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1 of 10 DOCUMENTS: Unreported Judgments Federal Magistrates Court

65 Paragraphs

ELDERS LTD v LLOYD - BC200505285

Federal Magistrates CourtRiethmuller FM

MLG 219 of 2005

25 May, 22 July 2005

[2005] FMCA 1020

BANKRUPTCY -- Proceedings in connection with sequestration -- petition and sequestration order-- hearing of creditor's petition -- tender of payment by debtor -- whether election to accept tender byagent of creditor company -- no election when agent merely receipted the promissory notes tendered.

BANKRUPTCY -- Proceedings in connection with sequestration -- petition and sequestration order-- hearing of creditor's petition -- misnomer -- incorrect spelling of debtor's middle name -- formaldefect only.

(CTH) Bankruptcy Act 1966 ss 41, 46, 109, 306

Alexander Korda Film Productions Limited v Columbia Pictures Corporation Limited and Anor [1946]Ch 336; Allen v Royal Bank of Canada (1925) 134 LT 194; Australia and New Zealand Banking Group v Coutts [2003] FCA 968; Australia and New Zealand Banking Group v Foyster [2000] FCA400; Australian Workers' Union v Bowan (1946) 72 CLR 575; Belshaw v Bush (1851) 11 CB 191;

Blumberg v Life Interests and Reversionary Securities Corp [1897] 1 Ch 171; Bowen, Re; Ex parte Australian Workers' Union (1945) 13 ABC 275; Bowes v Foster (1858) 2 H & N 779; Brien v Dwyer (1978) 141 CLR 378; Buckley, Re; Ex parte James Hardie & Co Pty Ltd (1976) 27 FLR 496;Commonwealth, The v Verwayen (1990) 170 CLR 394; Corney v Brien (1951) 84 CLR 343; Crowe v

Hughes [1997] FCA 864; Debtor, Re a [1937] Ch 181; Edwards, Dunlop and Co v Harvey (1927) LR 37; Ell, Re; Ex parte Austin (1886) 4 NZLR 114; Geary, Re; Ex Parte Feez Ruthning and Co Qld (unrep, Fed Ct, Spender J, 16/8/1984) ; Gentry, In re [1910] 1 KB 825; International Alpaca

Management v Ensor [1999] FCA 72; Kirkwood, Ex parte; re Mason (1879) 11 ChD 724; McIntosh vShashoua (1931) 46 CLR 494; McSwiney, Re; Ex parte Davies (unrep, Fed Ct, Beaumont J,

24/11/1986) ; National Australia Bank Limited v KDS Construction Services Pty Ltd (1987) 63 CLR 668; Romer, Hass & Aslam, Re [1893] 2 QB 286; Sargent v ASL Developments Ltd (1974) 131 CLR 623; Scarf v Jardine (1882) LR 7 AC 345; Sweeting v Pearce (1861) 9 CB(NS) 534; Tropical Traders

Ltd v Goonan (1964) 111 CLR 41; Ward and Ward, Re; Ex parte RW Brown and Company Pty Ltd (1991) 28 FCR 329; Wren v Mahoney (1972) 126 CLR 212

Riethmuller FM.

[1] The applicant filed a creditors' petition on 24 February 2005 setting out that the respondent debtors owe


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the applicant creditor $43,623 for a debt for which they held no security. The petition alleges that the parties failed to comply with a bankruptcy notice issued pursuant to s 41 of the Bankruptcy Act foundedupon a judgment debt.

[2] An affidavit verifying the debt was filed on the same date.

[3] The male respondent was served with the bankruptcy notice on 27 August 2004 as is attested to by theservice agent in an affidavit filed 24 February 2005. The female respondent was served with the bankruptcynotice on 29 September 2004, such service similarly being attested to by the service agent in an affidavitfiled at the commencement of the proceedings.

[4] On 19 April 2005 the male respondent entered an appearance on the petition.

[5] Affidavits attesting to service of the petition on both of the respondents and an affidavit of search have been filed.

[6] On 19 April 2005 Registrar Agnew made orders that the respondent file and serve a notice of oppositionand any affidavits in support of such opposition by 3 May 2005, with the applicant to file and serve anyaffidavits in reply by 10 May 2005. Registrar Agnew adjourned the matter to 23 May 2005 when it came on

before me.

[7] Affidavits were filed by the male respondent, sworn 3 May and 18 April. There are two affidavits of 3May, one being described as a supplementary affidavit.

[8] In the affidavits the following objections are taken:

1a) That the first-named respondent does not exist (apparently on the basis that his name is spelt'Morris' and ought to be spelt 'Maurice');

1b) An allegation that the creditor does not have its registered office at the address given;1c) An allegation that the debt had been paid;1d) That the creditors' petition cannot be taken to have been properly served until it is served on

all people named in the petition;1e) The petition is defective as it alleges that it relies upon a debt registered in the Magistrates'

court of Melbourne when the judgment was obtained from the County court;1f) That the judgment debt was obtained by fraud; and1g) That there is no final judgment until all appeal avenues have been exhausted and the

respondent is pursuing a further appeal.

[9] On the first day that the matter was listed for hearing the respondents did not appear. Their son appearedseeking leave to appear on their behalf. He outlined the nature of the case that they intended to put. On thatoccasion I indicated to the respondents' son that as he was not a solicitor, and the respondents were absent, Iwas not prepared to grant him leave to appear and represent them.

[10] I adjourned the proceedings until 11 am the next day to allow the respondents an opportunity to attend.The respondents did not attend on the second occasion (the respondents having been called three times oneach day). On the second occasion the respondents forwarded to the court a facsimile in the followingterms:

I am writing to you in relation to the above matter and in particular to your Orders of today 23 May 2005.

My wife Rita Lloyd is not well and is unable to travel to Melbourne tomorrow and to this end I asked my sonStephen to attempt to get a lawyer to represent both me and my wife at the Court at 11.00 am.

Stephen has advised me that after a number of phone calls he was advised by solicitors that he had to be joking, thatno one would be able to represent anyone at such short notice and that in order to bring themselves up to speed withthe case an adjournment would have to be granted.

I seek such an adjournment to enable me to instruct a suitable solicitor to represent the both of us. Stephen told methat the computer at the Law Institute was down and they were not able to help with their referral service at this


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time.

[11] It provides no explanation for the absence of the male respondent, nor any details with respect to theincapacity of the female respondent. The letter seeks an adjournment to instruct a suitable solicitor. The

proceedings have been on foot for a considerable period of time.

[12] In the absence of any appearance by the respondents and the limited material placed before me throughthe facsimile letter I am not satisfied that a further adjournment in this matter is appropriate.

[13] The female respondent has not filed material, however appears to be the wife of the male respondent.In the circumstances of this case it appears that the applicant's petition, to the extent that it relates to thefemale respondent, rises or falls on the same basis that it would with respect to the male respondent.

Misnomer issue

[14] The first issue raised relates to a misspelling of a middle name of one of the respondents. Formaldefects do not invalidate proceedings. Section 306 of the Bankruptcy Act provides as follows:

1) Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless thecourt before which the objection on that ground is made is of opinion that substantial injusticehas been caused by the defect or irregularity and that the injustice cannot be remedied by anorder of that court.

1) A defect or irregularity in the appointment of any person exercising, or purporting to exercise, a power or function under this Act or under a personal insolvency agreement entered into under this Act does not invalidate an act done by him or her in good faith.

[15] There is no dispute in this case that it is clear that the debtor is the person named in the proceedings,and the nature of the misnomer (being the third name of the applicant) is in the form of a phonetic spellingwhich has the same pronunciation as the correct spelling. The affidavits filed by the debtor confirm that heis well aware that he is the person referred to in the proceedings.

[16] Such defects are appropriately cured under s 306: see Re McSwiney ex parte Davies (unrep, Fed Ct,Beaumont J, 24 November 1986). A failure to describe the parties by precisely the same name as they have

been referred to in other proceedings is a formal defect that would be cured by this section: see Re Bowenex parte Australian Workers' Union (1945) 13 ABC 275 and Australian Workers' Union v Bowan (1946)72 CLR 575. A similar misdescription of the debtor in a petition has been held to be a formal defect: in Ex

parte Kirkwood; re Mason (1879) 11 ChD 724. Similarly, with a writ it would not invalidate the writ, butonly amounts to a formal defect that does not invalidate the proceedings: Alexander Korda Film

Productions Ltd v Columbia Pictures Corporation Ltd and Anor [1946] Ch 336.

[17] The applicant should have leave to amend.

Address of creditor

[18] The next issue raised is whether or not the creditor has its 'registered office' at the address given. Thereis no suggestion that the creditor does not have an office at the address listed. I am not satisfied that this is adefect, and even if it were is has not prejudiced the respondent. There is other evidence in these

proceedings that the debtors purported to make payment (as set out below) at another office of the petitioning creditor.

[19] This has caused no prejudice to the respondent.

Allegations of payment

[20] The third defect alleged is that the debt has been paid. In this case it is alleged that the male debtor


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paid the debt by way of delivery of two promissory notes to the creditor for which he was issued a receipt.The two promissory notes are drawn in favour of the male debtor by the female debtor, both on the sameday (6 April 2005), one in the sum of $20,000 and the other in the sum of $23,623. Both are expressed to be

payable in the future (by a considerable period). Both are endorsed on the rear by the male debtor with the

words "please pay Elders Ltd".[21] The promissory notes were delivered to an office of the petitioning creditor and a pro forma receiptissued describing the promissory notes as 'cheques', and showing a 'credit' in the sum of the total of the

promissory notes. The receipt was issued on 6 April 2005. The receipt had a section headed 'Other Details'to which had been added the word 'Merchandise'. The person issuing the receipt signed it in the appropriatesection.

[22] There is no evidence as to who accepted the promissory notes or issued the receipt. However, on 12April 2005 a letter was forwarded to the debtors for the applicant's solicitors stating:

We note that this Petition is listed for hearing in the Federal Magistrates' Court on the 19th April, 2005, and we alsonote that you have contacted our client's branch office and delivered to them documents described as promissorynotes in purported settlement of this matter. We note that our client has given a receipt acknowledging receipt of those documents and we understand that our client has returned them to you confirming that that is not anacceptable resolution of this proceeding.

It is not acceptable for the following reasons, firstly you would be aware that the original judgment was entered onthe 19th May, 2004 and interest accrued until the date of the issue of the Bankruptcy Notice on the 23rd July, 2004and interest has continued to accrue since that date. By our calculation the further interest outstanding is $3,787.01.We also note that there were costs associated with the County Court proceedings which have not been taxed sincewe have not been able to get any response from your son who appeared apparently on your behalf at the CountyCourt proceeding. Those costs would be approximately $9,500.00 as we put to you in our letter of the 20th May,2004 and the final matter outstanding would be the costs of the Application for Leave to Appeal to the Full Courtagain apparently conducted by your son on your behalf and we believe those costs would be in the order of $6,000.00. In both cases those costs figures would be inclusive of GST. We further note that none of those figuresinclude any of the legal costs associated with the Bankruptcy Petition which would again be in the order of $3,500.00. We also note that there are separate Bankruptcy proceedings against your son Stephen John Lloyd whohas not yet been served with a Petition and there are further costs associated with that proceeding of approximately$1,000.00 which would need to be taken into account if there is to be a general resolution of all matters outstanding.

Could we respectfully suggest that you urgently obtain some legal advice from an experienced Practitioner in thisarea so that your interests can be protected.

[23] A question arises as to whether or not the petit ioning creditor had accepted the tender of the promissory notes in payment of the debt.

[24] There is no doubt that the promissory notes were tendered to the applicant and that an agent of theapplicant accepted the documents and issued a receipt for them.

[25] It is generally considered that acceptance of a cheque or promissory note is taken as constituting aconditional payment; that is conditional upon the instrument being honoured. The obligation is notdischarged, but the right to sue with respect to it is considered to be suspended until payment is received.This has much commercial sense with respect to cheques and other instruments that are payable upondemand. The position was well set out in the High Court in National Australia Bank Ltd v KDS Construction Services Pty Ltd (1987) 63 CLR 668 where the High Court said (at 676):

Generally speaking, when a cheque is given in payment of a debt, it operates as a conditional payment. The payment is subject to a condition that the cheque be paid on presentation. If it is dishonoured the debt revies.Though it is sometimes said that the remedy for the primary debt is suspended, the suspension is no more than aconsequence of the conditional nature of the payment: Tilley v Official Receiver in Bankruptcy . The condition is acondition subsequent so that, if the cheque is met, it ranks as an actual payment from the time it was given. Subjectto non-fulfilment of the condition subsequent, the payment is complete at the time when the cheque is accepted bythe creditor: Thomson v Moyse [1961] AC 967.


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[26] It appears that a similar position follows with respect to other negotiable instruments: see Allen v Royal Bank of Canada (1925) 134 LT 194 and Belshaw v Bush (1851) 11 CB 191.

[27] The onus of establishing that acceptance of a negotiable instrument constituted an accord andsatisfaction in place of the original obligation rests upon the debtor: see Re Romer v Hass & Aslam [1893]2 QB 286 per Bowen LJ at 300 and Kay LJ at 303. On the material presently available I am not satisfiedthat any apparent acceptance of the negotiable instrument could be considered to absolutely discharge the

prior indebtedness by way of an accord and satisfaction. The mere acceptance of the notes and issue of areceipt is not sufficient, on its own, to evidence an agreement that the notes were taken in substitution for the debt.

[28] In this case the promissory notes are not yet due for payment as they were not payable on demand.There is no doubt that a negotiable instrument can be drawn such that it is not payable upon demand, butonly at a future date (see s 18 of the Bills of Exchange Act). In the past an answer to a question such as this(where the instrument had not been stamped) was that the instrument was invalid under s 45 of the StampAct (Vic): see Edwards, Dunlop and Co v Harvey (1927) LR 37 per Dixon AJ. However, such dutyrequirements are no longer in force. The instrument appears to be valid on its face.

[29] If the promissory notes were accepted as payment then they are conditional payment and the primarydebt would be suspended until the instruments are met or dishonoured on maturity. The date of maturity of the instruments is many months away.

[30] It was clearly open to the creditor to reject the tender at the time. In McIntosh v Shashoua (1931) 46CLR 494 Gavan Duffy CJ and Dixon J, as he then was, said (at 505):

The fact that after the presentation of the petition the debtor tendered payment of the assigned debt and the tender was refused cannot in this case affect the result. A petitioning creditor is entitled to refuse payment and proceedwith the petition ( Re Gentry [1910] 1 KB 825). The refusal of the tender in this case is consistent with theconclusion, if it does not strengthen it, that the petitioner truly desired to obtain a sequestration order.

[31] This was the law for some time before McIntosh v Shashoua : See In re Gentry [1910] 1 KB 825; Re Ell; Ex parte Austin (1886) 4 NZLR 114; and Re a Debtor [1937] Ch 181.The principle has been applied

in Re Geary; Ex Parte Feez Ruthning and Co Qld (unrep, Fed Ct, Spender J, 16 August 1984); Crowe v Hughes [1997] FCA 864; International Alpaca Management v Ensor [1999] FCA 72; Australia and New Zealand Banking Group v Foyster [2000] FCA 400 and Australia and New Zealand Banking Group vCoutts [2003] FCA 968.

[32] It is also clear that where tender is made to an agent, such as a solicitor, it remains open to the creditor to reject the tender within a reasonable time: Re Buckley; Ex parte James Hardie & Co Pty Ltd (1976) 27FLR 496.

[33] The question then becomes one of whether or not the provision of such documents to an agent of therespondent and the obtaining of a receipt is sufficient evidence of acceptance by a person with actual or implied authority to accept the negotiable instruments in payment of the debt. Prima facie an agent does nothave authority to accept payment other than in legal tender: Sweeting v Pearce (1861) 9 CB(NS) 534;

Blumberg v Life Interests and Reversionary Securities Corp [1897] 1 Ch 171. Even if the contract provides

for payment by cheque this does not include a post-dated cheque: Brien v Dwyer (1978) 141 CLR 378.Express authority is required to accept a bill of exchange.

[34] In the absence of any evidence with respect to a person who received the documents i t is not possiblefor the court to make any determination as to the actual authority of the person. No lack of authority wasalleged in the solicitor's letter. Indeed, the solicitor only takes issue with the tender on the basis that therewere other unquantified sums owing.

[35] It is appropriate to analyse the facts in order to determine whether the applicant elected to accept thetender of the promissory notes: see, for example, the analysis undertaken in Crowe v Hughes [1997] FCA864 and Re Buckley; Ex parte James Hardie & Co Pty Ltd (1976) 27 FLR 496 per Riley J at 508.


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[36] In order to determine whether an election has been made it is necessary to consider:

1) Whether the facts and circumstances giving rise to the election were known to the personwith the right of election; and

1) whether the conduct was unequivocal.[37] In Sargent v ASL Developments Ltd (1974) 131 CLR 623 Stephen J (with whom McTiernan ACJagreed) said:

1. In the present appeals I conclude that, contrary to the appellants' contentions, all that need beestablished in order for the doctrine of election to apply is knowledge by the vendors of the factsgiving rise to inconsistent legal rights; the appellants are to be taken to know of their rights of rescission conferred by cl 16 and, of course, of their right to enforce the contracts according totheir terms. If they then knew of the relevant facts giving rise to the rights of rescission, that is,the existence of a planning scheme affecting the lands sold, that is enough to invoke the doctrine.Their own interpretation or understanding of the nature or extent of their contractual rights will

be irrelevant, so that it matters not at all whether they were aware of the existence of cl 16 or of

its effect as it came to be enunciated in Wolczyk v Barr (1970) 92 WN (NSW) 518; it is enoughthat they knew of facts which have brought cl 16, as so interpreted, into operation.

1. The words or conduct ordinarily required to constitute an election must be unequivocal in thesense that it is consistent only with the exercise of one of the two sets of rights and inconsistentwith the exercise of the other; thus for a lessor to continue to receive rent under a lease will beconsistent only with his rights as lessor and inconsistent with the exercise of a right to determinethe lease (Viscount Dilhorne in the Kammins Ballroom's Case (1971) AC, at p 873 ; Herring CJin the Coastal Estate's Case (1965) VR, at p 436 ; Kitto J in Tropical Traders Ltd v Goonan (1964) 111 CLR 41, at p 56 ). However, less unequivocal conduct, only providing some evidenceof an election, may suffice if coupled with actual knowledge of the right of election ( Elder'sTrustee Case (1941) 65 CLR, at p 618 ). There need be no expressed intention to elect, nor willan express disclaimer of such an intention be of any avail in preserving one right if in fact there

be an exercise of another inconsistent right ( Croft v Lumley (1858) 6 HL Cas 672 (10 ER 1459); Matthews v Smallwood [1910] 1 Ch, at p 786 ). For an election there need be no actual,subjective intention to elect ( Scarf v Jardine (1882) 7 AC, at p 361 ), an election is the effectwhich the law attributes to conduct justifiable only if such an election had been made (per Kitto Jin Tropical Traders Ltd v Goonan (1964) 111 CLR, at p 55 ); cf. S Kaprow & Co Ltd v

Mclelland & Co Ltd ., per Wrottesley LJ [1948] 1 KB 618, at pp 629-630..

[38] Similarly, in Tropical Traders Ltd v Goonan (1964) 111 CLR 41 Kitto J (at [10]) said:

... election is [not] a matter of intention. It is an effect which the law annexes to conduct which would be justifiableonly if an election had been made one way or the other: Scarf v Jardine (1882) 7 App Cas 345, at p 361 ; Craine vColonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, at p 325.

[39] In The Commonwealth v Verwayen (1990) 170 CLR 394 Brennan J affirmed the statements inSargent , saying:

Election consists in a choice between rights which the person making the election knows he possesses and whichare alternative and inconsistent rights: Evans v Bartlam [1937] 2 All ER 646, at pp 652,653; Tropical Traders Ltd vGoonan (1964) 111 CLR 41 at p 55; Kammins Co v Zenith Investments [1971] AC 850 at p 883. A doctrine closelyrelated to election, and sometimes treated as a species of election, is the doctrine of approbation and reprobation.This doctrine precludes a person who has exercised a right from exercising another right which is alternative to andinconsistent with the right he exercised as, for example, where a person 'having accepted a benefit given him by a

judgment, cannot allege the invalidity of the judgment which conferred the benefit': Evans v Bartlam , per LordRussell of Killowen at p 652. An election is binding on the party who makes it once it is made overtly -- or, at allevents, not later than on the communication of the election to the party or parties affected thereby: Newbon v City

Mutual Life Assurance Society Ltd . (1935) 52 CLR 723 at p 733; Scarf v Jardine (1882) 7 App Cas 345 at pp 360-361. It is binding whether or not others who are affected by the election have acted in reliance on it. In this respect,election is to be distinguished from estoppel: Khoury v Government Insurance Office (N .S W.) (1984) 165 CLR


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622 at p 633.

[40] The fact that a person may require some reasonable time to decide what election to make wasacknowledged by Blackburn LJ in Scarf v Jardine (1882) LR 7 AC 345 at 360 to 361 as follows:

... where there is a right to elect the party is not bound to elect at once; he may wait and think which way he willexercise his election, so long as he can do so without injuring other persons ...

... The principle, I take it running through all the cases as to what is an election is this, that where a party in his ownmind has thought that he would choose one of two remedies, even though he has written it down on a memorandumor has indicated it in some other way, that alone will not bind him; but so soon as he has not only determined tofollow one of his remedies but has communicated it to the other side in such a way as to lead the opposite party to

believe that he has made that choice, he has completed his election and can go no further; and whether he intendedit or not, if he has done an unequivocal act mean an act which would be justifiable if he had elected one way andwould not be justifiable if he had elected the other way -- -- the fact of his having done that unequivocal act to theknowledge of the persons concerned is an election.

[41] Put simply, does the issuing of the receipt by the applicant's employee or agent show that the applicant

elected to accept the negotiable instruments as payment. The receipt demonstrates that the instrument wasreceived by the applicant at its branch office (not the office nominated in the bankruptcy notice). Thereceipt erroneously describes the instruments as 'cheques'. The document also sets out the 'other details' as

being 'Merchandise', presumably indicating that the receipt relates to merchandise. There is no evidence of any conversation at the time of the tender as to the nature of the documents or the issue of a receipt (unlikethe evidence in Re Buckley; Ex parte James Hardie & Co Pty Ltd (1976) 27 FLR 496).

[42] The exercise of an election is a significant step which must be made with knowledge of the factsgiving rise to the election. It would be unrealistic to imply actual or ostensible authority to an agent of alarge company, at an office other than the office nominated for payment in the bankruptcy notice, to makesuch an election in the circumstances of this case. There is no basis for imputing to the relevant agent theknowledge of the facts and circumstances giving rise to the election. Nor could it reasonably be said that anagent, in the circumstances here, would have apparent, implied or ostensible authority to make the election.

[43] If the agent were receiving the promissory notes, so as to allow the applicant to consider making anelection, then it would be reasonable for a receipt to be issued, acknowledging that the documents werereceived. It is clear from the misdescription of the instruments as cheques that the receipt can not beconsidered a specific document. It is a printed form that was not particularly suitable for the transaction. Itdoes not, on its face show an election (or even a representation thereof) to accept the promissory notes as

payment.

[44] The only other conduct that is referred to in evidence is the letter sent soon after by the applicantrejecting the tender.

[45] I am not satisfied that in this case the evidence shows that the applicant made an election to accept the promissory notes as payment of the debt. Thus, this is not a basis for resisting the application.

Failure to serve a joint debtor

[46] The allegation that there is some defect because the bankruptcy notice is against more than one personand not all persons have been served appears to me to be groundless.

[47] It is open to the creditors to proceed against any or all of the joint debtors. It is also open to them to join the debtors in the one proceedings as provided for in s 46 of the Act:

46. Petition against 2 or more joint debtors


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2) A creditor's petition may be presented against 2 or more joint debtors, whether partners or not.2) Where there are 2 or more respondents to a creditor's petition, the Court may make a

sequestration order against one or more of them and dismiss the petition in so far as it relates tothe other or others.

[48] It is clear that the creditor cannot proceed against a debtor that has not been served. However this doesnot preclude the creditor from proceeding against the debtors who have been served: see s 46(2) and moregenerally Re Ward and Ward; Ex Parte RW Brown and Company Pty Ltd (1991) 28 FCR 329.

[49] I see no prejudice to the respondent debtors by the fact that the creditor is not proceeding againstanother of the joint debtors on this occasion. Similarly, the fact that a bankruptcy notice or proceedingsinclude a person who is an undischarged bankrupt, whilst it would be irregular against that person, appearsto me to remain regular with respect to the debtors who are not undischarged bankrupts.

Incorrect description of judgment

[50] The next issue is that the creditor's petition is incorrect as it refers to a judgment 'registered in theMagistrates court in Melbourne', when in fact the only judgment is from the County court of Victoria.

[51] A copy of the actual judgement was annexed to the bankruptcy notice; it was therefore without defect.It is that notice that is relied upon by the creditors in this proceeding.

[52] The details of the County court proceedings, and an appeal to the court of Appeal of Victoria are setout in the affidavit material filed by the respondent.

[53] Clearly, the respondents were well aware of the judgment and would not have been prejudiced by thiseven in isolation. To the extent that leave to amend the petition may be required to cure this error, I grantleave as I see no prejudice with respect to this issue.

Allegation of fraud

[54] The next allegation is that the judgment debt was fraudulently obtained. The court has power to go behind a judgement obtained by fraud: see s 56; Corney v Brien (1951) 84 CLR 343 and Wren v Mahoney(1972) 126 CLR 212.

[55] The evidence in this regard is set out in the affidavits of the respondent, and appears to be complaintswith respect to the proceedings in the state courts, which were dealt with by the court of Appeal of theSupreme Court of Victoria.

[56] A copy of the judgment of the court of Appeal in this matter was tendered. The applicant's appeal tothe court of Appeal (or application for leave to appeal to the court of Appeal) was dismissed. It is not anappropriate case for me to consider looking behind the judgment where:

2) the judgment has been obtained through the County court and an application for leave toappeal dismissed by the court of Appeal of Victoria; and

2) none of the matters raised show that the judgment was obtained by fraud or collusion.[57] The matters sought to be agitated are all matters that have been, or could have been agitated before theVictorian State Courts in this matter.

[58] I therefore find that this is not a ground for opposing the creditor's petition.

[59] There is no evidence of an application having been made in the County court or court of Appeal to setaside the judgment on the basis of fraud or other defect. This would be the appropriate course in such acase.

Allegation judgment is subject to appeal


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[60] The final matter is an allegation that there is no final judgment until all matters for appeal have beenexhausted, and this plainly mis-states the law. A judgment becomes final upon pronouncement (in this case

pronouncement and entering in the County court of Victoria). Whilst it is open to a debtor to obtain anextension of time within which to comply with a bankruptcy notice (to allow for an appeal), this is not a

basis upon which to oppose a sequestration order: see s 41(6C).[61] Another issue raised was an allegation that the debt will be covered by the value of contract for thesupply of seed potatoes that the respondents have with the creditor. The fact that in the future the

petitioning creditor may become liable to the respondents under a contract for the supply of produce is notan answer to an allegation that the petitioning creditor has an unmet debt and evidence of an act of

bankruptcy.

[62] When one considers the totality of the large number of errors of the applicant it leaves one withconsiderable disquiet with respect to the proceedings. I note that the court of Appeal of Victoria, whenconsidering the appeal from the original judgment said:

1. The statement of claim does not in fact disclose a cause of action and it is unfortunate that atsome time this was not adverted to and corrected. However, I am quite satisfied from thematerial before this Court that the matter was fully understood at the trial and that there was nodoubt that the claim in fact was for money due on a running account in relation to goods sold anddelivered together with interest on the outstanding sum pursuant to an agreement. From what wewere told by Mr Lloyd this morning, there is no doubt that he understood that at trial and indeedfrankly admitted that the family or the defendants owe $25,000 and the real dispute relates to theamount of interest.

[63] However, to the extent that there is a dispute, it is as to the amount of interest, not the primary debt,which remains owing.

[64] I am satisfied that the respondents have committed acts of bankruptcy as alleged, that service waseffected, and that the debt remains owing. I am not satisfied that there are circumstances that would foundthe exercise of any discretion not to make a sequestration order.

[65] I therefore make orders for the sequestration of the estates of the respondents.

Order

1) That the applicant have leave to amend the name of the first respondent by substituting'MAURICE' for the name 'MORRIS'.

1) That the estate of JOHN FREDERICK MAURICE LLOYD be sequestrated.1) That the estate of RITA BEVERLEY LLOYD be sequestrated.1) That the applicant's costs of and incidental to the application be taxed and paid in

accordance with s 109(1)(a) of the Bankruptcy Act.

No appearance for the respondent.

Counsel for the applicant: Mr Dunne

Solicitors for the applicant: John Dunne & Associates


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2 of 10 DOCUMENTS: Victorian Reports/Judgments/11 VR/LEE v HEARN - 11 VR 270 - 20 May 2005

17 pages

LEE v HEARN - (2005) 11 VR 270

Court of AppealCallaway, Batt and Buchanan JJA

30 August 200420 May 2005

[2005] VSCA 127

Family and dependants provision -- Application -- Friend of deceased -- Provision of residentcaretaker services -- Provision of occasional routine domestic services -- Deceased leaving claimantsmall legacy from very large estate -- Trial judge dismissing application -- Whether or not deceasedhad responsibility to make provision for claimant -- Underlying test or standard of moral duty --Wise and just testator -- Application of contemporary Australian standards -- Legislativespecification of indicative criteria -- Relationship between deceased and claimant -- Trial judgefinding that deceased and claimant were merely good friends -- Whether trial judge erred inassessment and characterisation of impressionistic evidence -- Claimant failing to establish thatdeceased had assumed an obligation to maintain him -- No presumption of assumption of responsibility -- Administration and Probate Act 1958 (No 6191)s 91.

Section 91(1) of the Administration and Probate Act 1958, inserted by s 55 of the Wills Act 1997,

authorised the Supreme Court to make provision out of a deceased person's estate for the proper maintenance and support of a person for whom the deceased had responsibility to make provision.

Section 91(4) required the court, in determining whether or not the deceased had responsibility to make provision for a person to have regard to criteria specified in s 91(4)(e)-(o) including:

"(e) any family or other relationship between the deceased person and the applicant, including the nature of therelationship and, where relevant, the length of the relationship;

(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;

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(m) whether the applicant was being maintained by the deceased person before that person's death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had

assumed that responsibility;|PO

(p) any other matter the Court considers relevant."

For about 12 years from 1989, L (born in 1952) lived rent-free in an apartment in Queensland owned by H(1926-2000), acting as caretaker and (until about 1997) assisting H with personal tasks including cookingand acting as her chauffeur when she made winter visits from her home in Melbourne to Queensland andstayed at the apartment. L, who was not related to H by blood or marriage, had become a friend of H in


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about 1976 having been introduced to her by a mutual friend, U, who died in 1987 leaving the bulk of hislarge estate (including the Queensland apartment) to H. By her will made in 1988, H gave L and each of five other beneficiaries a legacy of $20,000. The remainder of H's estate, valued at more than $2.2m, wasleft to a charitable trust in memory of U. After 1989, L, a diabetic, had chosen to engage in paid

employment only intermittently. In or about early 2000, H had written to a friend noting that L had been avery loyal friend and was not strong or well and that she did not feel like evicting him from the Queenslandapartment. L appealed against the decision of a judge of the Trial Division dismissing his application under s 91

11 VR 270 at 271for an order that he was entitled to the Queensland apartment (amended, during the trial, to a claim for an

amount of money commensurate with the value of a life interest in that property).

Held , dismissing the appeal: (1) The court was bound in answering each of the questions posed in s 91(4)(a)-(d) of the Act to have regard to the matters mentioned in ss 91(4)(e)-(o) and, pursuant to s 91(4)(p), toany other matter considered to be relevant. To reason from the matters mentioned in s 91(4)(e)-(p) to aconclusion that a deceased person had a responsibility to make provision for a claimant, or that thedeceased failed to make adequate provision for the claimant, necessitated the application of an underlyingtest or standard to the matters to be considered. That test remained one of whether and if so what provisiona wise and just testator would have thought it her or his moral duty to make in the interests of the claimant.[4], [54], [55], [57].

Grey v Harrison [1997] 2 VR 359; Collicoat v McMillan [1999] 3 VR 803; MacEwan Shaw v Shaw(2003) 11 VR 95; Coombes v Ward [2004] VSCA 51; Blair v Blair (2004) 10 VR 69; Vigolo v Bostin (2005) 213 ALR 692 ; 79 ALJR 731 referred to

Obiter dictum in Singer v Berghouse (No 2) (1994) 181 CLR 201 not followed

Per Callaway JA (Batt and Buchanan JJA agreeing). Moral responsibility was not a static or idiosyncraticconcept. It was one thing to say that the prejudices of a nineteenth century paterfamilias were an unsafeguide or that courts should no longer discriminate against adult sons, rather than dealing with the claims of

adult children according to their individual circumstances. It was another thing altogether to say thatwisdom, justice or morality formed no part of contemporary Australian standards or failed to supply thenorm that the legislature had indicated by the use of the words "responsibility to make provision" in s 91(1)and (4). [8], [55], [57].

(2) In applying s 91(4)(e) of the Act, the trial judge did not err in her assessment or characterisation of theimpressionistic evidence given on both sides concerning the nature of the relationship between H and L.Her conclusion that H and L were merely good friends was not a finding of primary fact but an assessmentor characterisation. [1], [41], [57].

(3) Nor did the trial judge err in declining to find that H assumed an obligation to L to maintain him. Theletter that H had sent to her friend in early 2000 was concerned with action or inaction while H remainedalive and was expressed in the language of self-interest. Similarly, in purchasing the Queensland apartment,H had only her own interests in mind and, in referring in her letter to her friend to the possible sale of the

apartment, it was clear that L's occupation of it would not have been a bar to H selling it. [1], [43]-[45],[57].

(4) The alleged fact of L's partial maintenance by the provision of rent-free accommodation did not raise a presumption of an assumption by H of responsibility for L because, first, it proceeded on a false premiss inthat the trial judge was satisfied that L was not being maintained, wholly or partly, by H, a finding whichwas open to the judge, and, secondly, whatever the position was in England, the trial judge was entitled to

proceed on the basis that no such presumption arose under the Victorian legislative scheme. [1], [46]-[49],[57].

Jelley v Iliffe [1981] Fam 128; In re B (deceased) [2000] Ch 662 distinguished


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Decision of Warren J (2002) 7 VR 595 affirmed.

11 VR 270 at 272

Appeal

This was an appeal from a decision of Warren J ((2002) 7 VR 595) dismissing an application made under s91 of the Administration and Probate Act 1958 by a friend of the testator for an order that provision bemade for him out of the testator's estate. The facts are stated in the judgment of Batt JA.

W F Gillies for the appellant.

J D Merralls QC and R T A Waddell for the respondent.

Cur Adv Vult

Callaway JA.

[1] I agree with Batt JA. In my opinion, the learned trial judge correctly directed herself according to theauthorities and the decision she made was well open to her. 1 There is one point on which I wish to saysomething on my own account, mainly because the legislation has changed since Grey v Harrison .2

[2] Section 91 of the Administration and Probate Act 1958, as amended by the Wills Act 1997, now provides:

(1) Despite anything in this Act to the contrary, the Court may order that provision be made out of the estate of adeceased person for the proper maintenance and support of a person for whom the deceased had responsibility tomake provision .

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(3) The Court must not make an order under sub-section (1) in favour of a person unless the Court is of the opinionthat the distribution of the estate of the deceased person effected by --

1a) his or her will (if any); or 1b) the operation of the provisions of Part I, Division 6; or 1c) both the will and the operation of the provisions --

does not make adequate provision for the proper maintenance and support of the person.

(4) The Court in determining --

2a) whether or not the deceased had responsibility to make provision for a person; and2b) whether or not the distribution of the estate of the deceased person as effected by --

1. the deceased's will; or 1. the operation of the provisions of Part I, Division 6; or 1. both the will and the operation of the provisions--

1makes adequate provision for the proper maintenance and support of the person; and

2c) the amount of provision (if any) which the Court may order for the person; and1d) any other matter related to an application for an order under sub-section (1) --

must have regard to --


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1usb> [(e)-(o) -- 11 specified matters];1p) any other matter the Court considers relevant. [Emphasis added.]

[3] The relevance and weight of the matters referred to in s 91(4)(e)-(o) will vary according to which of thequestions in s 91(4)(a)-(d) the court is determining. I shall concentrate on the threshold question whether the deceased had

11 VR 270 at 273"responsibility to make provision" for the applicant. 3 That question is obviously unaffected by whether the

deceased died testate or intestate. 4

[4] I begin with a recent and, in my opinion, important observation by Nettle JA in Blair v Blair .5 HisHonour said: 6

The court is bound in answering each of those questions to have regard to the matters mentioned in s 91(4)(e)-(o)and, pursuant to s 91(4)(p), to any other matter considered to be relevant. Self evidently, such matters are of themselves incapable of providing an answer to either question . To reason from the matters mentioned in s 91(4)(e)-(p) to a conclusion that a testator had a responsibility to make provision for a claimant, or that the testator failedto make adequate provision for the claimant, necessitates the application of a test or standard to the matters to beconsidered. That test remains one of whether and if so what provision a wise and just testator would have thought ithis moral duty to make in the interests of the claimant. 7 [Emphasis added.]

A similar point was made in Grey v Harrison when I said, in relation to the previous legislation, that thetouchstone of what a wise and just testator would have thought to be his or her moral duty "supplies thenorm that the legislature left unexpressed". 8

[5] It is important to focus on the words of the legislation. 9 The question to be determined, in the words of the statute, is whether or not the deceased had responsibility to make provision for the applicant. That mustmean a legal or moral responsibility, in the sense in which "moral" has been explained in the authorities, for what other kind of responsibility is there? Our duty to attend to the language of the statute is one of thereasons we cannot derive assistance from Vigolo v Bostin .10 The Western Australian legislation prescribesthe persons entitled to claim, all of whom are partners or former partners or relatives, 11 and does not use theword "responsible" or "responsibility" or any equivalent expression. 12

[6] More fundamentally, if the deceased had neither a legal nor a moral responsibility to make provision for an applicant, why would Parliament abridge his or her testamentary freedom and why would a courtexercise its discretion in favour of the applicant? As I said in Grey v Harrison :13

[I]t is one of the freedoms that shape our society, and an important human right, that a person should be free todispose of his or her property as he or she thinks fit. Rights and freedoms must of course be exercised and enjoyedconformably with the rights and freedoms of others, but there is no equity, as it were, to interfere with a testator'sdispositions unless he or she has abused that right. To do so is to assume a power to take property from the intendedobject of the testator's bounty and give it to someone else. In conferring a discretion in the wide terms found in s 91,the legislature intended it to be exercised in a principled way. A breach of moral duty is the justification for curial

11 VR 270 at 274intervention and simultaneously limits its legitimate extent. So much may be derived from the concept of "proper"maintenance and support but also, and more fundamentally, from those considerations.

The real issues are not morality as such, but personal autonomy and individual freedom. 14

[7] In MacEwan Shaw v Shaw 15 Dodds-Streeton J had to consider whether the amendments made by theWills Act 1997 required or justified a different approach from that in Collicoat v McMillan and Grey v

Harrison . Her Honour concluded that the amendments did not have that effect. On the contrary, shecontinued: 16


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The retention of the traditional words "proper maintenance and support", the express reference to the responsibilityof the testator in the legislation and the acknowledgment in the second reading speech that the remedial legislationwas directed at facilitating applications by those who have "moral claims", reinforce rather than attenuate theapplication of the traditional concepts of moral duty and the wise and just testator.

Another reinforcing factor is that, in Victoria, any person at all may now apply for provision. It cannot besaid, as it can in some other jurisdictions, that the legislature has prescribed or even indicated the kinds of

person for whom the deceased is likely to have had responsibility to make provision. 17

[8] I referred earlier to moral responsibility in the sense in which "moral" has been explained in theauthorities. It is not a static or idiosyncratic concept. In Grey v Harrison after saying that the authorities sostrongly favoured the criterion of what a wise and just testator would consider his or her moral duty that wewere not free to jettison it, I continued: 18

That is not to say that either the denotation of those words or the content of wisdom, justice and moral duty do notchange with time or respond to community standards. See, for example, Permanent Trustee Co Ltd v Fraser [(1995) 36 NSWLR 24] at 35-6 per Handley JA. That is a point that is particularly important to remember whenreading authorities that reflect outdated stereotypes: cf Singer v Berghouse [(1994) 181 CLR 201] at 220-1 per Toohey J.

It is one thing to say that the prejudices of a nineteenth century paterfamilias are an unsafe guide or thatcourts should no longer discriminate against adult sons, rather than dealing with the claims of adult childrenaccording to their individual circumstances. It is another thing altogether to say that "wisdom", "justice" or "morality" forms no part of contemporary Australian standards or fails to supply the norm that thelegislature has indicated by the words "responsibility to make provision".

Postscript

[9] I wrote [2]-[8] above, including the accompanying footnotes, before the High Court gave judgment inVigolo v Bostin .19 As I said in [5], the Victorian legislation is now materially different from that in WesternAustralia, but I am

11 VR 270 at 275

reinforced in my conclusion by the judgments of Gleeson CJ and Callinan and Heydon JJ. Gummow andHayne JJ took a different view in that case, but their Honours would agree that we should attend to thelanguage that the Victorian Parliament has used. 20

Batt JA.

Introduction

[10] This is an appeal by the plaintiff below from a judgment 21 given in the Trial Division on 31 May 2002 by which his proceeding under Pt IV of the Administration and Probate Act 1958 ("the Act") claiming provision out of the estate of Olga Agnes Hetherington deceased was dismissed and costs as between partyand party were awarded against him in favour of the respondent as defendant.

[11] The deceased died on 25 June 2000 at the age of 83 years. She left a will dated 1 June 1988 and acodicil dated 23 March 1993. Probate of the will was granted to the respondent as an executor appointed byit, leave being reserved to the other executor appointed to come in at any time and prove. The value of thedeceased's estate totalled, as at 1 March 2002, some $2,270,000 less costs then estimated at $35,000. Byher will the deceased left pecuniary legacies of $20,000 to each of five persons, including the appellant,with the balance of the estate to form the Urquhart Charitable Fund in memory of William Frederick Urquhart and the income to be distributed annually to certain charitable or public benevolent institutions inVictoria.

[12] At trial the appellant alleged that the deceased had a responsibility to make further provision for him inher will by reason of his relationship with her, her assumption of responsibility to support him, his


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contribution to her welfare, his own financial needs and his poor employment prospects and bad health. Heclaimed that the deceased was a heavy drinker and was dependent on him physically. In his proceeding theappellant initially sought the unit at Port Merion on the Queensland Gold Coast left by the deceased,together with an appropriate sum to maintain him. The claim was modified during the trial to an amount

commensurate with the value of an interest for the appellant's life in the Port Merion unit.[13] The respondent alleged that the relationship between the appellant and the deceased was one of friendship and mutual convenience and that the deceased did not assume or acknowledge a responsibility tosupport the appellant. His contributions to the deceased's welfare were in exchange for contributions shemade for his welfare. The appellant's financial needs and poor prospects were not attributable to anydemand or request by the deceased. The respondent contested the allegation that the deceased was a heavydrinker and therefore dependent on the appellant. The respondent argued that the circumstances were notsuch that the deceased had a responsibility to make further provision for him in her will.

11 VR 270 at 276

[14] The trial judge dismissed the appellant's claim, holding that he was required, but had failed, to makeout a moral duty owed by the deceased to him and finding that he had "failed to satisfy each of the relevantcriteria" in s 91(4)(e)-(p). 22 The appellant now challenges her Honour's decision that he had notdemonstrated that the deceased had a responsibility to make further provision in her will for him.

[15] The appellant's claim below was supported by two affidavits sworn by him, as well as two affidavitssworn by Marjorie Edmunds, a friend of the deceased at Port Merion, and one sworn by each of thefollowing: Warren Humphries, the body corporate manager of the Port Merion Apartments from 1989 to1992; John Edmunds, the son of Marjorie Edmunds; Tony Bose, a medical practitioner of whom theappellant was a patient, and a real estate agent and a valuer. The respondent swore two affidavits inopposition and filed affidavits sworn by Betty Laver, a cousin and life-time friend of the deceased wholived in Melbourne; Ranald Hugh McCowan, who acted as solicitor for the deceased at the time of her

purchase of her unit at Port Merion; and Craig Hendricks, a first cousin once removed of the deceased.Besides the appellant the other legatees under the deceased's will were Mrs Laver, Mrs Edmunds, Mr Hendricks and his sister.

The undisputed facts

[16] The following facts are undisputed. The appellant, who was born in Malaysia in 1952, first met thedeceased in 1976 through a mutual friend, Walter Urquhart junior. The appellant had become a friend of thelatter as a result of befriending his father, Walter Urquhart senior, when the appellant was a student of graphic design in Adelaide in the mid-1970s. In 1983 the appellant moved to live on the Gold Coast andrented a flat at Mermaid Beach. Walter Urquhart junior died at the Gold Coast in 1987. The deceased wasthe principal beneficiary, to the extent of $1m, under his will. After his death the appellant became a friendof the deceased. Either in accordance with Mr Urquhart's wishes or from her own acknowledgment of friendship with the appellant, the deceased gave him $10,000 from the estate she inherited. In 1989 she

purchased the unit at Port Merion and asked the appellant to live in it. Thereafter she lived either inMelbourne or in Port Merion until about 1998. She did not visit Port Merion in 1999. As stated, she died in2000. The appellant had lived rent-free continuously in the unit from 1989 until the date of judgment. Hehad had only part-time jobs since 1989. He did not claim that the deceased demanded that he not work. Thereal estate agent's evidence established the rental value of the unit at $320 per week and a 25-year interestin the unit was valued by the valuer at $292,604. That evidence was not contested by the respondent. Therewas no evidence of the appellant's life expectancy.

Issues and findings at trial

[17] I turn to the factual issues in dispute at the trial and her Honour's findings as to them.11 VR 270 at 277

(a) The nature of the relationship between the appellant and the deceased


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[18] The appellant claimed that he had a very close relationship with the deceased. This was supported byHumphries, who said that they were like mother and son, and by Mrs Edmunds, who stated that theappellant was "like family" to the deceased. On the other hand, the appellant did not maintain greatfrequency of contact with the deceased when she was in Melbourne. Further, the respondent stated that the

deceased mentioned the appellant to him only once in the entire period during which she was his client,which was from 1987 to her death. He said that he did not know until after her death that the appellant wasliving in the Port Merion unit. Hendricks stated that the deceased hardly mentioned the appellant. Theappellant explained these statements by saying that the deceased did not want her solicitors to know muchabout her private life and that she was a very private person.

[19] The appellant said that the deceased spent six to nine months every year at Port Merion and everyChristmas for approximately two weeks. That evidence was supported by Humphries. The respondent,however, led evidence, including dates of travel in and out of Australia shown in the deceased's passport,that demonstrated that the deceased usually spent no more than four to five months in the years between1989 and 1998 at Port Merion and did not go to Port Merion every Christmas. This was supported by MrsLaver. Her Honour accepted the last-mentioned evidence and said that the appellant's statements wereshown to be quite exaggerated. Between 1990 and 1997 the most time that the deceased spent at the PortMerion property was about four months, the shortest period about six weeks. She did not stay at the Port

Merion unit during 1994 nor in the last two and a half years of her life. Her Honour did not accept theappellant's claim that the deceased often spent Christmas with him, finding that she spent some Christmas

periods in Melbourne, went on a cruise to New Zealand at Christmas in a particular year and in 1997 stayedwith her cousins, the Hendricks, in Sydney.

[20] Her Honour expressed her views on the relationship between the appellant and the deceased in her discussion of the first of the considerations enumerated in s 91(4) of the Act, namely, para (e). 23 Noting thatno family relationship existed between them but that they had been friends for about 25 years, her Honour said that it was difficult to discern the depth of their friendship. The appellant was one of only five

beneficiaries under the deceased's will and the deceased had allowed him to live in her property rent-free.On the one hand, it seemed that she had done so out of an acknowledgment of his loyalty and her concernfor him. On the other hand the arrangement seemed one of mutual convenience which she saw as suitingher financial and real estate interests. The varied extent to which the relationship was recognised by others(as stated earlier) attested to its ambivalent nature. Her Honour concluded that "the relationship was one of friendship but no more". She did not accept that the appellant was like a son to the deceased.

(b) The deceased's drinking habits

[21] The appellant said that after the death of Mr Urquhart junior the deceased developed a drinking problem. When she was intoxicated, she would require assistance and care and would often becomeincontinent. Humphries, Mrs Edmunds and John Edmunds supported the appellant's assertions. The

11 VR 270 at 278respondent contested these assertions. He stated that when he had attended the deceased at her home in a

professional capacity he had never seen her affected by alcohol.

[22] Her Honour noted that in the first affidavit sworn by the appellant there was no mention of thedeceased's drinking and that the allegation that she was a heavy drinker, or at least a woman who becauseof her slight build and age was easily affected by even a light or moderate consumption of alcohol, had,despite professed reluctance to speak on the matter, figured large in the appellant's case before her, it beinghis case that his role of care was made burdensome because her drinking necessitated that he bathe her andassist her to the toilet.

[23] Her Honour summarised the relevant evidence as part of her review of the evidence of each party.After summarising the evidence of Mrs Edmunds and her son on the topic her Honour said that sheaccepted that the deceased sometimes showed the effects of alcohol consumption at social functions over the years, but she did not accept that the evidence was sufficient to make out a claim of persistent heavydrinking and consequential dependence. Nor did the evidence make out the claim that the appellant's role of alleged carer was more onerous as a consequence of her drinking. Under the heading of the deceased's


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drinking activities her Honour accepted that from time to time the deceased drank alcohol at socialfunctions and also that on some occasions, of which few were identified, she might have becomeintoxicated quickly and suffered physically as a result, might have required assistance from those with her,in some instances the appellant and in others a member of the Edmunds family. Her Honour could not be

satisfied on the evidence that there were other than a few occasions. There were probably not more than 10episodes. Significantly, the deceased was able to live in Melbourne alone until almost the end of her lifewithout assistance. She did not require a resident carer. On the evidence her Honour rejected anysuggestion that she suffered from an alcohol-based problem such that she was dependent on the appellant.

(c) Whether the deceased was dependent upon the appellant

[24] The appellant stated that the deceased used to insist that he be available to assist her. That evidencewas supported by Mrs Edmunds. The appellant claimed that the deceased was dependent upon him, that hehelped her, cooking for her, driving her around, assisting with the shopping, bathing her and assisting her tovisit the toilet. He said that he was at her "beck and call". This evidence was supported by Humphries.

[25] The respondent said that the deceased was very much able to look after herself so far as her normalliving requirements were concerned until only shortly before her death. This was supported by Mrs Laver

from her observations during a visit in 1995 to the unit for one week and her knowledge of the deceased'slife in Melbourne over the entire period. Hendricks stated that the deceased was a strong and independent person right up to the last months of her life. The appellant said that Mrs Laver received a false impressionof life in the unit because he had been specifically asked by the deceased to leave her and Mrs Laver tothemselves during the latter's visit in 1995.

[26] Her Honour's findings on this topic are part of her findings on a group of associated topics, which Idefer stating for the time being.

11 VR 270 at 279

(d) Contributions by the appellant to the deceased's welfare; whether he was more than a caretaker;whether she maintained him

[27] The appellant said that he helped the deceased purchase and "co-ordinated" the management of her

properties in Queensland. However, the respondent stated that his firm managed the Port Merion unit andthat managing agents managed the other properties, and in cross-examination the appellant accepted that allhe did amounted to redirecting mail and attending body corporate meetings. The appellant stated that he

paid expensive accounts for the deceased's telephone calls while at the unit. Mrs Laver contradicted this. Incross-examination the appellant gave inconsistent evidence. He said that the deceased tended to use the

public telephone to call him. Edmunds said in cross-examination that the deceased preferred to use publictelephones.

[28] The deceased described the appellant as a caretaker to McCowan and in cross-examination theappellant agreed that that was not a misleading statement. In 1998 the deceased told Mrs Laver that she wascontemplating selling the unit and that the appellant was "only looking after it until I decide what I amgoing to do with it". She did not tell the appellant that she was thinking of selling the unit. He found outthrough Mrs Edmunds. In 2000 the deceased, just before she died, told Mrs Edmunds that she did not knowwhat she was going to do with the unit as she did not want the money. She indicated to John Edmunds that

the presence of the appellant in the unit did not "free her up" as much as she would like so far as havingreal estate interests that were ready to be sold at short notice was concerned.

[29] The appellant agreed in cross-examination that, essentially, he supported himself. Mrs Laver statedthat there was nothing she observed to suggest that he was dependent on the deceased or was beingmaintained by her. The appellant said that the deceased paid at restaurants most of the time. In cross-examination he said, "Well, she was looking after me too and I was looking after her, it works both ways".

[30] With regard to the topics dealt with under this heading (d) and under heading (c), her Honour statedthat she was not satisfied that the deceased was dependent on the appellant or, more importantly, that the


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roles were reversed. At most, the appellant was a caretaker permitted by the deceased to live rent-free in theunit in return for his caretaking duties. The arrangement was one that was convenient and financiallyadvantageous to the deceased. The unit was occupied for security purposes and maintained and, further,recurrent accounts such as electricity and telephone were paid by the appellant. "In my view," her Honour

said, "the arrangement between the appellant and the deceased was based on friendship and convenienceand no more. There was no obligation or duty recognised by the deceased. In addition, none was owed."

[31] Besides the foregoing, in the course of her review later of the considerations set out in s 91(4), her Honour said with reference to para (k) (which concerned any contribution, not for adequate consideration,of the applicant to the building up of the estate or to the welfare of the deceased) that the appellant'sevidence overstated the amount of time the deceased spent with him and overstated the problematic natureof her drinking habits. Her Honour found that the appellant undertook the functions of a caretaker when shewas not resident at the Port Merion unit and that when she was resident he undertook domestic tasks anddid some driving. "However, these services were well and truly compensated by the rent-freeaccommodation [the appellant] enjoyed." In relation to the

11 VR 270 at 280consideration in para (m) (which concerned whether the applicant was being maintained by the deceased

either wholly or partly and the extent to which and basis on which the deceased had assumed that

responsibility) her Honour stated that she accepted that the notion of being maintained was not strictlyfinancial but encompassed any condition whereby one person relied on another for the provision of his or her needs. She considered that the notion of being "partly maintained" was a rejection of a requirement of arelationship characterised by significant financial or emotional inequality. Caution, however, needed to beexercised lest any situation of co-operative living be seen as one of partial maintenance. In this case the

judge was satisfied that the appellant was not being maintained wholly or partly by the deceased. He livedrent-free in her property in exchange for performing the services of a caretaker. Throughout the period hesupported himself and paid his own bills. Nothing the deceased said or did could be taken as an assumptionof the responsibility to maintain the appellant. The $10,000 given to him out of the estate of Walter Urquhart junior was a once-only gift signifying gratitude but no continuing commitment to provide for or support him. The question the deceased asked the appellant, "What will happen to you when I'm gone?",whilst signifying her concern for his well-being, indicated that she had no intention of providing for hisfuture. Finally in this area, her Honour said, the appellant's case had been based in the main on his claim to

have assumed the role of carer for the deceased and not on her supporting him. However, a moralobligation to provide based on an applicant's being maintained by or dependent upon the deceased was, asMahoney JA pointed out in Churton v Christian ,24 not one where the deceased owed the appellant a debt of moral gratitude, rather it was the reverse.

(e) The effect of certain statements made by the deceased

[32] The appellant claimed that the deceased made statements to him which led him to believe that shewould support him and not leave him without a roof over his head. He said that she told him that he did nothave to go out and be "sold for a pup". Mrs Laver said that she had never heard the deceased use the latter expression. With reference to the appellant the deceased in a letter (Ex "ME-1") that was undated but waswritten in or about January 2000 stated to Mrs Edmunds:

I don't think I've got a hope in hell of making it up to the Coast again and I don't feel like turfing Bobby out. He has been a very loyal and honest friend and I know he is not strong or well, also I feel safer with somebody in the place.

In the letter she instructed Mrs Edmunds to show it to the appellant and to wish him happy Christmas. MrsEdmunds stated that on many occasions over the years she and the deceased had discussed Walter Urquhartand how she had inherited the appellant from him, together with the obligation to look after him. JohnEdmunds said that she had told him that, although the appellant was a problem, she would never get rid of him and that he would always be there for her.

[33] Her Honour expressed the view that the statements of the deceased were of no consequence. They


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were insufficient to establish any obligation or duty or acknowledgment thereof owed by the deceased tothe appellant. Indeed, her Honour accepted that the deceased contemplated selling the unit in 1998. Theappellant was no more than a caretaker. When dealing later with the consideration set out in para (f) of s91(4) (which concerned "any obligations or

11 VR 270 at 281responsibilities" of the deceased to the applicant amongst others), her Honour said that statements made tothe appellant by the deceased to the effect that he should regard 25 the Port Merion unit as his home couldnot be taken as conferring upon him a proprietary interest in the unit. Such statements were no more thanreassurances to a friend that for the present he need not worry about a roof over his head. Moreover,statements such as "home, sweet home" after returning from a drive did not even import that meaning, butwere pleasantries to which no legal or moral obligation could possibly be attached.

(f) Whether the appellant suffered a detriment because of his care for the deceased

[34] The appellant said that he was unable to hold down full employment because of his obligation to look after the deceased, although he stated in his affidavit, and confirmed in cross-examination, that she did notdemand that he not work. In cross-examination he said with reference to his employment prospects that hewas now "considered scrap".

[35] As appears under heading (g), which follows, her Honour found that the explanation for theseemployment-related complaints lay with the appellant himself.

(g) The appellant's health

[36] The appellant said that he had suffered from diabetes for four years and been unable to work to his fullcapacity. Dr Bose said that the plaintiff had been treated for diabetes for one year and that it affected him tothe extent that it reduced his work capacity and life expectancy.

[37] Her Honour stated with reference to para (i) of s 91(4) (which concerned, in part, any physical or mental disability of any applicant) that the medical evidence allowed no finding to be made as to the extentof the impairment. There was no satisfactory evidence establishing that the appellant was incapacitated for work or that he had been so incapacitated or suffering from such ill-health during the lifetime of the

deceased that she knew or ought to have known that he was dependent upon her. Her Honour acceptedgenerally that the appellant did not enjoy robust health but found that his inability to hold down full-timeemployment had been more the result of his failure to keep abreast of developments in his chosen field thana consequence of ill-health. She did accept that at his age of 50 his employment prospects were diminished.In dealing with para (h) of s 91(4) (which concerned the financial resources (including earning capacity)and the financial needs of the applicant) her Honour found that the appellant's financial position was poor.He had some personal debt and no savings and, as mentioned, had not held down full-time employment for many years. Her Honour accepted that it would be extremely difficult for him to obtain well remuneratedemployment in the future, so that his financial prospects in the foreseeable future were poor.

Other matters

[38] It is convenient to note findings by her Honour on other paragraphs of s 91(4). She accepted for the purposes of para (g) that the estate was a large one and subject to no liabilities except the costs of the proceeding. Under para (l) (which

11 VR 270 at 282concerned any benefits previously given by the deceased to any applicant or beneficiary), her Honour said

that, whether the deceased gave the appellant $10,000 at the urging of Mr Urquhart junior or at her ownvolition, she was under no obligation to do so. It was a gift and no more. Within para (n) there was no other

person liable to maintain the appellant. His family in Malaysia had apparently disowned him. Under para(o) (which concerned the character and conduct of the applicant) her Honour said that the appellant seemedof good character although prone to exaggeration in his evidence; that it was unfortunate that he had placedhimself in the situation where at the age of 50 he possibly faced a precarious future; but that it had been his


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own poor choices and in particular what could only be described as his servile tendency to rely on thelargesse of others that had left him so exposed. Finally, it may be noted that her Honour began her consideration of para (f) above-mentioned with the significant statement that the deceased had no legal,moral or financial obligation to the appellant or any other person.

Issues on appeal

[39] In opening the appeal Mr Gillies stated that he would deal with five matters. They were:

2a) the relationship between the deceased and the appellant;2b) that the deceased assumed obligations to the appellant;2c) that the fact of maintenance raised a presumption of obligation;2d) if the foregoing be correct, the appropriate disposition is a life interest in the Port Merion

unit to the appellant; and2e) whether the concept of breach of moral duty was material.

In reply Mr Gillies explained that he had focused his attack upon the considerations in paras (e), (f) and (m)of s 91(4). It is convenient to deal with the five matters in the order in which they were argued for theappellant.

The relationship between the deceased and the appellant

[40] It was pointed out that her Honour had not accepted that the relationship between the deceased and theappellant was like that between a mother and her son, yet, it was submitted, her Honour had accepted thatsome witnesses said that the relationship was like that. It was submitted that her Honour's conclusion thatthe relationship was one of friendship only and not that of mother and son flew in the face of the evidenceof Mrs Edmunds and John Edmunds when her Honour had not disbelieved them or impliedly accepted therespondent's evidence. It was an error to find that the relationship was one of friendship only withoutdisbelieving the evidence to the contrary. The right finding was between the two extremes. Finally, theevidence of the respondent and Hendricks was acknowledged along with the evidence that there was littlecontact between the appellant and the deceased when the latter was in Melbourne, but it was said that the

observations of the defence witnesses only went so far. They did not say that the appellant's witnesses werewrong.

[41] As was emphasised for the respondent, the evidence given on both sides on this question was evidenceof the impressions of the respective witnesses. With regard to the appellant's evidence, her Honour assessedhis credibility and was unimpressed by his exaggerations. Since her Honour was concerned withimpressions, it may not be right to look for express or implied indications of disbelief of Mrs Edmunds andJohn Edmunds, but the correct interpretation of her Honour's judgment is -- and this is patent -- that the

judge did not accept11 VR 270 at 283

the view or impression to which they deposed. Her Honour did not commit the error suggested for theappellant. Under s 91(4)(e) her Honour was required to have regard to the nature of the relationship. Her Honour's conclusion as to that is not a finding of primary fact but an assessment or characterisation. Theevidence set out earlier tends to support her Honour's conclusion that the deceased and the appellant weremerely good friends. At any rate the appellant has not persuaded me that her Honour erred in her assessment or characterisation.

Whether the deceased assumed obligations to the appellant

[42] Mr Gillies placed particular reliance upon Ex "ME-1", the relevant parts of which have been set out or summarised earlier. The letter is not referred to in her Honour's reasons and it was submitted that her Honour had overlooked it. The statement in it that the deceased did not feel like "turfing" Bobby outshowed, it was said, that she did not want to do so, and she did not do so. The letter was, it was submittedfor the appellant, consistent with various statements of the deceased sworn to and, together with them, was


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consistent with the deceased's accepting an obligation to maintain the appellant.

[43] The letter to Mrs Edmunds relied on does not show the assumption by the deceased of an obligation tomaintain the appellant, whom, incidentally, she describes as a "friend" rather than in terms of familymembership. First, its emphasis is on action or inaction while the author remains alive. Secondly, itslanguage is that of self-interest. She felt safer with somebody in the unit. If she sold she would lose$100,000. It may be that she would have sold if she could have done so at a profit. Thirdly, and consistentlywith the self-interested nature of the letter, in 1998 the deceased told Mrs Laver that she was thinking of selling the unit, but she did not herself tell the appellant that. That is, the occupation by the appellant andwhat he did for the deceased would not have been a bar to her selling. Nor indeed, in the mind of thedeceased, did the subject require discussion with him. That shows that she did not consider herself under any obligation to him. Leaving the letter aside, it is true that the appellant deposed to statements by thedeceased to him that he would always have a roof over his head, but it was open to her Honour, I consider,to treat such statements as inconsequential because they did not amount to an assumption of responsibilityto the appellant, lacking a promissory nature and being open to be understood as concerned only with thethen present time.

[44] So far as the appellant suggested that the purchase of the Port Merion unit was done at the suggestionof Mr Urquhart junior 26 or was a continuation of the appellant's relationship with him, Mr Urquhart had not

been providing accommodation to the appellant and the evidence of Mr McCowan established that thedeceased bought the unit for her own purposes, namely, in order that she could leave Melbourne during thewinter and live on the Gold Coast. Again, she had only her interests in mind.

[45] Accordingly, her Honour did not err in declining to find that the deceased assumed an obligation to theappellant to maintain him.

Whether the (alleged) fact of maintenance raises a presumption of obligation to the appellant

[46] It was submitted for the appellant that the fact of maintenance raised a presumption of an assumption by the deceased of responsibility for the appellant: there was an acceptance of responsibility by the provision of rent-free

11 VR 270 at 284

accommodation to the appellant. Basically they shared expenses and looked after each other. The strongestfact was that the appellant was in occupation. Reliance was placed on statements in the decisions of theEnglish Court of Appeal in Jelley v Iliffe 27 and in In re B (deceased) ,28 which, though cited to her Honour,are not mentioned in her judgment. It was said that her Honour had failed to deal with partial maintenance

by the deceased which made the appellant dependent.

[47] There are two difficulties with this argument. First, it proceeds on a false premiss. Her Honour wassatisfied that the appellant was not being maintained, wholly or partly , by the deceased: he lived rent-free inthe unit in exchange for performing the services of a caretaker. Albeit that those services were "well andtruly compensated" by the rent-free accommodation, the appellant's caretaking was of considerableassistance to the deceased, securing her unit, affording her flexibility and possibly saving her stamp duty,and it was therefore in her interests, as well as his, that he should have the benefit of rent-freeaccommodation. For the reasons given above in rejecting the appellant's second point, I am not persuadedthat the deceased assumed a responsibility for, or to maintain, the appellant, nor am I persuaded by any

other arguments for the appellant that her Honour's conclusions on maintenance and dependency wereerroneous.

[48] It was contended in particular that it was not open to her Honour to arrive at the conclusion that theappellant was not being at least partly maintained by the deceased because his caretaking services were of much less value than the rent-free accommodation. But the Act (unlike the English Act) does not require anexact pecuniary balancing. The correct analysis is that there was an arrangement convenient to both partiesthat involved substantial reciprocal obligations.

[49] Secondly, the English cases are distinguishable and afford no assistance here. It is true that in Jelley v Iliffe Stephenson LJ expressed the view 29 that the bare fact of maintenance raised a presumption that


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responsibility for it had been assumed and that appears to have been accepted in Re B (deceased) .30 Butthose cases turn very largely on a provision which has no counterpart in s 91 of the Act. 31 Since her Honour,correctly in my view, found that the appellant was not being wholly or partly maintained by the deceased atthe time of her death and since our Act has no equivalent to the English s 1(3), the English cases were

inapplicable and her Honour was free to disregard them.

The appropriate disposition

[50] This point was advanced on the assumption that all or at least some of the preceding points hadsucceeded. My estimation has been that, individually and collectively, they fail, so that, on the appellant'scase as argued, no disposition in his favour falls to be made.

11 VR 270 at 285

Moral duty

[51] Her Honour reviewed the history and interpretation of the Victorian legislation and the interpretationof the current New South Wales legislation on the topic and concluded that the proper approach to the newVictorian legislation remained unchanged from that described by Ormiston J in Collicoat v McMillan 32 and

that the Parliament did not intend to constrain the freedom of testation unless the deceased breached amoral duty owed to the applicant. As already stated, her Honour held that the appellant had failed to makeout a moral duty owed by the deceased to him.

[52] It was submitted for the appellant that her Honour was wrong to say that the concept of the "commonlaw" duty to provide still permeated the Act after "codification". Whilst there was much force in what

Nettle JA had said in Blair v Blair 33 as to having regard pursuant to s 91(4)(p) to any other matter considered relevant, the remainder of the principal paragraph in his Honour's reasons was, as I understoodthe argument, said not to be an appropriate way of dealing with moral duty. It was submitted in theappellant's written outline of argument that the obiter dictum of three of the five justices of the High Courtin Singer v Berghouse (No 2) 34 was persuasive and that, given what was said to be the exhaustive list of statutory criteria to which the court must now have regard when determining the threshold question, it wasneither necessary nor helpful for a primary judge to refer to the deceased's moral duty in respect of thedisposition of his or her estate. 35 It was said that the concept of moral duty came into use because there wasat the time little guidance for trial judges under the original testator's family maintenance legislation, butthat since then there had been a codification of the law in the form of paras (a)-(o) of s 91(4) and one couldnot now apply that codification by using the "encrusted concept" of moral duty. One could not put a glosson the criteria. Statements in High Court judgments were cited in support of the proposition that this courtmust approach the text of the Act as primary.

[53] I accept that last proposition as basic. But, as regards the obiter dictum in Singer v Berghouse ,Ormiston J in Collicoat v McMillan and then this court in Grey v Harrison 36 had declined to follow it.Moreover, in a decision given after the reservation of judgment in this case and on which the parties wereoffered, but did not wish to exercise, the opportunity of making submissions, Vigolo v Bostin ,37 by amajority of three justices 38 to two the High Court after detailed analysis disagreed with the above-mentioned obiter dictum, Callinan

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