(a) The beneficial interest in the MacDonald Park property
16 The Federal Magistrate found that there was no express or constructive trust in favour of Mrs Draper over Mr Draper's interest in the MacDonald Park property for the following reasons:
(1) the claim by Mr Draper that he appeared as a joint tenant only on the insistence of the first mortgagee, the lending institution, was not supported, except by a letter which 'was one insisting only that he be a joint borrower' and his presence on the title as a joint registered party was therefore 'left unexplained';
(2) initially the contract for the purchase of the MacDonald Park property was in the name of Kebar Sporting Goods Pty Ltd, and no explanation was given as to why the contract was assigned to Mr and Mrs Draper;
(3) no officer of the relevant lending institution was called to give evidence, and no reason advanced as to why such evidence was not called, so that his Honour drew an inference that the evidence of the relevant officer from the lending institution would not have assisted the Drapers (see Jones v Dunkel (1959) 101 CLR 298);
(4) there was no reference to any such arrangement in any of the documents completed by Mr Draper at or about the time of his bankruptcy, and there was no reference to that arrangement in his affidavit filed on 9 March 2004 in support of his original application, but the first claim that such an arrangement existed was made in Mr Draper's affidavit of 5 August 2004; and
(5) Mrs Draper in her evidence was unable to provide any detail about the arrangement, including whether it related to the MacDonald Park property, or to it and the Marleston property, or only to the Marleston property.
His Honour concluded: 'Her evidence persuaded me beyond reasonable doubt when taken in conjunction with the matters referred to in paras 1-55 above [sic] that no such agreement existed.' [This quote appears in [17] of the judgment. I take the reference to paras 1-55 above to be a reference to sub-pars (1)-(5) of [17] in which the quote appears, as the quoted section appears as (6) of [17].
17 A review of the material before the learned Magistrate, including that presented by the trustee, indicates that in significant respects his Honour's reasons are plainly wrong. The evidentiary material produced by the trustee containing details of the administration of Mr Draper's estate is sufficient by itself to demonstrate those errors. It is not necessary to refer to the Drapers' evidence to make the point.
18 Mr Draper provided a Statement of Affairs of 17 July 1989. He declared his estate to have assets of some $750 only, and liabilities of some $74,500. The two principal creditors were the ASA for $33,000, and Mrs Draper who was said to be a creditor for $40,000. The trustee appears to have accepted the debt of ASA, and not to have accepted the debt of Mrs Draper (although it is not clear that proofs of debt were called for). There were no other significant creditors. In a questionnaire of the same day, Mr Draper said that he was registered as a joint owner of the MacDonald Park property. In an interview with an officer of the trustee on the same day, 17 July 1989, Mr Draper said that he and his wife had recently become the registered joint owners of the MacDonald Park property, but that he did not have any interest in the property and his name was only put on the title at the insistence of the lending institution from whom Mrs Draper obtained the finance to purchase the property.
19 Consequently, at the very first opportunity, Mr Draper asserted that he had no equitable interest in the McDonald Park Property. The trustee's records dryly observe at one point that it would be surprising if Mr Draper, an accountant, did take a beneficial half interest in the MacDonald Park property the day before his bankruptcy, knowing of the consequences of doing so!
20 Mr Draper was then examined pursuant to s 69 of the Act on 19 September 1989. He was asked about the MacDonald Park property. The transcript was in evidence. He said that originally Kebar Sporting Goods Pty Ltd had agreed to purchase the property, but that the contract was assigned because the lending institution would not grant the loan unless his name was on it. He said that the purchase price was $48,000, all borrowed, and $1000 was paid by Mrs Draper for the acquisition expenses. He also said that the repayments on the mortgage were being made by Mrs Draper from her wages.
21 On 20 April 1990, Mrs Draper was also examined by the trustee pursuant to s 81 of the Act. She too was asked about the acquisition of the MacDonald Park property. She said that the property was first to be in the name of Kebar Sporting Goods Pty Ltd, and that she applied for a loan through the lending institution. They would not advance the funds to Kebar Sporting Goods Pty Ltd because it was a company, and 'the only reason that they would give me the loan was that my husband's name was on the document'. She then said that, despite his name being on the title, it was solely her property. She had procured the loan. She paid the stamp duty and conveyancing costs. Mr Draper had made no financial contribution to the acquisition of the property, and it came out of her wages. She paid the recurrent expenses of the mortgage capital and interest. Mr Draper had made no other payments in respect of it. By that time there had been a small improvement to the property by laying down a water pipe for which she had paid.
22 Earlier, on 21 July 1989, the trustee had sought information from the lending institution, then called Public Service Savings and Loans Society Ltd, about the circumstances in which the loan came to be made. The trustee was asked whether the lending institution had insisted upon a joint title being held by the Drapers. The lending institution then provided the relevant documents.
23 The loan application of 31 May 1989 was in the name of Mrs Draper only and made by her as the member of the lending institution. It contains a 'security offered' section which apparently proposed a mortgage to be granted by Kebar Sporting Goods Pty Ltd. The company's name has been crossed through. The Marleston property in the name of Mrs Draper was proposed as collateral security. On 16 June 1989 the lending institution wrote to Mrs Draper. It told her that her loan application for $40,000 had been approved, subject to the following conditions:
'1. Fortnightly repayments of $319-00 by salary deduction over a term of 10 years.
2. A Registered First Mortgage …
3. The loan be in joint names with yourself and your husband.
4. …'
24 The reference to 'salary deduction' is clearly a reference to Mrs Draper's salary as a teacher's aide being the principal source of repayment of the loan. The letter said the lending institution would prepare the security documents. It is customary for the loan agreement then to be prepared by the lender. What is obviously only part of the pro forma formal loan agreement is dated 25 June 1989. It contains the schedule into which the details of the particular transaction are inserted. It was obviously completed by the lending institution. It is signed by both the Drapers. It records them as joint borrowers and the security as a first mortgage over the property.
25 The lending institution then prepared the first mortgage documents. That is the usual course. The lending institution provided for the borrowing to be in joint names and the first mortgage also to be in joint names. The 'borrower' was required to give the security of the first mortgage over the MacDonald Park property under the terms of the lending agreement.
26 In my view, contrary to the conclusion of the Federal Magistrate, it is clear that Mr Draper became a joint borrower and consequently a joint registered owner of the MacDonald Park property upon the request of the lending institution. The application for the loan was made by Mrs Draper only, and she was notified of the grant of the loan. The lending institution required Mr Draper's involvement as a joint borrower (and, it may safely be inferred that it also wanted him as a joint borrower, to be a joint mortgagor) was required by the lending institution. That evidence also explains that the lending institution was not prepared to advance the money required in the name of the company. It is likely that the lending institution was unaware of Mr Draper's impending bankruptcy.
27 Subsequently, on 23 August 1996, the trustee made inquiries of the lending institution as to the status of the loan. It was informed by the lending institution that payments were maintained until the mortgage was discharged and that payments were made by payroll deductions from the Education Department from Mrs Draper's salary. It informed the trustee that $319 per fortnight was paid into the loan account on account of the mortgage capital and interest repayments, and $150 per fortnight was paid into a savings account in Mrs Draper's name. By June 1996, a balance of about $5500 had accrued to the savings account and Mrs Draper paid off the remaining balance of the mortgage. At about that time, inquiries were also made of the vendor/second mortgagee who confirmed that the second mortgage had been paid out by 17 November 1990, but was unable to indicate who had paid that money.
28 It is clear from that material that the trustee had as good access to the lending institution as the Drapers. The trustee, in fact, had obtained information from the lending institution to find out whether it had insisted upon joint proprietorship and joint borrowing, and had been given documents which amounted, in my view, to an affirmative response. In those circumstances, in my view, it was inappropriate to draw an inference, as the learned Magistrate did, that the evidence of officers of the lending institution would not have assisted the Drapers. Even if oral evidence from the relevant lending officer (if still available after some 15 or 16 years) were to address the topic, the trustee had access to the officer. The contemporaneous records of the lending institution were in evidence. On analysis, they support the evidence of the Drapers.
29 The Federal Magistrate also said there was no reference to the arrangement in the initial joint affidavit of the Drapers of 9 March 2004 filed in the proceeding. That affidavit is largely argumentative, and quasi-legal, in its content. However, it describes Mr Draper as a 'joint tenant' (sic) and says that he held the property 'in trust'. It refers to Mrs Draper having paid in full the cost of the property out of her salary. Especially in the light of Mr Draper's communications with the trustee as far back as 17 July 1989, that affidavit does not support any suggestion of recent invention (that is, of a claim first having been made in the affidavit of 5 August 2004) that Mr Draper at no time held the beneficial interest in the MacDonald Park property.
30 In my view, the material before the Federal Magistrate demonstrates that the first four of his Honour's reasons for rejecting the Drapers' claim that Mr Draper became a joint owner of the MacDonald Park property at the request of the lending institution, and that he held his half interest in trust for Mrs Draper were erroneous. They overlook material evidence. The fact that Mrs Draper directly made all subsequent payments to the lending institution from her salary deductions in respect of the property is consistent with, and capable of being evidence of, that arrangement. As his Honour pointed out, however, the making of those payments after the date the property was acquired cannot by the mere fact of those payments create an equitable interest in the property in favour of Mrs Draper; that interest must have existed at the time of settlement. See Calverley v Green (1984) 155 CLR 242 at 252 and 257; Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372 at 391.
31 In my opinion, that is sufficient to allow the appeal and to set aside the judgment of the Federal Magistrate. It is desirable, however, to also address the fifth reason for his Honour's rejection of the claim, and to address a further contention of the trustee.
32 As noted, the Federal Magistrate tied his assessment of Mrs Draper's credibility to the other four reasons for his conclusion. It was not an independent reason for his conclusion. It is also obvious that his Honour was not impressed by Mr Draper's evidence.
33 The Draper's several affidavits in support of their claims are obviously argumentative. They are expressed in aggressive terms. In his submissions, Mr Draper was abrasive and confrontational. He clearly thinks he has reason to be. The cross-examination transcripts also indicate that Mr Draper was, on occasions, unnecessarily curt and sometime unpleasant in the way he responded. Nevertheless, I think Mr Draper's cross-examination in at least two respects proceeded upon a factual misunderstanding (which he himself did not identify at the time) which may have coloured the way he then responded to further questions and the way the Federal Magistrate assessed his reliability.
34 The first is that the cross-examination appears to have assumed that that part of the pro-forma loan agreement prepared by the lending institution and dated 25 June 1989 was not prepared by the lending institution but was part of the loan proposal. The cross-examination focuses on the application for the loan, and its conditional acceptance by the letter of 16 June 1989, without recognising that subsequent document existed and was prepared by the lending institution, as apparently was the mortgage itself and it reflected the conditions which the lender had imposed, including that Mr Draper be a borrower and a mortgagor.
35 The cross-examination of Mr Draper appears to have overlooked that sequence. The misunderstanding appears to have led to some questions of, and answers by, Mr Draper which were based upon that error.
36 Mr Draper also was also asked about the apparent inconsistency in his Statement of Affairs, and the questionnaire form, both signed on 17 July 1989, about whether he had an interest in the MacDonald Park property and then why in the questionnaire where he disclosed that interest he had not then stated it was a purely legal interest only. Neither the Federal Magistrate's, nor the Drapers', attention was drawn to the record of interview with the trustee of the same day when he explained the circumstances in the way referred to above. There was also some cross-examination suggesting Mr Draper had wrongly claimed that Mrs Draper had paid for the purchase of the MacDonald Park property. In strict fact, she did not do so. It was paid for by jointly borrowed funds. If, as the Drapers claimed, she had repaid the lenders, her payments were not strictly for the purchase price but to repay the loans.
37 Mrs Draper's evidence at the hearing was confusing. She referred to an agreement to receive a property in lieu of wages owing by Mr Draper. The whole of the evidence makes it clear that was the Marleston property. She did not recall any other agreement, but she was not directly challenged about her affidavits of 5 August, 20 August 2004 and 5 August 2004 where she positively asserted the arrangement about the acquisition of the MacDonald Park property referred to above. She also explained the arrangement at her examination on 20 April 1990. Nor was she asked to comment upon her loan application, the lending authorities' letter of offer to her of 16 June 1989 or the terms of the security document. She confirmed in her oral evidence the fact she had paid the repayments of capital and interest on the MacDonald Park property to the lender from her salary. She said she had limited surplus funds after those payments, but was better able to pay over time with salary increases and when she went from part-time to full-time work. When she could not support herself, she was helped by family and friends. She denied having financial support from Mr Draper.
38 As has been said, Mrs Draper's evidence was not the only, or an independent, reason for the conclusion that in reality the MacDonald Park property was intended to be, and was, jointly acquired in law and in equity.
39 The other contention of the trustee is that s 29 of the Law of Property Act 1936 (SA) must result in no express trust being recognised, even if one were found to exist. Section 29(1)(b) relevantly proved that a declaration of trust respecting any interest in any land 'must be manifested and provided' by some writing signed by a person who is able to declare the trust. It does not require the creation or disposition of an interest in land itself be in writing. The writing sufficient to satisfy the terms of s 29(1)(b) may be created after the declaration of the trust and may be in an affidavit: Barkworth v Young (1856) 26 LJ Ch 153; Equuscorp Pty Ltd v Jimenez (2002) 220 LSJS 252 at [118] (Jimenez). The trustee relied on the decision in Jimenez, but I do not think it assists as the ruling was based upon the inadequacy of the writing relied upon, which did not show what the terms of the trust were: see at [122]-[123], and Smith v Matthews (1861) 45 ER 831. Windt v Carabelas (2002) 224 LSJS 124, the other case relied upon by the trustee, is also of no particular assistance as, in that case, there was simply no writing which was relied upon to manifest the claimed trust. In my view, there has been no review of the various documents produced by Mr Draper, including his affidavits, to determine if s 29(1)(b) has been satisfied: see too Halloran v Minister Administering the National Parks and Wildlife Act 1974 (2006) 224 ALR 79 at 96-97 [72]-[75], 98 [81] per Gleeson CJ, Gummow, Kirby and Hayne JJ. His Honour has addressed only the existence of a writing creating the trust in favour of Mrs Draper at the time of the acquisition or settlement of the MacDonald Park property. Section 29(2) in any event provides that the requirements of s 29(1) do not affect the creation of a constructive or implied trust. The significance, if any, of s 29 of the Law of Property Act 1936 should be revisited on the rehearing.