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SUPREME COURT OF QUEENSLAND
Plath v Plath & Anor  QCA 43
ALEXIS DUDLEIGH PLATH
CHEYENNE KELSEY PLATH
Appeal No 4853 of 2019
DC No 1352 of 2017
Court of Appeal
General Civil Appeal
District Court at Brisbane –  QDC 42 (Ryrie DCJ)
13 March 2020
21 October 2019
Morrison and McMurdo JJA and Mullins AJA
Upon the appellant’s undertaking to repay to the State of Queensland such amount as was paid to him as a first home owner grant in 2009, together with any interest and penalty owing by him or duly imposed upon him in relation to that grant:
ESTOPPEL – ESTOPPEL BY CONDUCT – PROMISSORY ESTOPPEL – PARTICULAR CASES – where the appellant entered into a contract of sale and mortgage to purchase a property from his parents – where the appellant’s parents had intended to give this house to him for some time – where the appellant and the parents wished for him to obtain the first home owner grant – where their solicitor advised that they should enter into a contract of sale with vendor finance in order to obtain the grant – where the appellant paid nothing under the contract – where the respondents, as personal representatives of the father’s estate, brought proceedings against the appellant seeking that the mortgage be enforced – where the appellant argued that the parents had told him that he would not be required to pay anything under the mortgage – whether the respondents were estopped from enforcing the mortgage
APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – FUNCTIONS OF APPELLATE COURT – WHERE FINDINGS CLEARLY WRONG – where the trial judge accepted evidence of witnesses that the parents had long intended to give the property to the appellant – where the trial judge found that that intention changed when they went to see the solicitor – whether the trial judge’s findings of fact were so glaringly improbable as to overcome the trial judge’s advantage of observing the witness’ testimony
EQUITY – GENERAL PRINCIPLES – RULES AND MAXIMS OF EQUITY – CLEAN HANDS – where the appellant admitted that the application for the first home owner grant was false and misleading – whether relief could be granted conditional upon the appellant repaying the grant – whether the appellant’s unclean hands could be “washed”
Brunskill v Sovereign Marine & General Insurance Co Ltd (1985) 59 ALJR 842; (1985) 62 ALR 53;  HCA 61, cited
Fox v Percy (2003) 214 CLR 118;  HCA 22, cited
The appellant appeared on his own behalf
A B Fraser for the respondents
The appellant appeared on his own behalf
Bell Dixon Butler Lawyers for the respondents
- MORRISON JA: I have read the reasons of McMurdo JA and agree with those reasons and the orders his Honour proposes.
- McMURDO JA: On 26 May 2009, the appellant went with his parents to the office of Mr Kingston, a solicitor in Childers, who had prepared some documents for their execution. There was a contract for the sale by his parents to him of a house at Turkey Beach, for a price of $315,000. The contract acknowledged that a deposit of $15,000 had been received, and required the balance of the price to be paid, with interest, by yearly instalments of $30,000. The first instalment was to be paid a year from the agreed date of completion of the contract, which was 1 June 2009. Another document was a mortgage by the appellant to his parents to secure that debt.
- The appellant’s parents had intended to transfer this house to him for some time. But they had meant to do so by a gift. They had told the appellant of their intention, and had said the same when they consulted Mr Kingston earlier that month. They had intended to give this property to him out of their gratitude for services which he had provided to them, without payment, in preceding years. But on this day, the appellant and his parents executed these documents, with the apparent intention that the appellant should not be given the house, but that he should pay for its full value, as well as interest at five per cent per annum until he had done so.
- Until then, the appellant had never owned a house. The apparent effect of the documents which were signed was that he became entitled to a first home owner grant, in an amount no higher than $15,000, under the First Home Owner Grant Act 2000 (Qld). Within a couple of months, with the assistance of Mr Kingston, the appellant successfully applied for that grant.
- The house was promptly transferred to the appellant and the mortgage was registered. But the appellant paid nothing under the contract.
- The appellant’s mother died on 29 September 2010, and her property passed to the appellant’s father, who died on 13 June 2011. They were survived by seven children, including the present respondents.
- In 2017, the respondents, as the personal representatives of their father’s estate, brought this proceeding against him in the District Court, claiming payment of the sum of $300,000 plus interest at the agreed rate, and recovery of possession of the house.
- The appellant’s case was and remains that he and his parents did not intend the contract and the mortgage to have their apparent effect. His case was pleaded as a defence of estoppel, in that his parents said to him that notwithstanding the terms of the documents, he would not be required to make any payment, and that in reliance upon that representation, he signed the documents. Alternatively, he claimed that he was entitled, on a restitutionary basis, to the payment of the reasonable value of his services which he provided to his parents over the years in an amount of $840,000.
- After a two day trial, Ryrie DCJ promptly delivered a reserved judgment in which she found that the contract and mortgage were enforceable, and that the plaintiffs should be given judgment on their claim. The counter-claim was dismissed.
- The judgment was delivered on 4 April 2019, and nothing was filed in this Court until 7 May 2019, when the appellant filed an application together with an affidavit in which he offered some explanation for his delay. The appellant was then and remains without legal representation. The appeal period had expired five days earlier. Exhibited to his affidavit was a notice of appeal. That document, like his outline of submissions, reflected the appellant’s lack of legal training and assistance, but clearly they challenged the correctness of her Honour’s conclusion, in reliance upon evidence which was given by Mr Kingston, that these documents were intended to have effect according to their terms and that there was no basis for an estoppel.
The evidence of Mr Kingston
- Mr Kingston was the principal witness in the plaintiffs’ case. His evidence, where it was inconsistent with the appellant’s evidence, was preferred by the trial judge.
- Mr Kingston testified that there were two occasions when the appellant and his parents came to his office in May 2009. All of this happened, of course, nearly 10 years earlier, but the trial judge said that Mr Kingston’s evidence was supported by notes in his diary. Extracts of his appointments diary became exhibit 5. The entries were very brief. For 20 May 2009, against the time of 9.15 am, was written “Plath”. For 26 May, the same was written in the diary against the time of 3 pm. “Plath” had also been written in the diary for 19 May, but it had been crossed out, which indicated to Mr Kingston that there was no meeting on that day.
- There was also an undated attendance note, in which Mr Kingston wrote:
“Sale price $315,000.00
$15,000.00 Deposit paid
Repayment amounts per year $30,000.00 per year
Interest: fixed at 5 %
IRA PLATH D a/bit 28.06.63
10 Bland Street Childers 41 261560
Principal Place of Residence”
- Mr Kingston said that he had known the appellant’s parents for many years. When asked when he had first seen the appellant about this matter, he answered that “[a]ccording to my records, including my diary, it was on the 20th of May 2009.” The diary to which he then referred was his appointments diary, which said nothing about whether the appellant, as distinct from his parents, was in Mr Kingston’s office on that day. The appellant’s evidence was that he was not there on that day.
- Early in his evidence in chief, Mr Kingston was asked by her Honour whether she should “take it you wouldn’t have any memory independently of any of this now?”. Mr Kingston answered: “I’m afraid not … not 10 years ago your Honour.”
“As I recall the defendant and his parents attended my office. The purpose of their attendance was that they wished to gift the Turkey Beach property that they jointly owned to the defendant and in the process the defendant was going to claim a first home owner grant, being his first home”.
- The evidence in chief continued as follows:
“And what advice did you give them?---Well, I mentioned that the eligibility rules under the First Home Owner Grant Act had fairly strict eligibility criteria and that – I think it’s under section 5 – I looked it up the other day – the eligible transaction needed to be by way of a contract for purchase of the home made after the 1st of June 2001 or something, and that the gifting of the property or proposed gifting of the property to the defendant would not fit that eligibility criteria.
And what was their response – what was the response of any Alf, Marilyn or Mr Plath to that?---I’m just going by my recollection of the events and what the file tells me basically. I can’t say that I can comment precisely on words spoken, but as I recall the application for a first home owner grant was fairly paramount in their minds and I basically advised them that to get that we’d really need to do a contract for the purchase of it. Given that [the appellant] wasn’t wanting to borrow for that purpose there would have to be a vendor finance contract.
…And that it would have to be on terms that were realistic and secured by a first mortgage. So we discussed the potential schedule of repayment of that debt. We had a valuation given to us by the Plath family – that was in September 2008 I think it was on the file – of 315,000. I suggested that we could have a deposit of 15,000 in recognition of services rendered by the defendant and that the balance 300,000 would need to be repaid. I canvassed the payment schedule and suggested maybe 30,000 per annum inclusive of principal and interest. I said that – to the parents that, you know, “If that happens you’ll basically have control of the management of that debt and how you decide to treat that debt into the future would be a matter for yourselves,” particularly given that there was an intention initially to gift the property to the defendant outright.
Did you say to those present that the loan amount would be forgiven‑‑‑?---No.
--- in one year’s time, in 12 months time?---I can’t recall saying that. I can recall saying that they’d have control of that debt into the future and they’d probably have to re-visit that at some stage.
Did you say words to the effect that it was a dummy mortgage?---I’ve never used the word “dummy mortgage” in my practice life. I only saw that the first time when the defendant raised it in some pleadings.”
- He was then shown a copy of his attendance note and was asked what it was. He answered:
“That is a summary of what was finally decided in the approach of the transfer of the property to the defendant; the sale price 315, deposit of 15,000, leaving 300,000 owing. Repayments amounts 30,000 per year, interest five per cent. … I’ve got [the appellant’s] date of birth, the address and the fact that it was going to be a first home and a principal place of residence. So that was my summary of what I believe we agreed to.”
- Mr Kingston identified a letter on his file from a local real estate agent, which estimated the value of the Turkey Beach property at $315,000. The letter was dated 23 September 2008. It seems from the letter that the agent had thought that Mr and Mrs Plath were meaning to list the property for sale, and were seeking his advice on its worth and asking price.
- Mr Kingston said that he “did run it past [the appellant] whether he would be – have the means to repay that sort of money regardless of any other outcome … and he did indicate that he would.” Again in evidence in chief, Mr Kingston was asked whether he said words to the effect that “the mortgage of $300,000 with a 30,000 once a year payment has to be stated in an application and in 12 months’ time we’ll waive the mortgage”. Mr Kingston answered:
“… I don’t think I would have suggested that – well, there’s no need to tell the first home owner grant – Office of State Revenue about any potential forgiveness of debt or whatever. I think I may have basically said that this has to be seen as a contract purchase and that under the mortgage the parents will have control over the management of that debt. How they see fit to do that – you know, they may have had intentions of forgiving that debt down the track. So, you know, that’s as far as I can really comment without …”
- There was then this question and answer:
“Did you, and again I apologise for being repetitive – did you ever say that no payment would need to be made by the defendant to his parents under the mortgage?---Well, the mortgage says that it has to be, so I wouldn’t have said it doesn’t need to be paid. It would be up to the parents as to how they managed that debt.”
- There was then this evidence:
“At that time to your recollection did either of Mr Plath’s parents say to him that no payment had to be made?---I can’t recall that.
HER HONOUR: You can’t recall it being said or you just ---?---I can’t recall that being said your Honour.
All right?---My memory of the words spoken is pretty---
Sure?---poor after 10 years.”
- Mr Kingston said that he then organised for “the three of them” to return to his office after he prepared documentation to give effect to what had been agreed.
- Mr Kingston prepared the contract, a transfer pursuant to the contract and the mortgage. He identified his signature as a witness to those of the parties. He said that, in accordance with his usual practice, he would have explained the essential terms of the documents when having them signed.
- He was asked whether in the meeting of 26 May, the appellant had said words to the effect that his parents were “gifting the property to him”, and there was this evidence:
“… Not at that point. That was raised initially on the 20th of May and it was discounted so that we could claim the first home owner grant.
HER HONOUR: Raised initially by who?---The parents and the defendant---
Right?--- ---said, “This is what we’re here to do.”
MR FRASER: And then so on the 26th of May at the time when these documents have been signed, did Mr Plath say – I’m talking this is now the second meeting. Did he say, “My parents are gifting me the property,” or words to that effect?---Not by my these documents.
No. Did he give any – did he make any statement like that?---I can’t recall that honestly.
Did Alf say in that appointment words to the effect that he was gifting the property to the defendant?---Not that I am aware. I can’t remember exact words that were spoken.
What about Marilyn? Do you think she---?---The same situation. You know, the documents were prepared on the basis there was a first registered mortgage. They had control of the management of the debt payable under that and how they chose to do that was a matter for themselves.”
- Mr Kingston was asked about his correspondence with the Office of State Revenue, by which there was the application for the first home owner grant. There was this evidence:
“Now, if you’d known that Marilyn or Alf were not insisting on repayment – well, let me start that again. If you’d known by the date of this letter that there was no liability owing by Mr Plath under the loan, do you think you would have sent this application to the government on his behalf?---The application was predicated on the fact that it was a purchase contract and that any gifting of the property was – rendered it ineligible. So, you know, that didn’t happen. I just sent it away on the basis that there was an existing mortgage.
So if in fact you’d known there was no liability from Mr Plath, the defendant, do you think you would have sent that document on his behalf to the government?---I doubt it. That would be claiming it falsely.”
- A little later in his evidence in chief, the witness answered some questions from her Honour in which there was this exchange:
“Yes, and that it was then up to them whether they wanted to forgive any debt under that prepared documentation or not. That’s how I understood your evidence?---Pretty much.
Yes?---The parents obviously had control over that debt and---
Sure?--- ---its future---
Sure?--- --- applicability. But at that point in time, there’s no suggestion that it was forgiven.
No, no. As far as you understood and you always understood, as I understand, they were---?---Yes.
The documents you prepared was in accordance with the advice – the proper advice, as you gave---?---Yes.
---which was that you want a first home owner’s grant for – is it – the child who’s going to receive the benefit of the property?---Yes.
You can’t gift it?---You could – that’s correct.
You have to go about preparing ---?---That’s correct.
---a different way, and the way to achieve that is the following: contract of purchase, as well as a mortgage, with the relevant responsibilities. And it’s a matter for them, between the mortgagee and the mortgager, as to what they wish to ---?---That’s basically the correct---
Yes. That’s what I---?--- --- analysis, your Honour.
---understood your evidence to be, yes.”
- In cross-examination, Mr Kingston rejected the appellant’s suggestion that the property was to be gifted to him and that the mortgage was a “sham mortgage”.
- There was then this exchange between the appellant and Mr Kingston:
“Did we not have a discussion about knocking the mortgage on the head after 12 months?--- I can’t recall 12 months. I know – I do know that we made – in …. the mortgage document itself, it said that no repayments were required until 12 months after the date of settlement of that transfer to you. Whether it was the intention of your parents to forgive that debt in that time, that’s – it was up – entirely up to them, as to when they chose to do what they may – would have done.”
The appellant’s evidence
- The appellant’s evidence was that he could recall only one meeting with Mr Kingston, which was on 26 May 2009 when the documents were signed. He said that Mr Kingston then told them that “we have to put in a pretend mortgage” to obtain the first home owners’ grant. He said that Mr Kingston, his mother and his father explained to him that “we had to put a mortgage on the property even though it wasn’t to be paid back, no payments had to be made.”
- His evidence continued:
“[A]t no time did they want any money paid back. And after 12 months we had to come back and knock the mortgage on the head.”
He was asked by the trial judge what he meant by “knock the mortgage on the head”, to which he answered:
“Well, you had to have – you had to run the mortgage 12 months and then after 12 months it’s up to the discretion of the parents’ ability to write it off”.
He said that after his mother became ill in January of 2010, he forgot about this transaction, as did his father.
- The appellant was asked by the judge whether he was told by his parents “separately from [Mr Kingston] during that meeting that you wouldn’t have to make any payments?”. He answered: “[t]here was no separation. The three of us were in the room together.”
- In cross-examination, he again said that he could only remember going to Mr Kingston’s office once, which was when he signed the documents.
- In cross-examination, the appellant recalled that at the meeting Mr Kingston had said that “at the end of 12 months, we’ll knock the mortgage on the head.”
- The appellant answered a question in cross-examination by saying:
“There was no intention on my behalf to pay anything back because mum and dad said in front of [Mr Kingston] ‘Don’t worry about paying the $30,000 a year, this is your gift for helping us out with [a fishing vessel]. We’re going to knock the mortgage on the head after 12 months.”
- The critical witnesses were Mr Kingston and the appellant, but it is necessary to briefly discuss the other witnesses.
- One of the plaintiffs, Alexis Plath, testified that nothing was said to her by either of her parents to the effect that the appellant had been given the house. Evidence to the same effect was given by the other plaintiff, Cheyenne Plath, who also said that at an earlier time, her father had told her that it was likely that the property would be left to the appellant and another of her brothers.
- Another sibling, Paulette Plath, recalled that some time around 2002, she understood that the appellant was to receive this property in return for work he had done for the parents on a fishing vessel.
- A family friend, Mr Rowan, testified that in 2002, he had asked Mr Plath whether he could buy a half share in the Turkey Beach property, and was told that he would have to deal with the appellant, because Mr Plath was going to give or leave it to him.
- Another family friend, Mr Russo, recalled a conversation about 20 years earlier, in which Mr Plath told him that in lieu of payment for the work which the appellant had done in helping his parents, they were going to give the property to him.
- Evidence was given by Mr Parcell, an accountant who had prepared tax returns for Mr and Mrs Plath for the 2009 year. He said his notes contained no reference to a gift of the Turkey Beach property. Capital gains tax was payable by them on this transaction.
- Evidence was given by a Mr Pedesco that in 2003 or 2004, Mr Plath told him that he and Mrs Plath had decided to give the property to the appellant because of work he had done for them, and he remembered a similar statement from Mrs Plath a year or two later. In response to questions from her Honour, as to whether similar statements had been made in 2009, Mr Pedesco said that he could recall Mr Plath telling him that he had actually given the house to the appellant, Mr Plath had made up a fictitious loan so that the first home owners’ grant would be paid, and there was no intention of having the money paid. Mr Pedesco said that he understood “it was just a dummy loan”. He subsequently conceded that it was from the appellant that he had heard the expression “dummy loan”. However, he maintained his evidence that he had been told by Mr Plath, in 2009, that the property had been given to the appellant.
- The trial judge said that she had no reason to reject any of the evidence given by these other witnesses regarding their recollections of events prior to May 2009. Her Honour observed that those recollections were not “that inconsistent with Mr Kingston’s own evidence” that when he was first approached on 20 May 2009, Mr and Mrs Plath said to him that they wanted to give the property to the appellant. But her Honour rejected the evidence of Mr Pedesco, as to his recollection of a conversation with Mr Plath in 2009, which she said “smacked of his attempt at gilding the lily in order to assist [the appellant] in whatever way he could”.
- Her Honour accepted Mr Kingston’s evidence about the two meetings which he said he had with the appellant and his parents. She found that having received that advice from Mr Kingston, Mr and Mrs Plath chose “to take the other option which Mr Kingston had also proposed to them, which was evidenced by the documentation subsequently executed regarding the sale of the Turkey Beach property, and the mortgage which was to attach to it.”
The findings of the trial judge
- The trial judge found that “all parties were happy to take that option up in order to facilitate [the appellant] being able to claim the first home owners grant”.
- Her Honour preferred Mr Kingston’s evidence that the appellant was present at each meeting, to that of the appellant that he was there only for the second one. She did so because “Mr Kingston had the benefit of his notes which even though were scant nevertheless assisted him.” Her Honour said that “as a matter of common sense”, upon receiving instructions to proceed, Mr Kingston “would have needed time in order to prepare the necessary documentation”.
- The trial judge found that neither Mr Kingston nor Mr and Mrs Plath were involved in the execution of “fake documentation” simply in order to obtain the first home owners’ grant.
- Her Honour reasoned as follows:
“ It follows that I do not find that the parents intended to ‘gift’ the property to Ira as he asserts. I also find that the alleged representations which he says were made by his parents during the solicitor’s meeting which he recalls in May 2009, were not made. That finding is supported by the fact that Mr Kingston, who I accept as credible, has no memory of such representations being made by the parents to Ira and further supported by the fact that neither parent when alive choose [sic] to change their wills at any point subsequent to the execution of the documentation on the 26th May 2009, to reflect any ‘waiver’ of the debt that was still owed to them from Ira in respect of the Turkey Beach property even at the time before their respective deaths. This was the case even though Mr Kingston had advised them that they could manage the debt owed to them however they liked. The letter by Ira which accompanied his first home owners grant (Ex 13) also belies Ira’s assertions.
 Indeed, it is important in my mind to note here that at the time that Alf’s will was prepared (dated 1 December 2010 and prepared by a solicitor other than Mr Kingston or his firm) that there was still no indication by him that Ira’s debt was to be relinquished. A fact in my mind that confirms that Alf considered the sale of the Turkey Beach property to Ira and the subsequent mortgage debt that attached to it was one which Ira nevertheless still needed to honour in order to keep Turkey Beach. There is also the evidence of Mr Kingston which suggests that in consideration of the services that had been rendered by Ira to them, that only 300,000 rather than 315,000 was to be repaid to back to the parents under the mortgage. Another fact which in my mind supports a reasonable inference to be drawn, that Ira was being helped by his parents with the finance of his loan in order that he could purchase Turkey Beach from them.”
- Her Honour dismissed the counter-claim, which she held was barred by the Limitation of Actions Act 1974 (Qld). She further held that there was insufficient evidence “to find or even draw a reasonable inference” that the work which the appellant claimed to have performed was done “at their specific request to do so.” Instead, her Honour said, the appellant “was simply being a caring decent son who had offered to help his father who had called him for help”, and that the evidence did not show that the parents would have “known, or expected, that [the appellant] would be wanting payment for those services.” Her Honour found that the calculations of the counter-claim were “somewhat vague, making it virtually impossible for me to calculate [it]”.
- The appellant’s argument was not always precise. But in essence, it was that the trial judge erred in not concluding that he was led by his parents to expect that he would not have to make any payment to them, and that induced by that conduct he signed the documents.
- For the respondent, it was contended that the trial judge had the benefit of seeing and hearing the evidence of Mr Kingston, as well as that of the appellant, so that the limitations upon appellate review of findings of fact in these circumstances preclude the critical findings in this case being disturbed.
- There was an abundance of evidence to the effect that for some time, the appellant’s parents had intended to give this house to the appellant. And most importantly, there was Mr Kingston’s evidence that when they came to see him on 20 May 2009, that is what they were there to do. Whether or not the appellant was present on this occasion, it is clear that it was no earlier than this meeting with Mr Kingston that anyone thought that the house should be sold, rather than gifted, to the appellant.
- It is also clear that the only reason for having these documents prepared and signed, and the mortgage registered, was to obtain a first home owner grant. It was not as if the parents decided, at the last moment, that they needed to be paid for the property, or that it might be unfair to their other children if it was given to the appellant. The transaction of a sale and a mortgage back resulted entirely from a wish to obtain the first home owner grant, and from Mr Kingston’s ideas for how that could be achieved. Indeed, it was Mr Kingston who suggested the amounts to be paid, the timing of the repayments and the rate of interest.
- The documents which Mr Kingston prepared, and which the appellant and his parents signed, proved to be effective for that purpose. At first, the Office of State Revenue wrote to the appellant on 28 July 2009, acknowledging his application for the grant, and saying that it was incomplete, in that the Office required a copy of “the loan agreement for the purchase property.” Mr Kingston was able to write back, with a copy of the mortgage and evidence of its registration, and within a fortnight the application was successful.
- Even according to Mr Kingston’s evidence, this was no ordinary transaction for the sale of a house. The so-called deposit of $15,000, which the contract document recorded as having been “received” by the sellers, was never paid. The explanation by Mr Kingston was that the so-called deposit was “in recognition of services rendered by [the appellant]”. It was Mr Kingston who suggested that the deposit should “be paid” in that way. But that was not what the contract recorded, and it is difficult to see that this could have served the usual purpose of a deposit as “an earnest to bind the bargain”. This was not a deposit which, according to the terms of this standard form of contract, was “liable to forfeiture upon default in completion by the purchaser.”
- Again, even according to the testimony of Mr Kingston, it cannot be thought that the intention of the parties, or at least of the appellant’s parents, was that this contract would be performed, year by year, according to its terms. And it cannot be thought that the appellant preferred to receive a grant of $15,000, at the cost of a liability to pay $300,000 with interest, to the alternative of receiving no grant but a gift of the house.
- According to the documents, the first instalment was due on 31 May 2010, just over a year from the meeting at which the documents were signed. Even on Mr Kingston’s evidence, there was a discussion about whether that instalment, and anything beyond it, would ever be paid. Ordinarily, a solicitor would not see fit to advise clients, for whom he had prepared a contract and mortgage such as these documents, about whether they would have to insist upon performance of the documents when the time for it arose. The fact that Mr Kingston said that he could recall advising them about that matter, and saying to them that it would be for them to decide whether they then insisted on performance, was remarkable, and its significance does not appear to have been appreciated by the trial judge. It strongly indicates that from something said at the meeting, Mr Kingston understood that Mr and Mrs Plath were not minded to insist upon performance, unless there was some legal requirement for them to do so. The inference is irresistible that it was in response to that understanding by Mr Kingston, that he advised them, in effect, that there was no requirement for them to enforce their contract. Importantly, Mr Kingston provided no evidence that Mr and Mrs Plath had said that this was a contract which they might need or want to enforce. On the contrary, he said that Mr and Mrs Plath “may have had intentions of forgiving that debt down the track”.
- The trial judge placed some importance on what she saw as the fact that when Mr Plath made a new will in December 2010, “there was still no indication by him that [the appellant’s] debt was to be relinquished”. Her Honour saw this as confirmation that Mr Plath considered that the “mortgage debt … was one which [the appellant] nevertheless still needed to honour in order to keep Turkey Beach.” In my view, this provided no support for the plaintiff’s case. The will made no reference to the mortgage debt as part of Mr Plath’s property. Given that such a debt would have to be paid by yearly instalments, over a period of well more than a decade, it is to be expected that some specific provision would have been made for it in the testator’s directions for the administration of his estate. If anything, the terms of the will provided some support for the appellant’s case, that his parents had no intention of enforcing their contract, and that with the ensuing illness and death of his mother, he and his father did not think to do anything to have the mortgage released.
- The trial judge referred to the evidence of Mr Parcell, who prepared the tax returns for Mr and Mrs Plath for the 2009 year, that his notes taken at the time contained no reference to a gift of the property, which he would have noted had he been told of it. Her Honour did not return to this evidence when expressing her reasons for her findings. In any case, the evidence did not support the plaintiff’s case. Capital gains tax, if payable on a disposition by sale, was also payable to the same extent on a disposition by gift, because in this case the value of the property was the sale price.
- The trial judge relied upon a letter written by the appellant, dated 21 July 2009, which purported to outline the reasons why he purchased the house. It is evident that this was another document prepared by Mr Kingston, and it was one of the documents which he sent to the Office of State Revenue on 22 July 2009, when applying for the grant on the appellant’s behalf. This was a dishonest misrepresentation of the true nature of this transaction. But in that respect, it was no different from other documents which Mr Kingston had prepared, and which the appellant had signed, to obtain the grant. With respect, it was illogical for the trial judge to see the letter as having the probative significance which she attributed to it.
- As I have set out earlier, more than once in his evidence, Mr Kingston said that he could not recall the words that he used in these meetings. Indeed, at one point, he agreed with her Honour that, after the passage of 10 years, he did not have any memory independently of his notes. As I have discussed, those notes could have provided no assistance to him, and her Honour’s view otherwise was erroneous. Her Honour ought to have recognised that Mr Kingston was giving his evidence by a process of reconstruction.
- The trial judge found that although the appellant’s parents had considered “over the years” giving or leaving the property to him, “that position then changed” in May 2009, and that, in effect, they did not intend the appellant to have the property without paying to them its full value. In all the circumstances which I have described, in my respectful opinion that finding is glaringly improbable. Their intention remained just as it was when they went to see Mr Kingston, namely that the appellant should have the house without having to pay for it. That is a compelling inference which, notwithstanding the trial judge’s having seen and heard the evidence as it was given, requires the contrary conclusion by her Honour to be overturned.
- The trial judge ought to have concluded that the appellant signed these documents with the expectation that he would never be required to perform the obligations within them, an expectation which was created by his parents. The exact words and actions of the parents, after the passage of 10 years before the trial, could not be expected to be proved. But it was sufficiently established that the appellant’s expectation was induced by his parents and that he signed in that expectation. Subject to the matters about to be mentioned, Mr and Mrs Plath were estopped from enforcing the terms of the contract and the mortgage, and the respondents, as their successors, are privy to the estoppel.
- The appellant conceded in his oral submissions that he has to repay the grant and any penalty imposed upon him by the Office of State Revenue, because his conduct was “false and misleading”. At the trial, it was submitted for the respondents that the appellant had not come to Court with “clean hands” and that as a condition of any relief in his favour, orders ought to be made that he repay to the Queensland Government the sum which he had received.
- It was also submitted to the trial judge that if her Honour found that the defendant had relied upon representations by his parents as he had pleaded, “the appropriate orders would be that the Contract, Mortgage and the transfer be set aside and the parties put back in the position in which they were prior to the estoppel”.
- Those submissions were not repeated in this Court and no submission was made here as to the appropriate relief if the appeal was allowed.
- On the facts which should have been found in this case, the appellant signed the contract and the mortgage in the expectation that the terms of those documents would not be enforced by his parents, an expectation induced by his parents who knew or intended him to act upon it. He would suffer detriment if that expectation is not fulfilled and the “minimum equity” which is required in order to avoid that detriment, is that the present respondents be precluded from enforcing the contract and the mortgage. Had the appellant’s parents not induced that expectation by the appellant, he would not have signed the contract and the mortgage and, it must be concluded, the house would have been transferred to him as a gift, as his parents meant to do.
- The remaining question is whether, as was submitted to the trial judge, any such equitable relief in the appellant’s favour should be made conditional upon his repaying the grant which was wrongly obtained. I would accept that there was an impropriety on the part of the appellant which had “an immediate and necessary relation to the equity sued upon”. But by the imposition of the condition that the grant be repaid, the appellant’s unclean hands may be “washed”. Such a condition should be imposed.
- I would order as follows. Upon the appellant’s undertaking to repay to the State of Queensland such amount as was paid to him as a first home owner grant in 2009, together with any interest and penalty owing by him or duly imposed upon him in relation to that grant:
- Extend the time for appeal until 7 May 2019.
- Allow the appeal.
- Set aside the orders numbered 1, 2 and 4, made on 26 April 2019.
- Dismiss the respondents’ claim.
- Declare that the appellant is entitled to a registered release of the mortgage the subject of the respondents’ claim.
- MULLINS AJA: I agree with McMurdo JA.
The amount of the grant which was received by the appellant was not independently proved by the evidence. The appellant seemed to accept that the amount was $15,000, although there is some reason to doubt that it was in that amount. According to s 20 of the First Home Owner Grant Act 2000 (Qld), the grant would have been $15,000 only for “a new home eligible transaction” and otherwise it would have been $7,000.
Citing Fox v Percy (2003) 214 CLR 118;  HCA 22.
Howe v Smith (1884) 27 Ch D 89 at 101. And see Freedom v AHR Constructions Pty Ltd  1 Qd R 59 at 65 per McPherson J.
Freedom v AHR Constructions Pty Ltd at 66.
Income Tax Assessment Act 1997 (Cth) s 116-30.
Reasons , .
Brunskill v Sovereign Marine & General Insurance Co Ltd  HCA 61 at ; (1985) 62 ALR 53 at 57; cited in Fox v Percy  HCA 22; (2003) 214 CLR 118 at 128 .
Chambers v Jobling (1986) 7 NSWLR 1 at 10, cited in Fox v Percy supra.
Transcript of hearing, page 11.
Plaintiffs’ written submissions para 77(b).
Plaintiffs’ written submissions para 77(a).
Crabb v Arun District Council  Ch 179 at 198 per Scarman LJ; Waltons Stores (Interstate) Ltd v Maher  HCA 7; (1988) 164 CLR 387 at 404-405 per Mason CJ and Wilson J and 423 and 427 per Brennan J; see also the discussion in Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2015) at [17-285].
Dewhirst v Edwards  1 NSWLR 34 at 51.
See Meagher, Gummow and Lehane’s Equity: Doctrines & Remedies (5th ed, 2015) at [3-115].
- Published Case Name:
Plath v Plath & Anor
- Shortened Case Name:
Plath v Plath
 QCA 43
Morrison JA, McMurdo JA, Mullins JA
13 Mar 2020
- White Star Case:
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QDC 42||04 Apr 2019||Judgment for the plaintiffs on their claim to recover real property and the sum of $300,000 pursuant to a registered mortgage; defendant's counterclaim for the value of works and services performed to the real property dismissed: Ryrie DCJ.|
|Appeal Determined (QCA)|| QCA 171||04 Sep 2019||Defendant's application to stay the judgment in  QDC 42 pending appeal granted: McMurdo JA.|
|Appeal Determined (QCA)|| QCA 43||13 Mar 2020||Upon the appellant’s undertaking to repay to the State of Queensland such amount as was paid to him as a first home owner grant in 2009; time in which to appeal extended; appeal allowed; respondents' claim dismissed; appellant declared to be entitled to a registered release of the mortgage the subject of the respondents’ claim: Morrison and McMurdo JJA and Mullins JA.|