Woods v Woods [1999] NSWSC 275

New South Wales Supreme Court CITATION : Woods v Woods [1999] NSWSC 275 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 1973/97 HEARING DATE(S) : 26 & 27 October 1998, 15-17 December 1998, 8 & 10 March 1999 JUDGMENT DATE : 31 March 1999

Glenn Woods (P1) Marcia Woods (P2) PARTIES : Desre Clair Woods (D1) Richard Lee Woods (D2) Amanda Jane Woods (D3) JUDGMENT OF : Hamilton J

COUNSEL : P P O'Loughlin (P1 & 2) Alex Radojev (D1-3) SOLICITORS : Clinch Neville Long (P1 & 2) Karageorge & Co (D1-3) CATCHWORDS : CONTRACT - Contract that in consideration of contribution of $11,500 by mother to purchase of house son and daughter-in-law would allow her to live in it for her lifetime and would pay the mortgage payments - Whether contract subsisted. GIFT - Whether $17,000 payment by mother to son gift or loan. DECISION : That contract alleged subsisted and $17,000 payment was loan not gift.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J WEDNESDAY, 31 MARCH 1999

1973/97 GLENN WOODS & ANOR v DESRE CLAIR WOODS & ORS

JUDGMENT His Honour: 1 These proceedings arise from 2 payments, of $17,000 and $11,500 respectively, which Desre Clair Woods, the first defendant ("Desre"), says she made to her son Glenn Woods, the first plaintiff ("Glenn"). He admits that he received the first, but says that it was a gift, not a loan as she alleges. He denies that he received the second payment at all. The second plaintiff is his wife Marcia Woods ("Marcia"). The second and third defendants are Richard Lee Woods ("Richard"), who is Desre's other son, and Amanda Jane Woods ("Amanda"), Richard's wife. The facts of the matter are as follows. 2 In 1982 Desre lived in a house at 2 Catriona Court, Normanhurst, which she owned subject to a small mortgage. In April of that year a Mr and Mrs Harwin ("the Harwins") lent money for use by Glenn in a business he was conducting, which was then in difficulties and which subsequently failed. It was alleged by the Harwins that the money was lent to Desre and then relent to Glenn, but by Desre and Glenn that it was lent by the Harwins to Glenn direct. Dispute as to who was the borrower was resolved by an arbitrator in the District Court, then by a Judge of that Court, and subsequently by the Court of Appeal, in favour of the Harwins. 3 During 1982 Glenn married Marcia, who is by origin a Singaporean Chinese. At various times between 1982 and February 1994 Glenn and Marcia lived with Desre in her residence, although not continuously. In some ways it is surprising that this was retried on many occasions, since it is quite plain from the evidence that, to say the least, Desre and Marcia did not get on from the start. It is clear on the evidence that as early as 1983 Marcia was taken to Hornsby Hospital and kept there overnight after an incident near Wahroonga railway station in which she became hysterical in Desre's presence, apparently at the prospect of returning to the same house as Desre. 4 In June 1984 Desre sold her house at 2 Catriona Court, Normanhurst and purchased a house at 18 Yakaloo Crescent, Forresters Beach ("Yakaloo Crescent"). She paid out the small mortgage over the Normanhurst house, bought Yakaloo Crescent without borrowing money and had about $10,000 in cash left over. 5 In June 1987 the Harwins sued Desre in the District Court at Sydney for money lent. The claim was heard before an arbitrator in July 1991 and he on 17 July 1991 made an award in favour of the Harwins for some $58,000. In 1992 those proceedings were reheard in the District Court before his Honour Judge McLachlan, who on 22 October 1992 again found a verdict for the Harwins. By this stage Glenn and Marcia had bought a block of land at 224 Cresthaven Avenue, Bateau Bay and were proceeding to build a house on it. At the time, Richard was in financial difficulties. Desre borrowed $65,000 against Yakaloo Crescent and advanced $30,000 to Richard. On 2 December 1992 she paid $17,000 to Glenn. 6 The facts thus far stated are not seriously in controversy, but there is conflict about what follows. 7 Desre's evidence is that in about November 1992 Glenn approached her and told her that he and Marcia were in trouble with their home at Cresthaven Avenue; they had gone way over budget; and the State Bank was not prepared to increase their approved limit to pay the final progress payment to the builder. He asked his mother whether she would arrange a loan for about $30,000 on her house for a year; and he said that he would pay the costs and repay the loan in 6-12 months from his business which was improving. She then went with him to see a finance consultant at Long Jetty and on that day Glenn asked her to come to the State Bank in Long Jetty "and give the Bank an undertaking that you are arranging to finance your house and will loan[sic] Marcia and me $17,000 from the proceeds otherwise they will not pay the last progress payment." He said that he would not need the loan for very long. Desre says that subsequently she went to State Bank at Long Jetty and met a woman who she thought was the accountant and signed "some documents giving some form of guarantee or undertaking on behalf of Glenn and Marcia … relating to their property at Cresthaven Avenue". It is clear from all the evidence that the borrowing that was in fact obtained by Desre at this time was not in fact $30,000, but $65,000 (not obtained through the finance consultant at Long Jetty), of which $30,000 was paid to Richard, undoubtedly as a loan, and $17,000 was paid to Glenn. Desre says that it was as a loan on the basis set out above that she paid $17,000 to Glenn on 2 December 1992. 8 Glenn's version of the conversation leading to the payment is that Desre said that she had to find $30,000 for Richard or the ANZ Bank would send him bankrupt; that Richard said that she could borrow $65,000 on the security of her house; "the more I borrow on the house the less I have to worry about the Harwins"; "if you will go guarantor for the loan I will give you $17,000 out of the proceeds". Glenn says that he replied that he would like to help her "and an extra $17,000.00 would be handy for some things Marcia and I want for the house." It is Glenn and Marcia's case that the word "give" was to be understood literally as a word of gift, and that upon payment of the $17,000 the gift of that sum was complete. 9 It seems clear that the document signed by Desre at the Bank was a statutory declaration which bears date 11 November 1992. The body of it states: "I am providing my son Glenn Christopher Woods with the sum of ($15,000) fifteen thousand dollars which is not repayable and there are no conditions what so ever pertainable[sic] to this gift." 10 It is Richard's evidence that in December 1992 in a conversation with Glenn he asked for an assurance that Glenn would in respect of the mortgage on Desre's house pay half the interest payments as he had agreed. He says that Glenn replied: "I don't think it's entirely fair that I pay half; Mum's only loaning[sic] me $15,000.00 and your[sic] getting $30,000. You should pay a higher share." Glenn did not demur at the use of the word "loan" by Richard or otherwise to the request for an assurance, except as to the quantum of his share of the interest. I accept Richard's evidence about this conversation. 11 Further undoubted facts are that in October 1993 Desre sold Yakaloo Crescent. Out of the proceeds she repaid the loan of $65,000 previously mentioned; she paid money into Court as security for the judgment in the case brought by the Harwins, the appeal in which was then pending; and after meeting legal bills she had about $15,000 left over. At the same time she moved into Glenn and Marcia's house at 224 Cresthaven Avenue, Bateau Bay. As might have been expected from the earlier history, things did not go well in the household. On 31 January 1994 Glenn and Marcia completed the purchase of a house property at 24 Waite Street, Bateau Bay, and shortly afterwards Desre moved in and is still living there. However, the basis on which she moved in and whether or not at about the time of the purchase of this house she paid to Glenn $11,500 are hotly contested, as set out below. 12 Desre says that in November 1993 she had a conversation with Glenn indicating that she could no longer put up with the domestic situation and that she was also under stress because of the court case with the Harwins. She said that this had cost her her home, her car and her security and that she held him totally responsible. He said that they should look around for another house for her; she said that, as she had only $12,000 left, that was impossible. The conversation then continued: "Glenn Woods: 'Well if you put in the $12,000 for a deposit, I think I can arrange for a mortgage with my bank. My business is going quite well now, but I don't have much cash at the moment.' DW: 'What security would I have in the house. You know Marcia and I don't get on.' Glenn Woods: 'Don't worry about that. We'll buy the house using your money for the deposit, I'll pay the mortgage and it can be a sort of long term investment for Marcia and I. You can live in it as long as you live and when your [sic] no longer around we can sell it or rent it. Marcia will be quite happy with that arrangement as we lived with you for nine years.'" She said that in late November a further conversation took place as follows: "Glenn Woods: 'Mum, I have made finance arrangements with my bank to purchase the Waite Street property and they have agreed provided I can evidence the deposit from my company. I have made arrangements with Marcia's brother in Singapore to give him the money you are providing in case and then he is going to loan it to my company G.C. Industries. This will satisfy the bank and keep your name out of the transaction in case the Harwin's[sic] bring any further actions against you.' DW: 'Why do you have to give my money to Marcia's brother so he can loan it to you.' Glenn Woods: 'It's just the way I've structured the deal and what I have represented to the bank.'" 13 The evidence originally given in her affidavit as to her providing Glenn with the money was that she obtained a cash sum from her cheque account of $9,700 on 21 October 1993 and that early in December 1993 she handed Glenn $11,500 in cash. She deposed that at that time Marcia was present as well as Glenn and the following conversation took place: "DW: 'Glenn, I want you to document my interest in this property as this is the last remaining amount of money I own.' Glenn Woods: 'Of course we can have something drawn up, but it will have to wait until I return from overseas.' Marcia Woods: 'Des, Glenn and I are buying this house as a long term investment. We are quite happy for you to live in it for as long as you live. After all its the least we can do after you losing your house and us living with you for all those years.'" 14 She deposed that on a number of occasions after moving into 24 Waite Street she asked Glenn for a piece of paper evidencing her "investment" and "life tenancy arrangement", to which he would reply that he would do it later, he didn't have time. On 21 November 1994 he was about to go overseas. She deposed that she then had a conversation with him as follows "DW: 'Glenn despite repeated requests you and Marcia have not documented my interest in the Waite Street property or your indebtedness to me. You are about to leave for overseas again. What would happen to me if God forbid you were killed in a plane crash or something?' Glenn Woods: 'Alright [sic], Mum I don't have time to go to the solicitor, but I will write you out a letter to cover you now until I get back and then we can get it done properly when I return.'" He then undoubtedly wrote a note, which is in evidence. The text, which is of some importance, is as follows: "In the event of my death I wish my mother to be secure in both the home at 24 Waite Street, Bateau Bay and the motor car Daihatsu Charade due to the fact that I owe her money that was loaned [sic] to me through 18 Yakaloo Cres. Forresters Beach. The house at 24 Waite Street, Bateau Bay is not to be sold and my mother to remain in that house." 15 Glenn's version of these events is as follows. He denies that he ever received $11,500 from his mother; that his mother paid any money towards the purchase of the Waite Street property; and that his mother was ever promised any right to live in the Waite Street property. As to the conversation in November 1994 and the note which is undoubtedly in his handwriting, he said that prior to November 1994 Desre had been pressuring him about what would happen with Waite Street if he died, saying, "I don't trust Marcia. Where do I live if anything happens to you?" and asking him to make provision for her in his will. In his original affidavit he simply acknowledges that he signed the document "to provide comfort to her if anything happened whilst I was overseas." His further versions as to the creation of that document will be adverted to below. Marcia denies her presence at any conversation in late 1993. Glenn says that the money for the deposit was provided from $14,000 lent to him by his brother-in-law who was at that time a lawyer in Singapore. His evidence concerning the circumstances of that borrowing will also be referred to below. 16 In fact, Desre was left in undisputed possession of the Waite Street property for some time. Hostilities broke out when Richard and Amanda became homeless and Desre took them into the house. Incidentally, she also allowed them to drive a car provided for her by Glenn. Their presence was bitterly resented by Glenn and Marcia. The proceedings 17 Glenn and Marcia have brought these proceedings for possession of 24 Waite Street. Desre has brought cross claims arising out of the 2 payments of $17,000 and $11,500 discussed above. The issues, as agreed between the parties, in relation to which the trial was conducted were as follows: 1 The plaintiffs' claim for possession. 2 The first defendant's claim to have an interest in the Waite Street property as an equitable licencee for life. 3 The first defendant's claim to have an interest in the Waite Street property as the beneficiary of a resulting trust in the proportions 11.5/155 (7.24%). 4 The effect of Marcia's lack of consent on any order granting Desre an interest in the Waite Street property. 5 The right otherwise of the first defendant to reside in the Waite Street property. 6 The claim by the first defendant for repayment of the sum of $17,000 being on Desre's case a loan and on Glenn and Marcia's case a gift. Credit of witnesses 18 A great deal in this case turns on the credit of witnesses. The principal witnesses were Desre, Glenn and Marcia. Oral evidence was also given by Richard and Amanda. 19 Desre. Desre's evidence was not without its difficulties. These, it seemed to me, arose largely through defects of memory. Overall, I formed the view that she was attempting to tell the Court the truth. 20 Glenn. Glenn was a most unsatisfactory witness. His credit was heavily attacked by Mr Radojev, of counsel for Desre, and with considerable success. He was to my mind demonstrated to be untruthful in a number of important pieces of evidence. First, he claimed that he had gone to Singapore to borrow the sum of $14,000 from Mr Tan and that it was paid to him in cash in Singapore. Subsequently, he said that it was paid to him in cash, not in Singapore but outside the customs area in the terminal at Subang Airport at Kuala Lumpur, where it was handed to him and he counted it in the presence of Mr Tan. Then and there, an agreement concerning the loan was signed by him, his signature being witnessed by Mr Tan's wife, who had either gone from Singapore to Kuala Lumpur especially for this purpose, or coincidentally happened to be there. Even when the story as to the place of handover changed, he continued to insist that he had been to Singapore during the course of that business trip. He maintained that story until his passport was produced on subpoena, and was found to lack any evidence of a relevant entry into Singapore. He then said that on that trip he had not gone to Singapore, but had gone to Johor Baru, which is at the Malaysian end of the causeway from Singapore to Malaysia.. He agreed that he at all times knew that Johor Baru was not in Singapore, but in Malaysia. When asked why he had said he had gone to Singapore, he said that he had said it because Johor Baru is virtually on the border. However, it was not there, but in Kuala Lumpur, that Mr Tan had handed him the money. Both the content of that evidence and the manner of his giving it were most unimpressive and reflect most seriously upon his credit, particularly in matters pertaining to the subject dealings with his mother and the circumstances surrounding them. Even more centrally, his evidence about the circumstances of the production of the note he gave his mother was most unsatisfactory. He admitted that it was all in his handwriting. At one time, he claimed that his mother had dictated to him the second paragraph, but said that he had written out the first half as his own composition. Upon being squarely faced with the difficulty of the use of the word "loan" in the first half, he gave other versions, including that his mother was the author of the entire note, which she had written out beforehand, brought to the meeting and handed to him, and which he copied. He is a businessman who has been engaged in various businesses, and is now engaged in international trade with various Asian countries. He does not claim not to understand the word "loan". He was quite unable to give any explanation as to why he used the word, though he claimed not to mean it, in the context of a document, the purpose of which according to him was that it was to be used after his death by Desre to attempt to persuade Marcia to let her continue to reside in the house. I am not prepared to accept anything he says about his dealings with his mother and associated subjects unless it is corroborated by credible evidence or is against interest. 21 Marcia. Marcia was also an unimpressive witness. Her credit, too, was challenged with cosiderable success. Whilst acknowledging bad relations between herself and Desre, she denied any abuse, physical or verbal, towards Desre (except for an exchange of the epithet "bitch"). She also denied the use of bad language towards Richard and Amanda. She particularly denied that she had used the word "arsehole" to or of any member of the family, or that she had returned baby clothes sent to her on the occasion of the birth of one of her children by Richard and Amanda with an abusive note describing them as "arseholes". She denied it was her handwriting in the note, when produced. It was, however, established to my satisfaction that her denials concerning Richard and Amanda, the abusive note and the use of "arseholes" as an insult were not true. Neither do I accept her general denials of abuse of Desre. Marcia was a witness of little credit. 22 Richard and Amanda. The ambit of their evidence was smaller. I was impressed by the way that Richard gave evidence concerning these events which occurred in an emotional and upsetting atmosphere. I formed the view that they were both attempting to tell the Court the truth and in general succeeding in relation to the matters to which they deposed. Conclusion: The Loan Transaction 23 In the event I accept that Desre's account of the circumstances in which the $17,000 was paid to Glenn was substantially as set out in her evidence summarised in [7]. I prefer her evidence concerning those events to that of Glenn. I am far from certain that, even if I accepted his version of what he said as set out in [8], it would be appropriate to construe the use of the word "gift" in that context as amounting to the verbal element necessary to constitute a gift. In any event, I simply do not accept his version of the conversation. Apart from anything else, it seems to me that the transaction deposed to by Desre is inherently probable and that deposed to by Glenn is inherently improbable. Why would a mother, whose son on his own evidence has effected her financial ruin, and who is now left with very little money, borrow money for a term of 12 months only against an unencumbered house which is virtually her only asset, and simply give it to him? Her version, that she was prepared,whilst helping Richard at the time by borrowing money to lend to him, to borrow an additional sum (rather generously one might think in the circumstances) to afford a short term loan to Glenn, is much more probable. I find that the transaction took place substantially as she deposed. She has demanded the repayment of the money and is entitled to judgment in the sum of $17,000 together with interest on that sum under §94 of the Supreme Court Act 1970 from the date of demand until judgment. I do not think there is clear evidence that the loan was made to Marcia as well as Glenn. Though it was said to be advanced for use as a progress payment on the house at Cresthaven Avenue, Bateau Bay, there is no evidence of participation by Marcia in the relevant conversations. The simultaneous loan to Richard appears to have been made to him alone, and it seems more probable that the loan was asked for by Glenn and made by Desre to him alone. In all the circumstances the judgment will be entered against him alone. 24 The only piece of evidence that gives any support to Glenn's version is the statement in the statutory declaration made by Desre on 11 November 1992 at the State Bank suggesting that the payment was a gift. It seems that a document was required in these terms by the Bank, which would not give Glenn further accommodation unless he demonstrated that he was injecting further funds of his own into the property: a loan from someone else would not do; a gift from his mother would. Whether or not Desre was fully aware of the significance of the statutory declaration and despite the fact that it is in her handwriting, in my opinion the transaction was in truth as I have found. Conclusion: Waite Street 25 Again, on the balance of probabilities, I accept Desre's version of what was said and done in relation to the $11,500 and the purchase of the Waite Street property. I accept that she had a conversation with Glenn and Marcia as set out in [13]. It is submitted that it is inconceivable that Marcia would have agreed to any transaction or any such transaction with Desre. However, a transaction in this form solved Marcia's problem and was for her benefit. The problem solved was that it provided somewhere for Desre to live which meant that there would be no question of Desre and her living under the same roof. At the same time it provided a beneficial opportunity with the use of someone else's money to acquire an asset which would be of value to her in the long run. I am not entirely clear as to whether or not Glenn obtained $14,000 from Mr Tan at about the same time or for what purpose. As I have already said, his evidence about this matter was utterly unsatisfactory and I do not accept it. The situation is rendered all the more curious because Mr Tan and his wife did not give evidence, although it is clear that they were in Sydney at the time of the trial and no convincing reason was given for their non-production as witnesses. It was said both by Glenn and Marcia that they were now so estranged from Mr Tan and his wife that the Tans would not come. However, no subpoena was served on them. And the fact of their estrangement depends upon the word of Glenn and Marcia, which I am not prepared to accept in this regard. Furthermore, it is odd, if there is such a degree of estrangement as is claimed, that there has been no demand by Mr Tan for the repayment of his loan of $14,000. Yet the evidence is that there has been none. It was further submitted that it is inherently unlikely that a son would promise to allow his mother to live in a house bought by him and his wife with borrowed money and promise to pay the mortgage payments, because the house could not then be let to defray those payments. In some circumstances that may seem unlikely, but where the son has caused the mother such financial haarm as in this case, but subsequently has a successful business, it does not seem particularly unlikely to me. 26 Desre's evidence, once accepted, establishes that there was a contract that in consideration of her contributing $11,500 to the purchase of the Waite Street property she would be permitted to live in that property for life and that Glenn and Marcia would continue to pay the mortgage payments in respect of it. Section 54A of the Conveyancing Act 1919 was not pleaded as a defence to the claim on that contract. Mr O'Loughlin, of counsel for Glenn and Marcia, has properly informed the Court that that was not by reason of an accidental omission but of a considered decision. No doubt it was taken by reason of the potentially available replies, but that is of no moment; the defence is simply not pleaded. 27 In these circumstances, there is no doubt that Desre is entitled to a declaration of the subsistence of such a contract. However, there has not been full argument as to whether she should have an order for specific performance. Objection has been taken that the requirement of supervision by the Court of future mortgage instalments ought preclude such an order; and there really has been no argument on the relationship between the specific enforceability of the contract and the plaintiffs' entitlement or otherwise to an order for possession. I shall stand the matter over for directions as to the further hearing of the matter on those issues of relief; short minutes can be brought in on that occasion if the defendant desires immediate final orders on the loan claim or for declaratory relief concerning the contract.