Donaldson v Freeson [1934] HCA 13

Donaldson v Freeson [1934] HCA 13 - HCA 1934 case summary — Zoe

[29]

The suit was heard before Long Innes J., and according to evidence which he accepted, the land was purchased by Donaldson, who found all the purchase money that was paid, and, at his request, was transferred into the name of Mrs. Donaldson to enable him to evade payment of income tax. The receipts for the purchase money were given in the name of Mrs. Donaldson. It was also shown that Donaldson had expended a sum of £130 in converting certain build- ings erected on the land prior to the transfer into semi-detached cottages, and that he had paid the legal costs in connection with the transfer, the insurance on the property, and interest moneys under the mortgage. He stated that the rent in respect of the property was either directly or indirectly paid to him. In affidavits sworn by Mrs. Donaldson on 26th April 1932 and 13th May 1932 respectively, in support of an application by her under the Moratorium Act for a stay of execution of the writ of fieri facias (which application was refused), she stated that the land was actually purchased by Donaldson, and he had the property put into her name, and also that the property " was bought for the sum of £630, and in respect of £280 of the purchase price a first mortgage was taken by the vendor, making the total of the cash payment £350 which money was supplied by Mr. Donaldson and which is still owing to him." Donaldson knew of the application and assisted in its preparation. Upon the levying of execution under the writ, as referred to in par. 9 of the statement of defence, Donaldson claimed that the furniture was his property. A solicitor gave evidence that towards the middle of April 1932 he received instructions from Donaldson to draw the declaration of trust which had been discussed for the first time on 31st March ; that later in April he drew and engrossed the document, and handed it to Donaldson for execution by Mrs. Donaldson after he had, at Donaldson's request, dated it 5th April 1932, and that a few days later Donaldson returned the document to him duly executed by Mrs. Donaldson. Subsequently, by a letter dated 9th May 1932, he informed the sheriff's officer that he was instructed to advise that the property the subject of the writ of fieri facias referred to in par. 7 of the statement of claim was held by Mrs. M. J. Donaldson as trustee for 8. J. Donaldson absolutely.

[30]

A perpetual injunction was granted restraining the registration of the transfer from the sheriff to Freeson and the withdrawal, without the order of the Court, by the Registrar-General of the caveat referred to in par. 8 of the statement of claim. In the course of his judgment Long Innes J. said : - " From my observation in the box I formed the opinion that . . . Mrs. Donaldson was a mere dummy or tool in the hands of Mr. Donaldson . . . she did just what her husband wished or advised without exercising any independent thought in the matter herself. . . . I place no reliance whatever on the fact that a declaration of trust was subse- quently executed by Mrs. Donaldson. . . . In itself it possesses, to my mind, no evidentiary value whatever, having regard to the fact that it was admittedly ante-dated with a view to bettering the case of the plaintiff S. J. Donaldson as against that of the defendant Freeson. On a review of the whole case, without shutting my eyes to the fact that I regard the plaintiff Mr. Donaldson as a very unsatis- factory witness, and that I am also extremely doubtful as to how much importance, if any, should be attached to Mrs. Donaldson's evidence - although in fairness to her I think I should say that there was nothing in her demeanour which caused me to doubt her veracity - on a review of the whole of the evidence, including the undisputed facts and the probabilities and improbabilities of the transaction, I have come to the conclusion that the plaintiffs have made out their case, and that the property was placed into the name of Mrs. Donaldson merely as trustee for her husband, and that she never had any beneficial interest therein." On the grounds that their case was based on deception; that they had from time to time made false and misleading statements which may have come to Freeson's knowledge and influenced his action; and that false evidence, that is to say, the ante-dated declaration of trust, had been produced, Long Innes J. refused the plaintiffs their costs of suit and ordered them to pay the costs of the Registrar-General. An appeal by Freeson from the decision of Long Innes J. was allowed by the Full Court of the Supreme Court, which gave as its reasons therefor that Donaldson should not be permitted to support a claim which was based upon a scheme that was of an immoral and deceptive nature and designed to defraud creditors, and that as Donaldson

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and the general purport of the affidavits to prove that Mrs. Donaldson was in fact the purchaser of the property. Long Innes J. formed the opinion that Mrs. Donaldson was a "' mere dummy or tool in the hands of Mr. Donaldson," and there is no doubt that the husband was aware of the contents of these affidavits at the time when they were sworn by the wife. The appellants were cross-examined on these matters at the hearing of the suit. But the learned Judge was not prepared to allow these admissions of the wife, made, as it would appear, with the concurrence of the husband, to prevail against other facts in the case which strongly tended to show that the husband was the purchaser of the property. I agree in that conclusion. The appeal must, therefore, be decided upon the basis that Donaldson was the purchaser and that he had the property conveyed into his wife's name. The principles of law which are applicable were stated by Cussen J. in Davies v. National Trustees Executors and Agency Co. of Australasia (1) : - ' Where a husband or father (as the case may be) purchases property in the name of his wife or child, and is proved to have paid the purchase money in the character of a purchaser, a prima facie but rebuttable presumption arises that the wife or child takes by way of advancement - that is to say, takes beneficially. Evidence may be given to rebut this presumption and to show that the husband or father did not intend the wife or child to take by way of advancement, and on the other hand evidence may, where necessary, be given to support the presumption. If on the whole of the evidence the Court is satisfied that the husband or father did not intend at the time of the purchase that his wife or child should take by way of advancement, the rule of law is that there is a resulting trust for the husband or father. Similar rules apply where a transfer or assurance of property is made without consideration by a husband or father to a wife or child. It has been suggested in some cases that the presumption in favour of advancement is stronger in the case of a transfer than it is in the case of a purchase ; but, although this may be so in some circumstances, I think that no substantial distinction applicable universally can be drawn. On the assumptions which were made for the purposes of the argument, the only question of fact which

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Judgment (97 paragraphs)