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[2004] NSWCA 408
appellant. Appeal allowed in part: trial judge's declarations and consequential orders as to the AU$2,000 and AU$10,000 transactions (orders 1(c), 1(d), 2(c), 2(d)) deleted; the declarations and orders...
The Court of Appeal held that two substantial payments from the deceased mother to her son (one in 1984 and one in 1988) were loans, not gifts, and that the trustee could require repayment and charge interest under the equitable rule in Cherry v Boultbee because New Zealand law (which applied) barred only the remedy not the right. Two later Australian payments lacked evidence of a loan and the declarations as to them were set aside. The court affirmed interest on the large New Zealand loan and adjusted orders and costs accordingly.
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1,742 words · generated 29/06/2026
This case is an appeal from Austin J's determination of disputes arising from the estate of the late Lillian Ethel Ashton Gray (Gray-Smith). The essential factual matrix is straightforward in outline. The deceased mother made a series of inter vivos transfers to one son, Robert, at various times (notably NZ$5,000 in July 1984 and a large sum recorded as NZ$156,732.57 in mid-1988), and smaller Australian payments in 1996 (AU$2,000) and 1998 (AU$10,000). After probate (8 March 1999) the residuary beneficiary Ventry sought declarations that certain assets formed part of the estate and the trustee cross-claimed for declarations that Robert was bound to account for particular sums. Austin J, on 18 December 2002, declared all four of the disputed payments to be loans and ordered repayment with interest (para 7). Robert appealed (he is the appellant in CA 40074/03); the appeal was heard 31 August 2004 and decided 11 November 2004 by Young CJ in Eq, with Sheller JA and Bryson JA agreeing (paras 1-2, 10). The Court of Appeal allowed the appeal in part: it upheld the trial judge's findings as to the two New Zealand transactions (the NZ$5,000 and the NZ$156,732.57), but deleted the declarations and consequential orders relating to the AU$2,000 and AU$10,000 payments and adjusted the interest/monetary award accordingly (paras 7, 67, 69-70, 102).
No linked legislation citations have been extracted yet.
Two lines of reasoning were decisive.
First, on the characterisation issue (loan v gift), the Court accepted the trial judge's factual findings where there was objective documentary material, solicitors' communications, post-payment conduct and admissions which cohered with the existence of a debt. The Court rehearsed the applicable legal positioning on burden of proof and family transactions: while there is a presumption of advancement in favour of children from parents (acknowledged after Nelson v Nelson, see para 58), the presumption is of limited use and can be rebutted by clear evidence of intention to create legal relations. Where the claimant (here the estate/trustee) asserts the existence of a loan they bear the onus (paras 15-18, 54-63). On the facts the Court found the evidence for the two New Zealand payments sufficient, notes and letters referring to repayment, solicitor files showing transfers, the absence of a gift duty declaration (which an experienced New Zealand conveyancer would ordinarily ensure) and correspondence in which Robert described the arrangement with loan-like language (paras 19-23, 30-36, 41-46, 53). For the two Australian payments there was no corroborating material beyond bank entries or a cheque butt; the Court held that mere receipt of funds does not establish a loan without more (paras 14, 68-70).
Second, on interest and the equitable remedy, the Court applied the equitable rule in Cherry v Boultbee. Critical to this was the choice-of-law finding that New Zealand law governs the large transaction and that the New Zealand Limitation Act (Limitation Act 1950 (NZ)) barred only the remedy and not the underlying right. Where a limitation statute bars only the remedy, equity may nevertheless withhold benefits and require a person who seeks a legacy to account for an outstanding debt and interest; in other words, the executor can apply the debtor's own assets (held as part of the estate) against his claim on the estate (paras 13, 89-101). The Court therefore sustained the trial judge's award of interest on the large NZ loan (paras 96-101).
Finally, on the rate and timing of interest the Court accepted the trial judge's approach. Equity will normally allow interest on mortgage-like charges or loans that operate as a charge on land even in absence of express stipulation (paras 72-77). Where there was a common intention that the large balance would bear interest but no precise quantum was agreed, the trial judge fixed interest using Schedule J to the Supreme Court Rules in the absence of evidence of a market rate (paras 81-85).
Before the decision the relevant authorities canvassed by the Court included the mid-19th century rule in Cherry v Boultbee (equitable withholding of benefits), authority on equitable charging of interest in mortgage-like situations (Re Drax; Re Fox, Walker & Co; Re Swan's Estate), and modern statements about the presumption of advancement and burden of proof (Nelson v Nelson; Seldon v Davidson; Schmierer v Taouk; Jones v Padavatton and Fleming v Beevers). The Court reiterated settled principles rather than created new law: (1) a large family transfer accompanied by solicitor involvement and correspondence is readily open to being characterised as a loan where the objective material so indicates (paras 30-36, 57-63); (2) Cherry v Boultbee remains applicable, equity will withhold a legacy from a beneficiary who owes an equitable debt where the creditor can apply the debt without suing for it, and that continues to be possible where a foreign limitation act bars only the remedy (paras 90-101); and (3) equity will commonly imply an entitlement to interest on mortgage-like obligations, and trial judges have a discretion to fix a reasonable rate, using Schedule J where no other evidence is tendered (paras 72-81, 85). Thus the judgment affirms and applies existing equitable doctrines to the particular fact pattern rather than extending or overturning precedent.
Passage: "He (Austin J) held that New Zealand law applied and the Limitation Act 1950, New Zealand, renders a statute barred debt unenforceable, but does not purport to extinguish the debt as occurs under NSW law." (para 13). Plain English: The Court accepted that under New Zealand law a limitation period stops you suing to enforce a debt but does not erase the debt itself. That meant equitable remedies could still be used to make the son account to the estate.
Passage: "Where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed so to participate unless and until he has fulfilled his duty to contribute." (para 90, quoting Sargant J). Plain English: If you are going to take money out of an estate but at the same time owe money into that estate, the estate (via the executor) can make you clear your debt before you get anything.
Passage: "In all the circumstances, I conclude that the arrangement between the parties was that the balance outstanding from time to time would bear interest at a reasonable rate... It is appropriate, in my view, to use the rates set out in Schedule J." (para 81). Plain English: The Court decided that interest should run on the big loan; because there was no evidence of a commercial rate, it used the court's own Schedule J as a reasonable proxy.
Passage: "The presumption of advancement is only of limited use, because it is rebutted by evidence of actual intention." (para 58). Plain English: Although there is a legal presumption that parents gift to children, that presumption can be overturned by clear evidence showing the parties intended a loan.
This judgment is binding on the following types of factual situations:
Large intra-family transfers where the donor's solicitor is involved, and there is contemporaneous correspondence or file notes, but no formal executed loan document: the court will look to objective indicators (solicitor's accounts, absence of gift duty declarations, letters using 'loan'/'repay') to infer legal intention (paras 30-36, 53-63).
Cases where a beneficiary of an estate owes a debt to the estate and seeks distribution: where the debtor-beneficiary's assets include funds originally paid by the deceased, Cherry v Boultbee allows the executor to require accounting and to apply the debt against the legacy, even where proceeding in law may now be limited (paras 90-101).
Situations where the defendant claims a family arrangement negating legal relations (Jones v Padavatton-style submissions): the Court will distinguish small informal promises from large transfers implicating legal consequences; large transfers and professional involvement point to binding legal relations (paras 55-58).
Transactions that effectively operate as a charge on land or mortgage-like arrangements: equity will usually allow interest even without an express covenant (paras 72-77).
The judgment itself does not record subsequent treatments by later courts. The present analysis is therefore limited to the authorities the Court of Appeal relied upon and to the reasoning contained within this judgment. Any authoritative statement about how later courts have treated Gray v Gray would require an examination of subsequent case law databases and is not contained in the judgment text.
The judgment leaves some questions for future litigation and clarification:
Precise scope of equitable interest beyond mortgage-like charges. The Court noted that equity's power to allow interest extends beyond strict mortgages (para 74) but expressly declined to define the outer boundary of that principle (para 75). Future cases may be required to pin down when non-mortgage family loans attract equitable interest and at what rate.
The correct approach to choosing the rate of interest where the parties had an indeterminate common intention that interest be paid. The Court accepted the trial judge's use of Schedule J in the absence of market evidence (paras 80-85), but indicated the rate is generally discretionary and ideally should be informed by market evidence. The appropriateness of Schedule J, particularly for foreign-currency or cross-border loans, remains an area for refinement (paras 84-85).
The interaction of different limitation regimes in cross-border family transactions. The Court's reasoning depended on New Zealand law's treatment of limitation; where foreign limitation statutes treat the right as extinguished rather than merely blocking the remedy, Cherry v Boultbee may not provide the same equitable recourse. How choice-of-law and the comparative effects of limitation statutes will play out in varied fact patterns requires further elaboration (paras 13, 87-101).
The evidential thresholds for characterising informal family transfers as loans. While this case reinforces that objective documents and professional involvement are telling, the precise quantum and quality of evidence necessary to displace the presumption of advancement and to satisfy onus remains fact-sensitive and may evolve in future decisions (paras 15-23, 30-36, 53).
In short, Gray v Gray applies established equitable principles (notably Cherry v Boultbee) to a contemporary family-estate dispute and clarifies how courts will assess documentary and conduct-based evidence to characterise transfers and to award interest, but it leaves open the fine boundaries of equity's power to imply interest and the mechanics of rate-setting in the absence of market data.
For the reasons which I have set out earlier and which I will supplement in the next heading, his Honour was well able to reach this view on the evidence. 59 (iii) I have set out earlier a whole host of passages from Robert's own evidence and letters in which the words "repay", "indebtedness" etc have been employed. 60 Both before the trial judge and before this Court Robert's counsel endeavoured to say that words such as "advance" and "obligation" did not necessarily refer to a legal debt. The proposition as an abstract one is correct, but the context in which the words were used by Robert show that in the present case they were more likely to refer to a debt than anything else. 61 The argument was also put that Robert made an offer via Mr Cuttance's letter of 12 January 1988 that there would be an advance for two years with interest at 15% and that this would be secured by unregistered mortgage. However, Mrs Gray never, as requested, sent back a signed copy of the letter acknowledging that she agreed with this offer. Accordingly, one must assume that she rejected it. Therefore, when the money was paid by Mr Cuttance to Robert it was paid otherwise than as a loan on mortgage, there is no evidence as to why it was paid; therefore anyone who alleges that it was a loan has failed to satisfy the onus of proof. The accounts which Mr Cuttance sent both to Mrs Gray and Robert in June 1989 show that Mrs Gray was fully aware that Mr Cuttance had advanced monies to Robert. 62 I reject this submission. Mr Lynch who appeared for Robert said that there was no evidence of acceptance. However, when one looks at the subsequent facts that there was a proposal made by a solicitor on behalf of Robert and then that solicitor later advanced monies to Robert and subsequently there was correspondence in which the parties referred to the words "loan" and "repayment", the great probabilities are that the payment was made by way of loan. Whether it was a loan at 15% per annum I will deal with in section (5). 63 In addition to all of this the Judge rejected Robert's evidence as being self-contradictory and implausible and whilst this does not prove the opposite, it in all the circumstances is a factor which goes into the weight which justified his Honour in finding against Robert in the way he did. 64 (iv) In Robert's affidavit of 3 September he swore: " [D]uring 1990 Mum phoned me and said words to the effect 'I've lost confidence in Hattersley and I'm not happy with what he is doing. I do not want you to have any further contact with him'. At around the same time, Mother said words to me to the effect 'as far as I am concerned you can forget about the money, what I need and what I want from you is for you to come over and visit me as often as you can for as long as you can'." 65 His Honour noted that the voluntary release of a legal right by writing not under seal is usually ineffective; see Byrn v Godrey (1798) 4 Ves 6; 31 ER 3; Lewis v Cook (2000) 18 ACLC 490 and see the discussion in Meagher, Gummow and Lehane's Equity Doctrine and Remedies 4th ed (Butterworths, Australia, 2002) [35-010]. 66 However, noting that Meagher, Gummow and Lehane say that there is some confusion in the law on this subject, his Honour said that as a matter of fact he could not be satisfied that there was a release. He said: "First, Mrs Gray's statement, as recounted by the second defendant, places emphasis on her desire to be visited, and her statement to 'forget about the money' is merely an introduction to her main point. That would be a remarkably informal way to release an entitlement to a sum of about $150,000, and I therefore think it unlikely that the statement (if she made it) was intended to be a release or forgiveness of the loan."
His Honour then referred to the statements made in the 1995 will and held as a matter of fact there was no release. This was well within his Honour's mandate as a tribunal of fact. 67 Accordingly, I would uphold the view that the NZ$156,732.57 was a loan and not a gift. 68 (3) There is evidence on a bank statement showing AU$10,000 was debited to Mrs Gray's bank account and the cheque butt is endorsed "Transfer Robt Gray". Robert gave evidence that while he was an insurance salesman he had a number of situations where he was required to refund commissions and was running short of cash. His evidence was he mentioned this to his mother and she sent him a cheque for $10,000. He said he did not ask for the money. She did not tell him it was coming, and after getting it, he thanked her. 69 There was actually no evidence at all as to this transaction other than the mere receipt of money which, as I have indicated at the commencement of these reasons, is in itself insufficient and the person who alleges that the transaction is a loan bears the onus of proof. His Honour at para 102 of his judgment reasoned virtually from similar facts that as Mrs Gray had already lent her son much more substantial money, it was likely that the provision of this further sum was treated by the parties as an additional loan. With respect to his Honour, I do not consider that one can reach this conclusion. 70 (4) As to the final transaction of AU$2,000, again, the only material is a cheque butt dated 3 December 1996 marked "RJG" for $2,000 and the bank statement showing that this amount was debited to Mrs Gray's Australian account. His Honour applied the same reasoning to this transaction as to the third transaction, and for the same reasons I must find for Robert on this transaction. 71 (5) The question of interest in this case is a very significant one as the interest on the NZ$5,000 loan was calculated by his Honour at NZ$1,936.98 and the interest on the large loan at NZ$260,721.54. Interest, accordingly, is more than 50% of the amount for which the Judge found Robert liable to the estate. 72 There is no doubt at all that as a general proposition both at law and in equity "Nothing but what arises from a contract, agreement, or demand of a debt, can give rise to a claim of interest and this Court [Equity] in these cases follows a court of law". The quotation is from Henry Maddocks, Treatise on the Principles and Practice of the High Court of Chancery (1820) Vol 1, p 611. The proposition is supported by Boddam v Ryley (1762) 1 Bro CC 239; 28 ER 1104; Upton v Ferrers (1801) 5 Ves 801, 806; 31 ER 866, 869 and Calton v Bragg (1812) 15 East 223; 104 ER 828, as well as in a host of more modern authority. 73 In Williams v Vicroft Pty Ltd Powell J, 31 May 1989, unreported, his Honour said at BC8902116 at 65 (omitting reference to authority): "The general rule at common law is that, in the absence of express agreement, or some course of dealing or custom to that effect, interest is not payable on a debt or loan … . The general position in equity is, however, different, the rule in equity being that, in the absence of any agreement, or custom, to that effect, interest is payable. Thus, interest is payable on a mortgage debt even though the relevant mortgage contains no mention of interest."
His Honour's authority for the proposition in that last sentence is Mendl v Smith (1943) 112 LJ Ch 279. Hamilton J followed that proposition in Whiteley v Hodge [2000] NSWSC 1161, [10]. 74 I mentioned during argument that I had fears that that proposition was too widely expressed. Those fears stem from the broad proposition which I have quoted from Maddocks which I have always understood to be the classic law. However, there is abundant authority for the proposition that the equitable principle extends beyond transactions by way of mortgage. Thus, if a surety has to pay the principal debtor's account, the surety is able to charge the principal debtor interest at a rate fixed by the court notwithstanding that the principal debt itself did not carry interest; see Rowlatt on Principal and Surety 5th ed (Sweet & Maxwell, London, 1999) 7-09; Re Fox, Walker & Co; Ex parte Bishop (1880) 15 Ch D 400, 421-2; Re Swan's Estate (1869) 4 Ir Eq 209 and A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481, 492. The principle may also extend in equity to cases where there are intercompany debts where there is no express promise to pay interest and the companies end up in liquidation or administration; see the A E Goodwin case at 494-5. 75 It is unnecessary in this case to speculate just how far the wider principle in equity departing form the common law rule extends. This is because it is clearly applicable in mortgage situations. In view of the facts as found by the learned trial judge and as affirmed in these reasons, the present transactions which have been held to be loans are in this category. 76 The Australian edition of Fisher & Lightwood on Mortgages (Butterworths, Sydney, 1995) para 39.39 sets out the law. The relevant sub-paragraph, omitting case references says: "Despite the general rule, interest is payable upon mortgage debts, even though it is not expressly reserved … unless inconsistent with the terms of the mortgage. This applies although the mortgage is only equitable including a charge by mere deposit of title deeds, and generally where the principal sum is a charge on specified property." 77 The leading authority is Re Drax [1903] 1 Ch 781, a decision of the English Court of Appeal. At 793 Colllns MR said: "It seems to me to be well established on the authorities … that a Court of Equity has power to give interest, and in point of fact does so where a charge is created on land, although there are no words allowing interest in the instrument creating the charge. Indeed, we go back to the principle laid down in many cases shewing that, in point of fact, the Court of Equity does charge interest."
Romer LJ and Cozens-Hardy LJ delivered separate judgments to the same effect. 78 One of the more recent authorities on the point is Cityland & Property (Holdings) Ltd v Dabrah [1968] Ch 166, a decision of R W Goff J who was then sitting in the English Chancery Division. His Lordship stated that he would not have allowed interest in that case . He said at 182: "True it is, as a general rule, that a mortgage debt carries interest in the absence of an express provision, but that is because, as stated in the Irish case of Carey v Doyne, (1856) 5 Ir Ch Rep 104 and approved in Re Kerr's Policy (1869) LR 8 Eq 331, it would be inequitable to allow redemption without payment of interest; or, as it was put in Mendl v Smith (1943) 112 LJ Ch 279 interest is allowed unless there is any contractual right or equity to exclude it." 79 His Lordship then went on to consider the rate of interest. He said that he thought the traditional 5% was too low and continued: "If one is charging interest on the actual loan, one ought at least to give market rates and possibly, in the circumstance of this case, somewhat more. But I have not been addressed on the rate of interest. At present advised I propose to allow 6 per cent, but I will hear counsel … ."
His Lordship then heard counsel and continued: "I do not accept the submission that it should be 9½ per cent but I think my initial idea of 6 per cent was too low and I will fix it at 7 per cent because that is a rate which I have chosen on the facts of this case and it has no bearing upon what will be the proper rate for working out any other quantity, or even this one, in any other case." 80 That final passage suggests that the rate is one for the discretion of the trial judge as to what is appropriate in all the facts and circumstances of the case and that it is usually appropriate for evidence to be tendered as to what is the market rate, but if no such evidence is tendered, the Judge still must do the best he or she can in the circumstances and on the evidence that is presented. 81 So far as the largest transaction is concerned, Austin J noted that the plaintiff contended that the rate should be 15%, or alternatively a reasonable rate, or yet again, 15% for two years and thereafter at a reasonable rate. His Honour noted that in subsequent dealings there was no mention of 15% and then said at para 87: "In all the circumstances, I conclude that the arrangement between the parties was that the balance outstanding from time to time would bear interest at a reasonable rate, for the common intention was that interest would be paid but the quantum was not settled. The third alternative advanced by the plaintiff does not appear to me to accord with such evidence as there is concerning intention of the parties. It is appropriate, in my view, to use the rates set out in Schedule J to the Supreme Court Rules in circumstances such as these." 82 The appellant put that there was no common intention at all that the loan should bear interest. If that were right, it still would make very little difference because the way the cases have gone show that interest is payable unless the circumstances show it was not to be payable. The appellant also says that the subsequent communications show that Mrs Gray was not willing to charge interest. I do not consider the material is strong enough for a court to hold that this is so. 83 Mr Lynch for the appellant said that there is a distinction between a commercial transaction by way of mortgage and a family transaction, and whilst equity may imply an obligation to pay interest in the former, it would not do so in the latter. He quoted no authority for this proposition and it seems to be against the reason for the equitable rule advanced by R W Goff J in the Cityland case which I have already quoted. 84 Mr Lynch submitted that Schedule J is not a reasonable rate because: (a) the present loan was in the New Zealand market, not the Australian market; and (b) it is notorious that Schedule J rates are at least 1% higher than the commercial rates; and (c) in any event mortgage home rates are usually lower than the commercial mortgage rate. There was some discussion during argument as to whether a Judge would also need to take into account the fact that the present loan was a bit precarious because it was made to a person with few means up to, it would seem, a large percentage of the property's worth and the loan was to a relative, relatives being notorious in paying their debts to relatives only as a matter of last resort. 85 There was no factual material before the learned Judge at all on the question of what was a reasonable rate of interest. It seems to me that in such a situation where the Judge has to do the best he or she can on the material available it is not an appealable error to choose Schedule J rates. 86 Mr Officer QC for Ventry said that there were really three matters to consider with respect to the question of interest: (a) whether it was payable at all; (b) from what date; and (c) what was a reasonable rate. I believe I have already covered (a) and (c). 87 As to (b), it should first be noted that the learned Judge held that interest was payable from 17 June 1988 on the large amount, but only from the date of death on the $5,000 as there was no contractual provision that the debt would carry interest. There is no challenge to this determination. Secondly, there is no doubt at all that in the instant case New Zealand law applied and that the relevant Limitation Act only barred the remedy not the right. 88 The appellant says that it is wrong to charge him with interest on the larger amount back to the date of the loan. 89 To examine this submission, one needs to analyse the principle in Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171. 90 This rule is as formulated by Sargant J in Re Peruvian Railway Construction Company Ltd [1915] 2 Ch 144, 150, "… Where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed so to participate unless and until he has fulfilled his duty to contribute." 91 As Derham says in his The Law of Set-Off 3rd ed (OUP 2003) 1401, "It is an illustration of a more fundamental principle of equity, that he who seeks equity must do equity." The principle is not strictly one of set-off or retainer by an executor for as Kekewich J said in Re Akerman [1891] 3 Ch 212, 219, "Nothing is in truth retained by the representative of the esate; nothing is in strict language set off." 92 A leading case on the rule is Courtenay v Williams (1843) 3 Hare 539; 67 ER 494 (Wigram VC) affirmed as Courtenay v Williams (1846) 15 LJ Ch 204. Lord Cottenham LC said at 208: "The executor is in possession of assets. He is to distribute those assets according to the will of the testator. Part of the assets are in the hands of the party who claims another portion of the assets. The executor says, 'You have assets sufficient to satisfy your demand; apply them for that purpose.' That was the rule laid down in a case, not indeed barred by the Statute of Limitations, but in a case cited at the bar, in the course of this argument; it was a case where the legatee was indebted for maintenance to the testator. The defendants', the legatees' demand (the Court says) is in respect of the testator's assets, without which the executor is not liable; and it is very just and equitable for the executor to say, that the defendant, the legatee, has so much of the assets already in his own hands, and consequently is satisfied pro tanto. That applies directly to the present case. He has so much of the testator's assets in his hands - assets that are not recoverable at law, because they are barred by the Statute of Limitations; but they are still assets in his hands, and let him pay himself out of those pro tanto. " 93 Later, on the same page, the Lord Chancellor said: "… though there has been no decision on the point, in all equitable cases where the debt exists, in the case of lien, the case of appropriation, and other cases of that description, the Court has always considered that the debt being a subsisting debt, the party had an equity to have that debt applied, where the circumstances were such that it could be applied without bringing an action for the purpose of recovering the amount. I think the principle of those cases is directly applicable to the present case." 94 There is no doubt that under the rule in Cherry v Boultbee, not only the debt but also interest due on the debt is able to be set against the legacy due to the debtor. This proposition is supported by cases such as Campbell v Graham (1831) 1 Russ & M 453; 39 ER 175, affirmed on appeal as Campbell v Sandford (1834) 8 Bligh NS 622; 5 ER 1073. 95 In Dingle v Coppen [1899] 1 Ch 726, 737-740, Byrne J distinguished cases under the rule in Cherry v Boultbee from other cases, saying at 740: "… in the case of a legacy, the person indebted to the testator's estate is not entitled to claim that legacy unless he treats the legacy in one way or other as being pro tanto satisfied … by the amount due from him to the testator, although barred by the Statute of Limitations." 96 The rule in Cherry v Boultbee has its exceptions, see Derham op cit Chapter 14 and the cases which Austin J discussed of Re Bickerdike (No 2) [1919] VLR 62. However, it is not necessary to go into these matters, as the rule clearly applied in the present case. 97 It should be noted that the general equitable principle is not confined to the Cherry v Boultbee situation, but applied whenever a person seeks equity but owes money in a case where the creditor is able to claim repayment of the debt without having to bring an action to recover it, at least where the relevant limitation acts bars only the remedy; see eg Australian and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478, 497. 98 The 8th edition of Hanbury, Modern Equity (Stevens, Longon, 1962) pp 44-6 deals with the rule in Cherry v Boultee. [This was the last edition edited by Professor Hanbury personally; later editors have omitted this section]. At p 46 Hanbury cites the decision of Parker J in Re Sewell [1909] 1 Ch 806 and then says: "Equity regards the question not what A [that is the debtor] can be compelled to do, but what he ought in conscience to do, and will withhold from him the advantages which it is in his power to give him, unless he will purge his conscience by paying what he is morally bound to pay." 99 Meagher, Gummow and Lehane (4th ed) [37-145] relying on this passage note that the right under Cherry v Boultbee may be exercised against a statute barred debt. 100 In the instant case, Austin J properly found that there was an agreement that the large debt would carry interest. No interest was paid. The executor may not have been able to sue at law for the principal or all the interest, but, as discussed above, this is irrelevant when the rule in Cherry v Boultbee is involved. 101 Thus the learned trial judge's award of interest on the large debt must be upheld. 102 (6) Accordingly, the appeal must be allowed only to the extent of deleting the Judge's orders 1(c) and 1(d) with respect to the $2,000 and $10,000 transactions, deleting orders 2(c) and (d) which are consequential and adjusting the money amount by deleting the interest that was referable to the two transactions on which the appellant has succeeded. 103 So far as costs are concerned, there was no argument put before us. The learned Judge made a very complicated order for costs after hearing submissions. I believe it is wiser to publish these reasons, to have short minutes brought in and deal with costs at that stage. My preliminary view from which I am quite willing to listen to argument as to why it should not prevail is that as the appellant has succeeded only on a very minor matter in the appeal and has been completely unsuccessful on the major matters, that the appellant, despite his small success, should pay 90% of the respondents' costs.
Last Modified: 11/18/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Gray
Gray
CITATION : Gray v Gray [2004] NSWCA 408 HEARING DATE(S) : 31/08/04 JUDGMENT DATE : 11 November 2004
CATCHWORDS : Equity- Administration of estate- Rule in Cherry v Boultbee- Effect of NZ Statute of Limitations which barred remedy only- What interest must be paid on taking of accounts. LEGISLATION CITED : Limitation Act, 1950 (NZ) A E Goodwin Ltd v A G Healing Ltd (1979) 7 ACLR 481 Australian and New Zealand Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478 Boddam v Ryley (1762) 1 Bro CC 239; 28 ER 1104 Byrn v Godrey (1798) 4 Ves 6; 31 ER 3 Calton v Bragg (1812) 15 East 223; 104 ER 828 Campbell v Graham (1831) 1 Russ & M 453; 39 ER 175 Campbell v Sandford (1834) 8 Bligh NS 622; 5 ER 1073 Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171 Cityland & Property (Holdings) Ltd v Dabrah [1968] Ch 166 Courtenay v Williams (1843) 3 Hare 539; 67 ER 494 Courtenay v Williams (1846) 15 LJ Ch 204 Dingle v Coppen [1899] 1 Ch 726 Fleming v Beevers [1994] 1 NZLR 385 Heydon v Perpetual Executors, Trustee & Agency Co (WA) Ltd (1930) 45 CLR 111 Joaquin v Hall [1976] VR 788 CASES CITED : Jones v Padavatton [1969] 1 WLR 328; [1969] 2 All ER 616 Lewis v Cook (2000) 18 ACLC 490 Mendl v Smith (1943) 112 LJ Ch 279 Nelson v Nelson (1995) 184 CLR 538 Re Akerman [1891] 3 Ch 212 Re Bickerdike (No 2) [1919] VLR 62 Re Drax [1903] 1 Ch 781 Re Fox, Walker & Co; Ex parte Bishop (1880) 15 Ch D 400 Re Peruvian Railway Construction Company Ltd [1915] 2 Ch 144 Re Sewell [1909] 1 Ch 806 Re Swan's Estate (1869) 4 Ir Eq 209 Schmierer v Taouk (2004) 207 ALR 301 Seldon v Davidson [1968] 2 All ER 755 Thiess v TCN Channel 9 Pty Ltd (No 5) [1994] 1 Qd R 156 Upton v Ferrers (1801) 5 Ves 801; 31 ER 866 Whiteley v Hodge [2000] NSWSC 1161 Williams v Vicroft Pty Ltd (Powell J, 31.5.1989) Robert John Charles Gray (Appellant) PARTIES : Rollo Ventry Wakefield Gray (1st Respondent) Guardian Trust Australia Ltd (2nd Respondent) FILE NUMBER(S) : CA 40074/03 T Lynch (Appellant) COUNSEL : D P F Officer QC and P M Lane (1st Respondent) M S Willmott SC (2nd Respondent) Turner Freeman Lawyers (Appellant) SOLICITORS : Teece Hodgson & Ward (1st Respondent) Mallesons Stephen Jaques (2nd Respondent)
(1930) 45 CLR 111
(1995) 184 CLR 538
(2004) 207 ALR 301
Appeal allowed in part: trial judge's declarations and consequential orders as to the AU$2,000 and AU$10,000 transactions (orders 1(c), 1(d), 2(c), 2(d)) deleted; the declarations and orders relating to the NZ$5,000 and NZ$156,732.57 loans and the award of interest on the larger loan were affirmed; monetary amount adjusted by deleting interest referable to the two transactions on which appellant succeeded; costs reserved for later determination (paras 1, 7, 102-103).