Sorbello v Sorbello[2005] QSC 219

SUPREME COURT OF QUEENSLAND

1. MULLINS J: The plaintiffs are the children of the first defendant and his late wife Mrs Debbie Sorbello (“Mrs Sorbello”).  The second defendant is a company associated with the first defendant.  The plaintiff Gina Sorbello (“Gina”) was born in November 1980.  The plaintiff Jai Sorbello (“Jai”) was born in March 1983.  The plaintiff Andre Sorbello (“Andre”) who was born in June 1994 sues by his litigation guardian, Mrs Beryl Anderson, who is the mother of Mrs Sorbello and the grandmother of the plaintiffs.  Mrs Sorbello was diagnosed with cervical cancer in January 1995 and passed away on 17 November 1995.

2. The plaintiffs allege that in or about February 1995 the deceased and the first defendant made an agreement (“the alleged agreement”) which is pleaded in paragraph 4 of the statement of claim as follows:

“a.  The First Defendant promised that the insurance policy nominated to be payable to the First Defendant were to be held and or received by him in the sum of $50,000.00 for his own benefit and in the sum of $100,000.00 for the benefit of their children, GINA SHEZ MARIA SORBELLO JAI DESMOND SORBELLO and ANDRE GIOVANI SORBELLO;

b.The First Defendant promised that the Deceased’s equity (or equitable share had their joint tenancy in their matrimonial home at 27 Pintail Crescent, Burleigh Waters aforesaid been severed (her ‘equity’)) in the matrimonial home was to be held beneficially for their children, GINA SHEZ MARIA SORBELLO, JAI DESMOND SORBELLO and ANDRE GIOVANI SORBELLO;

c.On the faith of such promises, the Deceased made a will making the First Defendant her sole beneficiary in equity and not otherwise as might have benefited the Plaintiffs;

d.On the faith of such promises the Deceased agreed that the First Defendant should be beneficially entitled to $50,000 of the life insurance proceeds on her death;

e.On the faith of such promises, the Deceased took no further steps to secure $100,000.00 of the insurance proceeds or her equity in the matrimonial home for the Plaintiffs, GINA SHEZ MARIA SORBELLO JAI DESMOND SORBELLO and ANDRE GIOVANI SORBELLO the nomination of her children as part beneficiaries of the proceeds of her life insurance policy or by way of severance of the joint tenancy.”             

3. The plaintiffs claim the alleged agreement constitutes a contract for their benefit within the terms of s 55 of the Property Law Act 1974 (“PLA”).  Gina and Jai have purported to accept the promises contained in the alleged agreement, as has Mrs Anderson on behalf of Andre.  It is alternatively alleged, if Mrs Anderson were unable to accept the promises on behalf of Andre, that as Andre is a minor, the first defendant is obliged to retain Andre’s entitlements until he reaches 18 years of age.

4. The plaintiffs seek specific performance of the alleged agreement or damages for breach of the alleged agreement or equitable compensation for breach of trust, after allowance is made for the sum of $30,000 which is acknowledged by the plaintiffs to have been applied by the first defendant for the benefit of Gina. The defendant denies that there was any agreement as alleged by the plaintiffs and claims that if there were any enforceable agreement entered into, it was on the terms set out in paragraph 3(c) of the further amended defence:

“The first defendant and the deceased had discussed the maintenance and support of the plaintiff children, such discussions occurring between February and October 1995; they discussed that the children would be maintained and supported by the first defendant in an appropriate manner the process of which was at the sole discretion of the first defendant in his capacity as father of the children.  It was agreed between the deceased and the first defendant that a sum of $100,000 would be allocated for, inter alia, maintenance and support; with such amount to be allocated equally between the plaintiffs for their maintenance and support with the method and timing of the allocation to be in the absolute discretion of the first defendant.  There was no agreement that the monies would be paid to the children in a fixed amount, at any specific time or in any specific manner nor that any monies would be paid upon the children reaching the age of majority; nor was there any agreement that the monies would be held on trust for the Plaintiffs.”

Background facts

5. The first defendant and Mrs Sorbello were married in September 1979. At the time of the marriage neither party had significant assets or liabilities. They resided at a maisonette owned by the deceased’s parents. Mrs Sorbello worked as a hairdresser until Gina was born. About that time the parents of Mrs Sorbello lent approximately $4,000 for a van and stock to start a car striping business in which the first defendant worked and Mrs Sorbello looked after the business records. The loan was later repaid. In 1983 the first defendant and Mrs Sorbello purchased a block of land at Pinnacle Drive, Townsville. They built a house with the assistance of Mrs Sorbello’s father, Mr Anderson, who provided his labour without charge, but they paid for the materials. They sold that house and built another house in Townsville. They sold that second home and their business when they decided to relocate to the Gold Coast where they acquired another car striping business in which Mrs Sorbello also looked after the accounts. They bought a house at Burleigh Waters. They sold that house in order to purchase one at Pintail Crescent (“the Pintail home”). That was the same street in which Mr and Mrs Anderson were building their house. Mrs Sorbello and the first defendant owned the Pintail home as joint tenants.

6. In accordance with insurance advice the first defendant received after the birth of Andre when he was increasing his own life insurance namely, that there should be a policy on Mrs Sorbello’s life in case anything happened to her, Mrs Sorbello took out a life insurance policy (“the policy”) with Suncorp Superannuation Pty Ltd (“Suncorp”) as trustee for Suncorp Personal Superannuation Fund, on her life, with effect from 26 November 2004. The sum insured was $150,000. The first defendant was the nominated beneficiary under the policy.

7. Mrs Sorbello and the first defendant were happily married when Mrs Sorbello was diagnosed with cancer in January 1995, which her treating doctor advised the first defendant was terminal.

8. Mrs Anderson took on a significant role in looking after Mrs Sorbello and Andre. The first defendant had an employee who assisted in operating the car striping business and as Mrs Sorbello’s condition worsened, the first defendant left the running of the business to that employee. Gina left school during Year 10 on 5 September 1995 in order to spend time with and assist in looking after Mrs Sorbello. Jai missed a lot of days of school whilst his mother was ill.

9. Mrs Sorbello had been optimistic about recovering when she was first diagnosed. By October 1995 she recognised that she was not going to survive.

10. The first defendant was advised by his brother who worked in the insurance industry that it would simplify matters if Mrs Sorbello had a will. At the first defendant’s suggestion, Mrs Sorbello made a will on 26 October 1995 pursuant to which she appointed the first defendant as executor and trustee and gave him her whole estate. When Mrs Sorbello passed away, there was nothing owed under the mortgage secured over the Pintail home and their business was well established.

Evidence of conversations relevant to the alleged agreement

11. It is common ground that prior to Mrs Sorbello’s death, she and the first defendant had discussions about the future and what the first defendant would do in relation to the children. The content and intent of those conversations is at the heart of this proceeding. For the critical conversations, Mrs Sorbello and the first defendant were the only persons present. Before Mrs Sorbello died, she had told Mrs Anderson something about the discussions she had with her husband.

12. Mr Collins of Counsel for the first defendant objected to Mrs Anderson giving evidence of what Mrs Sorbello said to Mrs Anderson about these discussions she had with her husband. I upheld the objection on the basis that it was hearsay for Mrs Anderson to relate what Mrs Sorbello told her that she and her husband had discussed. Objection was also made to Mrs Anderson stating what Mrs Sorbello asked of her at that time. The fact that Mrs Sorbello told something to Mrs Anderson about these discussions she had had with the first defendant and that a request was made by Mrs Sorbello of Mrs Anderson is admissible evidence of the subsequent conduct of one of the parties to the conversations that is relied upon by the plaintiffs to show the making of an enforceable promise by the first defendant. This is relevant to the issue of whether the first defendant and Mrs Sorbello had an intention to create legal relations at the time of having those critical conversations. What Mrs Anderson said that Mrs Sorbello asked her to do was to see that the promises made by Mr Sorbello were carried out.

13. The conversation in relation to the insurance policy which the defendant had with Mrs Sorbello was described by him in examination-in-chief as follows:

“Now, you were aware at that time, no doubt, about the insurance policy and there would be a payout on it-----?--  Yes.

-----at some stage, if and when she died.  Did you discuss that fact with Debbie at any time?--  Yeah, Debbie and I did discuss that briefly.  It was a passing comment.  It was that we had this policy and she said to me allocate some money aside for the children and you use the rest and she said the figure of a hundred thousand.

Right?--  And she said to do what you need to do to keep the family together and look after them and maintain the family with that money-----

Right?--  -----and give the kids a start with it.

And what was your reaction to that?--  I agreed with that.”

14. The first defendant also gave evidence about the discussion he had with Mrs Anderson about his conversation with Mrs Sorbello:

“Now, did you have any discussions that you – you can recall with your mother-in-law about the discussion that you and Debbie had had?--  The discussion of what we’d do with the children and maintenance of the children?

No, about the policy – yes, the moneys from the policy and things like that, did you have any discussion-----?--  I mentioned to Beryl that Debbie’s wish was I would take care of the children-----

Yes?--  -----and to set aside what she wanted me to do for the children, that’s put the mon – the hundred thousand dollars so the children could have benefit of that-----

Okay?--  -----during the course of their life as they developed, yeah.”

15. In cross-examination the first defendant was asked about any discussion which he had with Mrs Sorbello about the possibility that the first defendant would remarry. The first defendant stated that they had discussed the possibility of his remarriage, as he was 35 years old and that made remarriage a possibility. He described his discussion with Mrs Sorbello about the possibility as a brief discussion stating “… it was not an issue in my mind, I was not thinking remarriage when I was nursing a dying wife …”. The first defendant denied that he had any discussion with Mrs Anderson about his remarriage either shortly before or after Mrs Sorbello died.

16. The first defendant stated that for some period before Mrs Sorbello’s death, she had encouraged him to have a vasectomy and when she was ill he told her that he did not want to have any more children and he would have the vasectomy. The plaintiffs accept that those discussions between Mrs Sorbello and the defendant were a domestic arrangement and irrelevant to the proceeding.

17. In cross-examination the first defendant stated that he had never disputed that the sum of $100,000 was to be utilised for his children. The following exchange took place:

“No, let’s deal with $100,000?--  And the $100,000, the $100,000 was mentioned to her, she mentioned it to me to maintain the children, to take care of them as we have done in the past-----

But-----?--  -----to give them a start in life-----

Well-----?--  -----at my discretion.”

The first defendant stated that the sum of $100,000 was not to be separated in some way, but it was at his discretion to use for the children when it was necessary.  The first defendant stated:

“There was no mention of allocating it to a separate bank account, putting it aside separately and let alone before I get married.”

18. The first defendant was cross-examined on paragraph 21 of the affidavit which he swore on 1 August 2003 in support of an application to strike out the statement of claim in this proceeding. Paragraph 21 was in the following terms:

“Because Debbie’s cancer was considered to be terminal, a lot of our discussion focussed on how I would cope with the children after her death.  Between February and October 1995, the exact date of which I cannot readily recall, Debbie and I discussed the subject of the future maintenance and support of the children.  I agreed with her that I would look after the children, maintain and support them and I agreed that each of the children would receive a one third share and a portion of the proceeds of her life insurance policy.  The one third share was to be apportioned out of the $100,000.  The balance would come to me.  There was no agreement in respect of any interest on the $100,000 but it was specific that I have the discretion to be able to provide the money to them as and when I considered that they were eligible to receive it and as and when I deemed it necessary to provide it to them.  The giving of these moneys was strictly under my control as I was the parent and Debbie told me that she knew that I would have the children’s best interests at heart.  It was also a term of our agreement that I would not have anymore children and I accordingly honoured the terms of the agreement having maintained the supported all of our children during the course of their short lives.”

19. Mrs Anderson gave evidence-in-chief about a conversation that she recalled having with the first defendant about early October 1995 which she put in the following terms and which she said the first defendant confirmed was what he had discussed with Mrs Sorbello:

“I said to John that Debbie had told me that he had promised that on her death, he would put aside $100,000 of her insurance moneys in the names of the children before he remarried and that he would put Gina and Jai’s names on the deeds of the house and that she told me that he had promised that he would have a vasectomy so that their children would be his only children.”

20. Although in this piece of evidence Mrs Anderson recited that she had related to the first defendant that he had told his wife that he would put Gina’s and Jai’s names on the title of the Pintail home, the plaintiff’s case was conducted on the basis that he would put the names of the three children on the Pintail home. The first defendant denied that he had any conversation with Mrs Sorbello to the effect that he would ensure a one-half interest in the Pintail home would go to the children. The first defendant also denied that he had any conversation with Mrs Anderson in which he told her that he had made such a promise to Mrs Sorbello about the interest in the Pintail home.

21. Gina said that she heard a conversation between her grandmother and her father the day before her mother died when the $100,000 was mentioned, but could not recall the details of that conversation.

22. Mrs Anderson also gave evidence of a conversation she said she had with the first defendant within a couple of weeks after Mrs Sorbello died while they were seated in the family room of the Pintail home which she described in these terms:

“Yes, and we talked about many things, about the future, their – the future of the children, of him remarrying, things to look for how the children should have a relationship with a new wife, things like this that would – should be – like, I said to him, ‘You’re a single man but you’ve got children to consider before you remarry’.”

Mrs Anderson stated that she also “brought up the $100,000” and “how that was something that Debbie had said would be done before he remarried”.  When Mrs Anderson was asked to give her evidence in the words that were actually used by the first defendant, her evidence was:

“Well, yes, he said that this was so and I mentioned about the vasectomy, when was he going to have that and he said he would have that at a later date and with the children’s names on the property, he said, ‘Well, it’s going to cost money to get it on now on this property’, the 27 Pintail Crescent property, which I agreed it would cost the stamp duty and stuff, so he said he didn’t really intend to keep the house all that long and that if he – when he bought again or a new property, he’d put their names on there and because it wouldn’t add any extra money outlayed and I said, ‘Well, that seems reasonable to me.’, and so that was how it was going to be.”

23. Gina also gave evidence of hearing a conversation between Mrs Anderson and the first defendant shortly after Mrs Sorbello passed away. Gina stated that she was cleaning up in the kitchen whilst her father and grandmother were seated in the living area and talked. This is how she described the conversation:

“My grandma mentioned – said to my dad that Debbie had – my mother had told her about the $100,000 that was to be put aside for us three children and Dad said, ‘Yes, that’s right, I agreed I would do that before I remarried.’, and also Grandma said about Dad having a vasectomy because that’s what Mum wanted and dad said, ‘Yes, I’ll do that a bit later on.’, and then also Grandma said that Mum had also told her that she wanted the – our children’s names to go on the deeds of the house and dad said that he was planning on selling the house maybe at a later date and it would cost money to do that at this time, so he would do that on the next property.”

When Gina was cross-examined on this conversation, she said that her grandmother had told her father about her mother mentioning about putting Jai’s name and her name on the deeds of the house.

Subsequent events

24. The first defendant described, and I accept, that he was in a state of extreme grief after Mrs Sorbello passed away. The same description applied to Gina and Jai and Mrs Anderson.

25. The first defendant did not return to full time work immediately after Mrs Sorbello died. At the end of 1995 the employee who had been working in the business left and from January 1996 another person was employed by the first defendant to manage the business.

26. In the months after Mrs Sorbello’s death, Andre spent most of his time with Mrs Anderson and lived at the home of his grandparents. The first defendant, Gina and Jai would regularly have their dinner with Mr and Mrs Anderson and Andre.

27. Jai repeated year 8, but ended up leaving school before he reached the age that normally applied to leaving school to work with the first defendant. Jai has always had a learning disability that affects his comprehension (of both the written and spoken word) and which he described as affecting his understanding of big words and long sentences. Jai attempted to return to school when he was nearly 17 years old, but that did not work out.

28. The first defendant received a cheque for $149,925 in payment of the death claim under the policy under cover of letter dated 30 April 1996 from Suncorp.

29. Mr Flannery of Suncorp gave evidence about how Suncorp determines to whom payment of the benefits under a life insurance policy should be made upon the death of the person whose life was insured. He stated that the nomination of the beneficiary is treated as a guide or a piece of information that informs Suncorp as to whom they should contact to obtain information about which persons were dependent upon the deceased. He explained that Suncorp will ask for a copy of the will and for a form to be completed which provides details of emotional and financial dependency and that Suncorp makes a decision on the payee, having regard to this information and the constraints under the trust deed governing the superannuation fund, in connection with which the policy was taken out.

30. Mrs Anderson gave evidence about a conversation which she said she had with the first defendant after he had received the payout under the policy and on one of the occasions on which he came with Gina and Jai to the Anderson house for dinner, which occurred while she was standing at the kitchen sink and the first defendant was also in the kitchen:

“So I said to him, ‘Why don’t you put the children’s money, the hundred thousand, aside in a fixed term or something that you will get good interest in because you could have the interest off it and it would be there when you went to remarry, when you find someone and want to get married again.’, and he said to me, ‘I don’t like money in the bank, mum.’  I said to him that he could – you know, he’d have his 50,000 to spend and he said, ‘I don’t like money in the bank, mum.’  He said, ‘I just want to have fun with it.”

31. Around early 1997 the manager of the first defendant’s business left and set up a business in competition with the first defendant’s business to the financial detriment of the first defendant.

32. In the latter part of 1997, the first defendant decided to sell the Pintail home. It sold in August 1997 for $340,000. The family looked for land to purchase. The first defendant located land in a new development at Dunlin Drive. The relevant plan of subdivision had not been registered, but the first defendant and Gina signed a contract that was dated 20 October 1997 for the purchase of lot 78 on the proposed plan for the sum of $115,000. Although Jai did not sign the contract as a purchaser, his name was inserted as one of the purchasers. Mrs Anderson did the conveyancing for the purchase and prepared a transfer showing the first defendant, Gina and Jai as the transferees of the land as joint tenants.

33. In evidence-in-chief the first defendant stated that Mrs Anderson said to him that it would be a good idea to have the children’s names on the land in case he died. The first defendant stated that “death was an issue in my head … at the time” and that he accepted Mrs Anderson’s suggestion that it would be a good idea to put the names of Gina and Jai on the contract. Mrs Anderson stated that she had a conversation with the first defendant when he had a copy of the proposed plan of subdivision for the land that he was interested in buying during which he asked her whether he should put Jai’s name on the contract, as well as Gina’s name. She said she told him that as Jai was only 14 years old he would not be able to sell the land until Jai was 18 years old if Jai’s name was on the title and that the first defendant responded, “Well that’s fine. I don’t intend to sell it, anyway. It’s going to be our family home, so that’s not a problem.” The first defendant denied that a conversation to such effect took place.

34. Jai recalled being taken by car to the block of land in Dunlin Drive that the first defendant was proposing to purchase and stated that the first defendant told him that he was going to build a house on the land and that “our names were going to be on”. Gina stated that she had a conversation with the first defendant after they had been to the sales office to purchase the property and that the first defendant said “that he wanted our names on the deeds of that property because this is what Mum wanted and because this is what he’d promised her that he’d do”.

35. Part of the proceeds from the sale of the Pintail home was used by the first defendant to provide funds to the second defendant to purchase factory premises at Ramley Drive for $92,500. The first defendant had decided to change the direction of his business to importing cars.

36. In October 1997 the first defendant met Robin (to whom I will refer to as “Robin”) and soon after commenced a serious relationship with her. On a couple of occasions in late October 1997 Mrs Anderson said she raised with the first defendant setting aside $100,000. She stated that “he said he was under pressure and just not right now but he would do – see his children were cared for”. Mrs Anderson also referred to an occasion in November 1997 when the first defendant came around to her home in his work van and she mentioned the sum of $100,000 and said that the first defendant said “That was a promise made to a dying woman, mum. I am not going to keep that.” and that when she pointed out that Mrs Sorbello was his wife and he claimed he loved her, that he said “I did, but she’s not here, so I’m not going to keep that promise.” and “That money’s not a handout for the children. That is my money.”

37. The first defendant purchased Gina a new car in about November 1997 for about $15,000. The parties have treated that purchase as an expenditure of $15,000 from the insurance payout for Gina’s benefit.

38. Mrs Anderson gave evidence of an occasion on 10 January 1998 when the first defendant, Gina and Jai came around to her home and she raised this issue of the $100,000 by saying “You haven’t done it. When are you going to do it?”. Mrs Anderson said that the first defendant replied “I don’t have the money, Mum.” She said that she suggested that he put the warehouse in the children’s names and that he responded “Well, I could do that.”

39. The first defendant and Robin married in February 1998. The household became the first defendant and Robin, Gina and Jai and Robin’s two children. Andre commenced staying a night or two in the first defendant’s household whilst otherwise residing with Mrs Anderson.

40. On 30 April 1998 Mrs Anderson went to see the first defendant at his factory. She took a pocket dictaphone with her in order to record the conversation. The tape of that recording is exhibit 4. It had been suggested to her by her then solicitor to tape the conversation that she was proposing to have with the first defendant as it was “only his word” against her word about the arrangement for the insurance payout. Mrs Anderson asked the first defendant whether he intended to keep the promise that he had made to Mrs Sorbello regarding the $100,000 and the first defendant responded “I didn’t think it was such a big issue at the time. I mean that was just something between her and me.” and “The insurance policy got me back on my feet. It wasn’t there as a handout for children. It was an insurance policy I took out for my benefit if anything happened to her – not for the children’s benefit.”

41. A dispute then commenced in early May 1998 and ensued for many years between the first defendant and Mrs Anderson, involving many court hearings, over the residency of and contact with Andre.

42. In May 1998 after a disagreement with the first defendant, Gina left the first defendant’s household and moved in with Mr and Mrs Anderson.

43. When the first defendant tried to organise a loan for constructing a house on the Dunlin Drive land, his bank refused to make a loan as children who were under the age of 18 years were registered as owners. The first defendant then requested each of Gina and Jai to sign a transfer to enable the title of the Dunlin Drive land to be solely in the first defendant’s name. By letter dated 3 July 1998 (exhibit 8) the first defendant’s solicitors advised the solicitors acting for Mr and Mrs Anderson that the moneys under the insurance policy were expended as follows (which was also confirmed by the first defendant when giving his evidence):

44. The first defendant explained that after Mrs Sorbello’s death there were medical expenses which had been incurred in relation to her that had to be paid. During her illness, they had explored alternative treatments. There were also tax liabilities that had to be met.

45. The letter dated 3 July 1998 also foreshadowed the first defendant’s intention to apply for an order to rectify the title to the Dunlin Drive land to remove the names of Gina and Jai as owners, on the basis that the first defendant had acceded to the suggestion of Mrs Anderson that Gina’s and Jai’s names should be included on the title in case he died. The affidavit which the first defendant swore on 20 August 1998 for the purpose of such an application was exhibit 10. The first defendant later decided not to proceed with that application.

46. Gina returned to live with the family in January 1999. Gina and Jai agreed to transfer their interest in the Dunlin Drive land to the first defendant. The form of transfer was prepared by the first defendant’s solicitor, Mr Arcuri, and is shown as being signed by them on 15 March 1999. The first defendant sold the boat and used some of those funds towards building the house on the Dunlin Drive land. Around June 1999 the first defendant gave Gina the sum of $15,000 from the proceeds from the sale of the boat. Gina requested that payment in exchange for signing the transfer of her interest in the Dunlin Drive land. The payment was not made to her until months after she had signed the transfer. The plaintiffs accept that this payment of $15,000 to Gina reduces her claim in this proceeding. The first defendant relies on the payment as the exercise of his discretion to make a payment to Gina for her benefit when he considered it appropriate to do so.

47. Jai had moved from the first defendant’s household when he was about 18 years old. When Jai was about 19 years old, he went to ask the first defendant for his “inheritance” at the factory and he stated that the first defendant said to him “You’ve got no inheritance. Your Grandma’s been in your ear again. There’s no money for you.” and Jai watched and heard the first defendant ring up Mrs Anderson and say to her something to the effect “You got his inheritance and you got all the money, you pay him.” The first defendant stated that when Jai asked him for money, he refused because Jai had been squandering what the first defendant had given him and the first defendant told him “I’m protecting you from yourself”. Jai was angry after this confrontation and visited Mrs Anderson who advised him to get legal advice and accompanied him to see a solicitor. It appears that Mrs Anderson, Jai and Gina provided statements to a solicitor in September 2002. This proceeding was commenced on 22 May 2003.

48. In early 2002 the Dunlin Drive home was sold for $470,000. The first defendant and Robin used the proceeds from the sale of the Dunlin Drive property, after paying out the mortgage, to purchase land at Varsity Lakes in their joint names for $149,000 in June 2002 and have proceeded to build a house on that property which they still own.

49. The Ramley Drive unit was sold by the second defendant in August 2003 for $245,000.

50. The final hearing in the Family Court on the issue of contact between Mrs Anderson and Andre took place in November 2003 with judgment being given on 27 February 2004. Mr and Mrs Anderson were ordered to have no contact with Andre and were restrained from having contact with Andre, the first defendant and Robin, subject to an exception that they were permitted to write to Andre and send gifts on no more than four occasions per year. When I raised during the trial of this proceeding as to whether it was appropriate for Mrs Anderson to continue to act as litigation guardian of Andre after those orders were made, the submission was made on behalf of the plaintiffs that this proceeding had commenced by the time those orders were made and Mrs Anderson did not need to have contact with Andre to pursue the proceeding on his behalf. As the first defendant did not seek the removal of Mrs Anderson as Andre’s litigation guardian and counsel for the plaintiffs submitted that it would cause the trial that I was hearing to be adjourned to enable another person to become involved as Andre’s litigation guardian, I did not proceed to consider whether the interests of Andre required another person to be substituted as litigation guardian.

Credit issues

51. It is necessary to record the observations that I made about the witnesses during the course of the trial and the conclusions which I formed about which evidence on relevant matters should be preferred, where there was conflicting evidence.

52. It is clear from Mrs Anderson’s evidence that since her daughter’s death she has been single-minded about pursuing the first defendant to set aside the sum of $100,000 for the benefit of Gina, Jai and Andre. Much of the evidence that was advanced in the trial can be attributed to her repeated raising of this topic with the first defendant and her dealings with Gina and Jai in relation to the same matter, particularly when it became clear in late 1997 that the first defendant intended to marry Robin.

53. After listening to Jai give his evidence and considering his superficial involvement in this matter, there is no doubt that Jai is not responsible for the prosecution of this proceeding. When Jai was angry with his father and attended with Mrs Anderson on a solicitor to obtain legal advice, I find that it suited Mrs Anderson to use Jai as the catalyst to commence this proceeding. I accept that Gina has been a willing party to the prosecution of this proceeding, despite the fact that she is seeking only the sum of $3,333 for herself. I completely reject Mrs Anderson’s evidence that all she has been doing in this proceeding is supporting Jai and that it was Jai who instigated and is responsible for the continuation of the proceeding. If Mrs Anderson truly believes that is the case, she has deluded herself about her role in this matter.

54. Many of Mrs Anderson’s answers during the course of giving evidence were not responsive to the questions or were argumentative and she had a tendency to press her interpretation of events, rather than answering the questions. The following exchange during cross-examination is a good example of this:

“No, no.  What’s happened is it went into three names as joint tenants and you did the transfer.  Given your interest in the matter, why didn’t you say to him, ‘John, it’s supposed to be one half in the three names of the children.’?--  I just didn’t think of that.

But it was something that was always on your mind, wasn’t it, you were insisting on Debbie’s wishes being carried out?--  Well, they were happy to have half, they were happy to have half, they’ve never claimed more than half.

No, but it didn’t end that up that way, did it?--  Yes, that’s all they’re claiming is half.

No, no, two names went on the title deed?--  They’re still only claiming half.

But did you not point it out to John at the time?--  I didn’t think of that.

Well-----?--  But they’re only claiming half.”

55. Mrs Anderson recorded details of conversations she had with the first defendant during 1997 and 1998 in her 1997 diary. In cross-examination it was suggested to Mrs Anderson that she had fabricated those conversations. The plaintiff sought to tender Mrs Anderson’s diary entries for the conversations she claimed to have had with the first defendant on 25 November 1997 and 10 January 1998, relying on Nominal Defendant v Clements (1960) 104 CLR 476 (“Clements”) which, in limited circumstances, makes a previous consistent statement admissible to rebut the suggestion put in cross-examination of fabrication.

56. Dixon CJ stated the rule of evidence in Clements at 479:

“If the credit of a witness is impugned as to some material fact to which he deposes upon the ground that his account is a late invention or has been lately devised or reconstructed, even though not with conscious dishonesty, that makes admissible a statement to the same effect as the account he gave as a witness if it was made by the witness contemporaneously with the event or at a time sufficiently early to be inconsistent with the suggestion that his account is a late invention or reconstruction.”

In that case the plaintiff was a 7 year old boy who was injured in a motor vehicle accident and who gave evidence that he went over to the monument that was near the road to watch other children playing and although a beach ball came towards him, he did not run onto the road.  The plaintiff was cross-examined for the purpose of showing that he had no memory of the accident and that his evidence was given as a result of coaching by his father.  To rebut that suggestion, the plaintiff’s counsel tendered a statement from a police officer obtained from the plaintiff 2 months after the accident which gave a similar account to that which he gave in his evidence.  On appeal the court confirmed that the statement was admissible for the purpose of rebutting the suggestion of late invention.

57. The evidence of the plaintiff in Clements went directly to the issue of whether the accident in which the plaintiff was injured was caused by the driver of the vehicle that ran him over.  The two conversations which are the subject of diary notes in this matter were relied on by the plaintiffs, because there was a discussion between the first defendant and Mrs Anderson about the first defendant’s alleged promise to Mrs Sorbello in respect of the $100,000.  Even accepting that Mrs Anderson’s recollection of those conversations is accurate, neither conversation has the first defendant making an unequivocal admission that he made a legally enforceable promise to Mrs Sorbello about how he would use the $100,000 from the insurance payout.  The evidence of the conversation is relied on for assisting in determining credit issues and is not evidence of a material fact in issue in this proceeding.  There is no basis for applying the rule of evidence that was relied on in Clements.  I rule that Mrs Anderson’s diary entries for these conversations are inadmissible.

58. Mrs Anderson’s determination to force the first defendant to set aside $100,000 for the children not only affected her relationship with the first defendant, Gina and Jai after Mrs Sorbello’s death, but it has affected her involvement in this proceeding and her approach to giving evidence. In particular, I consider that her recollection of events immediately preceding and following Mrs Sorbello’s death was unduly influenced by her own view of what the first defendant should have done with the insurance payouts.   

59. Gina conceded that she disliked the first defendant and Robin, because she considered she was treated badly by them. That dislike was evident in the way in which she gave her evidence and how she never missed an opportunity when answering questions to be critical of the first defendant, even on matters that were peripheral to the issues. I find that Gina’s intense dislike of the first defendant has coloured her recollection of relevant events. It was clear that Gina has also been influenced by Mrs Anderson. I have therefore approached her evidence cautiously.

60. The first defendant was the subject of innumerable negative allegations throughout this trial. When he gave his evidence he conducted himself in a controlled and dignified way and responded in a straightforward manner to the questions put to him in both evidence-in-chief and cross-examination. The first defendant has been consistent in confirming to Mrs Anderson that he and Mrs Sorbello had a conversation about putting aside $100,000 from the insurance payout to use at his discretion for the benefit of their three children. It is understandable that the first defendant became frustrated or defensive in his responses to Mrs Anderson on the various occasions that she mentioned the $100,000 to him, as it was a matter that she kept pressing, when the first defendant had a different view about the nature of his obligations to his children. The submission was made on behalf of the plaintiffs that the first defendant “has shown severe animosity to Mrs Anderson and his two older children”. His evidence did not show animosity towards Gina and Jai. His attitude to Mrs Anderson reflected impatience and annoyance rather than animosity. I conclude that the first defendant was an honest witness whose evidence on the relevant events should generally be preferred to that of Mrs Anderson and Gina.

Intention to create legal relations

61. The promise that is relied on by a party for the purpose of s 55 of the PLA must be one that is capable of being enforced at law between the promisor and promisee.  It must therefore be a promise that is capable of being given contractual effect.  Subject to the other requirements for creating a legally enforceable contract of agreement and consideration, it is only a promise that is made with intention to create legal relations which can result in a contract.

62. The test of intention is objective: Riches v Hogben [1986] 1 Qd R 315, 316, 326, 329.  It must be the intention of both parties to the contract: Todd v Nicol [1957] SASR 72, 78.  It is permissible to have regard to the subsequent conduct of the parties for the purpose of ascertaining whether the intention to be attributed to them was to make a binding agreement or otherwise:  Riches v Hogben [1986] 1 Qd R 315, 316, 329.  

63. There are a number of authorities that support a rebuttable presumption of fact (based on the experience of life) that relatives, such as husband and wife or parent and child, do not intend their agreements to be contracts, preferring instead to rely on family ties of mutual trust and affection: Balfour v Balfour [1919] 2 KB 571, 578-580; Jones v Padavatton [1969] 1 WLR 328, 332-333.

64. Reliance on such a presumption was questioned in the majority judgment of the High Court in Ermogenous v Greek Orthodox Community of SA Inc (2000) 209 CLR 95, 106 [26] where it was suggested that the presumption does no more than indicate who bears the onus of proving the existence of a legally binding contract. 

65. It was common ground in this matter that the plaintiffs bear the onus of proving that the first defendant and Mrs Sorbello had the intention of creating legal relations at the time of their discussion about what use should be made by the first defendant of the insurance payout. Whether or not the matter is analysed by reference to a rebuttable presumption of fact that a husband and wife in the position of the first defendant and Mrs Sorbello would not intend any agreement to be a legally enforceable contract, the very nature of their relationship, at the time of the relevant conversations, is an important factor in determining whether, in fact, they had the intention to create legal relations.

Findings

66. I find that at the time the first defendant and Mrs Sorbello had the discussion or discussions about what the first defendant would do with the insurance payout under the policy, the first defendant and Mrs Sorbello’s marriage remained strong, but they were acutely aware of Mrs Sorbello’s impending death. Their discussions took place against the background that the first defendant, with Mrs Sorbello, had maintained and provided for their children at all times. There is absolutely no evidence whatsoever to suggest or support an inference that, at any stage leading up to her death, Mrs Sorbello was considering severing the joint tenancy on which the Pintail home was held by her and the first defendant or changing the nomination of the first defendant as the beneficiary under the policy.

67. I accept the first defendant’s evidence that he organised for Mrs Sorbello to make the will that was signed on 26 October 1995 at the suggestion of his brother because that was a prudent step to take in order to avoid any unforseen difficulties with her estate generally. I am not satisfied that the inference should be drawn that the will was procured by the first defendant specifically for the purpose of ensuring the payout under the policy was made to him. I am also not satisfied that there is evidence to support drawing the inference that the making of the will by Mrs Sorbello was as a consequence of the discussions that the first defendant and Mrs Sorbello had about the use to which the first defendant would put the payout.

68. I accept the evidence of the first defendant as to the substance of the discussion that he had with Mrs Sorbello about using an amount of $100,000 determined by reference to the size of the insurance payout at an appropriate time to benefit each of the three children equally in the context of the understanding between them that the first defendant would continue to carry out his responsibilities as a parent and maintain and provide for the children. The first defendant had spent the total funds from the insurance payout by the time he married Robin. Although the first defendant spoke in terms of using $100,000 of the insurance payout at his discretion to benefit the children, it is clear in the circumstances that it was never his intention to use the actual funds received from the payout, but to use an amount that was determined by reference to the payout. Although the first defendant admits that the possibility of his remarriage was discussed in passing with Mrs Sorbello, I accept his evidence that he did not promise Mrs Sorbello that he would set aside a specific fund of $100,000 for the children before remarrying. Such a condition was inconsistent with the substance of the discussion that the first defendant had with Mrs Sorbello about giving each of the children one-third of the sum of $100,000 at a time or times that he decided was appropriate for them.

69. I also find that it was never any part of such discussion that the first defendant promised to put the children’s names on the title of the Pintail home and he did not tell Mrs Anderson that he had made such a promise to Mrs Sorbello. Even prior to Mrs Sorbello’s death it was a matter about which Mrs Anderson obviously felt strongly was the appropriate and fair step for the first defendant to take. Having regard to Andre’s age at Mrs Sorbello’s death, it is unlikely that either the first defendant or Mrs Sorbello proposed such an impractical arrangement. Mrs Anderson’s evidence was inconsistent as to whether the arrangement was in respect of putting Gina’s and Jai’s names on the title or whether it was the three children’s names that would go on the title. Although Mrs Anderson denied the suggestion that was put to her in cross-examination that it was her own thought about the children having a half interest in the matrimonial property, I find that it was Mrs Anderson’s own view about the propriety of such a step that influenced her evidence on that issue. It was also consistent with a practice that had developed in the Anderson family of putting a child’s name on the title of property with the parent as joint tenants, so that the child would obtain the property by survivorship, if the parent died. Mrs Anderson gave evidence that she had put Mrs Sorbello’s name on four titles with hers and Mrs Sorbello’s name was still on one of those titles when she died.

70. I reject as implausible Mrs Anderson’s evidence (and Gina’s evidence to the extent that it appears to deal with the same or a similar conversation) that she had a conversation with the first defendant within a couple of weeks after Mrs Sorbello’s death in which she raised the matter of the $100,000 and that it would be set aside for the children before he remarried. The grief of all involved at that stage was so great that I am not satisfied that such a discussion in the context of remarriage by the first defendant would have taken place. In addition the evidence of Mrs Anderson and Gina of this conversation had the first defendant already deciding to sell the Pintail home which is at variance with the evidence of the first defendant (which I accept) that he decided to sell the Pintail home in the second half of 1997 when he was then ready to get on with his life.

71. The recollections of both Mrs Anderson and Gina appear to have been affected by the subsequent conduct of the first defendant in putting Gina’s name and Jai’s name on the title to the Dunlin Drive land. In view of the Anderson family practice of putting a child’s name on the title to land, it is more likely that the first defendant accepted a suggestion by Mrs Anderson at the time he was considering buying the land about putting Gina’s and Jai’s names on the title to the Dunlin Drive land in case he died than the first defendant deciding of his own accord to include them on the title. I reject Gina’s evidence that the first defendant made a statement to her at the time of signing the contract for the Dunlin Drive land to the effect that her name was to be on the title of that property because he had promised Mrs Sorbello that he would do that, as the first defendant had done no such thing. In addition, Gina’s evidence on this point is inconsistent with the plaintiffs’ claim that the first defendant’s promise was in respect of the transfer of an interest in the Pintail home to the children.

72. The reliance by the plaintiffs of this act of the first defendant, in putting the names of two of his children as owners with him of the Dunlin Drive land as joint tenants, as supporting their case that there was an enforceable promise made by him to Mrs Sorbello about giving the children the benefit of one-half interest in the Pintail home, is misplaced. There is the plausible explanation given by the first defendant for why he acted as he did in October 1997 when purchasing the Dunlin Drive land. In addition, the act of including Gina and Jai as joint tenants with him of the Dunlin Drive land did not accord with what the plaintiffs say the first defendant’s arrangement with their mother was in respect of the Pintail home.

73. In determining whether both the first defendant and Mrs Sorbello had an intention to create legal relations when they had the discussions about what the first defendant would do with $100,000 of the insurance payout, it is arguably a factor in favour of Mrs Sorbello intending to create legal relations that Mrs Sorbello informed her mother of the substance of the discussions and made the request of her to see that the first defendant carried out his promises. It is also consistent with a family or an informal arrangement existing between Mrs Sorbello and the first defendant that Mrs Sorbello let her mother know about her discussions with the first defendant, because Mrs Sorbello was dying. It is not consistent with an intention to create legal relations that the discussion took place between husband and wife in circumstances where their relationship was strong, but where they both knew that Mrs Sorbello was about to die, and they were canvassing a number of issues relating to the future. The recognition by the first defendant, in the various discussions he had with Mrs Anderson after Mrs Sorbello’s death, that they had discussed his doing something for the children with an amount of $100,000 is consistent with the first defendant’s stated position that he never undertook to Mrs Sorbello in a legally enforceable way to deal with the sum of $100,000. It is also relevant that the policy was taken out to cover the very event that was the catalyst for the discussions between Mrs Sorbello and the first defendant and at the time of the discussions, there were outstanding debts to the first defendant’s knowledge that could usefully be met from the insurance payout. The conversations which the first defendant had with Mrs Anderson after Mrs Sorbello’s death do not support the inference of an intention on the first defendant’s part to have made a legally enforceable promise to Mrs Sorbello, particularly when many of those conversations were held after a substantial part of the insurance payout had been spent. In all these circumstances, the plaintiffs have failed to discharge the onus they bear of showing that the first defendant and Mrs Sorbello had an intention to create legal relations when they had discussions about what the first defendant would do with $100,000 of the insurance payout.

74. The plaintiffs’ claim must also fail on the basis that they have failed to show that there was consideration moving from Mrs Sorbello for the promise alleged against the first defendant. There is no evidence to support a finding that Mrs Sorbello would have made a different will or severed the joint tenancy on which the Pintail home was held or taken steps to procure Suncorp to pay $100,000 of the insurance payout to the children, if the alleged promise had not been made by the first defendant.

75. The claim as pleaded by the plaintiffs was based on the existence of the agreement alleged to have been made between the first defendant and Mrs Sorbello. There was no alternative claim for the imposition of a constructive trust, if the plaintiffs were unsuccessful in proving the existence of the agreement that they alleged. It is therefore unnecessary to deal with the submission made on behalf of the plaintiffs’ seeking the imposition of a constructive trust as a remedy against the first defendant.

Order

76. The order that should be made is that the proceeding be dismissed. I will hear submissions from the parties on the issue of costs. As Andre’s litigation guardian, Mrs Anderson will be personally liable for any costs ordered against Andre. The question arises whether Mrs Anderson’s role in this litigation has been of such a nature that she alone should be ordered to pay the costs of the first and second defendant of the proceeding.