Supreme Court New South Wales Medium Neutral Citation: Junge v Junge [2013] NSWSC 1842 Hearing dates: 22 October 2013 Decision date: 11 December 2013 Jurisdiction: Equity Division Before: Darke J Decision: Parties to bring in Short Minutes Catchwords: TRUSTS - resulting trust - by provision of purchase money - no direct evidence of source of funds - assertions as to source of funds not contradicted - evidence sufficient to establish resulting trust CONTRACT - negotiations between husband and wife in context of matrimonial dispute - whether concluded agreement reached - intention to create legal relations - binding agreement established CONTRACT - promise made by A to B to ensure that interest in land becomes property of B or C - B predeceases A - whether agreement lapses - promise remains able to be performed - specific performance of promise ESTOPPEL - promise made by A to B to ensure that upon death interest in land becomes property of B or C - A makes will inconsistent with promise - whether failure of C to complain about will gives rise to estoppel precluding enforcement of promise - no estoppel found Legislation Cited: Limitation Act 1969 Uniform Civil Procedure Rules 2005 Cases Cited: Barns v Barns [2003] HCA 9; (2003) 214 CLR 169 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Brown v New South Wales Trustee and Guardian [2012] NSWCA 431 Byrne v Australian Airlines Limited [1995] HCA 24;(1995) 185 CLR 410 Dalton v Ellis [2005] NSWSC 1252; (2005) 65 NSWLR 134 Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 Drummond v Registrar of Probates (SA) [1918] HCA 58; (1918) 25 CLR 318 Hendriks v McGeoch [2008] NSWCA 53 Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Ltd (1988) 5 BPR 11,110 Maddock v Registrar of Titles (Vic)[1915] HCA 10; (1915) 19 CLR 681 Nguyen v Cosmopolitan Homes [2008] NSWCA 246 Varma v Varma [2010] NSWSC 786 Category: Principal judgment Parties: Theodor Linden Junge (Plaintiff) June Peggy Junge (Defendant) Representation: Counsel: M Gorrick (Plaintiff) D Liebhold (Defendant) Solicitors: Phillip Boyce & Associates (Plaintiff) Turner Freeman Lawyers (Defendant) File Number(s): 2012/116323 Publication restriction: Nil Judgment Introduction 1The plaintiff, Theodor Linden Junge, is the only son of Theodor Hermann Junge and Audrey Agnes Junge, both now deceased. Theodor Hermann Junge (to whom I shall refer to as Mr Junge Snr) married Audrey Junge in 1948. At the time of the marriage Audrey Junge was the owner of land in Bargo (Lots 191 to 197 in Deposited Plan 13127) known as Sunninghill. Initially, the married couple lived in Burwood, but in about 1954 they moved, together with plaintiff who was then about 5 years old, to Sunninghill. 2In September 1948 some adjoining land was purchased. Mr Junge Snr became the registered proprietor of that land. There is an issue about whether the purchase was effected using money provided by Audrey Junge. That land, which consists of Lots 198, 199 and 200 in Deposited Plan 13127, will henceforth be referred to as the Property. The plaintiff, as the executor of his late father's estate, has become the registered proprietor of the Property. These proceedings concern its ownership. 3In essence, the plaintiff alleges that the circumstances of the acquisition of the Property in 1948 gave rise to a resulting trust in favour of Audrey Junge. Alternatively, it is alleged that certain dealings between Audrey Junge and Mr Junge Snr in the period between 1972 and 1974, when they were negotiating the settlement of their matrimonial dispute, gave rise to either an enforceable agreement that Mr Junge Snr would, upon his death, leave the Property to Audrey Junge or the plaintiff, or otherwise a trust in respect of which the plaintiff is the beneficiary. 4The plaintiff pursues his claims either in his own personal capacity, or as the representative of the estate of Audrey Junge by virtue of a "chain of representation". The "chain of representation" is based upon the fact that Mr Junge Snr was the executor of the estate of Audrey Junge, and the plaintiff is the executor of the estate of Mr Junge Snr. 5The defendant to the proceedings, June Peggy Junge, became Mr Junge Snr's partner following the breakdown of his marriage in the 1970s, and in 1996 she became his wife. She is the major beneficiary under the last will of Mr Junge Snr. The plaintiff is also a beneficiary under that will. 6Since about November 2011 the defendant has suffered a diminished mental capacity and accordingly defends these proceedings by a tutor. In substance the defendant has, in the interests of the estate of Mr Junge Snr, discharged the role of contradictor to the plaintiff's claims. Apart from generally taking issue with those claims, the defendant raises various affirmative defences including that the plaintiff is estopped from bringing the claims by reason of the plaintiff's failure to make complaints to Mr Junge Snr from about June 1996 until his death in November 2008. 7At the hearing, an affidavit sworn by the plaintiff on 24 October 2012 was read, as were affidavits sworn by the plaintiff's solicitor Philip Boyce on 13 November 2012 and 22 April 2013. The plaintiff was required for cross-examination. Much of his evidence was not challenged, but he was particularly tested in relation to his failure, from June 1996, to confront his father concerning the will his father had made which was apparently inconsistent with certain promises he had made to Audrey Junge. However, it was not suggested by the defendant that any aspect of the plaintiff's evidence should not be accepted. I formed a generally favourable impression of the plaintiff as a witness, and I have no hesitation in accepting his testimony. Salient Facts 8As noted above, Audrey Junge purchased the property known as Sunninghill in May 1946, prior to her marriage to Mr Junge Snr. As also noted above, in September 1948 the Property was purchased and Mr Junge Snr became the registered proprietor. There is an important issue in the case as to whether Audrey Junge provided the money for the purchase price of the Property. There is no direct evidence that establishes the source of the purchase money, but there is evidence of numerous assertions made by Audrey Junge to the effect that she provided the entirety of that money. Those assertions will be dealt with in more detail below. 9The plaintiff was born in May 1949. In November 1952 Audrey Junge purchased some further land (Lot 190 in Deposited Plan 13127) which adjoined Sunninghill. This land adjoins the northern boundary of Sunninghill; whereas the Property adjoins the southern boundary of Sunninghill on Panorama Street. The properties owned by Audrey Junge were inherited by the plaintiff (who retains ownership of them) and, as mentioned, he has become the registered proprietor of the Property in his capacity as executor of his late father's estate. 10The plaintiff deposed that from an early age and into his adulthood his parents argued on many occasions about land, usually the Property. He recalls that in the late 1950s (when he would have been about 10 years old), his mother said to his father: You diddled me over the land. He also recalls that when he was about 14 his mother said to him: I was cheated by your father. I gave him the money to buy the land [the Property] on my behalf but he put it in his name. 11There were difficulties in the marriage, and in about 1971 Mr Junge Snr moved out of Sunninghill. In November 1971 he filed a petition in this Court seeking a decree for the dissolution of the marriage on the grounds of desertion, or alternatively separation. 12The petition contained a statement to the effect that Audrey Junge owned Sunninghill "and adjoining land on the northern side thereof" free of any mortgage or encumbrance. The adjoining land referred to is the land purchased by Audrey Junge in 1952, not the Property. The Property itself is not mentioned in the petition. 13Audrey Junge, in her answer to the petition, took issue with many matters to which it is not necessary to refer. It should be noted, however, that in response to the orders sought in the petition she requested that an order for maintenance be made in her favour in the sum of $60 per week, and further requested that Mr Junge Snr transfer the Property "registered in the name of the Petitioner bought by the Respondent from Sister Smith and paid by Petitioner with Respondent's money". The answer to the petition contains an affidavit sworn by Audrey Junge verifying the truth of the facts stated therein. 14From about March 1972 there was discussion about a possible settlement of the matrimonial dispute. On 13 March 1972 Audrey Junge's solicitors wrote a letter to her in the following terms: There may be a change [sic] of this matter settled without Court proceedings, if you are prepared to let your husband have a Divorce, provided he provides you with sufficient permanent alimony, and transfers all the land to you. If this would be agreeable to you, what amount would be sufficient for alimony? 15On 19 May 1972 the solicitors for Mr Junge Snr wrote a letter to Audrey Junge's solicitors (in reply to a letter of 7 March 1972 which is not in evidence). The letter contained the following: Your client phoned our client yesterday. Apparently your client is mainly interested in having the land owned by our client at Bargo transferred to her as soon as possible. She also seems to be upset about being the respondent party in the proceedings. As regards this matter, we therefore suggest, with respect, that you may explain to your client that if the petitioner, with the Court's approval, proceeds at the hearing on the ground of separation only, the principal relief of a decree of dissolution of the marriage will be based on a neutral and objective ground where questions of "fault" by either party do not arise. ... As regards ancillary matters our client proposes, by way of settlement thereof, as follows: - (a) By way of settlement of property for the benefit of your client, our client to transfer to your client, the whole of his right title and interest in the three blocks of land owned by him at Bargo, being lands adjoining your client's property at "Sunninghill". (b) By way of permanent maintenance, our client to pay your client the sum of $10 per week. These payments, we suggest, would not prevent your client from obtaining a full pension as we understand that our client's lands at Bargo would be added to and treated as part of her home property of "Sunninghill". We suggest, with respect, that you advise your client in this regard. After transfer of the lands by our client to your client she would, of course, be free to sell same if she so wishes but this would probably affect her pension position as regards the means test. ... If our respective clients reach agreement as regards ancillary matters we will draw up and submit to you Minutes of Agreement for Settlement of Ancillary Matters to be filed in Court. We refer to the telephone conversation which the writer had with you today and as arranged we are forwarding a copy of this letter to your client with a request that she get in touch with you as soon as possible. 16On 8 August 1972 Audrey Junge's solicitor wrote to her in the following terms: Your husband is not prepared to pay you any more than $10 per week as well as transferring Bargo land to you and paying all costs incurred. As you claimed that the land was purchased with your money you are only getting what you are entitled to as regards Bargo land. Would you please let me know as soon as convenient what amount you require to support yourself. If you cannot obtain any proof of his earnings it will be difficult to obtain a large alimony. ... 17It is apparent that Audrey Junge provided further instructions to her solicitor in relation to the issue of maintenance. On 5 September 1972 her solicitor wrote to the solicitor for Mr Junge Snr stating that it must be realised that his client could not survive on $10 per week, and that she would not be entitled to a pension "for some years". The letter concluded with the following: My client contends that it was her money used to buy the land at Bargo and your client had no right to have the land put in his name. If he is not agreeable to paying $60.00 per week matter had better be left to the Court. She does not wish to oppose granting of divorce. 18On 2 January 1973 Mr Junge Snr's solicitor wrote to Audrey Junge's solicitor in response to a letter, which is not in evidence, said to be dated 24 December 1971 (presumably 24 December 1972). The letter stated that Mr Junge Snr was quite unable to pay an amount of $60 per week by way of maintenance, but that the respective clients discussed the question of settlement of ancillary matters on 23 December 1972 and both would like to finalise such matters. The letter contained a proposed settlement on the basis, inter alia, that maintenance of $20 per week be paid, that Mr Junge Snr pay rates and insurance on Sunninghill, that Mr Junge Snr transfer the Property to Audrey Junge and that the terms of settlement be incorporated into a deed which would be sanctioned by the Court under section 87(1)(k) of the Matrimonial Causes Act 1959. A copy of this letter was forwarded directly to Audrey Junge with a request that she communicate with her solicitor. 19The next relevant communication in evidence is a handwritten letter from Audrey Junge to Mr Junge Snr dated 25 July 1973. As some emphasis is placed upon this letter, it is desirable to set out much of its terms. The letter stated: Dear Theo, I have applied to the Social Welfare Dept. for a widow's pension which they will only approve if I take the matter to a Magistrates Court. Will you please let me know your intentions regarding the land fronting Panorama Street Bargo which is in your name. I have been in touch with your solicitor and he seems to be of the opinion that you have no objection to handing over the deeds and he has indicated that this can be done prior to any divorce action. Let me know if you are prepared to send me the deeds with an authority of transfer, so that the question of the land need not arise in court and I need only show that I am only getting $20 pw in order to be eligible for a pension. I do not know what you wish to achieve - all we want is the return of our land and a good feed. Please treat this matter as urgent. ... The prospect of going to court fills me with loathing - having to discuss one's private affairs with perfect strangers is so repugnant, that only the desperate position we are in could induce me to take so revolting and degrading a step. Audrey 20It seems that in about early September 1973 Audrey Junge again made direct contact with her husband's solicitor. She apparently informed him that both parties were anxious to have the proceedings finalised. This appears from a letter dated 4 September 1973 from Mr Junge Snr's solicitor to Audrey Junge's solicitor. In that letter, a response to the letter of 2 January 1973 was sought, and a suggestion was made that if settlement could be reached, a settlement deed could be prepared and submitted for the Court for its sanction. Once again, a copy of the letter was forwarded to Audrey Junge. 21A number of handwritten notes appear at the foot of the letter. The handwriting appears to be the product of two different pens, and is possibly that of two different people. The plaintiff deposed that the "notations" were in handwriting which he recognised to be his father's. It is not clear whether the plaintiff was referring to all of the handwritten notes. 22The notes appear to concern discussions about aspects of a possible settlement of the matter, including amounts of maintenance. Two of the notes seem to be of telephone calls to "McMaster" or "D McM" which I would infer are references to D McMaster, the solicitor for Mr Junge Snr. I am satisfied that at least these two notes were made by the Mr Junge Snr. He would have received a copy of the letter, and it is logical that he would use it to make notes of conversations he had with his solicitor. Moreover, and consistent with the plaintiff's evidence referred to above, the notes bear a close resemblance to two handwritten notes which appear on Audrey Junge's letter of 28 July 1973 which was also received by Mr Junge Snr. One of the notes of a telephone call to Mr McMaster is in the following terms: 10/12/73 12-12.30 ph D McM asking to proceed with AJ's wishes for a legal separation to fix property ownership + maint @ $20pw with promise not to obstruct or contest divorce on the grounds of separation. Will present along those lines. 23On 28 February 1974 Mr Junge Snr sent a handwritten letter to Audrey Junge. Again, as great importance is placed upon this letter, it is necessary to set out most of its terms. It stated: Dear Audrey, On giving further thought to our phone conversation on 25th Feb. it seems unfortunate that any "communication?" seems to bring out the worst in us, makes us both feel physically and mentally exhausted and is expensive to boot. ... On my part I have been apprehensive of complying with some of your "demands" because there seems to often be a "backwash" which is even worse that [sic] your original "demand". If in complying with your last demand I am again foolishly making extra trouble and unnecessary expense for myself, as has been suggested to me, I can only accept the responsibility. If, however, this land really means so much to you and your future happiness then I guess it is worthwhile. ... Although I have acceded to your constant demands and threats concerning the Deeds of Lots 198,199 and 200 and have enclosed the Certificate of Title by registered mail, please give full consideration to the possible outcome if you act rashly in regard to possible transfer costs which I may not be able to meet, death duties, additional land tax on your Bargo property under the latest ruling and the possible effect it may have your pension. Admittedly you will be in a very good position financially if you make reasonable use of your assets. If through rising rates and taxes and upkeep you are unable or unwilling to maintain your Property, the current and rapidly increasing sale price of the individual 10 blocks would be ample to purchase a 2 - 3 bedroom home unit or small town house outright, a small car with sufficient capital left over to give you permanent income for life of about $50pw, so you have not done too badly from this point of view. If on second thoughts you do not wish to sell the property you might like to leave it in my name on the definite understanding that (as in the past years since 24/1/46) you have exclusive use of the property and that in the event of my death it becomes either your or Linden's property, as I have previously arranged. In return for the use of this property as collateral as required I would undertake to continue to pay those rates and taxes. Now that I have done my bit to comply with your demands, how about burying the hatchet (not in my head for a change) and making life easier and happier for all of us? Theo [emphasis in original] 24There does not seem to be any doubt that, consistent with the statement made in the letter, Mr Junge Snr sent the Certificate of Title to the Property to Audrey Junge. The plaintiff deposes that at some time in 1974 his mother showed him the title deeds to the Property and said: At last it's settled. Finally I've got peace of mind. He has given me the deeds. 25The plaintiff further deposes that his mother thereafter kept the Certificate of Title and the February 1974 letter in a safe. There is no evidence that Mr Junge Snr, either then or at any other time, forwarded any Transfer in respect of the Property to Audrey Junge. 26The evidence is not clear as to what occurred with the matrimonial proceedings. The Court file (which is missing at least one document) does not reveal whether the proceedings were further pursued, or resolved in some way. There is no reason to think, however, that there were any contested proceedings that went to a hearing. 27The Plaintiff's evidence establishes that his father continued to pay council rates and land tax in respect of the Property up until Audrey Junge's death in May 1988. There is no evidence that Mr Junge Snr ever sought to use the Property "as collateral" as envisaged in his letter of 28 February 1974. 28Probate of Audrey Junge's last will (dated 23 January 1956) was granted to Mr Junge Snr. Under that will, the plaintiff inherited his mother's real estate. The plaintiff deposes that shortly after his mother's death his father visited him at Sunninghill and said: I need the deeds to the house and next-door as I'm the executor of your mother's estate. 29The plaintiff then removed the title deeds to Sunninghill and the Property from his mother's safe and gave them to his father. The plaintiff stated that he assumed that the Property would be dealt with by his father in accordance with the terms of his February 1974 letter. The plaintiff retained possession of that letter as evidence of the promises he considered had been made by his father to his mother. 30A number of wills made by Mr Junge Snr were in evidence. First, a will made on 9 December 1980 appointed June Peggy Petrou (i.e. the defendant, with whom Mr Junge Snr was now in a relationship) as executrix and gave to Audrey Junge, inter alia, "the interest which I have in land at Bargo known as lots 198, 199 and 200 Panorama Street Bargo". That will further provided that in the event that Audrey Junge predeceased him or died within two months of the date of his death then her share of the estate was to go to the plaintiff. 31Secondly, a will dated 4 November 1988 (made within six months of Audrey Junge's death) appointed the plaintiff as executor and made various gifts to him including a gift of "my properties known as Lot 198, 199 and 200 Panorama Street, Bargo". 32Thirdly, a will dated 18 October 1995 appointed the plaintiff as executor and gave the estate to the defendant and to the plaintiff in equal shares as joint tenants. 33Fourthly, a will dated 4 June 1996 (made within about six months of the marriage of Mr Junge Snr and the defendant) appointed the plaintiff as executor. A number of specific gifts were made to the plaintiff including the contents of the garage at Mr Junge Snr's residence in Coogee. The will further provided for the residue of the estate to go to the defendant as to 75 per cent, and to the plaintiff as to 25 per cent. On that same date Mr Junge Snr made a General Power of Attorney in favour of the plaintiff. 34Fifthly, a will dated 6 June 1996 was made in the same terms as the 4 June 1996 will save for the appointment of a second executor, namely, Tamara Jones who was a niece of the defendant. 35The wills of 4 June 1996 and 6 June 1996 (and the power of attorney) were sent by solicitors acting for Mr Junge Snr to the plaintiff. The plaintiff accepted, in the course of cross-examination, that he regarded the terms of those wills as being inconsistent with the agreement he understood his father had made with his mother. He conceded that he did not complain to his father about the terms of the wills or otherwise take up with him the inconsistency (as he saw it) between the terms of the wills and the agreement between his parents, apart from a couple of occasions when he mentioned to his father "in passing" that he had agreed that the Property "would go to me". 36The plaintiff said that he made "some oblique reference" to the matter, but did not want to "go into discussions" with his father about it. He agreed that he did not tell his father that if he died leaving such a will there would be "a problem". The plaintiff maintained that there were various reasons why he did not want to pursue the matter with his father. These reasons included not wanting to make life more difficult for his father with the defendant, and thinking that there was not much point taking the matter up with his father because of the influence the defendant had over him. The plaintiff's attitude appeared to be that his father was at least morally, and perhaps legally, obliged to fulfil the promises he had made in his 1974 letter, but that whether the promises were fulfilled or not would not be known until his father's death, and there were a number of possibilities as to what might occur before that time. 37It was put to the plaintiff that he was content to have his father proceed on the basis that he did not have any problem with the terms of the 1996 wills. The plaintiff did not directly dispute that proposition, but stated in effect that he did not tell his father in terms that he had no problems with the terms of the wills. 38On 20 September 1996 Mr Junge Snr made a General Power of Attorney in favour of the defendant. However, unlike the Power of Attorney given in favour of the plaintiff in June 1996, this power contained a limitation to the effect that the attorney was not to have the authority to transfer or otherwise deal with the real property of the donor. 39After Mr Junge Snr died in 2008 the plaintiff obtained possession of his father's papers. Presumably this is the source of the letters which contain Mr Junge Snr's handwritten notes. Amongst those papers was a photograph which, according to an accompanying note in Mr Junge Snr's handwriting, was taken in June 1996 on the occasion of Mr Junge Snr going to make a new will. It appears that the photograph is of the defendant and her niece (Tamara Jones) and was taken by Mr Junge Snr. His handwritten note is in the following terms: 6/96 June Junge and Tamara Jones take Theo Junge to solicitor to ensure new "free" will. 40On 24 July 2009 the plaintiff obtained a grant of Probate in respect of his father's will dated 6 June 1996. The attached inventory of property listed the Property as an asset of the estate with an estimated value of $600,000. The estimated value of the estate in total was a little over $1.5 million. The estate has been administered and distributed, save in respect of the Property. 41It appears that the plaintiff first asserted his claims in respect of the Property in November 2009. In response, solicitors acting for the defendant considered that claim and obtained counsel's advice. In May 2010 those solicitors stated, in effect, that the plaintiff's claims were not made out. 42As noted earlier, the defendant began to suffer mental incapacity from about November 2011. The proceedings were commenced in April 2012. Resulting Trust 43The first issue to consider is whether the Property was held by Mr Junge Snr on a resulting trust for Audrey Junge on the basis that she provided the money for its acquisition in 1948. 44The difficulty with this aspect of the case is that, as mentioned earlier, there is no direct evidence that establishes the source of the purchase money. Neither is there any evidence concerning the financial circumstances of Mr Junge Snr and Audrey Junge at about the time of the acquisition. This lack of evidence may well have been explicable on the basis that such evidence is no longer available due to the more than 60 years which have passed since the transaction, but no attempt was made to so explain the situation. 45The resulting trust case essentially rests upon the evidence of Audrey Junge's assertions that she provided the purchase money, coupled with the failure of Mr Junge Snr to contradict those assertions when he had the opportunity to do so. The defendant submitted that the evidence was insufficient to ground a finding that the Property was held on a resulting trust. 46The plaintiff recalls an occasion in the late 1950s when his mother told his father that she had been "diddled" by him in relation to the Property. However, no evidence was given of any response to that accusation by Mr Junge Snr. The plaintiff also recalls being directly told by his mother when he was about 14 years old that she had given Mr Junge Snr the money to buy the Property "on my behalf". This evidence, taken with the evidence of what was stated years later in the matrimonial proceedings indicates, if nothing else, that Audrey Junge consistently maintained that she was the source of the purchase money. 47When the divorce proceedings were commenced she made a clear statement to that effect in her answer to the petition which was verified by her affidavit. That statement does not seem to have been contradicted or questioned in any way by Mr Junge Snr (or by his solicitors) during the negotiations which followed in the two year period from about March 1972. 48From at least May 1972 Mr Junge Snr expressed a willingness to transfer the Property to Audrey Junge. Of course, that attitude is not necessarily inconsistent with the notion that Mr Junge Snr did not accept Audrey Junge's claim about the purchase money. It might be merely reflective of a willingness to compromise. However, as the negotiations continued over an extended period, and the parties could not find common ground (and indeed appeared to a be a long way apart) as to the level of maintenance, it would in my view be quite odd for Mr Junge Snr and his solicitors to remain completely silent on the question of the purchase money if Audrey Junge had not in fact provided that money as she had claimed. 49That claim was made yet again in the letter dated 5 September 1972 from her solicitors to Mr Junge Snr's solicitors. Whilst the chain of communications (both written correspondence and conversations) has been only incompletely adduced in evidence, there is no hint in any of the later communications which are in evidence that Audrey Junge's claim was disputed. In these circumstances I infer that Mr Junge Snr was not in a position to credibly dispute or even question his wife's claim. Moreover, the circumstances in which he agreed to deliver the Certificate of Title to her in February 1974 is, as explained further below, entirely consistent with an acceptance of her claim, and hence her beneficial ownership of the property. 50Ultimately, and despite the incomplete state of the evidence, the failure of Mr Junge Snr or his solicitors to dispute or question Audrey Junge's claim (which on one occasion was verified on oath) persuades me that, on the balance of probabilities, Audrey Junge did provide the money for the purchase of the Property in 1948 (see Brown v New South Wales Trustee and Guardian [2012] NSWCA 431 at [52]; Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [54]-[55]). 51Accordingly, I conclude that Mr Junge Snr held the Property on resulting trust for Audrey Junge. 52The dealings between Mr Junge Snr and Audrey Junge in February 1974 are (regardless of whether a binding contract was reached) consistent with the existence of Audrey Junge's beneficial ownership. Viewed in its context, Mr Junge Snr's letter of 28 February 1974 and the delivery of the Certificate of Title may be seen as an acceptance of that ownership. The terms of the letter essentially provided that if, in addition to receiving the Certificate of Title, Audrey Junge wanted Mr Junge Snr's title transferred to her Mr Junge Snr would effect that transfer, but if she did not want that to occur, the Property could be left in Mr Junge Snr's name. In that latter situation, it was definitely understood that Audrey Junge would continue to have exclusive use of the Property, and that upon the death of Mr Junge Snr, his title would "become" either Audrey Junge's or the plaintiff's. The second part of the understanding should in my view be regarded as an assurance by Mr Junge Snr that he would (whether by will or otherwise) ensure that upon his death his title would become the property of Audrey Junge or the plaintiff. 53The fact that, as it turned out, Mr Junge Snr remained the registered proprietor of the Property in no way affected Audrey Junge's beneficial ownership. Moreover, there having been no bona fide purchaser of the Property for value, Audrey Junge's beneficial ownership remained unaffected and became an asset of her estate upon her death. That interest in property falls to be dealt with in accordance with her will, which provides for the whole of her real estate to be given to the plaintiff for his absolute use and benefit. Contract 54In case my conclusion concerning resulting trust is wrong, I turn to consider the alternative claim in contract. It is alleged that in about February 1974 an agreement was reached between Mr Junge Snr and Audrey Junge which contained various terms including: (a)that Mr Junge Snr would give the title deeds to the Property to Audrey Junge; (b)that Audrey Junge would refrain from seeking a determination of the matrimonial proceedings; (c)that if the title to the Property was left in Mr Junge Snr's name, Audrey Junge would have exclusive use of the Property, and Mr Junge Snr would ensure that on his death the Property became either Audrey Junge's or the plaintiff's; and (d)that in return for the use of the Property as collateral as required, Mr Junge Snr would continue to pay the rates and taxes in respect of the Property. 55It is alleged that the agreement (said to be partly in writing and partly oral) was reached by the acceptance of an offer contained in Audrey Junge's letter of 25 July 1973, or by acceptance of an offer contained in Mr Junge Snr's letter of 28 February 1974. In final submissions it was put more broadly that the totality of the communications, culminating in the 28 February 1974 letter, established that an agreement, supported by consideration, had been reached (cf Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Ltd (1988) 5 BPR 11,110 at 11,117). 56The defendant took issue with the contention that a concluded agreement of sufficient certainty was reached, and pointed to the absence of a formal document of the type envisaged in the solicitors' letters, as well as to a lack of clarity and gaps in the evidence, including in relation to how the matrimonial proceedings were eventually determined. It was further submitted that there was no intention to create legally binding relations. 57A number of further submissions were put in the alternative, in the event that a concluded agreement was found. These included: (a)that the contract lapsed upon the death of Audrey Junge in 1988; (b)that the claim is barred pursuant to s 14 of the Limitation Act 1969; and (c)that the plaintiff is estopped from now asserting that Mr Junge Snr was obliged to ensure that on his death the Property was transferred to the plaintiff. The basis of the alleged estoppel is the plaintiff's failure, from 1996 until the death of his father in 2008, to challenge his father about his will which was in its terms inconsistent with the promise now sought to be enforced. 58It is true that the evidence concerning the negotiations which commenced in about March 1972 is incomplete and in some respects lacking in clarity. Further, despite the fact that both parties retained solicitors to act for them, and those solicitors envisaged that any settlement would be embodied in a formal written agreement, the parties conducted aspects of the negotiations in the absence of their lawyers, and introduced a considerable element of informality into the process. 59Nevertheless, it would seem that at certain moments in the negotiations the parties took the trouble to write letters setting out their positions in some detail. I would infer that such letters reflected the considered positions of their authors. 60The evidence establishes that from the outset the negotiations concerned three principal topics. These were: (a)the divorce sought by Mr Junge Snr - that is, whether it would be contested and, if so, on what grounds; (b)the Property - that is, whether title would be transferred to Audrey Junge; and (c)the amount of on-going maintenance to be paid to Audrey Junge. 61As to the first matter, it appears that by 5 September 1972 Audrey Junge was indicating that she did not wish to oppose the grant of a divorce. The final paragraph of her letter of 25 July 1973 strongly suggests that she would not have stood in the way of a divorce provided the other matters were settled. 62As to the second and third matters, it appears from Audrey Junge's letter of 25 July 1973, the handwritten note of the conversation between Mr Junge Snr and Mr McMaster on 10 December 1973, and Mr Junge Snr's letter of 28 February 1974, that consensus had been reached concerning the payment of on-going maintenance at the rate of $20 per week (a rate Audrey Junge thought would allow her to obtain a pension), and the transfer of Mr Junge Snr's title. It was essentially agreed that if, in addition to receiving the Certificate of Title, Audrey Junge wanted Mr Junge Snr to transfer his title to her he would effect such transfer, but if she did not want such transfer to occur and was content to leave the Property in the name of Mr Junge Snr, it would so remain in his name, subject to the "definite understanding" that Audrey Junge would continue to have exclusive use of the Property and, further, that upon the death of Mr Junge Snr his title would become the property of either Audrey Junge or the plaintiff. The defendant pointed to the words "as I had previously arranged" and submitted that this rendered any promise about the transfer of title uncertain. I do not agree. I think that the reference to an earlier arrangement could only qualify the promise in respect of its mode of performance, as opposed to its substance. 63It is necessary to consider whether, on the evidence before the Court, Mr Junge Snr and Audrey Junge reached a concluded agreement, and, if so, upon what terms. As was stated by Basten JA in Hendriks v McGeoch [2008] NSWCA 53 at [39]: Whether a contract exists between particular parties is a matter to be inferred from an objective assessment of the circumstances, including the communications between the parties. 64As this is not a case where a formal written contract was entered into, it is necessary to find (including by inference) the express terms of the contract (see Byrne v Australian Airlines Limited [1995] HCA 24;(1995) 185 CLR 410 at 422 and 442). 65In my opinion the evidence sufficiently establishes that a concluded agreement was reached between Mr Junge Snr and Audrey Junge in about late February 1974. The terms of the agreement emerge with sufficient clarity from the written communications between the parties, albeit that only an incomplete record of the parties' communications is in evidence. 66As noted earlier, consensus had been reached on two of the three principal matters the subject of the negotiations, and I would infer, particularly from the final paragraph of Audrey Junge's letter of 25 July 1973 and from the handwritten note of the conversation between Mr Junge Snr and Mr McMaster on 10 December 1973, that at some stage between 10 December 1973 and 28 February 1974 Audrey Junge also agreed with Mr Junge Snr that she would not contest a divorce on the grounds of separation. 67Accordingly, consensus was reached and promises had been exchanged in respect of all matters of cardinal importance. The fact that a concluded agreement is made is further supported by the act of delivery of the Certificate of Title to Audrey Junge. Possession of the "deeds" was undoubtedly seen as an important matter, and their delivery, at the conclusion of a lengthy negotiation, is apt to signify that agreement had finally been reached. There is no evidence which suggests that the parties remained in dispute after February 1974. 68In my view, the contract included terms to the following effect: (a)that the Certificate of Title to the Property would be delivered to Audrey Junge; (b)that if requested by Audrey Junge title to the Property would be transferred to her; (c)that if Audrey Junge did not so request, title to the Property would remain with Mr Junge Snr, in which case: (i)Audrey Junge would continue to have exclusive use of the Property; (ii)Mr Junge Snr would ensure that, upon his death, his title would become the property of either Audrey Junge or the plaintiff; and (iii)that in return for Mr Junge Snr being able to use the property for collateral security as required, he would continue to pay the rates and taxes on the Property; (d)that Mr Junge Snr would pay on-going maintenance to Audrey Junge in the sum of $20 per week; and (e)that Audrey Junge would not oppose a grant of divorce on the grounds of separation. 69It should also be noted that the conduct of the parties after February 1974 was consistent with the fact that such a contract had been made (see Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25] per Heydon JA). In particular, the will made by Mr Junge Snr on 9 December 1980 is consistent with term (c)(ii) in the paragraph above. The same can be said of the will he made on 4 November 1988. 70I do not doubt that the parties intended the agreement they made to be legally binding. Whilst the agreement is one between family members, in the objective circumstances present here, I conclude that the parties intended to create a legally binding agreement. The agreement was made in the context of matrimonial proceedings where not only was a divorce sought, but also orders in respect of property and maintenance. These were all matters of significance to the parties. Moreover, by its very nature the dispute was one which was to bring legal finality to the relations between the parties, either by determination of the Court or by way of an agreement. To the extent that there was some lack of formality in the negotiations and the recording of the agreement, that is not, to my mind, inconsistent with the evident aim of the parties to bring the matters in dispute between them to a close. In this regard, it is relevant to note that by July 1973 Audrey Junge regarded the matter as "urgent", and the letter from Mr Junge Snr's solicitor of 4 September 1973 suggested that both parties were then anxious to have the proceedings finalised. 71The plaintiff was not a party to the contract between his parents. However, he seeks to enforce the promise made to his mother on two bases. These are: (1)that his mother held the benefit of the promise on trust for him; and (2)that due to a "chain of representation" he is the representative of his mother's estate able to enforce the promise made to her. 72I do not accept that the plaintiff is the beneficiary of a trust of the chose in action. Whilst the form of the promise was such that the parties must have intended that the plaintiff might benefit from the performance of the promise, the evidence fails in my view to establish an intention to create a trust. There is no language that indicates such an intention, and the mere intention to benefit a third party is not sufficient (see Dalton v Ellis [2005] NSWSC 1252; (2005) 65 NSWLR 134 at [47]-[48]). 73I accept, however, that the plaintiff does posses an "executorship by representation" in relation to his mother's estate (see Maddock v Registrar of Titles (Vic)[1915] HCA 10; (1915) 19 CLR 681 at 688-9; Drummond v Registrar of Probates (SA) [1918] HCA 58; (1918) 25 CLR 318 at 321). The sole executor of her estate (Mr Junge Snr) is deceased, and the sole executor of the deceased executor's estate is the plaintiff. I do not accept the defendant's submission that there has been a break in the chain of representation because the estate of Audrey Junge has been fully administered. It has not been, insofar as the contract with Mr Junge Snr is concerned. 74Accordingly, the plaintiff is, in my view, a proper party to seek to enforce the promise made to his mother. The practical effect of such enforcement is to confer a benefit upon himself (see Coulls v Bagot's Executor and Trustee Co Ltd [1967] HCA 3; (1967) 119 CLR 460 at 478 and 502-3). As the subject matter of the promise is real property, there is no reason why specific performance of the promise would not be decreed. 75I turn now to the specific defences raised by the defendant in relation to the contract. 76The defendant submitted that any agreement by Mr Junge Snr to leave the Property by his will lapsed upon the death of Audrey Junge. Reliance was placed upon the statement made by Handley JA in Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 at [33] where his Honour stated: A contract to leave property by will is subject to lapse if the promisee pre-deceases the promisor... 77I do not think that this principle applies in the present case. It is true that Audrey Junge is the promisee. However, the promise given by Mr Junge Snr was not only to benefit the promisee. It was a promise to ensure that, upon his death his title to the Property would become the property of either Audrey Junge, or the plaintiff. That is, the promise obliged Mr Junge Snr to ensure that, upon his death, his title to the Property became the property of one or other of Audrey Junge or the plaintiff. Thus, even after the death of Audrey Junge, the promise remained able to be performed by ensuring that the title to the Property would become that of the plaintiff. The will made by Mr Junge Snr on 4 November 1988, which gave the testator's interest in the Property to the plaintiff, exemplifies this. Further, the plaintiff in fact survived his father. In these circumstances I do not think that it can be said that the contract has lapsed. 78I also do not think that any action on the contract is barred by s 14 of the Limitation Act 1969. Leaving aside questions of anticipatory breach and repudiation (none of which are raised here), a breach of the promise made in respect of the Property would not occur until the death of Mr Junge Snr at the earliest (see Varma v Varma [2010] NSWSC 786 at [466] per Ward J as her Honour then was). The present proceedings were commenced within six years of that event and are thus not barred. 79I turn now to consider the alleged estoppel. It was submitted that when the plaintiff received the June 1996 wills from solicitors acting for his father, and appreciated that they were in terms inconsistent with the promise he understood his father had made concerning the Property (as contained in the letter of 28 February 1974), the plaintiff ought to have challenged his father's conduct and thus given his father the opportunity to change his position (for example, by altering his will). It was further submitted that the Court should infer that Mr Junge Snr, having gone to the trouble of having solicitors send the wills to his son, and not being subsequently challenged about them, would have assumed that the plaintiff would have no objection to them. 80As noted earlier, the plaintiff accepted that he thought that the wills were inconsistent with the promise he understood his father had made and further accepted that he did not confront his father about the matter other than by raising the issue in passing. There is evidence that the plaintiff mentioned to his father that he had promised in his letter to leave the Property to him, but that this did not lead to "a discussion". The plaintiff said that his father's response was "fairly non-committal" and that he neither denied nor accepted the statement. The plaintiff also said in his evidence that he did not tell his father that he had no problems with the will. 81I have considerable doubt as to whether it was incumbent upon the plaintiff (who was not the contracting party) to say anything to his father about the matter. However, the matter was raised, in a fashion, and it appears that neither side pressed the issue one way or the other. That is say, the plaintiff did not positively assert that the 1996 wills, being contrary to the promise, would give rise to a problem, and Mr Junge Snr did not seek or obtain any assurance from the plaintiff that, despite the 1996 wills being contrary to the promise, there would be no problem. 82In these circumstances, I would not draw the inference that Mr Junge Snr would have assumed that the plaintiff would have no objection to the wills. In the absence of a clear statement by the plaintiff to that effect (and the making of such a statement was not suggested to him) I do not think that it would be reasonable for Mr Junge Snr to form such a belief. Moreover, there does not seem to me to be any unconscionability in the plaintiff now (as the representative of his mother's estate) seeking to enforce the promise his father made to his mother. I do not think that any estoppel which would prevent such enforcement of the promise arises in the circumstances of this case. 83In my view, the defences advanced in relation to the contract fail, such that it is open to the plaintiff to enforce the promise made in relation to the Property. Other Matters 84It should be noted that the plaintiff contended that if the contract case was rejected, the dealings between the parties, including the representations made by Mr Junge Snr in his letter of 28 February 1974 as to the Property, nonetheless gave rise to a situation where it would have been unconscionable for Mr Junge Snr to deny that the Property was held on a constructive trust for the benefit of the plaintiff. It was put that, in reliance upon the representations made by Mr Junge Snr, Audrey Junge and later the plaintiff refrained from taking steps to have the Property transferred during Mr Junge Snr's lifetime. It was also put that the terms of the 28 February 1974 letter, and the delivery of the Certificate of Title, created an express trust of the Property in favour of Audrey Junge. 85In view of the conclusions I have reached above it is not necessary to deal with those contentions. However, I should state that the evidence concerning reliance was sparse, and in view of the plaintiff's knowledge of his father's wills in 1996 he must be taken to have appreciated that his father might not fulfil his promise. In these circumstances, the constructive trust case faced obvious difficulties. 86As far as the express trust case is concerned, it seems to me that this case also faced considerable difficulties because the language used by the parties was not that of trusts but rather of contract (cf: Barns v Barns [2003] HCA 9; (2003) 214 CLR 169 at [77] - [80]). 87There is also a procedural matter to note. The plaintiff sought orders pursuant to Uniform Civil Procedure Rules 2005 r 7.10 that the defendant be appointed as representative of the estate of Mr Junge Snr, and that the plaintiff be appointed as representative of the estate of Audrey Junge. 88Uniform Civil Procedure Rule 7.10 relevantly provides: (1) This rule applies to any proceedings in which it appears to the court: (a) that a deceased person's estate has an interest in the proceedings, but is not represented in the proceedings, or (b) that the executors or administrators of a deceased person's estate have an interest in the proceedings that is adverse to the interests of the estate. (2) The court: (a) may order that the proceedings continue in the absence of a representative of the deceased person's estate, or (b) may appoint a representative of the deceased person's estate for the purposes of the proceedings, but only with the consent of the person to be appointed. 89It is correct to say that the plaintiff, as executor of the estate of Mr Junge Snr, has an interest in the proceedings adverse to the interests of the estate. However, as noted earlier, the defendant, who is the major beneficiary of the estate, has appeared and has essentially discharged the role of contradictor to the plaintiff's claims. I would be prepared to make the order sought if I thought it necessary to do so, but it seems to me that in these circumstances it is not necessary. 90It may also be strictly correct to say that the estate of Audrey Junge has an interest in the proceedings but is not represented as such in the proceedings. However, in circumstances where the plaintiff has an "executorship by representation", is relevantly the only beneficiary of the estate who might gain from the proceedings, and there is no suggestion that the estate has any debts, I also see no need to make the order sought in relation to the estate of Audrey Junge. Conclusion 91I have concluded that Mr Junge Snr held the Property on resulting trust for Audrey Junge. 92I have also concluded that: (a)Mr Junge Snr and Audrey Junge entered into a legally binding contract in about February 1974 which included a promise by Mr Junge Snr to the effect that if title to the Property remained with him he would ensure that, upon his death, his title to the Property would become the property of either Audrey Junge or the plaintiff; and (b)it is open to the plaintiff, by virtue of an "executorship by representation", to obtain specific performance of that promise. 93Any interest in the Property held by Audrey Junge became an asset of her estate upon her death. Any such interest would pass to the plaintiff in accordance with the provisions of her will. Upon the enforcement of the promise made by Mr Junge Snr, any interest in the Property held by Mr Junge Snr would become held by the plaintiff. There is no suggestion that anyone other than Audrey Junge or Mr Junge Snr held any interest in the Property. It follows that the plaintiff is entitled to full beneficial ownership of the Property. 94In view of the fact that the plaintiff is already the registered proprietor of the Property it may be that the appropriate relief is merely a declaration to the effect that the Property is owned beneficially by the plaintiff. However, as the matter is not free of complications, I will order that the parties bring in Short Minutes which give effect to these reasons. 95The Short Minutes should also deal with costs. As to that matter, there does not seem to be any reason to depart from the usual rule that costs follow the event. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 December 2013