Allen v Allen[1997] QDC 208

[Before Forde DCJ]

[Beryl Viveian Allen and Theila Rochelle Allen]

BETWEEN:

AND:

JUDGMENT

Judgment delivered: 29 August 1997

BETWEEN:

AND:

REASONS FOR JUDGMENT - Forde D.C.J.

Delivered the 29th day of August 1997

Introduction

The plaintiff in this action is Beryl Vivian Allen. She was the wife of Douglas Cecil Allen who died on 20 April 1987 (“the deceased”). The plaintiff is 80 years of age. She sues her daughter, Theila Rochelle Allen, who is the defendant in these proceedings.

The action involves a claim by both parties for an interest in land which was originally described as subdivision 10 of resubdivision 50 and 51 of subdivision 60 and 67 of portion 47, county of Stanley, Parish of Nundah, being whole of the land contained in Certificate of Title volume 2931 folio 96 (“the original land”). Situated on the original land was a timber house which has been described in litigation as “the blue house” or “the timber house”. The defendant became the registered proprietor of the original land on 13 February 1974. The Memorandum of Transfer is dated 9 April, 1973 (Exhibit 2). Subsequently the land was subdivided. The original land as subdivided was known as lots 1, 2 and 3 on registered plan 151377, county of Stanley, parish of Nundah, being the whole of the land contained in certificate of title volume 5534, folio 68, folio 69 and folio 70 respectively. The defendant continued to be the registered proprietor of lot 2 upon which was situate “the timber house”. Lot 1 was transferred to the plaintiff and the deceased, on or about 25 October 1976. The transfer was registered on 11 January, 1977 (Exhibit 25A). Once the deceased passed away, the plaintiff became the registered proprietor (Exhibit 124, document 4). The record of death was registered on 29 March, 1989 (Exhibit 25B) (Exhibit 124, Document 5).

Lot 3 of the subdivision was transferred to the Brisbane City Council as a condition of the subdivision. (Exhibit 124, Document 16). It was subsequently transferred back to the plaintiff to become part of lot 1 and was thereafter known as lot 13. The Certificate of Title issued on 18 September, 1989 (Exhibit 124, document 16).

Background to Purchase and Transfers

It is pleaded that by an agreement made on or about 1974 between the deceased, the plaintiff and the defendant, the defendant agreed to be registered as a proprietor of the original land and to hold the said land as trustee for the deceased and the plaintiff. The subdivision was registered on 25 June 1976 (Exhibit 27). This facilitated the transfer by the defendant to the deceased and the plaintiff of lot 1. The plaintiff's case is that lot 1 was transferred by the defendant pursuant to the terms of a Declaration of Trust made on 11 May, 1976. In or about August 1976, the construction of a brick dwelling on the said lot 1 commenced. It was completed just before Christmas. The plaintiff and the deceased thereafter lived in the said brick dwelling for about 10 years.

There is a dispute in the case as to how the original land was paid for. The plaintiff contends that she received a gift from her mother in the sum of $6,000. Exhibit 1 evidences that transaction. The necessary gift duty forms were attended to in relation to part of the gift, namely $3,950, and a loan for the balance. The loan was subsequently converted into a gift from the plaintiff's mother, Mrs. Green, to her on 26 March 1974. The documentary evidence supports the proposition that she did receive $6,000 from her mother and that those moneys were used in the purchase of the original land at 32 Speight Street, Brighton.

In the proceedings another document (Exhibit 32) was presented signed by Mrs. Green and prepared by a Mr. Malcolm Dixon was presented. Mr. Dixon was a close friend of the defendant and provided financial assistance over the years to the Allen family. His company was responsible for the construction of the brick house. Subsequently, in 1989, the defendant attempted to sell lot 1 to him. That is mentioned by way of passing at this stage, but it does reflect his involvement. Initially, Mr. Dixon appeared in court pursuant to a subpoena served by the plaintiff's solicitors, and was reluctant to allow documents out of his possession. He appeared to me to be a most persistent and demanding character. The transcript shows the interchange between himself and the Bench during the course of his reluctantly handing over of the documents (page 173(F)) Exhibit 32 is Mrs. Green's statement, written by Mr. Dixon. In that note dated 17 February 1974, it is stated:

It seems to be common ground that the sum of $6,000 allegedly gifted to the plaintiff was the money used by way of deposit and legal fees referred to in Exhibit 32. The purchase price of the original land was $13,250.00. The defendant borrowed some $8,000 and the shortfall together with expenses was, I find, provided through funds originating from Mrs. Green. Either Exhibit 32 is an attempt to rewrite history or Exhibit 1 is a fiction. In view of the formality of the transaction as recorded in Exhibit 1, I am inclined to the view that Exhibit 32 was a document prepared by Mr. Dixon for the convenience of ensuring that the defendant's contribution to the original purchase was more than in fact it was. In this regard, in so far as the plaintiff's evidence is supported by documents, I find that she did provide the sum of $6,000 by way of deposit for the purchase of the original land. Mrs. Green signed Exhibit 32 on 17 February 1979. She forgave the debt to the plaintiff on 18 April 1974 (Part Exhibit 1). Mrs. Green, I find, was attempting to placate Mr. Dixon and the defendant. I find Exhibit 32 to be of no consequence. It makes no sense when Exhibit 1 is examined. Mrs. Green, by Exhibit 32, was attempting to give to the defendant monies which she had, I find, already gifted to the plaintiff.

The fact that the defendant did provide $8,000 is evidenced by a mortgage with the Commercial Savings Bank of Australia as mortgagee and the defendant as mortgagor of the original land. There seems little doubt that the defendant did borrow the sum of $8,000 for the purchase of the original land: see also Exhibits 101A, B, C.

Credit

In dealing with the question of credibility in this case, I approach it on the basis that unless the evidence of a witness is supported by some documentary evidence, then the evidence of that witness has to be scrutinised carefully. In other words, in each instance apart from the formal witnesses in the case such as Mr. Laird, the former bank manager, and the solicitor for the plaintiff and Mr. Vincent, the accountant, the oral evidence is unreliable in many aspects. It is a case where one cannot accept the totality of the evidence of any one of the Allen family or Mr. Dixon. However, to the extent that their evidence is supported by documentary evidence which is not in conflict with other documents, I am prepared to act upon it.

In this context, it is convenient to look at the effect of Exhibits 1, 32 and 15, and the evidence of some of the witnesses.

Exhibit 1

Exhibit 1 is an affidavit of Mr. O'Neil sworn on 9 August 1993. The exhibits to that affidavit included gift duty returns and assessments, together with a forgiveness of debt which indicates that the plaintiff did receive the sum of $6,000 from her mother, Rubina Green. Part of that exhibit is a letter from Mrs. Green to Mr. O'Neil. The effect of this letter was that Mrs. Green asked that the loan of $2,050 be changed from a loan into a gift from her to the plaintiff. Prior to that, the documentation had showed it to be a loan. The appropriate duty was then paid on the gift. The plaintiff had previously acknowledged the debt to her mother. These matters are fully documented in the documents forming part of Exhibit 1.

The original gift was for the sum of $3,950. This was assessed on 7 March 1973 for gift duty. Together with the later gift of $2,050, the sum of $6,000 was gifted by Mrs. Green to the plaintiff. The plaintiff's evidence in this regard is consistent with that of the documents and to that extent I accept her evidence. These monies were, according to her evidence, placed in her account. She regarded those monies as belonging to her. Given the nature of the documents, that evidence is credible.

Exhibit 32

The effect of this letter was an attempt by Mrs. Green to gift the monies to the defendant. The document was written out by Malcolm Dixon, an intimate friend of the defendant. Mr. Dixon has been involved in most if not all of the matters giving rise to these proceedings. He gave evidence in the case. Whatever the intention of Mrs. Green was, the fact that she had already gifted the monies to her daughter in my view prevented her from thereafter gifting it to her granddaughter, the defendant. The attempt to change the gift is inconsistent with the documentary evidence, and in particular, the letter of 26 March 1974, when she had Mr. O'Neill, the solicitor acting for her. It is also inconsistent with other legal documents in relation to gift duty being paid in April 1974. It is also inconsistent with the forgiveness of the debt of $2,050 owed by the plaintiff to her under a promissory note of 1 March 1973. The forgiveness was dated 18 April 1974.

I have formed the view that given the circumstances under which the document, which is Exhibit 32, signed by Mrs. Green it is of no effect whatsoever. It is a belated attempt by Mrs. Green to change the direction of the gift which had been clearly documented and which supported the legality of the gift from Mrs. Green to the plaintiff. It is noted that when Mrs. Green signed this document, she was some 82 years of age. I find that Mr. Dixon was an overbearing and forceful personality who was no stranger to commercial dealings.

Therefore, I find that the $6,000 which was part of the purchase price of the original land, was contributed by the plaintiff. What effect this had upon the equitable title of the original land is problematical.

Exhibit 15

It will be noted that Exhibit 15 was dated the same day as Exhibit 32. Mr. Dixon was the person who wrote out Exhibit 15. The document was signed by the deceased, Douglas Allen, on his behalf and on behalf of the plaintiff. It is accepted by the plaintiff that he had the authority to sign documents on her behalf.

It is necessary to look at the background upon which the Exhibit 15 was prepared. In this respect I found the evidence of Mr. Dixon to be helpful. His evidence in this respect can be found at transcript page 468(f). In effect, the late Mr. Allen wanted to move closer to Brisbane and to have Mr. Dixon arrange an investment house for the defendant in Brisbane. The plaintiff and the defendant gave similar evidence. On the trip to Brisbane to choose the house the deceased, Mr. Allen, made Mr. Dixon aware of a publication called “Banner for Christ”. The second home was intended to be built in Brisbane. Mr. Dixon stated:

Mr. Dixon stated that the house was purchased from the Public Curator by him on behalf of the defendant. The documents from the Department of Natural Resources show that Exhibit 2 is the transfer from the Public Curator to the defendant on 9 April 1973 of the property at 32 Speight Street, Brighton, the original land.

Both the plaintiff and Mr. Dixon, who was called on behalf of the defendant, gave evidence that the deceased, Douglas Allen, was very keen for the brick house to be built both for the plaintiff and to accommodate visitors from overseas. The latter seemed to be the most pressing reason. Given that the financial position of the plaintiff and the deceased was precarious, it was necessary for them to look to assistance from the defendant, and moreover Mr. Dixon in relation to the purchase of the original land and the subsequent subdivision and finally the financing for the building of the brick home on lot 1. Of course, lot 1 became part of lot 13 when lot 3 was transferred by the council to the plaintiff on 14 September 1989 for a nominal consideration. I shall deal with why lot 1 was transferred by the defendant to the plaintiff and the deceased in due course.

Effect of Exhibit 15

The following, I find, seems to be the original intention of the plaintiff and the deceased as evidenced by Exhibit 15:

This document was written out by Mr. Dixon. Where it specifically says that the plaintiff and the deceased were not willing to hold assets in their own name, it confuses the basis upon which the property was purchased. It also assumes that the original purchase monies were provided totally by the defendant. I have found to the contrary in this regard. To the extent that it is based on that false premise, then it is consistent with the plaintiff and the deceased not having the property held in their name in order to avoid any seizure by the Ballantyne family pursuant to any writ of execution. There seemed to be confusion on the part of the plaintiff and the deceased as to how the property would be held in the future.

The evidence of Mr. Dixon and the defendant is similar in this regard in that their evidence asserts the fact that at all material times the defendant held all right to property for both lot 1 and lot 2. In her evidence, the plaintiff said that (page 23) the reason the land was put in the defendant's name at first “was because I think she was borrowing more money on that house”. Earlier the plaintiff said: “I think it must have been registered in Thiela's name and then we got a block offer to put the brick house on.”

Defendant's Evidence

The defendant stated that the purpose in acquiring Speight Street, Brighton was to provide a home for her parents. The purchase price was $13,250.00. I am satisfied that the defendant contributed some $8,000.00 for this purchase.

I also accept her evidence that the financial contributions of the Ballantyne family to the defendant and her family assisted the Aliens considerably. The defendant had married Des Ballantyne.

The Allen family, with the help of the Ballantynes, purchased some flats in Quarry Street, Gladstone. By 1979, the defendant had sold her interest in those flats for some $70,000.00. After helping to pay the debts of her mother, some $12,000.00 was used to assist in the final payment for building the brick home. There is no dispute in this case that the defendant and Mr. Dixon contributed considerably to the construction of the brick house. I accept that she paid some $12,000.00 at least to Dixon for his outlays. The defendant also contended that she borrowed $36,000.00 from General Credits (Exhibit 93) and that she contributed this to the construction of the brick house. It seems clear from the documentary evidence that the defendant did not contribute the total of the sum of $36,000.00 which she borrowed:

Exhibit 44

This is a document which was prepared by the defendant's solicitors, Messrs. M.G. Lyons, Gladstone. It acknowledges that some $11,351.99 was used for the defendant's personal purposes. Also, there was a payout of $5,648.00 referable to the first loan of $8,000.00 (Exhibit 86 Appendix 2 being a file note of the defendant's solicitor) when the original land at Speight Street was purchased. In fact, Exhibit 105 shows that the balance of the loan account (3779857) viz. $7,365.59 was transferred to the CB A Gladstone on 12 July 1977. The defendant denied any part of this was paid out of the $36,000.00 (372:60).

Exhibit 102A

This is a CB A Bank Statement (Sandgate Branch) of the defendant as at 14 January 1977. The balance is a debit of $10,055.33. As at 13 July 1977, the debit was $9,982.30 and it was finalised. (Exhibit 102B). This debit balance was transferred to the Gladstone branch on 25 January 1978 (Exhibit 102C). On 25 January 1978, the sum of $36,000.00 was credited to the defendant's current account (Gladstone) Exhibit 103). On the same day, $9,982.30 was debited to the same account thus extinguishing the personal debt of the defendant at the Sandgate branch. In total, some $19,581.00 was used from the General Credit's loan for personal use, seemingly unrelated to the brick house. I find that the explanation given by the defendant to be unsatisfactory.

Therefore, the defendant has a serious credibility problem on a major issue in the case. Also, the conduct of the parties has assisted me in giving effect to some of the documentary exhibits. Even some of these seem contrived e.g. Exhibit 32 and the Deed of Declaration of Trust which was referred to but never produced. I specifically reject the defendant's evidence when she says that the loan from War Services was not used to pay for the brick home. I find that she probably paid Mr. Dixon $19,000.00 from the General Credits loan. (Exhibit 86 Appendix 2). Of this, $14,582.00 was paid in respect of the brick house and the balance for work on the premises in Quarry Street (Exhibit 104 15 January 1978). Exhibit 104 is a journal prepared for the defendant by her brother, Edgar Allen.

She had given sworn testimony that all of the $36,000.00 was spent on the brick house. This was an attempt to maximize her contribution to Lot 1. In fact, whatever she did spend was limited by the Acknowledgment of Debt (Exhibit 68). This has been discussed elsewhere. Exhibit 100 is an acknowledgement by the defendant that she received some $40,000.00 in consideration as a result of the transfer of the Caloundra land to her.

The defendant's responses to diary notes or summaries of her family's indebtedness prepared by her solicitor, I find, and prepared on her instructions, were evasive and often non-responsive. In this regard, the plaintiff and the defendant had something in common when it came to giving explanations on documents adversely affecting their respective cases. As stated earlier, I have given more weight to the documentary evidence in this case than to oral evidence.

Transfer of Lot 1

The defendant contends that the sole reason for the transfer was to enable her parents to get the War Service loan. Assume that to be true as at 1976. By 1979, with the borrowing by the plaintiff and the deceased and their expectations given their expenditure on the brick home, I find that upon the acknowledgement of debt being given effect to, that the intentions and expectations of the parties changed.

The statements in Exhibit 15 must be read subject to the plaintiff and the deceased subsequently borrowing $15,000.00 from the CB A Bank on 26 October 1976. The original intention I find, was varied as reflected in the actions of the parties. The approach of Muirhead A.J. is helpful as in Arthur v. Public Trustee Supreme Court of Northern Territory, unreported 15.4.87

The house which was situated on the original land has been referred to in the evidence as “the blue house” or the “timber cottage”. The plaintiff and her husband lived there from 1973 to about 1976 when lot 1 was subdivided from the original land and the brick home was built.

In order to obtain a War Service loan, it was necessary to put lot 1 and moreover the brick home, in the name of the plaintiff and the deceased (Document 1, Exhibit 124). They intended to borrow $15,000. Originally, the defendant borrowed the sum of $8,000 to purchase the original lands. A Bill of Mortgage was executed in favour of the CB A Bank and dated 7 January 1974, Exhibit 37. Subsequently, a Bill of Mortgage was executed by the plaintiff and the deceased on lot 1 on 26 October 1976, (Exhibit 41). By that time the plaintiff and the deceased were the owners, it having been transferred on 25 October 1976 (Exhibit 40). The transfer was registered on 11 January 1977. It was transferred by the defendant. The Bill of Mortgage to the Commercial Bank of Australia Limited was dated 26 October 1976 in respect of lot 1 to secure a loan for $15,000. Subsequently, that debt was paid out by the Defence Services Home Corporation (DSHC). Mr. Lacey confirmed that he was employed by the DSHC at all material times. An amount of $15,000 was advanced on or about 3 March 1977. It was conceded initially by the plaintiff's counsel that there was no evidence at that point the $15,000 originally borrowed from the CB A Bank was used for the construction of the home. Subsequent evidence from the defence witnesses pointed in the opposite direction. Mr. Dixon, on the other hand, contended that these monies were never used for the building of the home, but rather for the development of a gold mine. Strangely, Mr. Dixon supported each position. He contended for the latter position at trial.

Evidence of Mr. Dixon

In fact, Mr. Dixon gave evidence that the cottage on the mining lease was upgraded to a comfortable residence and expenditure on the hire of equipment for the mine occurred. He said that the $15,000 from the Defence Services loan was used for that purpose. However, the evidence of Mr. Dixon was contradicted by Exhibit 120 and the evidence of the defendant, who called Mr. Dixon. The following matters lead me to find that the $15,000 borrowed by the plaintiff and the deceased was probably used by them for the construction of the brick house or related improvements.

I am satisfied that the sum of $15,000 borrowed by the deceased and the plaintiff was used for the construction of the brick house. The contribution of $15,000, I find, was made with the expectation that they would have some interest in the brick house. (The evidence of Mr. Lacey from the Defence Services Homes Corporation confirms this (228.42-60).

Role of Mr. Dixon

Initially Mr. Dixon had a business relationship with the defendant which developed into an intimate relationship. In 1972 he had assisted and arranged the finance and guaranteed same for the defendant for a brick veneer house for investment purposes at New Auckland, Gladstone. He met the plaintiff and the deceased through the defendant. They all formed a close relationship and Mr. Dixon expressed the view that he regarded himself more of a son. Although he advised them against moving from Gladstone to Brisbane, he then proceeded to assist, as he had always done with the Allen family. He assisted Mr. Edgar Allen with his debts, including both business and bookmaking debts. There seems little doubt that throughout the period through from 1960's, ‘70's and ‘80's that the Allen family had financial problems. Mr. Dixon described the plaintiff and the deceased as “paupers” on a pension (Exhibit 120). It also seems clear that both the deceased and his son Edgar were bookmakers and unsuccessful ones at that. For example, to enable Edgar Allen to continue bookmaking, Mr. Dixon would put cash into a bank account so that there would be a minimum deposit able to be relied upon by Edgar Allen for the purpose of maintaining his bookmakers licence. Subsequently the funds would be withdrawn by Mr. Dixon. This evidence was not contested and I so find. It would be fair to say that Mr. Dixon went out of his way to assist the Allen family. He has continued to have a close relationship with the defendant and this, together with his generous nature, I find, allowed him to provide both moral and financial support to the family over many years. Even when he saw that the land at Speight Street, Brighton, was not in a good position, he decided to assist as it met the requirements of the Allen family. In giving his evidence, he has once again attempted to help the defendant. He has attempted to be frank but in various ways documentary evidence is inconsistent with his evidence at trial; e.g. Exhibit 120 where he says the $15,000 was contributed to the construction, whereas at trial he asserted it was used to develop a mine. Also, he denied a conversation with Bruce Allen but Exhibit 123B proved this to be untrue. Therefore, in assessing his evidence, one must place more weight on documentary evidence. Mr. Dixon described the proposed building of the brick home as the deceased's attempt to “honour his commitment to God”. This is supported by statements of the deceased in various letters. Initially, Mr. Dixon provided the expertise to get the project organised and financed. The expenditure by Mr. Dixon is evidenced by the CB A account 96038336 (See also Exhibit 23). The plaintiff acknowledged in a letter 2nd March, 1976 to the defendant that the sum of $8,000.00 had been put into an account.

Mr. Dixon was asked about Exhibit 42 which purports to be a payment by Edgar Allen for expenses incurred at Speight Street. Mr. Dixon said that at no stage did Edgar Allen pay money to Dixon Investments for expenses on the brick house in Speight Street. He said there was money owed in relation to the flats in Gladstone, and also to pay other accounts including the Rockhampton Jockey Club and for horse racing expenses. Edgar Allen and Mr. Dixon owned a horse called Guntawang Lad. Apart from the cost of racing horses, I find that Edgar Allen was supported in his bookmaking venture by Mr. Dixon and that it was more likely that the $5,000 was to pay gambling debts. I found Mr. Edgar Allen to be a most evasive witness. This I find reflects adversely on his credit. He said that he had previously been prepared to lie and cheat for the defendant. Now, he was attempting to help his mother. I found his evidence most unhelpful.

Mr. Dixon gave evidence that initially the plaintiff and the deceased failed to obtain a War Service loan. He thereupon proceeded to do the subdivision and provide any necessary funds. A bridging loan was obtained for $15,000 from the Commercial Bank. He stated the $15,000 went to the gold mine at Neumwonta. I have already made findings in that respect. He described the loan from the Defence Services as a sham as it was never intended to be used on the house. I generally reject his evidence in this regard. Once the house was built, of course, the plaintiff and the deceased had ample security to obtain the loan from War Services. I note that War Services valued the property at $45,743 being $8,000 for the land and $36,993 for the house. This was in 1976. This evidence was given by Mr. Lacey, an employee of the Defence Service Homes Corporation (218.46-50).

The plaintiff gave evidence that she continues to pay off the war service loan (111.34) and has paid the rates and insurance on the brick house. This, I find, ceased after the defendant took possession of the brick house in May, 1989. The defendant has paid the rates and insurance since that time.

Effect of Documents

It is alleged by the plaintiff that there was a declaration of trust by the defendant on 11th May, 1976 whereby the defendant acknowledged that she held the original land on trust for the plaintiff and the deceased. Although this document was not produced, it was referred to in documents prepared by her then solicitor Mr. Lyons: See Clause 29 Bill of Mortgage Exhibit 70 and Exhibit 68.

I am satisfied that

Expectation of Plaintiff and Deceased

However, one must consider the effect of the contribution of $6,000.00 by the plaintiff and the expectation which she held that she and her deceased husband would be provided with some accommodation on the original property: Riches v. Hogben p. 300.

The plaintiff and the defendant are ad idem in this respect i.e. that accommodation would be provided and the brick house built. The defendant contends that no beneficial interest in Lot 2 and Lot 13 is vested in the plaintiff. In my view the following findings are open on the evidence:

I find that the defendant held lot 2 both legally and beneficially, at least from the date of the transfer of lot 1 to the plaintiff and the deceased. No further accounting or equities need be considered in relation to Lot 2.

Deed of Acknowledgment of debt 6.8.79 (Exhibits 68 and 69)

Exhibit 68 is an acknowledgement by the plaintiff and the deceased that they were indebted to the defendant to the extent of $60,000.00. The deed recites various matters which it is necessary to repeat to understand the importance of the document.

By their conduct, I find that the plaintiff and the deceased gave effect to this deed by the transfer to the defendant of the Caloundra land. Its net value was $40,000 on transfer. It was subsequently sold by a mortgagee in possession in 1993 for $300,000. The defendant had allowed Mr. Dixon's son to use it as security for a loan and which he failed to pay as required. The plaintiff would argue that the $40,000.00 was in full satisfaction of all debts between herself and the defendant. She relies on statements by the deceased in letters that the debts owing to the defendant should be settled “once and for all” (Exhibit 3, 87). I find that she was aware of the value of the land viz. $45,000. (Exhibit 46 was copied in hand by the deceased). These were unilateral statements by the deceased and were not acknowledged or accepted by the defendant. Therefore, upon the sale of the Caloundra land on 14th November 1979, I find that a debt of $20,000.00 remained outstanding to the defendant. This remains unpaid.

Exhibit 69 was a second deed. It also was an acknowledgement of debt. This related to the flats property at 13 Quarry Street, Gladstone on the basis that the defendant had expended monies on this property and provided other improvements. The plaintiff and the deceased acknowledged a debt of $19,600.00. Although this debt is not directly related to the original lands, I find that some rents from this property were used by the plaintiff and the deceased to pay off the War Services loan on Lot 1 from time to time (defendant p. 402.56). The parties in this action have approached the case on the basis that any accounting between the parties ought be resolved by this case. Therefore, I intend to allow a further credit of $19,600.00 in the defendant's favour. As at November 1979, the defendant was owed $39,600.00. Allowing interest at 10% for the total period to August, 1997 (7 2/3 years) the amount outstanding and owed to the defendant by the plaintiff is $69,960.00.

It follows that any proprietary interest held by the defendant in Lot 1 was extinguished by the acknowledgement of the debts and the subsequent part payment of$40,000.00 to her. I find from that point onwards that the legal and beneficial title vested in the plaintiff and the deceased (until his death). At this point, the plaintiff is the sole registered proprietor. There is nothing in the other exhibits, e.g., 72, 73 and 74 which detracts from these findings. The plaintiff and the deceased were trying to be co-operative. It does not prevent the plaintiff from asserting her legal rights.

As at 23rd December 1976, Lot 1 including the brick house was valued at $45,743. (Exhibit 50). As at 27th October 1989, the market value of Lot 1 including the brick house was $97,000.00. Exhibit 78 provides some evidence of market value. The acknowledgment of $60,000.00 in my view more than compensated the defendant for any proprietary interest held at that time by her. One must not lose sight of the fact that $6,000.00 was contributed towards the purchase of the original land for a home for the plaintiff, the deceased and the plaintiff's mother. This equity continued and the transfer of Lot 1 to the plaintiff and the deceased must be seen as part of the family arrangement to provide such a home. However, I am satisfied that the deed of acknowledgment of debt finalised the account to that point between the parties including the $6,000.00. I refer to the defendant's evidence in this regard.

Admittedly, there were some improvements made after that date (November 1979). Exhibit 106 is made up of some receipts for work done by the defendant on Lot 1 subsequently. They total some $1,486.31. The items in Exhibit 118 seem to be of such as to pre-date the acknowledgment of debt and so are not to be added to the defendant's credit again. It seems to me to be reasonable to add $2,000.00 to the sum due and owing to the defendant, viz. $69,960.00. This figure of $2,000.00 includes an interest component. Thus far, the defendant is owed $71,960.00 by the plaintiff.

Deed of Gift (10.9.79): Exhibit 8

By a deed executed by the plaintiff and the deceased in consideration of natural love and affection gifted to the defendant the sum of $80,000.00. When one considers that on 6th August, 1979, the same parties seemed to have resolved their financial arrangements “once and for all”, the reasons for the deed of gift and related Bill of Mortgage (Exhibit 7) and Wills are elusive. No money was paid to the defendant. No consideration of value seems to have passed. In any event, I am not satisfied that the Deed of Gift in the Bill of Mortgage ever intended to have legal effect between the parties.

Bill of Mortgage (10.9.79): Exhibit 7

The said Bill was executed on the same day as the Deed of Gift. The consideration was said to be $80,000.00. No money was paid. It seems to have been an attempt to secure the said gift.

Relevantly the Bill of Mortgage provided:

This power of Attorney was registered in the office of the Registrar of Titles on 26th September, 1989.

The plaintiff's case is that the defendant is a volunteer who gave no consideration for the security which the Bill of Mortgage purported to effect. The Bill of Mortgage was not registered in accordance with the provisions of the Real Property Act 1867. It is pleaded that therefore the said Bill of Mortgage was not effectual to pass any interest in Lot 1 (or Lot 2) on Registered Plan 151377. Certainly, the Bill of Mortgage does not mention Lot 2. Lot 1 became part of Lot 13 on 18th September, 1989 (Exhibit 16).

Conduct following execution of Bill of Mortgage:

In order to avoid the consequences of the Deed of Gift and the Bill of Mortgage, the plaintiff's counsel has pleaded that the plaintiff and the deceased were not independently advised (paragraph 13 Amended Reply and Answer). The evidence in this respect is that:

I find that there is no basis whatsoever for saying that the plaintiff is now entitled to avoid the consequences of the documents on the basis that she and the deceased were not independently advised.

Effect of Gift and Bill of Mortgage - 19 September 1979 - (Exhibits 7 & 8)

The overall indebtedness between the plaintiff and the deceased on one part and the defendant on the other, was resolved I find, by the acknowledgment of debt for $60,000. This transaction has been referred to. If one looks to Exhibit 15, some inspiration is found to explain the further “gift” of $80,000.00 and the subsequent security. The deceased had reason to be concerned about the Ballantyne family seeking to recover monies from the Allen family. The evidence of Mr Dixon was:

This is the only rational explanation for the plaintiff and the deceased giving a gift and then putting a mortgage on their own property. I am satisfied that no consideration was provided or given inter parties. Further, there was no intention to be legally bound as between themselves. Mr Dixon seemed to be the facilitator. Whether the said documents would have achieved the desired effect if challenged by a third party is not a matter which need concern me.

No consideration/under seal

Although the documents viz. Exhibit 7 and 8 appear to be under seal, it is my view that this is of no consequence:

See also Corin v. Patton (1990) 169 CLR 54. Mr and Mrs Patton were the registered proprietors as joint tenants of certain land. She executed a memorandum of transfer in favour of Mr Corin. He executed a contemporaneous deed of trust as bare trustee for Mrs Patton. Deane J. said at 577-8:

It is not suggested by either side in the present case that if the Bill of Mortgage is ineffectual that a declaration of trust is appropriate.

The effect of the decision in Norman v. Federal Commissioners of Taxation (1963) 109 CLR 9 was that in equity there was a valid gift of property transferable at law if the donor intending to make a disposition to the donor did all that on her part is necessary to give effect to her intention and armed the donor with the means of completing the gift according to the requirements of the law. Having cited that principle the learned authors Duncan and Wallace added at 12.120:

The legal estate in land will not pass until registration. Once the unregistered Bill or Mortgage had been delivered to the defendant by the plaintiff and the deceased, did the defendant have the power to require third parties to concur in the production of the Certificate of Title? In Anning v. Anning ibid Griffith C.J. said that the gift would be complete upon “execution of the transfer and the delivery of it to the donor.

In Brunker v. Perpetual Trustee Co Ltd ibid at 602-4, Dixon J said, after referring to the principle in Milroy v. Lord:

Dixon J distinguished O'Regan v. Commissioner of Stamp Duties ibid as the transfers of land

It is relevant as to whether the defendant is able to lodge the Bill of Mortgage even up until the present time. S. 43 ibid says that instruments are not effectual until entry in the registry book. S. 84 of the Property Law Act sets out the prerequisites for the power of sale. In Mathieson v. The Mercantile Finance and Agency Company Limited 17 VLR 271, it was held that the demand of payment and notice of sale before registration of the mortgage were valid and effectual to authorize a sale after registration. Registration has not occurred in the present case. It was further held in Mathieson's case that the security in respect to the land itself only comes into existence when the deed is registered. As the defendant could not even register Exhibit 7 without the assistance of the plaintiff, any purported sale would be void.

Deane J. in Corin v. Patton said at 580.5:

As Murphy J. put it in Seale v. Perry [1982] V.R. 193 at 220

In the present case, there is no evidence to support a finding that the plaintiff and the deceased intended the Bill of Mortgage to have the effect of transferring any interest to the defendant: Associated Securities Ltd v. Perry [1978] Qd. R. 13. It is doubtful that registration of the Bill of Mortgage could have occurred without the further assistance of the donor/donors especially when it is in the control of a third party: Commissioner for Australian Federal Police v. Cox (1987) 70 ALR 509 at 518-9 and Pincus J. took a strict view of this:

In fact, Mr Lacey said at p. 222 of the transcript when asked about the consent by the DSHC to a further mortgage:

At 228:

Further at 232:

Having perused the evidence carefully and having the benefit of analyzing the authorities, I am satisfied that some further steps (albeit minor) were probably required to be taken by the donors or third parties at their request to find effect to the gift and Bill of Mortgage after their execution in order to facilitate registration. I am not, in effect, satisfied that the defendant could have demanded that the Certificate of Title be produced without the plaintiff or the deceased making the necessary request.

Brennan J. as he then was stated in Corin v. Patton:

Similar considerations apply in the present case.

By 1984, the plaintiff and the deceased had changed their Wills to exclude the defendant and contrary to the said Bill of Mortgage (clause 27, 28). This in my view amounted to a revocation of any gift. Also, the new title for Lot 1 and 2 issued on 14th September, 1989.

The Bill of Mortgage (Exhibit 7) was not granted over Lot 13. The Certificate of Title volume 5534 Folio 68 has been cancelled. Whatever the attitude of the first mortgagee was, the defendant armed with a second mortgagee cannot, without the assistance of the plaintiff or the Court, produce the relevant Certificate of Title to allow registration pursuant to s. 43 of the Real Property Act 1861: S. 56 of the Real Property Act 1861 requires an accurate statement of the estate to be mortgaged.

Section 80 Property Law Act 1974

The Defence relies upon this section to avoid the consequences of further acts being required to be done by the donors/donor ie. the plaintiff and the deceased (paras. 36D (a) and 36E(b) and S. 36G).

The question is not about whether the DSHC would have consented or not to the execution or registration of the Bill of Mortgage. The question is whether the defendant as donee could without the assistance of the court in fact have so registered the Bill of Mortgage.

The amalgamation of Lot 1 and Lot 3 into Lot 13 has been dealt with. At the time of the execution of the Bill of Mortgage Lot 1 was a separate title. Under s. 80(2) the defendant as mortgagee could have asked DSHC to produce the certificate of title to allow registration of the Bill of Mortgage. However, if the date of execution is the relevant date, the mortgagors were required to apply for consent from the DSHC. They did not do so. It was a step probably necessary to be taken to facilitate the consent. Therefore, s. 80 does not assist the defendant: See also the remarks of Dixon J ibid.

The defence submitted that Westpac was willing to produce the title for registration of the defendant's mortgage at all material times. Westpac took over the DSHC mortgage on 28th February 1989. By this time, the donors had revoked their gifts. (Exhibit 5) The relevant time to determine whether there was any further steps required to be taken by the donors was prior to the revocation. Once the gift was properly revoked the Bill of Mortgage did not secure anything. Under the DSHC policy guidelines, I have found that the donors would probably have had to apply for consent to put a second mortgage on Lot 1. Even if this is incorrect, by September 1989, notwithstanding the defendant was in possession of Lot 1, her right to sell Lot 13 was disputed. The Bill of Mortgage (Exhibit 7) secured Lot 1 only.

Registration of Power of Attorney

The Defence relies on clause 22. It is contended that the stamped Bill of Mortgage contains within itself confirmation of registration of the power of attorney clause. It is pleaded in paragraph 36B. It is common ground that the Bill of Mortgage was not registered as distinct from clause 22.

The plaintiff's submissions refer to the power of attorney under clause 24 of the Bill of Mortgage. This is an obvious misunderstanding of the defence case. In any event put simply, what the defence contends is that as long as the relevant clause of the Bill of Mortgage is registered, then the mortgagee is entitled to sell the property by exercising the power of attorney. This argument seems to contradict the requirements of registration of the security as provided for in Mathieson's case ibid.

Judgment for foreclosure seems to be a prerequisite to the exercise of the power under clause 22. The power of attorney allows the necessary paper work to be attended to facilitate a transfer. The power of sale is found in clause 8 and also the Property Law Act. To rely solely on clause 22 overlooks the statutory framework applicable to the rights and obligations of the mortgagee.

Statutory Framework

The exercise of powers of sale by mortgagees is regulated by s. 84 of the Property Law Act. It is not disputed that the defendant gave notice to the plaintiff of her intention to exercise a power of sale under the Act. The defendant has been in possession of Lot 1 since that date. For the defendant to exercise a power of sale there must be a default under the Bill of Mortgage. It is true to say that if the Bill of Mortgage is unenforceable, then it cannot be relied upon to validate the notice. Clause 22 cannot be used as a basis for substantive rights. Section 84 has no operation in relation to the exercise of any right to possession even if possession is taken for the purpose of exercising a power of sale: McVeigh v. Petterwood Group Pty. Ltd. (Queensland Supreme Court Kneipp J. 12.10.87 unreported).

It has always been in dispute that the power of sale was exercisable by the defendant. Given my findings that the Bill of Mortgage is unenforceable or of no effect, the defendant is, I find, not entitled to proceed to sell Lot 1 aforesaid. She is hereby restrained from so doing. The defendant has abandoned any reliance on the option to purchase granted to Malcolm Dixon. In any event, Mathieson's case is authority for the proposition that the defendant cannot rely on an unregistered mortgage to sell Lot 1.

S. 32 Defence Services Homes Act 1918

This section provides as follows:—

The word “Director” was changed to “Corporation” in subsequent amendments. The section was repealed in 1988.

For present purposes, the plaintiff relied on the absence of consent. The Act is more forceful and says that the mortgage is void and of no effect without the consent in writing of the Director to the mortgage.

This was not specifically pleaded and so was not the subject of argument.

In any event, on the view which I have taken as to the unenforceability of the Bill of Mortgage, it is of academic interest only.

Damages and 31 July 1989 Injunction

The following written submission was made by the defendant's solicitor in this regard:

Apart from an alleged undertaking about damages in the written submission, no evidence has been led about any losses. Even if effect could be given to the undertaking given by the plaintiff, any damages would be nominal in the absence of evidence to support a loss.

This assumes, of course, that the defendant was entitled to sell Lot 1 at that time.

Admissibility of Evidence

The plaintiff through her counsel gave evidence from time to time about her intention and that of her husband, the deceased. Objection was taken as to what her husband may have intended or comments made by him in the presence of the plaintiff. In effect, it is hearsay evidence and usually of a self serving nature. In Arthur v. Public Trustee ibid, paragraph 9 of the following observation is made:

There are many documents in this case signed by the deceased which are more probative of the issues e.g. Exhibits 13, 15 and 72. I otherwise adopt the approach espoused in Arthur's case.

Proprietary Estoppel: Defence paras. 36J - 36N

In the first instance, the defendant held the original land on trust for the plaintiff and the deceased. She then transferred Lot 1 to them as registered proprietors. The defendant says this was done for convenience. These matters have been canvassed elsewhere.

On the basis that the Bill of Mortgage, moreover the Deed of Gift, are of no legal consequence, the defendant seeks to set up an equity in Lot 1. I have dealt with Lot 2 elsewhere.

The starting point with this type of claim is Ramsden v. Dyson (1866) LR 1 HL 129.

The principle is that where the plaintiff seeks to recover land from the defendant, in circumstances where the defendant has, to the knowledge of the plaintiff, expended moneys in the mistaken belief that the land was his, the plaintiff can recover only if he offers to reimburse the defendant for his expenditure. Exhibit 15 would have given the defendant some expectation that the land would be hers. However, by transferring legal title of the land to her parents and allowing them to expend money, left her with a mistaken belief, in my view, as to ownership. Equity binds the owner of property who induces another to expect an interest in the property will be conferred on her: Ramsden v. Dyson ibid. Also, equity binds the donor of property where after the making of an imperfect gift, the donor induces the donee to act on the assumption that the imperfect gift is effective or on the expectation that it will be made effective: “Equity: Doctrines and Remedies” para. 1715; Dillwyn v. Llewelyn (1862) 4 De GF & J 517; 45 ER 1285; Walton Stores (Interstate) Ltd. v. Maher (1988) 164 C.L.R. 387, 420; Corin v. Patton ibid 580; Riches v. Hogben ibid 300-301.

In the present case both parties expended monies with an expectation that each held an interest in Lot 1. It is clear that on the plaintiff's part the original contribution of $6,000.00 for the original lands, the transfer of Lot 1 to her and the deceased, the subsequent $15,000.00 expenditure by them gave rise to an expectation. On the defendant's part, Exhibit 15 gave her some expectation in 1974 at least that the land would be hers. Subsequent events overtook this belief, but the plaintiff ought be made to compensate her in view of statements to be found in Exhibits 72 and 73. The plaintiff and the deceased recognized that the defendant or Mr. Dixon provided substantial expenditure on Lot 1. Mr. Dixon, he says, was repaid by the defendant. This was not disputed.

The plaintiff and the deceased acknowledged this indebtedness to the extent of $60,000.00. This sum included expenditure on Lot 2 as well. This aspect has been discussed. At this point it is established to my satisfaction that the defendant is owed with interest some $71,960.

However, she has been in possession of the brick house on Lot 1 since April, 1989. She has had the benefit of living in the home or she could have rented same. Either way, she should account to the plaintiff who has lived elsewhere and has not had the benefit of income from Lot 1. Therefore, there must be some accounting between the parties. She who seeks equity must do equity. The defendant has conducted herself as if she were the mortgagee in possession. The learned authors Meagher et al at para. 2506 state:

See also Sea brook & Ors v. McMullan (1908) 10 WALR 47 at 53.

Mr. Vincent, the accountant, gave evidence that over the period that the defendant has been in possession the rent received would approximate $60,000.00. Rates and insurance would be in the vicinity of $5,000.00. This evidence was not challenged, leaving a net rental income of $55,000.00. The defendant has lived in the brick house since April, 1989. I do not propose to add any interest to rent monies as the defendant has maintained the property throughout this period. This is a separate consideration to the rates and insurance paid by her. The plaintiff acquiesced in having the defendant reside there.

It was submitted that any notional income from rent should be reduced because of the tax otherwise payable by the defendant on such income. This does seem appropriate in the circumstances as the figure of $71,960 is not a taxable amount per se. It seems appropriate also as she has lived there herself.

The tax rate for this period where excess income is earned is carried over the threshold e.g. $5,100 - $5,400 is 20%. Therefore, I reduce the income by $11,000. This produces a figure of $44,000 which is to be deducted from $71,960. The defendant is entitled to a judgment on her counter-claim of $27,960.

Costs

The plaintiff has succeeded in relation to her claim of ownership in relation to Lot 1. The defendant has succeeded in relation to her claim of ownership in relation to Lot 2. There has been an adjustment in the defendant's favour of an amount of $27,960.00. However, in a global sense, the defendant has not recovered more than the value of Lot 1.

An order to tax costs would add to the burden of costs already incurred by each of the parties. One cannot say that the evidence relating to Lot 1 took more or less time and was more complex than the evidence in relation to the claim for Lot 2.

It seems appropriate given the difficulty in a case of this type of trying to costs the claim and counter-claim to make no order as to costs.

Declarations and Orders