed a transfer, his half of the property would be held in trust for him and that he would be well taken care of, meaning that this arrangement would be reflected in his parents’ wills?
(l)Was it on such a basis that the plaintiff signed the transfer?
(m)Or, as the defendant alleges, did the plaintiff sign the transfer in order merely to align the legal interests with the existing (alleged) beneficial interests?
(n)Or, as the defendant alleges in the alternative, did the plaintiff sign the transfer in order to pass any interest he had in the property to his parents by way of gift?

There is considerable overlap between these fourteen issues.

My short conclusions on them are as follows:

(a)       Yes.
(b)      Yes.
(c)       Yes.
(d)      Yes.
(e)       Yes.
(f)       No.
(g)      50% or thereabouts.
(h)      50% or thereabouts, until 1983.
(i)       To some extent, but unnecessary to be more precise.
(j)        No.
(k)      Yes.
(l)       Yes.
(m)     No.
(n)      No.
The legal principles and the burden of proof

As mentioned above, the plaintiff alleges an express trust, alternatively a resulting trust, alternatively a “common intention” constructive trust.

Express trust

For the express trust, the plaintiff relies on the statements allegedly made by his father, with the alleged concurrence of his mother, to induce him to sign the transfer in 1984. The question whether the plaintiff’s father uttered the words on which the plaintiff relies, or words to the same effect, is simply a question of fact. The plaintiff bears the onus of proof on that question.

The plaintiff does not rely on the statutory declaration of 2005 as a document creating or constituting a trust[9], but rather as a document evidencing the existence of a previously created trust. He relies on the statutory declaration in that way[10] for the purposes of s 53(1)(b) of the Property Law Act 1958, which provides that:

“a declaration of trust respecting any land or 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”.

In that regard the plaintiff refers to Secretary, Department of Social Security v James[11] in which Lee J said:
“Any informal writing may stand as evidence of the existence of a trust including correspondence from third parties, a telegram, an affidavit or an answer to interrogatories.
The date of creation of the writing is not material. It may come into existence at any time after the declaration of the trust.”

[9]His caveat of 2005 may give the impression that he did so at that time but his counsel disclaimed any such stance in his opening address (Transcript 53).

[10]He also relies on it as an admission by the defendant of the accuracy of the plaintiff’s version of events generally.

[11](1990) 95 ALR 615, 622. See also Gentsis v Forty-First Advocate Management Pty Ltd [2004] VSC 398, [89]–[90] and Yard v Yardoo Pty Ltd [2006] VSC 109, [353], both cited by the plaintiff.

Counsel for the defendant did not suggest that Herman 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[12] 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.[13] He did not elaborate on that submission, but I understood him to be referring to the fact, now acknowledged by the plaintiff, that Herman 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).
[12]Transcript 403–4.
[13]In paragraph 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.

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 Senior as well as by Maria.[14] 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.[15]
[14]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: WA Lee et al, The Law of Trusts (4^th ed, 2010) ¶6.1050.
[15]See generally Yard v Yardoo Pty Ltd [2006] VSC 109 [352]–[354], relied upon by the plaintiff; WA Lee et al, The Law of Trusts (4^th ed, 2010) ¶6.1070–6.1090; JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (2006, 7^th ed) ¶709–712; ICF Spry, The Principles of Equitable Remedies (8^th ed, 2010) 251–253; Gino Dal Pont and Tina Cockburn, Equity and Trusts in Principle (2005) ¶17.25; and cases there cited respectively.

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.[16] 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 sub-s (2).[17]
[16]Ibid.
[17]Cf WA Lee et al, The Law of Trusts (4^th ed, 2010) ¶6.1090, ¶22.4240, ¶22.4300; JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (2006, 7^th ed) ¶711; ICF Spry, The Principles of Equitable Remedies (8^th ed, 2010) 252; Equuscorp Pty Ltd v Jimenez [2002] SASC 225, [128]; and cases there cited respectively.

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).

Resulting trust

The plaintiff’s first alternative legal contention is that a resulting trust in his favour arose when he transferred the property to his parents without consideration in 1984. It is common ground that his parents gave no consideration. In support of this contention the plaintiff cites the following passage from the judgment of McHugh J in Nelson v Nelson[18]:

“When a person (the transferor) transfers property without consideration … equity presumes that the transferee holds the property on a resulting trust for the transferor.” (footnote omitted)

[18](1995) 184 CLR 538, 600 (McHugh J). See also House v Caffyn [1922] VLR 67, 78–79 (Cussen J), cited with approval in Wirth v Wirth (1956) 98 CLR 228, 235–6 (Dixon CJ); cf JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (7^th ed, 2006) 252–253.

It is not required that a resulting trust in respect of land be evidenced in writing.[19]
[19]Property Law Act 1958, s 53(2).

Sub-section 19A(3) of the Property Law Act 1958 provides:

“In a voluntary conveyance executed after the commencement of this section, a resulting trust for the grantor shall not be implied merely by reason that the property is not expressed to be conveyed for the use or benefit of the grantee.”

Sub-section (4) provides that sub-s (3) “does not limit or affect the operation of any principle or rule of equity relating to the implication of resulting trusts”.

Sub-section 19A(3) was not relied on by the defendant. Indeed neither sub-s (3) nor sub-s (4) was mentioned at the trial. I will assume (without deciding) that s 19A(3) does not affect the applicability of the passage from Nelson v Nelson quoted above to voluntary transfers of Torrens land in Victoria.[20]
[20]That view is expressed in Gino Dal Pont and Tina Cockburn, Equity and Trusts in Principle (2005) ¶21.40 and was apparently taken by Cummins J in Yard v Yardoo Pty Ltd [2006] VSC 109 (esp [294] et seq). Cf Lohia v Lohia [2001] EWCA Civ 1691, [21]–[26] (Mummery LJ), [34] (Sir Christopher Slade); Ali v Khan [2002] EWCA Civ 974, [24]; Bhana v Bhana [2002] NSWSC 117; WA Lee et al, The Law of Trusts (4^th ed, 2010) ¶21.080–21.090.

The other kind of presumption of resulting trust relevant to the present case is the ‘purchase money’ presumption. If A and B provide the purchase money for the acquisition of property but A alone is put on title, in the absence of a presumption of advancement A is presumed to hold the property on a resulting trust for A and B as tenants in common in the proportions in which they contributed to the purchase money. [21]
[21]Calverley v Green (1984) 155 CLR 242.

In order to raise the presumption of a resulting trust, a claimant needs to establish, by evidence, admissions or other legal presumptions, the facts on which he or she relies. That may require, in a case where the claimant has voluntarily transferred property previously held in his or her name, establishing that, immediately before the transfer, the claimant had been, fully or to such extent as he or she claims, the beneficial owner of the property. In the case of a new acquisition, the claimant may need to establish that he or she paid the whole price or such part thereof as he or she claims. Generally speaking, in respect of an acquisition made with the assistance of mortgage finance, the respective contributions of the parties are to be assessed as at the time of the acquisition, not taking into account who actually made any later mortgage payments.[22]
[22]Ibid, 252 (Gibbs CJ), 257, 262 (Mason and Brennan JJ).

Where the evidence raises a presumption of a resulting trust, the presumption may be rebutted, in some family situations, by the presumption of advancement[23] (which is not relied upon in this case) or, in any situation, by evidence that the true intention of the parties was not in accordance with the presumed resulting trust.[24]
[23]See Wilkins v Wilkins [2007] VSC 100 (12 April 2007) [8]–[9].
[24]Calverley v Green (1984) 155 CLR 242, 251–252 (Gibbs CJ), 255, 261 (Mason and Brennan JJ), 269 (Deane J).

It is common ground in the present case that the $15,300 purchase price of Argyle Street was financed in part by an upfront payment or payments totalling $3,800 and as to the balance by a loan of $11,500 from EFT Keystone Permanent Building Society, secured by a mortgage. The plaintiff was solely legally responsible to the building society for the loan and mortgage, and he became the sole registered proprietor pursuant to a transfer dated 5 June 1973. In Wilkins v Wilkins[25] Kaye J said:

“In the absence of evidence to the contrary, a registered proprietor of real estate is presumed to own the equitable interest in it.”

[25][2007] VSC 100 (12 April 2007) [8].

As mentioned above, the defendant asserts that between 1973 and 1984 the plaintiff as registered proprietor held the entirety of the property on a resulting trust for her husband and herself. However, as the plaintiff in effect submitted[26], the onus was on the defendant to prove this. Strictly speaking, for the purposes of the law relating to resulting trusts, the plaintiff would be considered to have provided the entirety of the $11,500 of loan moneys towards the purchase price, irrespective of who subsequently made repayments under the loan.[27] Hence, as at the time he took title, the plaintiff would be regarded as having been, prima facie, beneficially entitled to at least a 75% share of the property ($11,500/$15,300 ≈ 75%), and to an even greater share if he had also contributed 50% of the upfront amount as he claims. Therefore, he would, on usual principles, be taken, prima facie, to have held the land on a resulting trust for himself and his parents as tenants in common in shares of 75%/25% or better.
[26]Transcript 564–5, 592–3, 596–598.
[27]See Calverley v Green (1984) 155 CLR 242, esp 252 (Gibbs CJ), 257, 262 (Mason and Brennan JJ); cf Baumgartner v Baumgartner (1987) 164 CLR 137, esp 156 (Gaudron J).

In these circumstances, so far as strict resulting trust principles go, the plaintiff’s parents could have had no more than a 25% interest in the property during the period from 1973 until immediately before the transfer in 1984; and if in truth his parents had had a greater beneficial interest (eg a 100% interest, as the defendant primarily claims) then this could only have been because of some other kind of trust, such as a common intention constructive trust[28] or a Baumgartner constructive trust[29]; and the onus would be on the defendant to establish the existence of such a trust.
[28]See further below.
[29]Baumgartner v Baumgartner (1987) 164 CLR 137. See further below.

In order to establish a common intention constructive trust, the defendant would need to show that at the time of the acquisition in 1973, or at some time prior to the 1984 transfer, the plaintiff and his parents had a common intention that the plaintiff should hold the land on trust for them to the claimed extent and that in reliance on that common intention they suffered a detrimental change of position.[30]
[30]DPP v Ali (No 2) [2010] VSC 503 (10 November 2010) [68]; Rasmussen v Rasmussen [1995] 1 VR 613, 615; Allen v Snyder [1977] 2 NSWLR 685; WA Lee et al, The Law of Trusts (4^th ed, 2010) ¶22.4020–22.4350.

Similarly, to establish a Baumgartner constructive trust the defendant would need to show that contributions were made by or on behalf of her husband and herself such as to entitle them to a 100% beneficial interest or to some other interest greater than 25%.

The plaintiff concedes that his true beneficial interest did not exceed 50%, but so far as resulting trust principles are concerned, this does not shift the burden of proof back to him in relation to the question of the true beneficial ownership of the property during the period between 1973 and 1984.

The plaintiff’s counsel submitted, correctly in my view, that, if the Court were satisfied that the plaintiff had had either a 50% interest or a one-third interest in the property immediately before the 1984 voluntary transfer, then a further burden would fall upon the defendant to rebut the presumption of resulting trust that would then arise in respect of that transfer. Immediately after quoting the passage from Nelson v Nelson set out above, counsel said: [31]

“ … the use of the word ‘presumes’ is powerful, it works strongly in favour of the plaintiff. It means that when you sign over the property, equity assumes that his parents hold it on trust for him.”

Counsel went on to submit that the judgment of Kaye J in Wilkins v Wilkins[32] highlights the importance of looking at the events at the time that the transfer occurred in 1984.

[31]Transcript 626.

[32][2007] VSC 100 (12 April 2007).

Counsel for the defendant did not contest any of the plaintiff’s submissions about the location of the burden of proof in relation to the resulting trust aspects of this case.

Common intention constructive trust

As a second alternative, the plaintiff alleged a “common intention” constructive trust. In his written outline of final submissions, the plaintiff’s counsel accurately said:

“ … a ‘common intention’ constructive trust will arise where there is a common intention, to be inferred from the words or conduct of the parties, between the legal owner and the beneficiary that the beneficiary is the beneficial owner of the property. The beneficiary must show that he has acted to his detriment on the basis of the common intention, and that it would be a fraud on the beneficiary for the legal owner to deny the beneficiary his interest: see generally Giumelli v Giumelli[33] and Flinn v Flinn[34].”

[33](1999) 196 CLR 101.

[34](1999) 3 VR 712.

There is no requirement for writing in relation to a constructive trust of land.[35]
[35]Property Law Act 1958 s 53(2).

The plaintiff’s counsel placed little emphasis on this second alternative approach. Nevertheless, it seems to me that, if the substance of the plaintiff’s factual case be accepted but for some reason neither an express trust nor a resulting trust is thereby demonstrated, the case could appropriately be determined in his favour under the heading of “common intention” constructive trust.[36] The defendant’s counsel made no submission to the contrary.
[36]See above n 30.

I should indicate that my ultimate conclusion on each of the above listed main factual issues in this case would be the same regardless of any presumptions that may operate in the plaintiff’s favour under trust law. In other words, even if the burden of proof lies on him in relation to every one of those factual issues, he has discharged it.

The evidentiary principles

In his final address the plaintiff’s counsel referred to and relied upon two uncontroversial evidentiary principles.

First, citing Poricanin v Australian Consolidated Industries Ltd[37], he submitted that, as a matter of principle, it would in many cases be wrong, unreasonable or even perverse for a tribunal of fact to reject evidence upon which there has been no relevant cross-examination.
[37][1979] 2 NSWLR 419, 426.

Second, citing O’Donnell v Reichard[38] and Jones v Dunkel[39], he submitted that where a party without explanation fails to call a person whom the party might reasonably be expected to call, it is open to infer that that person’s evidence would not have helped that party’s case; and that the court may take the inference into account:

(i)in deciding to accept any particular evidence which relates to a matter with respect to which the person not called could have spoken; and
(ii)in deciding to draw inferences of fact which are open on evidence which has been given, in relation to matters in respect of which the person not called could have spoken.

[38][1975] VR 916 (concerning a treating doctor).

[39][1959] 101 CLR 298 (concerning the defendant).

The defendant did not dispute these principles.

On the other hand, the defendant appropriately drew my attention to the following statement in Cross on Evidence:

“A claim against the estate of a deceased person will not generally be allowed on the uncorroborated evidence of the claimant, because the absence through death of one of the parties to the transaction calls for caution, but there is no rule of law against allowing it. The same principle applies to any evidence from a living witness of a conversation with a deceased person.”[40] (footnotes omitted)
[40]JD Heydon, Cross on Evidence (2010) ¶15150 and cases there cited. See also Napier v Public Trustee (WA) (1980) 32 ALR 153 (High Court) 160.

Application of evidentiary principles

The plaintiff’s counsel submits that there were several important parts of his client’s evidence upon which he was not cross-examined. I will identify certain suggested or apparent omissions to cross-examine when I come to the discrete factual issues to which they may be relevant, but in general I do not consider that any such omissions were as significant as the plaintiff’s counsel contends. The plaintiff was cross-examined at considerable length. Express contradiction on a point is not necessarily called for when it is clearly implied, and that was most often the situation in this case.

Counsel also submits that there is much significance in the absence from the witness box of the defendant herself and of Ingrid Schweitzer and of the defendant’s treating doctor. As I have already indicated, I accept the thrust of this submission, and I will in due course refer to the matters upon which each of them might have been expected to give evidence.

The need for caution by reason of the unavailability of Herman Senior is tempered somewhat by the fact that the plaintiff alleges that Maria was centrally involved in many of the events on which he relies. As mentioned above, her absence from the witness box has not been satisfactorily explained. Further, much of the plaintiff’s case is corroborated by documentary evidence.

Indeed, it is desirable to deal first with the documentary evidence which refers directly or indirectly to the acquisition and ownership of Argyle Street. The documentary evidence concerning the acquisition and sale of Christmas Hills only became available after the trial had begun. I will turn to it in due course. As indicated above, bearing in mind the lengthy passage of time, the illness and death of Herman Senior, the frailty of human memory generally and the plaintiff’s health and memory problems in particular, I regard the documentary evidence as being of considerable significance in this case. It aids the plaintiff’s position substantially and, even apart from the oral evidence led by the plaintiff, it called for cogent rebuttal evidence from the defendant’s side, which was not forthcoming.

Salient documents concerning Argyle Street

Probably the most important document in this case is the statutory declaration executed by Herman Senior and Maria on 9 September 2005.[41] Omitting formal parts, it reads:
[41]Exhibit P 17.

“1. We are the joint registered proprietors of the property at 29 Argyle Street, Moonee Ponds (‘the property’) being the land in certificate of title volume 3756 folio 150.
2.The property was originally purchased by me Herman Schweitzer and our son Herman Ludwig Schweitzer (as tenants in common in equal shares) in 1975; but for convenience our son became the sole registered proprietor thereof.
3.I Herman Schweitzer and our son Herman Ludwig Schweitzer purchased the property with the assistance of finance provided by the EFT Keystone Permanent Building Society, mortgage number E860753 registered 18^th June, 1973.
4.I Herman Schweitzer and our son Herman Ludwig Schweitzer contributed equally to the deposit moneys, and all other moneys payable under the contract of sale, and all payments made under the said mortgage.
5.The purchase price of the property was $15,300 and the amount borrowed on first mortgage we cannot now recall.
6.All moneys owing under the mortgage were repaid in full and the said mortgage was discharged on 3^rd August, 1978.
7.Our son Herman Ludwig Schweitzer married Wendy Anne Schweitzer on 11^th October, 1984.
8.By reason of that marriage we had concerns as to our tenure in the property and we demanded of our son that he transfer the property into our names, and that he agreed to do. The property was so transferred by instrument of transfer number L400879T on 4^th December, 1984.
9.Notwithstanding that we have since 4^th December, 1984 been the joint registered proprietors of the property our son Herman Ludwig Schweitzer has nevertheless retained a one half interest in the property and we have always recognised and declared that fact.
10.To avoid doubt we hereby confirm and declare that our son Herman Ludwig Schweitzer has at all times material held and still holds a one half interest in the said property at 29 Argyle Street, Moonee Ponds.”

It will be noted that apart from a mistaken reference to 1975 instead of 1973 the statutory declaration accords with the substance of the plaintiff’s case.

I turn to the surviving contemporaneous documents that refer, directly or indirectly, to the acquisition or ownership of 29 Argyle Street. I will mention them in chronological order.

A firm of solicitors, Wray-McCann and O’Doherty, handled the purchase side of the conveyancing in relation to Argyle Street. The evidence includes letters from that firm dated 14 February 1973,[42] 30 March 1973[43] and 29 May 1973[44] which were sent to the Schweitzer household. Each letter includes the plaintiff as an addressee and, seemingly, as a purchaser and client.[45]
[42]Exhibit P 1.
[43]Exhibit P 2.
[44]Exhibit P 29.
[45]In the first letter the plaintiff’s middle initial is wrongly rendered as “M” rather than “L”.

The plaintiff is named as the sole purchaser in the transfer of land dated 5 June 1973.[46] The certificate of title shows him as the sole registered proprietor between 1973 and 1984.[47]
[46]Exhibit P 3.
[47]Exhibit P 4.

A City of Essendon valuation field card relating to 29 Argyle Street includes an entry, apparently made in 1973, showing the “owner” as Herman, Maria and Herman Ludwig Schweitzer.[48] The same card includes a further entry, apparently made after the 1984 transfer, showing the “owner” as Herman Senior and Maria. However, there was no clarity about the source of the information the subject of these entries and neither side relied upon or even referred to the document in final submissions. Accordingly I will give it no weight.
[48]Exhibit P 31.

The plaintiff is named as the sole mortgagor in the “mortgagors payments record card” which was issued by the EFT Keystone Permanent Building Society in or about June 1973.[49]
[49]Exhibit P 6.

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[50] to Herman Senior (as their client) as follows:
[50]Part of exhibit D 5.

“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 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 … “.[51] 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.

[51]Exhibit P 13. Oddly, each of Herman Senior and the plaintiff is described in the caveat as a Ward Assistant, whereas the evidence in this case indicates that while Herman Senior worked as a Ward Assistant, the plaintiff did not. Maria Schweitzer is described as “Married Woman”.

The transfer of land from the plaintiff to his parents dated 10 September 1984, which was also prepared by Koltay and Myers, is strangely worded.[52] So far as relevant it reads:

“I, HERMAN LUDWIG SCHWEITZER, Pastrycook … in consideration of being entitled to a Transfer in equity DO HEREBY TRANSFER to HERMAN SCHWEITZER, Pastrycook and MARIA SCHWEITZER, Married Woman … all my Estate and interest in ALL THAT piece of land being [29 Argyle Street].”

It is not clear whether the reference to consideration was intended to be a reference to the plaintiff being entitled to a transfer (back) in equity or to his parents being entitled in equity to the instant transfer.

[52]Exhibit P 15.

Amongst other documents prepared by Koltay and Myers in connection with the 1984 transfer[53] is a memorandum of costs dated 6 September 1984 addressed to Herman Senior which is stated to be for:
[53]Included in a bundle marked exhibit D 5.

“Transfer of Title to property registered in the name of Trustee for beneficiaries acting for both Transferor and Transferees – submitting documentations for opinion at the Comptroller of Stamps – obtaining statement of assessment of duty – notifying authority etc.”

The memorandum of costs includes an account for disbursements asterisked with a note as follows:
“assuming there will be no stamp duty payable to the Comptroller of Stamps if there is, such amount as may be assessed will have to be paid in addition.”

There is only one piece of evidence in this case which even remotely supports the defendant’s alternative contention that the plaintiff had a beneficial interest of only one-third (as distinct from one-half) in the Argyle Street property. It is an unsigned copy letter from Koltay and Myers to the Comptroller of Stamps dated 17 October 1984 which reads, omitting formal parts:
“RE: Herman Ludwig Schweitzer to Herman and Maria Schweitzer
Referring to your telephone conversation with your Mr . Sayer on the 11^th Inst. we enclose copy of the original Trust Deed which appears to show that the Transferees are already the beneficial owners of ⅔ of the interest in the subject land, the Transferor having an interest as to the remaining ⅓. This ⅓ share in the land is to pass as a gift to the Transferees.
Awaiting your further advice.”

However, within a month of that letter, on 14 November 1984, Koltay and Myers wrote to Herman Senior and Maria as follows (omitting formal parts):
“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.”

It seems that each side may have hoped at some stage that the apparent contradictions in these letters might be resolved in that side’s favour through evidence from a representative of Koltay and Myers. Before trial the plaintiff had issued a subpoena to a former principal of Koltay and Myers, Alex Charles Koltay. In the end the plaintiff did not call him. However the defendant did. Mr Koltay is quite elderly now. In his evidence in chief he said that he is semi-retired, but that he retains a practising certificate. He practised as a solicitor for 52 or 53 years up until the mid 1990s. From the 1970s onwards he practised under the name Koltay and Myers in Coburg. He was one of the principals and “the major person operating in the place”.[54] He speaks German. He came to know Herman Senior and Maria Schweitzer. He did not act in relation to the acquisition of Argyle Street. He first became involved in relation to Argyle Street in 1977 or 1978. He no longer has the transaction file. He had some index cards, but they proved to be unenlightening in this respect. He was shown court book copies of the abovementioned documents from the period 1978–1984 which appear to emanate from the firm of Koltay and Myers. He verified them to that extent. They became the defendant’s exhibit D 5. They included the abovementioned letter dated 17 October 1984. He was not the author of it. However he agreed with the defendant’s counsel that in the ordinary course of business it would be based on instructions received.
[54]Transcript 344–5.

Under cross-examination, after dealing with some separate matters, Mr Koltay was taken to the letter of 20 November 1978 which referred to the lodging of the caveat of 3 November 1978. He said that the signatory of the letter was his then partner, Ted Myers. He agreed that it was probably Mr Myers, rather than Mr Koltay himself, who had handled the 1978 matter generally. He could not explain why the caveat referred to a deed of trust, whereas the letter did not. Turning to the correspondence of 1984, he could not identify the author or the reference details of the document dated 6 September 1984 or of the document dated 17 October 1984. He said that there had been four lawyers and “14 girls” working in the office. Sometimes there were irregularities with reference details. He agreed that the (unknown) author of the asterisked note on the memorandum of 6 September 1984 must have assumed that no stamp duty would be payable because the author apparently thought that the transfer was a transfer of the legal title to the actual beneficial owner. He acknowledged that the author of the letter of 17 October 1984 must have proceeded on a different basis. He agreed that the use of the word “appears” in the letter of 17 October 1984 suggested that the author was uncertain as to the meaning of the trust deed to which reference was being made.[55] He agreed that there must have been a query from the State Revenue Office. He agreed that the sentence which read “This one-third share in the land is to pass as a gift to the transferees” was plainly inconsistent with the letter of 20 November 1978.[56] A theory concerning possible confusion with other Schweitzer land transactions was put to him by counsel as a possible explanation for the author’s reference to a ⅓interest. Mr Koltay did not accept that theory, although he later agreed it was one “plausible” explanation among others.[57] He was then taken to the letter of 14 November 1984. He acknowledged that it bore his own signature. He said that he believed he had come into the matter because delicacy was required in dealing with the State Revenue Office. He agreed that the terminology of his letter of 14 November 1984 was “entirely consistent” with the letter of 20 November 1978 to Herman Senior which had said that the plaintiff was “to hold one half of his interest in the said land on trust for yourself and Maria Schweitzer”.[58] Mr Koltay then said that there may be a “possible” or “plausible” explanation for the apparent inconsistency with the letter of 17 October 1984.[59] His evidence about this was quite unclear, save that it seemed to involve attributing to someone at Koltay and Myers a decision to accept a ruling of the State Revenue Office that was neither as favourable nor as disadvantageous to the client(s) as it might have been. In final submission, neither side really sought to elucidate or to adopt Mr Koltay’s “possible” or “plausible” explanation, whatever it was.
[55]Transcript 360.
[56]Transcript 361.
[57]Transcript 367.
[58]Transcript 366.
[59]Transcript 366–369.

It seems to me that one reasonable explanation for the letter of 17 October 1984 is that whereas the trust deed of 1978 had probably referred to three people as beneficial owners, namely the plaintiff, Herman Senior and Maria, the (perhaps inexperienced or insufficiently careful) unknown author of the letter had misread the deed as attributing a one-third share to each rather than one half to the plaintiff and the other half to Herman Senior and Maria together. In any event, the letter of 17 October 1984 stands alone in this case in its suggestion that the plaintiff had (only) a one-third share. For the reasons I have just mentioned and for additional reasons to which I will come in due course, I am quite satisfied that, if the plaintiff had any share, it was a one half share, not a one third share.

Like the thirteenth chime of a clock, the clearly erroneous[60] reference in the letter of 17 October 1984 to a one-third share casts grave doubt on the correctness of the assertion in the same sentence that the plaintiff’s share was to pass as a gift to his parents. There are additional, compelling reasons, to which I will also come in due course, for rejecting the defendant’s (alternative) “gift” plea.
[60]In my view.

The plaintiff gave evidence that just before he signed the 1984 transfer his father produced his and Maria’s then wills to him to assure him that he would be well taken care of; and that the plaintiff checked his father’s will and saw that, indeed, the will indicated that the plaintiff was a half owner of the house. Those wills have apparently been lost or destroyed and no copies survive. However a copy of Herman Senior’s last will, dated 19 April 2001, is in evidence.[61] It was prepared by a solicitor, Mr Con Italia. So far as relevant, it reads as follows:
[61]Exhibit P 22.

“THIS IS THE LAST WILL AND TESTAMENT of me HERMANN SCHWEITZER, of 29 Argyle Street, Moonee Ponds, 3039, in the State of Victoria, Master Baker.
1.I REVOKE all former Wills and Testamentary dispositions heretofore made by me.
2.I APPOINT my daughter INGRID SCHWEITZER to be the executrix of this my Will and trustee of my estate and IN THE EVENT that my aforesaid daughter predeceases me I APPOINT my son, ALBERT SCHWEITZER to be the substituted Executor, and to such of them who shall prove my Will, I hereinafter refer to as ‘my Trustees’.
3.I GIVE DEVISE AND BEQUEATH the whole of my Estate both real and personal of whatsoever kind and wheresoever situated unto my Trustees after payment of all my just debts, funeral and testamentary expenses and any duties which may be payable in consequence of my death unto my aforesaid wife MARIA ADELHEID SCHWEITZER for her own use and benefit absolutely subject to her surviving me by a period of thirty days. If my aforesaid wife, MARIA ADELHEID SCHWEITZER, predeceased me then I make the following arrangements as follows;-
(a)I GIVE, DEVISE AND BEQUEATH all my moveable items of furnishings, ornaments, books, household items, tools and gardening accessories to be divided amongst my children as shall survive me in equal shares;-
(b)I GIVE DEVISE AND BEQUEATH my one quarter share of my property situated at 29 Argyle Street, Moonee Ponds, 3039, unto my son, HERMANN LUDWIG SCHWEITZER, for his own use and benefit absolute so long as he survive me;
(c)I GIVE DEVISE AND BEQUEATH the residue of my estate after payment of all my just debts funeral and testamentary expenses including my remaining one quarter part or share of my property at 29 Argyle Street, Moonee Ponds, 3039, in the aforesaid State unto my children, ISABELLA MARIA SCHWEITZER, INGRID SCHWEITZER, ANNE MARIA SCHWEITZER, ANGELINA SCHWEITZER and ALBERT SCHWEITZER, as shall survive me as tenants in common in equal shares.”

It appears that on the same date, 19 April 2001, Maria also made a will prepared by Mr Italia. That will was destroyed by or with the assent of the defendant and Ingrid Schweitzer shortly before the trial, contrary to orders relating to that very document made by an Associate Justice and without having been produced by the defendant for inspection by the plaintiff or his solicitors. However the plaintiff’s exhibits include[62] a supplementary affidavit of documents dated 19 August 2009 made by Ingrid Schweitzer, who deposes that she had read her mother’s will of 19 April 2001. She continues:
[62]Exhibit P 24.

“To the best of my knowledge, the contents and effect of that will were in similar terms as the will of the then First Defendant, Hermann Schweitzer Snr, dated 19 April 2001, save for the following:
(a)the will was made by the Defendant, rather than Hermann Schweitzer Snr; and
(b)the principal bequest was to Hermann Schweitzer Snr.

Now produced and shown to me marked ‘IS-1’ is a true copy of the will of Hermann Schweitzer Snr, dated 19 April 2001, which, save for those changes, otherwise demonstrates the contents and effect of the Defendant’s will made 19 April 2001.”

The relevant parts of Herman Senior’s 2001 will are not easy to construe. However, on the assumption that his will and his wife’s will were in corresponding terms (as Ingrid deposes), it seems to me that both of them intended to acknowledge implicitly by their wills that the plaintiff was already a half owner of 29 Argyle Street. The bequests in paragraph 3 of Herman Senior’s will seem to be premised on the prior receipt by him by survivorship of Maria’s interest as a joint tenant of Argyle Street. Even then, Herman Senior seems to acknowledge that he would only have a half interest in Argyle Street to dispose of by his own will. He then chooses to give “my one quarter share” to the plaintiff and “my remaining one quarter part or share” to the other five children equally. On this view, the plaintiff would ultimately own ¾ of the property, whereas his five siblings would acquire only ¹/₂₀^th each. However, this is not necessarily surprising. On the plaintiff’s case, not only did he contribute half of the upfront payment, half of all the mortgage payments and half of the outgoings for 10 years, but he also made himself solely liable on the mortgage, paid the insurance premiums on the mortgage and, in 1984, at his father’s request, reluctantly gave up the security he had had as the registered proprietor of the property in order to appease his father’s concerns about his fiancée. Further, the defendant’s counsel himself put to the plaintiff, and the plaintiff agreed, that because the plaintiff was the eldest son Herman Senior looked to him more than to his daughters to be involved in financial decisions about purchasing and selling property, and, in particular, looked to the plaintiff, rather than Ingrid, to assist in the purchase of Argyle Street notwithstanding that, at the time, Ingrid was older than the plaintiff and was working.[63]
[63]Transcript 118–119.

The medical evidence concerning the plaintiff’s health and memory

The defendant contends that the plaintiff was an unreliable historian in the witness box. There is no doubt that the plaintiff is in frail health and that his memory was deficient to a significant extent. The evidence includes two medical reports from the plaintiff’s treating oncologist, Dr Rosenthal. His report dated 12 August 2008[64] states that since the plaintiff’s diagnosis in 2002:
[64]Part of exhibit P 30.

“ … he has been seen on a regular basis in the epilepsy clinic and the neuro-oncology clinic. His seizures had been controlled on a number of medications and he has had ongoing problems of depression, memory loss and limitation in his activities of daily living because of permanent neurological deficits.”

In June 2009, the plaintiff’s solicitor wrote to Dr Rosenthal asking certain questions about his 2008 report, including the following[65]:
[65]Another part of exhibit P 30.
“2. In relation to Herman’s memory loss referred to in your report is such loss affecting;
a.his memory for recent events;
b.his memory for events in the past?

3.Herman has given me clear instructions as to important events and conversations which took place in 1973, 1983, 1984 and more recently in 2005. Is this consistent with your observations of him?
4.In the period that you have been treating Herman –
a.has he had problems in providing you with a satisfactory history of his condition and personal history;
b.has he kept all of his appointments?”

In reply, Dr Rosenthal reported, so far as relevant[66]:
“2.The most prominent memory loss is for recent events rather past events [sic]. However, I am not an expert in memory nor neuro-cognitive evaluation and if you require more detailed information, then Mr. Schweitzer should be referred to a neuro-psychologist with an expertise in memory evaluation.
3.I note that you have received instructions from Mr . Schweitzer regarding events and conversations that took place in 1973, 1983, 1984 and 2005. I have no reason to believe that he was not capable of giving clear instructions regarding these events and conversations.
4.Mr . Schweitzer has certainly kept all his appointments and has been a clear historian and compliant patient.”

[66]Also within exhibit P 30.

I will say more about the reliability of the plaintiff’s oral evidence in due course.

The Christmas Hills property and the original acquisition of Argyle Street

The preponderance of the evidence is strongly in favour of the plaintiff’s claim that he had a 50/50 arrangement with his father in relation to both the Christmas Hills property and the original acquisition of Argyle Street.

To help explain this, a little more of the uncontested family background is worth noting.

After arriving in Australia in 1960 the family lived in a migrant hostel, then with friends, then in rented accommodation and ultimately in a house in West Brunswick purchased by Herman Senior, who was working first as a pastrycook/labourer at Four ’N’ Twenty Pies and then as a ward assistant at Plenty Psychiatric Hospital. The plaintiff did not like school. He left during Form 3 (in about 1966). He wanted to do physical work. He worked as a trainee spray painter until 1969 when the family returned to Germany. In Germany he worked in a tile factory. When the family (except Isabella and Anne-Marie) came back to Australia in 1971 they initially lived in temporary and rental accommodation in Moonee Ponds and Brunswick. Ingrid moved out shortly after to live with Max Ebner, whom she later married. That left only the plaintiff (aged about 19), Albert (aged about 15) and Angelina (aged about 11) at home. Both Albert and Angelina were at school. Herman Senior was again working as a ward assistant, first in Brunswick and then back at the Plenty Psychiatric Hospital. He also had a side business making and selling garden statues. Maria was working as a domestic at an after-care hospital. The plaintiff went to work at Four ‘N’ Twenty as a pastrycook/labourer, as his father had done before him. The plaintiff worked long hours.[67]
[67]Transcript 62 (H.L. Schweitzer), 293 (A. Schweitzer).

In his evidence in chief the plaintiff gave the following account of the Christmas Hills matter. About one year after the family returned to Australia his father wanted land — “wide open spaces”. His father said to him that they should find a property and go “half each” in payment and ownership.[68] They noticed a newspaper advertisement for land at Christmas Hills. They drove there with Albert, who was still a 15 year old school boy. They saw a 10 acre property comprising 5 steep acres and 5 flat acres with a creek in the middle. The property was being auctioned and there was a crowd there. Herman Senior put in a bid and got the property. The plaintiff could not remember the price his father bid. The contract of purchase was signed by his father, himself and Albert. He and his father, only, became the registered owners of the property. Albert signed the contract because Herman Senior “wanted him to feel important as well, owning land”. A cash holding deposit was paid equally by the plaintiff and his father. He could not remember what proportion of the price it was. The balance was financed “through the auctioneer”. The plaintiff and his father paid monthly amounts on the property. This was physically attended to by Maria who regularly paid the money in cash to “the bank or something”.[69] Members of the family visited the property from time to time. Within about a year a solicitor came to the Schweitzers’ home and offered to buy the property for a client. He spoke to Herman Senior, with the plaintiff also in the room. Herman Senior told him they were not interested in selling. The solicitor came back three or four times unsuccessfully. Then Herman Senior quoted a price so high he felt sure it would be rejected. But the solicitor agreed. The amount was “two or three times the price, I think”.[70] The property was sold. The money owing to the original vendor was paid off. The plaintiff’s father put the remaining proceeds of the sale in the bank.
[68]Transcript 63.
[69]Transcript 65.
[70]Transcript 66.

Turning to the acquisition of Argyle Street and the use of the Christmas Hills proceeds for that purpose, the plaintiff’s evidence in chief was along the following lines.[71] After the plaintiff and his father sold Christmas Hills they were looking for a family house. In discussions between him and his father it was said that the house had to be big enough for the family and that the two of them were to buy it “50/50”. The plaintiff was only free to look for houses on Sundays because he worked Monday to Saturday. On one such Sunday he and his mother, Maria, travelled to Moonee Ponds and found the house at 29 Argyle Street. He had driven there in his own car with his mother. The house was unoccupied. It needed work, especially painting. It was weatherboard. They told Herman Senior (presumably by phone) that they had found a good house and started driving home. They were involved in an accident on the way home. Maria was injured. Afterwards Herman Senior said: “Yes, we will buy it”. Herman Senior, alone, handled all of the negotiations with the vendors and the agent. He told the plaintiff about them. The price was $15,300.[72] The plaintiff and his father had verbally committed to the purchase but had paid no deposit and had signed nothing. To fund the purchase, the plaintiff and his father went (physically) to the Keystone Permanent Building Society in the city. Herman Senior wanted to take out the finance in his own name alone. The plaintiff does not know why. Herman Senior was unsuccessful in that regard. So the plaintiff made the application, and got the loan. The plaintiff has no knowledge or recollection of the legal firm Wray-McCann and O’Doherty which was apparently acting for the family in the purchase. Herman Senior handled the legal side of it. The plaintiff does not recall signing a contract of sale.[73] He thinks that his father ensured that the vendor was paid by the Building Society. The amount of the loan was $11,500.[74] The difference between this figure and the purchase price of $15,300 (namely $3,800) was paid from the money that they had left over from the sale of Christmas Hills. That money was “in the bank”, meaning a bank account of his parents. The plaintiff himself did not have a bank account at the time. The plaintiff is not sure whether there was any surplus of the Christmas Hills proceeds left after the vendors of Argyle Street were paid. Keystone required the plaintiff to take out a life insurance policy to cover the loan, and he did.[75]
[71]Transcript 68–74.
[72]Counsel had directed the plaintiff to the relevant transfer of land which showed this price, and the plaintiff confirmed it.
[73]No copy of the contract of sale was in evidence.
[74]Counsel had directed the plaintiff’s attention to the Keystone record card that showed this figure, and the plaintiff confirmed it.
[75]Exhibit P 7.

All of this evidence was given by the plaintiff on the first day of the hearing. It was given without the benefit of any documents specifically relating to the Christmas Hills purchase and sale. Neither side had discovered any such documents. However, on the second day of the hearing, counsel for the defendant advised that a group of documents relating to the Christmas Hills purchase, and a newly found letter dated 29 May 1973 from Wray-McCann and O’Doherty concerning arrangements for the settlement of the Argyle Street purchase, had just been obtained by his side. Their provenance was not revealed (then or ever). Counsel commenced to cross-examine the plaintiff by reference to the documents. The plaintiff’s counsel objected. The cross-examination was interrupted to give the plaintiff’s counsel time to examine the documents. In the upshot, counsel for the plaintiff decided to tender them in support of his own case. The Christmas Hills documents became Exhibits P 27 and 28 and the Wray-McCann and O’Doherty letter became Exhibit P 29.

The forensic decision made by counsel for the plaintiff to tender the documents was not surprising. The documents show that the plaintiff’s unaided memory of the Christmas Hills acquisition and sale (including matters of timing), though partly erroneous, was reasonably accurate despite his health problems and despite the passage of some 37 years.

The following matters emerge from the documents:

(a)The plaintiff’s physical description of the Christmas Hills property was accurate.
(b)The property was part of an estate comprising 14 adjacent blocks being offered for sale at the same time by Cellante and Scholtz Pty Ltd. A brochure issued by the vendor was endorsed with fixed prices for each lot. The price specified for the lot bought by the Schweitzers was the same as the price they agreed to pay, namely $6,000. The sale was on vendor terms, by way of instalments. In all of these circumstances it is most unlikely that the property was bought at auction.
(c)The contract to purchase Christmas Hills was dated 23 January 1972.
(d)The deposit paid was $650 and the balance was payable by monthly instalments of $100.
(e)Mr Koltay acted as the solicitor for the Schweitzers as purchasers.
(f)In Mr Koltay’s correspondence the purchasers were described as “A & H & H Schweitzer”.
(g)Mr Koltay accepted title on behalf of the purchasers on 28 January 1972 and settlement occurred on that date.
(h)An accountant acting for the vendor certified in writing on 22 February 1973 that “H. Schweitzer, A. Schweitzer (Jnr) and H.L. Schweitzer (Jnr)” were purchasing the property on terms from the vendor and that the monthly repayments of $100 had been paid meticulously since the date of the contract.
(i)An estate agent, H.A. Stevens, obtained from the Schweitzers an authority dated 8 March 1973 to sell the property for $9,500.
(j)An offer to purchase the property at $9,500 in the form of a sale note containing certain special conditions, was made by J & P Redapple, through H. A. Stevens, on 22 March 1973.
(k)A further offer at the same price, apparently shorn of the special conditions, was made the next day, 23 March 1973, by the Redapples.
(l)The Christmas Hills land was sold to the Redapples for $9,500. A deposit of $950 was paid.
(m)Koltay and Myers acted as solicitors for the Schweitzers as vendors to the Redapples. Settlement occurred on 28 May 1973. The firm’s memorandum of costs referred to “Messrs H & A & H L Schweitzer” as the clients. The bill included the costs of preparing the contract of sale and of work to complete the terms purchase from Cellante and Scholtz Pty Ltd. A statement of adjustments[76] shows that Koltay and Myers received a cheque for $4,118.29 (from which $112.66 was to be deducted for legal costs) on behalf of the Schweitzers at settlement on 28 May 1973.
(n)By letter dated 29 May 1973, Wray-McCann and O’Doherty sought $3,474.50 (including $255.71 for legal costs) from the Schweitzers (“Mr and Mrs H Schweitzer and Mr H L Schweitzer”) to be put together with the funding from the Keystone Building Society, in order to complete the purchase of Argyle Street. The settlement of the purchase of Argyle Street was due to occur on 1 June 1973, ie 4 days after the settlement of the sale of Christmas Hills.[77]
(o)Albert, Herman Senior and the plaintiff became registered as joint proprietors of the Christmas Hills property on 24 July 1973. Later the same day the Redapples became joint proprietors.[78]

[76]Within Exhibit P 27.

[77]Exhibit P 29.

[78]Exhibit P 28.

So the plaintiff was correct that Christmas Hills was purchased about a year after the family returned to Australia and that it was sold about a year later for a handsome profit. The “solicitor” who had a client anxious to purchase Christmas Hills was presumably the real estate agent, Mr Stevens. And the Christmas Hills settlement predated the Argyle Street settlement.

Counsel for the defendant did not suggest to the plaintiff that he could not have afforded to pay his alleged share ($325) of the deposit for Christmas Hills or his alleged share ($50 per month) of the instalments. Indeed the plaintiff was not cross-examined at all on his evidence that he had paid a cash deposit. In any event, the plaintiff had been in the workforce, both in Australia and in Germany, since about 1966. He was working long hours at Four ‘N’ Twenty during the relevant period (1971 to early 1973). In the following financial year (1973/74), while still in the same employment, his tax assessment showed gross income of $7,258 per annum, net income of $5,167 ($99 per week) and a tax refund of $362.[79]
[79]Exhibit P9. See further below.

It is true that, even after the newly obtained documents were put into evidence, the plaintiff insisted under cross-examination that Christmas Hills had been bought at auction.[80] I am satisfied that he was wrong about that. In so concluding I take into account also the evidence of Albert Schweitzer, who recalled going to the property (as a 15 year old) with his father and brother, meeting a representative of the vendor and walking around the property.[81] He was adamant during cross-examination that there was no auction and that there was no-one there apart from themselves and the vendor’s representative.[82]
[80]Transcript 174.
[81]Transcript 261–263.
[82]Transcript 286.

On the other hand, Albert’s evidence was at least fully consistent with the proposition that the “true” purchasers of Christmas Hills were Herman Senior and the plaintiff. In his evidence in chief he said that he was “there (at Christmas Hills) when they purchased it”.[83] He said that at the time “when they were just about to sign something” he “piped up” and said “Can I go on the contract, Dad?”[84] He said that the vendor’s representative was willing but Herman Senior was a bit reserved about it, but eventually agreed. Albert denied knowing of any prior discussions about him or his brother signing the contract of sale. He acknowledged that he himself had contributed nothing to the purchase price of the property. During cross-examination the following exchange took place:[85]
[83]Transcript 261. My emphasis.
[84]Transcript 262. My emphasis.
[85]Transcript 262.

“Just in relation to the Christmas Hills property, you said that you were there? --- Yes.
And your words were, I was there when they purchased it? --- Yes.
When they purchased it, do you mean your father and Herman Ludwig? --- Yes, yes.”[86]
[86]Transcript 2.

Albert said that he did not know anything about the payment of a deposit of $650 or anything else about the contractual terms or the financing of the transaction. Then there was the following question and answer:
“Herman says that the arrangement he had with his father in relation to Christmas Hills was that they would go 50/50 in the purchase. Are you aware of that? --- I’m not sure what you mean. He must have been, he was on the title, wasn’t he. I’m not sure.”

Albert was then asked about a topic on which the plaintiff had given self-contradictory evidence, namely whether he had told Albert that he (the plaintiff) was contributing to the cost of the Christmas Hills property.[87] Albert said that he could not remember his brother ever telling him that he (the plaintiff) was an owner of the Christmas Hills property and making repayments on it. Albert believed that he would remember that if his brother had ever said it to him.
Then this:[88]
“I suggest to you that his name was on the title because he was a part owner of the property? --- Well, well, he’s part owner of the property then if his name’s on the title.”

[87]Transcript 173, 175–176.

[88]Transcript 288.

In his final address, counsel for the defendant, Mr Staindl, criticised the plaintiff’s evidence about Christmas Hills on a number of grounds. He referred to the auction point and to the question whether or not Albert was made aware of the plaintiff’s alleged ownership. The auction point goes only to the reliability of the plaintiff’s memory and of his evidence generally. It does not otherwise matter whether the purchase of Christmas Hills was by auction or not. Mr Staindl acknowledged as much.[89] There was self-contradictory evidence on both sides as to whether Albert knew about the plaintiff’s claim to ownership. This does not take the defendant far.
[89]Transcript 411.

Mr Staindl also submitted that the plaintiff erred by saying that only his father and himself became the registered owners of the Christmas Hills property. This is a quibble. The sale by the Schweitzers was on vendor terms. It is true that Albert also became a registered owner, but, like his father and brother, only momentarily (on 24 July 1973). The plaintiff is not well versed in legal matters. He spent most of his working life as a labourer, although he was apparently promoted to storeman and eventually manager (of the meat boiler room) at Four ‘N’ Twenty.[90] He may well have meant to convey that it was only his father and himself who became the “real” owners. In any event, it is common ground that Albert had no beneficial interest in Christmas Hills.
[90]Transcript 119.

Mr Staindl criticised the plaintiff’s abovementioned evidence that the Schweitzers had sold Christmas Hills “for two or three times the price”; and also his evidence (given during cross-examination)[91] that they had obtained “a few times, three times, maybe four times” what they had purchased it for. Mr Staindl submitted that the plaintiff “simply seems to be making it up as he went along there”. It is true that the property was bought for $6,000 and sold (one year later) for $9,500, which is not 2, 3 or 4 times the price. But it is still a good profit. Moreover, the Schweitzers had not outlayed the full $6,000. They had paid a deposit of $650 and about 12 monthly instalments of $100, a total outlay of about $1,850. They had had the benefit of the property. They were required to pay out the vendor, but, on one view, they had made a profit of $3,500 on an outlay of $650 or alternatively $1,850. The tenor of the plaintiff’s language about the scale of the profit was not dogmatic. So I do not regard this part of the plaintiff’s evidence as particularly troubling.
[91]Transcript 121.

The defendant’s counsel also made a passing submission[92] to the effect that moneys for a deposit on Argyle Street could not have come from the sale of Christmas Hills, because a deposit on Argyle Street would have been required before the date of settlement of the sale of Christmas Hills. However the precise sequence of events in that regard is not clear on the evidence. In any event, any deposit required would presumably not have exceeded 10%, ie $1,530. In fact it seems from the letter of 29 May 1973 from Wray-McCann and Doherty[93] that the Schweitzers had paid no more than about $600 by way of an initial deposit on Argyle Street. And, depending on the exact sequence of events, that sum might have been covered in advance by the deposit of $650 which they received in relation to Christmas Hills. Moreover, it is clear that the proceeds of Christmas Hills were amply sufficient to fund the entire amount of the upfront payment (or payments) on Argyle Street, and that those proceeds were in hand before the settlement of the Argyle Street purchase.
[92]Transcript 413–415.
[93]Exhibit P 29.

Argyle Street: contributions to mortgage repayments, outgoings and maintenance

The plaintiff gave uncontradicted evidence[94] that, when first acquired by the Schweitzers,[95] Argyle Street was divided into two flats; that the plaintiff and his parents and Albert and Angelina moved in; that Ingrid did not, because she had already left home to live with Max Ebner; that some necessary repair work, including painting, was done at an early stage; that one flat was then rented out to a young German couple for about a year; that Ingrid and Max then moved into that flat and remained there for a period of about one year, perhaps longer, but less than two years; that Ingrid and Max also paid rent during their stay; and that after they departed the two flats were knocked into one residence. I understand that none of this was controversial and I accept it.
[94]Transcript 75–76.
[95]The abovementioned documentary evidence shows that settlement occurred on 1 June 1973.

The plaintiff also said in his evidence in chief that the rent paid by Ingrid and Max was paid to his father and himself; and that “it went towards the costs”[96]. He said that, physically, it was paid to his mother, Maria, in cash.
[96]Transcript 75–76.

The plaintiff said that he contributed 50% of all the mortgage repayments.[97] He said that he made his contributions by giving his mother cash “for the house” on the first day of each month. He “assumed” that his father did the same. The plaintiff also said[98] that he paid weekly “rent” or “board”[99], in an amount which he initially nominated as $40 per week. He said that the house payment was extra. However he said initially that he could not remember how much he paid to his mother for the house payment, only that it was “half” the required loan repayment. He said that the house payments were physically made by his mother by depositing cash at a bank in Moonee Ponds. Counsel then directed his attention to the Keystone “mortgagors payments record card”.[100] It covered the period from 27 June 1973 to 1 October 1973. It showed that the monthly loan repayment which was required and regularly made during that period was $95.82.[101] The plaintiff said that his mother looked after this card and “did all the transactions”. Of the monthly repayment amount of $95.82, he said he would pay “[h]alf, down the middle”. He said he paid it monthly.
[97]Transcript 76–77,80.
[98]Transcript 76–77.
[99]He said that rent and board to him were the same thing.
[100]Exhibit P 6.
[101]It also showed that the interest rate was 8¼%. There is no evidence as to whether the interest rate was fixed or variable; or as to the movement of interest rates between 1973 and 1978; or as to the term of the loan; or as to whether the amount of the monthly repayments was variable at the instance of the lender, but it does appear that extra or additional repayments were accepted, because it is common ground that the loan was paid off early.

The plaintiff was then taken to his discovered tax assessments (on the question of his capacity to make the mortgage contributions). They covered the financial years ended 30 June 1974, 1975, 1976 and 1978.[102] The assessments indicate that the plaintiff had a net (after tax) weekly income of $99 and a refund of $362 in 1973-1974; net income of $131 per week and a refund of $352 in 1974-1975; net income of $143 per week and a refund of $280 in 1975-1976; and net income of $143 per week and a refund of $542 in 1977-1978. In relation to 1973-1974, his counsel put to him that he needed to find approximately $11 per week for the repayments on top of $40 per week for board. He accepted this. He said he would spend the balance (about $50 per week) on “petrol, cigarettes, couple of beers, the usual things that kids spend it on”. He said he had no social life because he worked every week day until 8 pm or 9 pm and on Saturdays until 3 pm or 4 pm. On Sundays he would go on family picnics.
[102]Exhibit P 9. The assessment for 1977 was said to be unavailable.

It is common ground that the mortgage was paid off in a little over 5 years (by 3 August 1978). Asked how that was achieved, the plaintiff said (speaking of his father and himself):

“Every time we had a lump sum, 1,000 each, we put it on.”[103]

It was put to Angelina that she had agreed at the art show lunch that the plaintiff should have his share of the house. She said she could not remember any such conversation. She denied that she had known full well at the time that the plaintiff had an interest in the property. She vehemently denied that she had known in 2005 of the caveat and of the “reverse mortgage” conversations. However, her demeanour changed very noticeably when she was asked if she was aware that Maria had changed her will as recently as July 2009. She seemed quite shocked. Initially, she twice denied knowing about the new will. Then she made a vague reference to knowing something about her mother being driven somewhere by Ingrid and a new will being involved. Then she backtracked. She said she was getting a bit muddled. She knew nothing of who gave any instructions to the solicitor for the preparation of a new will. She did not know that after her mother’s most recent will was made, the prior will was destroyed. She was not aware of her mother giving approval for the destruction of the prior will.

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 Street. 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.

Before finishing with the topic of the statutory declaration, I will deal with another argument put forward by the defendant. The defendant submitted, citing Amadio,[159] that it would be unconscionable for the plaintiff to rely on the statutory declaration in light of the circumstances in which it was signed. These circumstances, according to the defendant, are Maria’s old age and frailty, lack of independent legal advice, the position of trust occupied by her son and the fact that Maria did not usually make financial decisions within the Schweitzer family.[160] I accept that the circumstances surrounding the signing of the statutory declaration were quite unsatisfactory. Further, I do not overlook the fact that the plaintiff initially sought to rely on Herman Senior’s signature on the statutory declaration, as well as Maria’s. It was only after unfavourable evidence was given by Professor Helme that the plaintiff conceded that Herman Senior could not have understood the declaration.
[159]Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.
[160]Transcript 469, 474, 509.

I do not think, however, that Amadio assists the defendant in the present case as the plaintiff is not seeking to rely on the statutory declaration as an instrument creating any rights. Rather, the statutory declaration is used only as evidence. I have taken the circumstances of the signing of the declaration mentioned above into account when considering how much weight I should attach to it. In the end, however, I am satisfied that Mr Staindl’s concession that he could not submit that Maria did not understand what she was doing when she signed the statutory declaration was properly made, and is a most telling factor in favour of the plaintiff’s overall case.

Alleged admissions by the plaintiff

In his final address, counsel for the defendant sought to rely on certain evidence that had been given by Albert Schweitzer’s wife, Helen Polley, to the effect that, prior to signing the transfer in 1984, the plaintiff had made statements admitting, in effect, that he had no true claim over Argyle Street. To the extent that Ms Polley gave evidence to that effect, I do not accept it. My reasons follow.

Ms Polley’s evidence of present relevance was along the following lines. She married Albert Schweitzer in 1976. She and Albert moved to Tasmania in 1983. She is now an Australian Senator for Tasmania. The Schweitzer family was a close one, but she and Albert could only come to Melbourne infrequently. There were two relevant conversations.[161] The first, she believed, was in 1983 in the living room at Argyle Street. She, the plaintiff and Herman Senior were present. Initially she was not sure whether Albert was there for the entire conversation or whether he was in and out, but then she recalled that Albert was present for the relevant part of the conversation. Herman Senior asked whether the plaintiff had told Wendy any of the Schweitzer business, including about the title to Argyle Street. Herman Senior said he felt insecure and wasn’t happy about the relationship between Wendy and the plaintiff. The plaintiff objected to this statement and indicated that he hadn’t said anything to Wendy, and, in the same conversation, the plaintiff said that there was “no big deal” about having his name on the title “because he had no claim to it and that was something between his parents because he helped his father and mother get the loan initially to buy Argyle Street”. However there was nothing said in this conversation about removing the plaintiff’s name from the title. On a later occasion, around Christmas of 1983 or in 1984, there was another conversation involving the plaintiff, Ms Polley and Albert. Ms Polley and Albert were staying at Argyle Street and the conversation “would have been” there.[162] This conversation also related to the plaintiff’s relationship with Wendy and the impact it was having on the family and his parents in particular. The plaintiff was upset that the family was not accepting Wendy and all the children. The plaintiff said to Ms Polley and Albert that:

“he didn’t know what mum had to worry about because he hadn’t spoken to Wendy about it, she had no knowledge and there was no reason to be [sic] because he had a full understanding with his mother and father that they [sic] only ever helped out getting the loan for [sic] the bank and that he would never be making claim to it, and he again at that time asked us not to mention anything to Wendy”.[163]

[161]Transcript 325 and following.

[162]Transcript 328. She later insisted under cross-examination that is did occur there: Transcript 342.

[163]Transcript 329.

Under cross-examination, Ms Polley accepted that she first met the Schweitzer family in 1975. She had believed, at the time of the alleged conversations and still believed, that the plaintiff had been a mere guarantor for the loan on Argyle Street. She did not know that he had taken out the loan himself. She was unaware that there had been no guarantor for the loan. She did not know that the loan had been secured against the property itself or that the plaintiff had been the sole borrower. She was not aware of any claim by the plaintiff, as at the time of the alleged conversation, to be a half owner of the property.

Counsel pointed out to Ms Polley that in her evidence in chief on this point she had twice said that the plaintiff had said that he had no claim to “it”. Counsel suggested that the plaintiff (if he had said anything at all of the kind alleged) may have been referring only to his parents’ half of the property, and saying that he had no claim to “it”. Ms Polley emphatically rejected this suggestion. Her clear understanding, she said, had been that the plaintiff was referring to the whole property. I asked her whether it was possible that the plaintiff was seeking to give assurance to his parents that they would never be removed from the house against their will. Her response was to say:

“Herman in those days would never have done anything like that at all, so I truly believe at that time he was talking about he had no claim on the property. “

Ms Polley also vigorously rejected similar suggestions by counsel in relation to the second alleged conversation.

I am not persuaded by Ms Polley’s evidence as to these alleged conversations. If they happened, they happened over 25 years ago. Ms Polley claimed that she remembered them clearly because it was “pretty significant”, a “big issue in the family”.[164] If so, it is strange that no-one ever saw fit to ask the plaintiff to commit his “admissions” to writing. By contrast, virtually all of the contemporaneous (and other) documentary evidence supports the plaintiff’s case. Further, notwithstanding that Ms Polley claimed that Albert was a party to both of the alleged conversations, Albert himself did not corroborate her evidence in this regard, despite being asked questions that gave him every opportunity to do so.[165]
[164]Transcript 342.
[165]Transcript 277–279 (evidence in chief); 297–299 (cross-examination).

When giving evidence on a separate topic — whether she and her husband had had a written agreement with Herman Senior in relation to the ownership of a different property — Mr Polley defiantly refused to distinguish between what they “would have” done and what they actually did.

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.[166] 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”.[167] 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.
[166]Transcript 183–186.
[167]Transcript 184. The plaintiff rejected the suggestion.

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.

The defendant further contends that the plaintiff’s conduct is inconsistent with him having any interest in Argyle Street in that he has failed to disclose his alleged interest in Argyle Street to Centrelink and omitted to disclose it to the lending institutions from which he has obtained his last two mortgages.

The plaintiff acknowledged that he had been in receipt of disability pension since his diagnosis in 2002.[168] However, he said that he did not know what he had been required to disclose to Centrelink or what had in fact been disclosed by him or on his behalf. He said that the doctors had done the paperwork for him.[169] On the other hand, Wendy Schweitzer acknowledged that she had assisted the plaintiff in filling out forms to qualify for his disability pension; that he had been required to make a declaration of assets; and that he had not declared an interest in Argyle Street. She said that the form had only needed to be filled out once, in 2002. She acknowledged that she and plaintiff had not sought to change the information supplied nor otherwise contact Centrelink about the matter even after the plaintiff had taken steps in 2005 to advance his present claim and notwithstanding that Wendy was aware of the importance of advising Centrelink of changes in circumstances.
[168]Transcript 205.
[169]Ibid.

However, the defendant did not adduce any evidence to show that at any relevant time Centrelink rules or forms actually required the disclosure of a disputed, unregistered, equitable interest in land which was, in any event, subject to a life estate. Even if I assume that the matter should have been disclosed to Centrelink, the plaintiff and Wendy may not have realised this. In any event, in all the circumstances, the omission is not of great weight. It is merely one factor which I take into account, but I regard it as being substantially outweighed by factors pointing in the opposite direction.

The plaintiff himself was not asked about disclosure to lending institutions at all. The defendant’s counsel did ask Wendy Schweitzer about it.[170] She acknowledged that loan application forms “usually” require applicants to set out their assets. She also said that no mention of Argyle Street has been made in the loan applications that had been made for their current mortgage and for their previous mortgage.
[170]Transcript 251.

Nevertheless, it is not clear the plaintiff’s claimed interest was required to be disclosed to either lender or that any such requirement would have been easily perceived. In any event, both applications were approved. I give only modest weight to this circumstance. Again, factors pointing in the opposite direction are much more telling.

Other properties

It was common ground that all of the property purchases made by Herman Senior after 1971 — Christmas Hills, Argyle Street, Kilmore[171] and Coburg[172] — involved one or more of his children in some fashion. In relation to two of them — Kilmore and Coburg — it was conceded by the defendant that the children were true part owners. This provides some basis for an inference that Herman Senior was prepared to, and indeed preferred to, purchase property jointly or as tenants in common with his children. On the other hand, I acknowledge that, of the four properties, only Argyle Street served as Herman and Maria’s own home and it could be distinguished on that basis.
[171]Exhibit P 11.
[172]Exhibit P 12.

Failure of certain witnesses on the defendant’s side to give evidence

I regard the failure of Maria and Ingrid to give evidence as very significant. As mentioned earlier, Maria was alleged to have been involved in many of the key transactions and conversations. In particular, Maria would have been able to give evidence about:

(a)The alleged 50 / 50 arrangement between the plaintiff and Herman Senior;
(b)The extent, if any, to which the plaintiff contributed to the mortgage repayments and the payment of Argyle Street outgoings;
(c)The extent, if any, to which the plaintiff contributed to the lump sum repayments;
(d)The terms of the missing 1978 trust deed;
(e)The reasons why Herman Senior demanded that the plaintiff transfer Argyle Street to his parents in 1984 and the reasons why the plaintiff acceded to that demand, including whether the transfer was intended to effect a gift from the plaintiff to his parents of a 1/3 interest in Argyle Street;
(f)The alleged conversation between the plaintiff and Herman Senior immediately prior to the execution of the 1984 transfer where Herman Senior is said to have promised to hold Argyle Street in trust for the plaintiff;
(g)The content of the wills allegedly shown to the plaintiff prior to the execution of the 1984 transfer;
(h)The discrepancies in the various letters from Koltay and Myers relating to Argyle Street;
(i)The 2002–2005 conversations, including the “reverse mortgage” conversations;
(j)The circumstances surrounding the execution of the statutory declaration, including the reasons for executing the declaration;
(k)Whether Maria tried to hide the caveat from Ingrid and, if so, the reasons for so doing;
(l)The reasons why Maria failed to dispute the caveat in the period between 2005 and 2007;
(m)The circumstances surrounding the making of a new will in July 2009 and the destruction of the previous will.

In relation to many of these matters, the death of Herman Senior left Maria as the only person, other than the plaintiff, with first-hand knowledge of the matter.

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.[173] However, in the end, Mr Staindl did not adduce any medical evidence about Maria’s current mental or physical health.
[173]Transcript 256.

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.[174] 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.[175] 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.
[174]Transcript 280–283, 304–312.
[175]Transcript 311.

I have been troubled by Wendy Schweitzer’s evidence that Maria was very distressed by the dispute within the family. I readily accept that giving evidence against her son would have been very stressful for Maria. Nevertheless, she is the defendant in this proceeding. She signed the statutory declaration. The plaintiff’s case was certainly strong enough to call for an answer. Maria’s evidence would have been of critical importance. Mr Staindl did not attempt to provide any explanation for her absence in his closing submissions.[176] I am firmly of the view that Maria was a person whom her side might reasonably have been expected to call. I regard the omission to call her as a very significant omission.
[176]On the day after the hearing concluded a letter addressed to me from Ingrid Schweitzer was received at the Court. It purported to explain Maria’s absence from the witness box and suggested that I have a private conversation in chambers with Maria about the case generally. This letter was apparently sent without the involvement or knowledge of the legal representatives of the defendant. I made both sides aware of it and it became common ground that I should simply pay no regard to the letter.

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 Street;
(c)Any knowledge that she may have had about the plaintiff’s contributions to Argyle Street;
(d)The plaintiff’s involvement in the maintenance of Argyle Street;
(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.

Conclusion

I am satisfied that the plaintiff has made out his case to be the owner in equity of one half of the beneficial interest in 29 Argyle Street, Moonee Ponds, subject to a life interest in favour of the defendant. He is so entitled pursuant to the express trust on which he relies. Alternatively, he succeeds under the heading of resulting trust. In the further alternative, he succeeds under the heading of common intention constructive trust.

9 December 2010

After handing down the above reasons for judgment on 30 November 2010 I gave the parties an opportunity to make submissions in relation to the form of order appropriate to give effect to my conclusions and in relation to costs.

Form of order

After discussion, the plaintiff asked for a declaration in the following terms:

“The defendant holds the property situate at and known as 29 Argyle St, Moonee Ponds and being the land more particularly described in certificate of title volume 3756 folio 150 on trust for herself and for the plaintiff as tenants in common as follows:
(a)as to one equal undivided half part or share, for herself absolutely;
(b)as to the other equal undivided half part or share, for herself for her lifetime, and then for the plaintiff absolutely.”

Ultimately the plaintiff did not seek any consequential or ancillary orders and the defendant did not oppose this form of order.

I will make the declaration sought by the plaintiff.

Costs

After the form of order was agreed upon, the plaintiff’s counsel handed up a document stated to be a copy of an offer of compromise made by the plaintiff to the then defendants (Herman Schweitzer Senior and Maria Schweitzer) under r 26.02(1) of the Supreme Court (General Civil Procedure Rules) 2005. The document was dated 16 February 2009 and had been served on or about that date. The proceeding had been commenced in November 2007. The terms of the proposed compromise were as follows:

“A.That the defendants consent to the following declarations being made by the court:
‘1That since 18 June, 1973 the plaintiff has held an undivided one third share in the property known as 29 Argyle Street, Moonee Ponds being the land described in certificate of title 3756 folio 150 (‘the property’);
2That since 4^th December, 1984 the defendants have held an undivided one third share in the property as registered proprietors on an express or constructive or resulting trust for or on behalf of the plaintiff as the sole beneficial owner of that one third share’.

B.That within 30 days of acceptance of this offer the defendants transfer to the plaintiff at the expense of the plaintiff a one third interest in remainder in the property at 29 Argyle Street, Moonee Ponds being the land described in certificate of title volume 3756 folio 150 (‘the property’).
C.That subject to the registration of such transfer the plaintiff forego and surrender any devise or bequest to him of any interest in the property that might be contained in the wills of the defendants made before this date.”

As explained above, Herman Senior was a co-defendant to this proceeding prior to his death in June 2009. He was at all times represented by Ingrid Schweitzer as his litigation guardian.

The plaintiff’s counsel also handed up the defendants’ letter in response dated 2 March 2009. The letter rejected the plaintiff’s offer and stated that “the only acceptable settlement of this matter from the defendants’ point of view is a discontinuance of the proceeding, the payment of the defendants’ costs and the removal of the caveat”.

The plaintiff’s counsel submitted that pursuant to r 26.08(2)(b) I should award indemnity costs against the (remaining) defendant from the day after the day on which the offer was served.

The prima facie entitlement to indemnity costs under r 26.08(2) arises only if the result obtained by the plaintiff at trial is no less favourable to the plaintiff than the terms of the offer. In that respect, the plaintiff’s counsel submitted that the offer made by the plaintiff was, in effect, to accept a one third interest in Argyle Street subject to life estates in favour of the then defendants. As the result obtained by the plaintiff at trial is a one half interest subject to a life estate, the plaintiff’s counsel submitted that r 26.08(2) was applicable.

I leave aside the additional offer made in paragraph C, the legal effect of which is not immediately obvious. I am not satisfied that the combined effect of paragraphs A and B was to make it sufficiently clear that what was being offered was for the plaintiff to accept a one third interest in Argyle Street subject to life estates in favour of the then defendants.

The proposed declaration in paragraph A makes no mention of a life estate. Paragraph B does state that the defendants are to transfer a one third interest in remainder, but on its face paragraph B is inconsistent with paragraph A. It may be, as the plaintiff’s counsel submitted, that paragraph B was indeed to qualify paragraph A. But that is not fully clear. It must be remembered that the ability of the plaintiff’s elderly parents to remain in the house for their lifetimes, or for as long as they chose, was a very important matter to them and indeed to the family as a whole. I think that the omission to make it precisely clear in the offer that that security of tenure in the house would not be threatened by the proposal has the result that the offer did not conform with the requirements of Order 26.[177]
[177]See David L Bailey and John K Arthur, Civil Procedure Victoria (2010) ¶I 26.02.30, ¶I 26.02.35; and cases there cited.

No submission was made that the offer should be treated as a Calderbank offer.

Accordingly, I will simply order that the defendant pay the plaintiff’s costs of the proceeding (including reserved costs), meaning that such costs will be payable on a party - party basis.

[2010] VSC 543

30 November 2010 (substantive judgment) and 9 December 2010 (form of order and costs)