Zetting v Müller

[2017] NSWSC 659

Supreme Court

New South Wales

Medium Neutral Citation:	Zetting v Müller [2017] NSWSC 659
Hearing dates:	17 May 2017
Date of orders:	30 May 2017
Decision date:	30 May 2017
Jurisdiction:	Equity - Duty List
Before:	Parker J
Decision:	Declaration and vesting order made
Catchwords:	EQUITABLE REMEDIES – declaration – proper contradictor – vesting order to give effect to declaration
Legislation Cited:	Trade Practices Act 1974 (Cth) Trustee Act 1925 (NSW), s 71 Uniform Civil Procedure Rules 2005 (NSW), r 7.10(2)(b)
Cases Cited:	Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378; [2012] FCAFC 56 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; [1972] HCA 61 Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438
Texts Cited:	JD Heydon, MJ Lemming and PG Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	Herbert Zetting (Plaintiff) Aloisia Müller (Defendant)
Representation:	Counsel: S Chapple (Plaintiff) D Legg (solicitor for Defendant)   Solicitors: Foulsham & Geddes (Plaintiff) Burridge & Legg (Defendant)
File Number(s):	2015/326834
Publication restriction:	Nil

Judgment

1. These proceedings concern a residential property at Connells Point, a suburb of Sydney.

2. The property was purchased in September 1987 in the names of the plaintiff, Herbert Zetting, and his mother, Aloisia Müller, as joint tenants.

3. Ms Müller was born in Austria in September 1923. The plaintiff was born in Austria in April 1946 and was brought up there. He migrated to Australia in September 1965. Ms Müller continued to live in Austria.

4. The proceedings were commenced by Mr Zetting against Ms Müller in 2015. Ms Müller died in July 2016. In evidence is what purports to be her last will and testament (in German, with a translation), made at Graz in Austria in September 2009. Under that will, she left her share in the Connells Point property to her grandson, Dr Karlheinz Morré. Dr Morré was also identified as her “heir”. It is said that “probate” has not been granted, but there is no evidence as to whether there is an Austrian equivalent of our probate procedure. On the evidence, Ms Müller’s estate is in fact being administered by a firm of notaries. The administration is not complete.

5. As a result of Ms Müller’s death, Dr Morré has applied to be joined as the defendant in these proceedings pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 7.10(2)(b). I am satisfied in the circumstances that this order (to which the plaintiff consents) is appropriate.

6. Mr Zetting’s case in the proceedings is that he alone is the beneficial owner of the Connells Point property. He seeks a declaration that Ms Müller held her interest on trust for him and an order vesting the property in him. Initially this was opposed but the proceedings have been settled and the orders sought by the plaintiff have now been consented to. However, as a declaration is sought, the matter has been referred to me.

7. The evidence on the application establishes that the property was purchased in the joint names of Mr Zetting and Ms Müller because it was contemplated that Ms Müller might come to live in Australia and it was perceived that it would assist her immigration application if she had property in her name. Ms Müller did indeed visit Australia on a number of occasions, staying for two to three months on each occasion, but in fact she never did emigrate from Austria.

8. Most of the purchase price was provided by Mr Zetting from his own resources. The balance was provided by way of mortgage finance from the ANZ Bank. The mortgage was signed by both Mr Zetting and Ms Müller (as was necessary because they were joint owners of the property) but Mr Zetting alone was the borrower under the loan facility, and he alone was liable to repay the principal and interest on the loan (as he in fact later did).

9. In these circumstances, there is a presumption that Ms Müller’s interest in the property was acquired by way of resulting trust for Mr Zetting, unless there is evidence to rebut that presumption: Calverley v Green (1984) 155 CLR 242 at 246.

10. Whether a resulting trust is established depends upon the circumstances which existed at the time of the acquisition of the property in question. The evidence of the parties’ subsequent conduct is not relevant to the question of whether the property was acquired on a resulting trust basis. It may, however, be relevant to the question of whether some sort of equitable interest in the property has subsequently been created. In the present case, the evidence establishes that Mr Zetting paid all of the financing costs for the property and all of the outgoings on the property (even when Ms Müller was living there during her visits to Australia).

11. Although the evidence supports the conclusion that Ms Müller held her interest in the property as trustee for Mr Zetting under a resulting trust, the question arises as to whether I should make a declaration to this effect in circumstances where there is now no active opposition to my taking of that course.

12. It is frequently said that a declaration should not be made by consent. More precisely, in Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448, Lord Dunedin stated that before a declaration is made, among other things, the plaintiff “must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought”. This statement was adopted by Gibbs J in Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 438.

13. There is room for debate about whether this is an essential requirement before a declaration can be made, or is merely a matter of discretion: Meagher, Gummow and Lehane’s Equity Doctrines and Remedies at [19-115] to [19-125]. However, it is not necessary for me to enter into this debate in the present case. In Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378, the Full Federal Court had to consider whether it was open to the Court to make a declaration of contravention of the Trade Practices Act1974 (Cth) in circumstances where the defendant did not oppose that course. The Court held at [30] that the requirement of a proper contradictor was satisfied. This was because when the proceedings had been commenced the defendant had an interest in resisting the relief sought by the ACCC, including the declaratory relief. By the end of the case, the defendant had dropped its opposition to the declaratory relief sought by the ACCC, but this was a matter which went to discretion, not jurisdiction.

14. So it is in this case. When the proceedings were commenced, Ms Müller was the proper contradictor. The fact that the proceedings have now been settled and the legal representatives for her estate do not wish to resist the plaintiff’s claim any further does not deprive the Court of jurisdiction to make a declaration if the circumstances are otherwise appropriate.

15. In my view, the declaration should be made. The evidence presented in support of the claim for a declaration is persuasive. The fact that the defendant has chosen ultimately not to contest the plaintiff’s claim makes it even easier to accept. The making of a declaration is a convenient way (indeed, so far as I can see, the only way) in which to resolve the issues put in suit by Mr Zetting’s claim.

16. Accordingly, I propose to make the declaration sought. The convenient method of giving effect to it is through a vesting order under the Trustee Act1925 (NSW), s 71. In my opinion, such an order may be supported on the basis that the trustee, Ms Müller, lived in Austria (s 71(2)(f)); or on the basis that it is uncertain whether she currently has a legal personal representative under Austrian law with respect to the property (s 71(2)(l)). In any event, it seems to me to be expedient in the circumstances of the case to make a vesting order to give effect to the declaration (s 71(2)(o)).

17. Accordingly, the Court makes the following orders:

1. Pursuant to UCPR r 7.10(2)(b) Karlheinz Morré be appointed to represent the estate of the deceased defendant, and be joined to the proceedings as defendant in substitution for Aloisia Müller.

2.   Declare that the deceased held her interest in the property at 40 Duggan Crescent, Connells Point, Lot 33 in Deposited Plan 238406, on trust for the plaintiff.

3.   Order pursuant to the Trustee Act 1925 (NSW), s 71 that the interest of the deceased held in the property vest in the plaintiff forthwith.

4.   No order as to costs.

5.   Note the undertaking by the defendant and the defendant’s legal representative to execute all necessary documents and do all things required in order to give effect to order 3 above.

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Decision last updated: 30 May 2017