Harpur & Ors v Levy

Harpur & Ors v Levy - [2007] VSCA 128 - VSCA 2007 case summary — Zoe

[26]

The latter reading - involving a change of tense - could only be justified, in my view, if the text - and the surrounding circumstances - showed it to be "the only possible meaning in this context."[10]

15 Counsel for the respondents conceded in argument that the words "he holds" in clause 1 (and in clause 2) appeared to signify an intention to create a present trust. He submitted, however, that the words were governed by the reference to the commencement date, and that recital 13 exposed a misunderstanding by the drafter of the deed, and by Mr Rand himself, of the principles of trusts. Clause 1 reflected, so counsel for the respondents argued, an erroneous belief that a trust could effectually be created by a promise to create the trust in the future. I turn therefore to the recitals.

Reference to the recitals

16 As Neave JA has noted, the appeal was conducted on both sides on the basis that recourse to the recitals was permissible in order to elucidate Mr Rand's intention. As her Honour has pointed out, however, and as counsel for the appellants conceded, authority establishes that recourse to the recitals is permissible only if there is ambiguity in the operative clauses.

17 As there is ambiguity in the present case, it is unnecessary to consider whether the recitals might not be examinable even in the absence of ambiguity, given equity's willingness to examine surrounding circumstances in order to ascertain what was intended.[11] In the present case, as Neave JA has explained, the "recitals" are expressed as declarations by Mr Rand of the circumstances in which he came to make the deed. These circumstances both clarify, and explain, his intention to create the trust. (Moreover, as statements made in a document by a person now deceased, they would ordinarily be admissible under s 55(1)(a) and (5)(a) of the Evidence Act 1958 (Vic) to prove those circumstances.)

18 The ambiguity in the present case is in both clauses 1 and 3. It derives from the inconsistency between the words "he holds" and the phrase "from the commencement date". The one is in the present, the other in the future.

19 I now set out the relevant recitals. The first four are stated to be "declarations" by Mr Rand. For ease of comprehension, I have reformulated them as statements in the first person by Mr Rand.

[31]

Background

24 Peter Thomas Evan Rand, a very wealthy man, died on 7 October 1997, after a long illness. This case concerns the disposition of his extensive property holdings.

25 In September 1997, about a month before Mr Rand died, he executed a will appointing his solicitor, Mr Levy, and two other executors. About a month after his

death, the solicitor for Mr and Mrs Harpur, the first and second defendants, sent the executors a copy of a deed of trust executed in August 1997, which appeared to dispose of almost all of Mr Rand's property. The Harpurs claimed that Mr Rand had executed the deed to avoid pressure which was being brought to bear on him by his partner, Mr Acquilina, about the contents of his will. Mr Harpur said that Mr Rand had given him the original deed on the day it was executed, and that Mr Harpur had handed it to his accountant the following day, but that the original was later stolen from the accountant's car and has never been recovered.

26 Under the deed Mr Rand purported to declare himself trustee of his property for the beneficiaries of the P & G R Harpur Trust, a discretionary trust established on the same day as the deed was executed. Kai Tak Pty Ltd, the third defendant, was the trustee of that trust. Mr and Mrs Harpur were the directors of Kai Tak Pty Ltd.

27 Mrs Harpur and the Harpurs' son, Guy, are the beneficiaries of the P & G R Harpur Trust and Mrs Harpur is the appointor. If the trust was effectively constituted on 27 August 1997, Mr Rand retained little or no property to pass to the beneficiaries under his will. Apart from provisions giving Mr and Mrs Harpur the right to occupy a Sorrento property known as "The Sisters" for a limited period and providing for a payment out of the residuary estate to Guy Harpur, members of the Harpur family were not named as beneficiaries in Mr Rand's will.

28 Mr Rand's executors commenced proceedings against Mr and Mrs Harpur and Kai Tak Pty Ltd, claiming that the deed of trust was invalid because it was not authentic. Alternatively they contended that even if the deceased did execute the deed, he was not acting freely and independently of the Harpurs, because his judgment was impaired by his physical and mental condition. Kai Tak Pty Ltd later obtained leave to file and serve a counterclaim asserting that the declaration of trust was valid and seeking orders requiring the executors to hand over the relevant property to the trustee. Mr Acquilina was joined as a defendant to the counterclaim. In April 2003 Master Evans directed that the proceeding on the counterclaim should be stayed until the hearing and determination of the plaintiffs' claim.

29 Mr Levy and the other executors sought a judgment under r 23.01(2) of the Supreme Court (Civil Procedure) Rules, on the basis that the defence to the claim brought by the executors was bad in law. They contended that, even if the deed were validly executed, the declaration of trust was ineffective on its face. This application succeeded in the court below. Mr Acquilina did not actively participate in those proceedings and made an undertaking to abide by any orders which might be made. The Harpurs and Kai Tak Pty Ltd now appeal against that judgment.

Issues

30 The question to be determined in this appeal is whether the judge below correctly gave summary judgment against the defendants, under r 23.01(2).[15] As I explain below, the power to strike out proceedings under this provision is exercised very cautiously. Mr Levy and the other executors must show that the defendants' claim that the trust deed disposed of beneficial interests in Mr Rand's property is obviously untenable or unsustainable in law.[16] If the executors' claim succeeds and the terms of the trust deed are held not to create a binding trust, further proceedings contesting the validity of the deed will become unnecessary.

31 Mr and Mrs Harpur also appeal against the costs orders made by his Honour.[17] This aspect of the appeal is discussed in more detail below. Mr Acquilina's involvement in this appeal is limited to seeking an order that Kai Tak Pty Ltd pay his costs of the appeal.

What is the test for striking out a defence under r 23.01(2)?

32 Mr Levy and the other executors could have initiated proceedings under r 47.04, which allows the court to order that any question in a proceeding be tried before the trial of the proceeding. Instead they chose to invoke the court's power under r 23.01(2) to give summary judgment, on the basis that the defence "does not disclose an answer" to the plaintiffs' claim.

33 On one view this procedure is only "appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim [or in this case the defence] as it stands is insufficient, even if proved, to entitle the plaintiff to what he asks."[18] According to this view this power can only be exercised in cases where the matter is beyond argument.[19] In other situations the proper procedure is for the objecting party to seek determination of the matter as a preliminary question under r 47.04.[20]

34 The alternative view is that, if there is full argument on the matter and the court comes to a clear view that the defence cannot succeed, the power should be exercised,[21] because this approach can save a party from futile and expensive proceedings.[22]

35 Whichever view is taken on this issue, it is clear that the power to give summary judgment must be "sparingly exercised" and that the mere fact that the argument has slim prospects of success does not justify striking out a defence.[23] In UFH Holdings Pty Ltd v Ord Minnett Corporate Finance[24] Chernov J referred to both these approaches and concluded that it was necessary for a party to:

[33]

36 Counsel for the appellants submitted that their defence "was neither so obviously untenable that it could not possibly succeed or obviously so manifestly groundless that it did not admit of argument. The judge should not have determined the issue but should have left it to trial."

37 In my view the executors have satisfied the "very high onus" of showing that the claims made by the Harpurs and Kai Tak Pty Ltd were unsustainable, because the terms of the deed do not create an enforceable trust. My reasons for this view are set out below.

Did Mr Rand Declare Himself Trustee of the Property?

38 Ground of appeal 3(a) alleges that the learned judge below erred in finding "that the deed... constituted only a declaration of intention to transfer interests in property to or upon the trusts of the P & G R Harpur Trust... in the future." The remainder of Ground 3 and Ground 4 state the same proposition in different ways. The appellants' sixth ground of appeal is that "[t]he judge erred if he held or proceeded on the assumption that for the trusts declared by the Deed to be effective it was necessary for the settlor to affirm the trusts in the period between 27 August 1997 and his death." This ground also turns on the submission that Mr Rand's declaration of trust took effect on the date when the deed was executed, making it unnecessary to show that the settlor took steps to affirm the trust at a later date.

39 Both the appellants and the respondents agree that the effect of the deed depends on whether, in the words of the judge below, clause 1 of the trust deed, read in the context in which it appears, expresses the deceased's intention "to create a trust in the future" or, on the other hand, expresses an intention to create a trust immediately "with a postponement of enjoyment by the beneficiaries".[26]

40 In the former case, equity will not assist a volunteer by enforcing the intention to create a future trust.[27] In the latter case, a trust is created immediately and can be enforced by volunteer beneficiaries, although their enjoyment may be postponed. For example, if an owner declares that she holds property on trust to pay the income to herself for life and after her death to pay the capital to specified beneficiaries, those beneficiaries have an immediately enforceable interest in the property, even though they will not be entitled to the capital of the fund until the settlor dies.

The terms of the deed

41 The deed contains four recitals, which are said to explain the background to the execution of the deed. Recital A, which is drafted in a colloquial rather than a legal manner, sets out the circumstances in which the deed is made. It refers to Mr Rand's very close relationship with the Harpur family ("he loves Pamela and Guy Harper greatly") and speaks disparagingly of his own long term friend and partner, Michael Acquilino. It expresses Mr Rand's concern about being "pressured and bullied into making a Will in terms he does not wish to make" and says that Michael Acquilino has threatened to leave him if he does not make greater provision for Michael. It says that Mr Harpur has asked Mr Rand to speak to an independent solicitor of his choice, that he has refused to do so, and that he feels unable to discuss the matter with Mr Levy, his solicitor, "as he has concerns about him keeping the information confidential from Michael Acquilino or [another friend] Deborah Williams."

42 Paragraphs 12 and 13 of Recital A provide that:

[41]

48 Both the recitals and clause 1 were said to show that, when Mr Rand declared himself trustee in August 1997, he intended to immediately hold the property in the Schedule for the beneficiaries of the P & G R Harpur discretionary trust, although their enjoyment of the right to share in distributions under the discretionary trust was postponed until the commencement date of the deed.

49 Counsel for the appellants relied on a number of cases to support his submission that the deed created an immediately enforceable trust. He equated the facts of this case with the facts of Re Armstrong.[28] In that case Armstrong deposited two amounts with a bank for 24 months. He told the bank manager that the principal amount was to go to his sons on the maturity of the investments following his death, but that the interest was to be paid to him during his life. Deposit receipts issued by the bank acknowledged the payments as "George Armstrong in re William Armstrong" (William was one of his sons) and "George Armstrong in re Bernard Armstrong" (Bernard was another son). Herring CJ held that Armstrong had constituted himself a trustee of the chose in action represented by the deposits, on terms entitling him to interest of the trust fund for his life, with his sons having an interest in remainder in the capital.

50 Along similar lines, in Kauter v Hilton[29] it was held there had been an effective declaration of trust of monies deposited in a bank account in the name of a man who had handed the bank passbook to the beneficiary and said that he intended to create an immediate trust in favour of that beneficiary.

51 Counsel for the appellants also referred the Court to the recent Privy Council decision of T Choithram International SA v Pagarani.[30] The issue in that case was whether, before he died, Mr Choithram had made an effective gift to the trustees of a philanthropic foundation, which was to hold the property for the benefit of various charitable trusts. The deceased executed a trust deed establishing a foundation under which he was to be one of six trustees. Immediately afterwards he stated orally that he gave all his wealth to the trusts and told the company accountant, Mr Param, that Mr Param should transfer credit balances in Mr Choithram's four companies to the foundation.

52 At directors' meetings of the four companies held on the same day, resolutions were passed acknowledging that the trustees of the foundation were "henceforth the holders of the shares and assets in the company." Mr Param altered entries in the books of one of Mr Choithram's companies substituting the foundation for Mr Choithram, as a creditor, but the deceased man did not execute share transfers or formal assignments or sign any declaration of trust.

53 Although Mr Choithram did not vest his property in all of the trustees of the foundation prior to his death, the Privy Council held that Mr Choithram had an intention to make an immediate and unconditional gift to the foundation and that he had validly declared himself trustee of that property. It was held that no distinction should be drawn between the situation where a person declares him or herself a sole trustee and the situation where that person declares him or herself one of the trustees for that purpose.[31] Lord Browne-Wilkinson, delivering the judgment of their Lordships, said:

[43]

54 Counsel for the appellants submitted that, in the case before us, Mr Rand had also made a solemn declaration which was binding on his conscience, so that the terms of the trust were enforceable against him from the time the deed was executed.

55 Counsel for the respondents submitted that the cases relied upon by the appellants were simply examples of situations in which the court was satisfied that the alleged trustee had a clear intention to create a trust which would operate

immediately. In Re Armstrong[33] and Kauter v Hilton,[34] this was clear from the oral statements made by the alleged trustee contemporaneously with the making of the deposits. Similarly, the trust was binding in the Choithram case because Mr Choithram intended "to make an immediate, unconditional gift to the foundation" which was acknowledged and accepted by the other trustees.[35]

Conclusion

56 The authorities cited by the appellants and the respondents do little more than re-state the fundamental proposition that if a person manifests an immediate intention to declare a trust, the trust is binding on its declarant, even though the enjoyment of the beneficiaries may be postponed until a future date. These cases provide examples of situations in which courts have held that a person did, or did not, have an intention to confer a beneficial interest immediately, in circumstances where the person declaring the trust clearly intended that possession of the property in which an interest may have been conferred was postponed. None of these cases assists us in determining whether the deceased intended to create a trust immediately, or only to bind himself from the commencement day of 1 October 1997.

57 In Choithram,[36] which was relied upon by the appellants, Mr Choithram had a clear and unconditional intention to transfer his shares to the charitable foundation. The decision has been criticised by some academic commentators because the Privy Council treated an imperfect transfer of property to trustees as a declaration of trust, despite the established principle that an imperfect gift cannot be saved in this way.[37] That is not the question which arises here. Mr Rand did not purport to create a trust by transferring his property to the trustees. Rather, he declared that he would hold the property in trust "from the commencement date." The question which must be resolved is whether the words used in the trust deed were effective to dispose of an interest to the beneficiaries of the P & G R Harpur Trust.

58 Where the words of a deed are ambiguous, an exception to the parol evidence rule allows admission of extrinsic evidence to clarify the intention of the person executing it.[38] In the hearing before the judge below, however, counsel for the appellants said:

[51]

67 Counsel for the appellants submitted that evidence called at trial on behalf of the Kai Tak and the Harpurs would show that the discrepancies between Mr Rand's will and the earlier deed were explicable on the basis that the will was "intended to deceive." It was said that his Honour had "applied the wrong test" to r 23.01(2) by saying that "were the defendants seriously to press this part of the case, then it was incumbent on them to put before me some evidence in support. They produced none." It was submitted that his Honour should have assumed that the allegations of fact in the defence were true, for the purposes of the application.

68 I reject this submission. As I have already said, the parties agreed that the effect of the deed was to be determined by reference to its terms. Thus the question of whether the defence discloses an answer to the executors' claim turns on the meaning of the words used in the deed and cannot be affected by the provisions of the later will.

69 It is unnecessary (and may be impermissible) to rely on the terms of the will in construing the deed. If the deed was effective to create a trust, the will could not dispose of property previously included in that trust. If, on the other hand, the deed did not manifest an intention to create a trust immediately, the provisions of the will are irrelevant to the appellants' claim, as his Honour recognised. In my view he was saying no more than that the execution of the will, so shortly after the date of the execution of the deed, fortified his conclusion that the trust was not intended to operate until the commencement date of 1 October 1997.

70 Courts may be prepared to find that an informal oral declaration of trust has passed an equitable interest to a beneficiary, when the court is "dealing with simple people unaware of the subtleties of equity."[47] However this deed was drafted by Mr Harpur, who is a solicitor. A lawyer can reasonably be expected to understand the difference between expressing an intention to establish a trust in the future and creating a trust which operates immediately.

71 In my opinion, the deed executed by Mr Rand on 27 August 1997 expressed an intention to create a trust beginning at a future date (the "commencement day"), which was therefore unenforceable by the purported beneficiaries because they were volunteers.[48] Mr Rand did not declare himself trustee of a trust which would operate immediately, while at the same time postponing the possessory interests of the objects of the discretionary trust. The question determined by his Honour was one of construction only and was not dependent on disputed issues of fact. For these reasons I would find that the defence was unsustainable and that the learned judge below was correct in striking it out under r 23.02.

Should the judge below have ordered that the defendants bear the plaintiff's costs of the proceedings?

72 The appellants sought to set aside the costs orders made by the judge below. Grounds 8 - 11 contend that the learned trial Judge erred in awarding costs against the Harpurs.[49] It was submitted that Mr and Mrs Harpur were not necessary or even proper parties to the proceedings, that the only proper party was the trustee company, Kai Tak Pty Ltd, and that his Honour should have dismissed the proceedings against them, and awarded them costs on an indemnity basis.[50]

73 Rule 9.03(2) provides that:

[65]

85 The fact that r 16.02 makes it unnecessary to join the beneficiaries of a trust where a person is sued as trustee does not preclude beneficiaries from being proper parties to proceedings in appropriate circumstances, any more than the specification of "necessary parties" under r 9.03 precludes the joinder of a "proper party" under r 9.02. This interpretation of r 16.02 is confirmed by r 16.02(2), which provides that the provision does not limit the power of the Court to order the addition of a party under r 9.06.

86 Further, Mr Harpur was not an object of the P & G R Harpur Trust, so that r 16.02 has no relevance to him. Similarly, the fact that "The Sisters" property would form part of the estate, whether or not they were parties to the proceedings, means that the Harpurs are not "necessary parties" but does not prevent their joinder as "proper parties" if the requirements of r 9.02 or r 9.06(b) are satisfied, as is the case here.

87 Rule 9.06(b)(ii) refers to a person "whose presence before the Court is necessary to ensure that all questions in the proceedings are effectually and completely determined and adjudicated upon." Although the learned trial Judge did not specifically refer to this provision, he referred to the Harpurs' "depth and interest in the outcome of the case", to the fact that "they have throughout been active in maintaining and advancing their opposition to the plaintiffs' claims", and to "the fact that Mr Harpur's credit is very much in issue." All these factors clearly bring them within r 9.06(b).

88 In my view the learned trial Judge was also correct in finding that the terms of settlement in relation to the probate application precluded the defendants from claiming that initially they were not proper parties to the proceedings. The fact that Mr Acquilina was not joined, because he agreed to be bound by any order which was made, does not change the situation as far as the Harpurs were concerned.

89 Given their agreement to be joined as parties to the proceedings, it does not lie in the mouths of Mr and Mrs Harpur to contend that the executors of Mr Rand's will should have discontinued the proceedings against them. It would have been open to them to seek an order that they be excluded as proper parties under r 9.06, but they did not do so.

90 Although matters relating to costs were fully argued before the Judge below, the proposition that no additional costs were incurred as a result of the Harpurs' joinder does not appear to have been clearly put to his Honour. Counsel for the Harpurs made submissions on the issue of whether the Harpurs should have withdrawn from the proceedings. He said:

[80]

100 It is not disputed that an owner may create an immediate trust in which the interests of beneficiaries are postponed in enjoyment. A trust, terms of which are only to come into effect at a future date, may be perfectly valid.[66] The appellants submitted that the deed created a trust with a postponement of enjoyment by the beneficiaries, giving them an immediate interest which would vest in possession on the commencement date. But in order to constitute a trust the intention must be clear.[67] The creation of a present trust intended to have immediate effect is to be contrasted with a promise that a trust will come into existence at some future time. The latter will have no proprietary consequences, whether the property is after- acquired (Re Northcliffe)[68] or is not yet in existence (Brennan v Morphett)[69] or is already in the hands of the settlor (Allen v Commissioner of Inland Revenue).[70]

101 I agree for the reasons given by Neave JA that Mr Rand did not declare himself the trustee of a trust which was to operate immediately and which was effective to dispose of an interest to the beneficiaries of a P & G R Harpur Trust. The deed executed by Mr Rand, by clause 1, in my view, expressed an unambiguous intention to create a trust which would begin on a specified future date described in the deed as the "commencement day".

102 The operative clauses of the deed have been set out in the judgment of Neave JA[71] and the recital clauses have been set out in the judgment of Maxwell P[72] and need not be repeated. The form and substance of the deed do not evince an intent to create an immediate trust. In the absence of ambiguity, the operative clauses must be construed according to their proper meaning.[73] The cases referred to by Neave JA make clear that the recitals, even if they conveyed a contrary intent, would not have the effect of qualifying or altering any clear statement of purpose contained within the operative clause.[74]

103 The appellants in their outline of submission contend that the use of the phrases "now irrevocably declares" and "he holds" demonstrates a present intention to create a trust. That submission cannot be sustained when those words are read within the context of clause 1 considered in its entirety. It is not in issue that the "commencement day" referred to in operative clauses 1 to 4 is the commencement date of the deed which is set out in clause 5. The trustee declares that "he holds the property and assets" for the beneficiaries from the commencement date of the deed. By clause 2, from the commencement date of the deed, the trustee holds property which is subject to a mortgage for the specified beneficiary. By clause 3, from the commencement date, the trustee will, at the request of the beneficiary, transfer the property to that beneficiary. Clause 4 provides that from the commencement date, Paul Henry Harpur is authorised to do all things necessary to transfer the property and assets to the specified beneficiary. In each case the specified beneficiary is Mr Rand as trustee of the P & G R Harpur Trust. In short, the operative clauses unequivocally contemplate that the property, held on trust from the commencement date of the deed, may thereafter be transferred to the beneficiary.

104 With great respect to the view expressed by Maxwell P, I am unable to agree that the word "holds", appearing in the phrase "as from the commencement day he holds the property and assets ... for the beneficiary" in clause 1, signifies an intent to immediately hold the property and assets for the beneficiary. Both clauses 1 and 2 express Mr Rand's intention to hold the property and assets for the beneficiary from the commencement date. In each of operative clauses 1 to 4 Mr Rand declares his present intention as to a state of affairs which shall only occur on or after the commencement date. The trial Judge was correct in my view to construe clause 1 as a declaration that from the commencement day the trustee "will hold" the property and assets for the beneficiary.

105 Counsel for the appellant submitted that there was nothing in the language of the deed which would explain why the trustee "holds" the property from the commencement date. It may be accepted that the deed provides no discernible reasons why the trust was to take effect from the commencement date or why the enjoyment of the beneficiary's interest was deferred. But there is also an absence of reasons to support a view that the trust was to commence immediately. None of these arguments can alter the plain meaning of the words, to which we are duty bound to give effect.[75] The consequence of the language employed was that the legal effect of the deed was postponed until 1 October 1997. Moreover, this is not a case where an intention is revealed which would be frustrated by giving effect to the plain meaning of the operative clauses.

106 I do not regard the recitals as revealing an intent by Mr Rand to create an immediate trust at the time of the execution of the deed. References to the transfer of assets to the trustee which are referred to in paragraphs 11, 12 and 16 of the recitals must be understood as being references to the transfer of those assets as explained in the operative clauses of the deed, which provide that such transfers may take place on or after the commencement of the deed. The recitals reflect Mr Rand's intent, that by executing the deed, he intended to act in accordance with the terms of the operative clauses and would transfer the beneficial interest in the assets to the trustee of the P & G R Harpur Trust on or after the specified date. They are consistent with the plain meaning of the operative clauses.

107 As the trial Judge stated and as the outline of submission of the respondents indicates, the appellants at trial had contended that clause 1 meant "that he is now irrevocably declaring that the trust will be established on 1 October and that the words mean what they say and that it was a present trust in that sense." Certain of the observations made by the trial Judge must be understood in light of the submission then made.

108 The appellants now contend that the word "irrevocably" demonstrates a present intention to create an immediate trust as distinct from a trust that will be established in the future. The employment of the term "irrevocable" does not advance the question as to whether there was an intention to create a present trust, just as the reservation of a right to revoke the trust would not prevent an immediate trust from arising.[76] The irrevocability of Mr Rand's intention does not affect the date upon which he intended that the trust would commence to operate, namely 1 October 1997.

109 For the reasons given by Neave JA I also agree that grounds 8 to 11 fail.

110 The appeal should therefore be dismissed.

[81]

[1] A J Oakley, Parker and Mellows: The Modern Law of Trusts (7th ed, 1998) 82.

[2] R P Meagher, J D Heydon and M J Leeming, Meagher Gummow and Lehane's Equity Doctrines and Remedies (4th ed, 2002) [3-200].

[3] (1873) LR 19 Eq 233, 239 cited in Re Armstrong [1960] VicRp 34; [1960] VR 202, 205 (Herring CJ).

[4] Ibid 205 (emphasis added).

[5] (1995) 130 ALR 415, 422 (Beaumont & Sackville JJ).

[6] Ibid, citing Tito v Waddell (No 2) [1977] Ch 106, 211 (Megarry VC); see also J D Heydon & M J Leeming, Jacobs' Law of Trusts in Australia (7th ed, 2006) 56.

[7] [2001] 1 WLR 1.

[8] Ibid 11-12 (emphasis added).

[9] The decision has not escaped criticism: see D J Hayton, Underhill and Hayton Law Relating to Trusts and Trustees (16th ed, 2003) 148.

[10] T Choithram International SA v Pagarani [2001] 1 WLR 1, 11.

[11] See, for example, Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86, 100 (Dixon CJ, Williams and Fullagar JJ); Tito v Waddell (No 2) [1977] Ch 106, 222 (Megarry VC).

[12] Emphasis added.

[13] Hayton, above n 10, 146.

[14] See, for example, in Re Baden's Deed Trusts [1969] 2 Ch 388, 399-400 (Harman LJ), 402 (Karminski LJ).

[15] The decision was made in interlocutory proceedings. Rule 23.01(2) of the Supreme Court (Civil Procedure) Rules, allows the Court to give judgment in proceedings where the defence does not disclose an answer to a claim.

[16] General Steel Industries Inc v Commissioners for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125.

[17] See Levy & Ors v Harpur & Ors [2004] VSC 461.

[18] Hubbuck & Sons Ltd v Wilkinson, Heywood & Clark Ltd [1899] 1 QB 86, 91 (Lindley MR).

[19] This view was expressed by Dixon J in Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 90-91. The case concerned a summons to strike out the plaintiff's action, rather than to strike out a defence.

[20] Rule 47.04 provides for the separate trial of a preliminary question, the result of which may be that judgment is entered in accordance with r 47.05.

[21] This view was taken by Latham CJ in Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 84-85 where he discussed the view that the procedures should only be used in cases that were "plain and obvious". His Honour disagreed with that approach, finding that "If, as a result of argument, the court reaches a clear decision which could not be altered by any evidence which could be adduced at the trial, then it is proper in the interests of both parties to dismiss the action..." For a discussion of the two approaches see UFH Holdings Pty Ltd v Ord Minnett Corporate Finance Ltd And Ors (Unreported, Supreme Court of Victoria, Chernov J, 28 May 1998, 24 June 1998).

[22] Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 85 (Latham CJ). See also General Steel Industries Inc v Commissioners for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 130 (Barwick CJ), where his Honour commented that the fact that argument might be necessary to establish the futility of a claim did not preclude it from being struck out under the summary proceeding power.

[23] General Steel Industries Inc v Commissioners for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 130 (Barwick CJ). Note that this case concerned the jurisdiction to strike out a plaintiff's claim on the ground that it was an abuse of process. See also Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8; (1997) 188 CLR 241, 271 (McHugh J). This case dealt with the power to strike out a plaintiff's claim under rule 46.18 of the South Australian Supreme Court Rules.

[24] UFH Holdings Pty Ltd v Ord Minnett Corporate Finance Ltd And Ors (Unreported, Supreme Court of Victoria, Chernov J, 28 May 1998, 24 June 1998).

[25] UFH Holdings Pty Ltd v Ord Minnett Corporate Finance Ltd And Ors (Unreported, Supreme Court of Victoria, Chernov J, 28 May 1998, 24 June 1998) 1. Note that the case was concerned with the exercise of the similar power in R 23.01(1).

[26] A Scott and W Fratcher, Scott on Trusts, Vol 1 (4th ed, 1987) [26].

[27] In their defence the Harpurs and Kai Tak denied the alleged lack of consideration. Harper J held that if they wished to argue that consideration had been given they carried the evidential burden of proving it, see Levy & Ors v Harpur & Ors [2004] VSC 241, [20]-[22]. This aspect of his Honour's judgment was not challenged on appeal.

[28] [1960] VicRp 34; [1960] VR 202.

[29] [1953] HCA 95; (1953) 90 CLR 86.

[30] [2001] 1 WLR 1 ("Choithram"). This was an appeal from a decision of the Court of Appeal of the British Virgin Islands.

[31] Ibid 12.

[32] Ibid.

[33] [1960] VicRp 34; [1960] VR 202.

[34] (1953) 90 CLR 806.

[35] [2001] 1 WLR 1, 12.

[36] [2001] 1 WLR 1.

[37] Hayton, above n 10, 148. Hayton suggests that the explanation is that the declaration of trust was perfected by a later confirmation**.**

[38] Lutheran Church of Australia v Farmers Cooperative Executors & Trustees [1970] HCA 12; (1970) 121 CLR 628; Boranga v Flintoff (1997) 19 WAR 1.

[39] [1996] 1 AC 543.

[40] Ibid 561.

[41] O'Loughlin v Mount (1998) 71 SASR 206, 217-8, which summarises a line of English authority supporting the position that has subsequently been accepted, and applied in Chacmol Holdings Pty Limited v Handberg (in his capacity as administrator of Australian Risk Analysis Pty Limited) [2005] FCAFC 40 and Koops Martin v Dean Reeves [2006] NSWSC 449.

[42] [1935] AC 96.

[43] Ibid 134-135, citing McKenzie & Ors v The Duke of Devonshire & Ors [1896] AC 400, 405-406.

[44] [1925] 1 Ch 651.

[45] See Levy & Ors v Harpur & Ors [2004] VSC 241, [15].

[46] Ibid [45]-[47].

[47] Paul v Constance [1976] EWCA Civ 2; [1977] 1 All ER 195, 197 (Scarman LJ). In that case the question was whether the defendant had orally declared himself trustee of the property for his de facto wife.

[48] See above n 27.

[49] The issue of costs was the subject of a separate judgment by Harper J, namely Levy & Ors v Harpur & Ors [2004] VSC 461.

[50] This related to the costs of the application by summons. Separate costs orders were sought in relation to the cost of the appeal.

[51] See also r 9.03(1).

[52] [2004] VSC 390.

[53] See Levy & Ors v Harpur & Ors [2004] VSC 461, [11]-[13].

[54] See r 9.06(a).

[55] Levy & Ors v Harpur & Ors [2004] VSC 461, [13].

[56] Harpur and Ors v Levy and Ors, Application on Summons (Unreported, Supreme Court of Victoria Court of Appeal, 18 February 2005).

[57] Mr Acquilina sought an order that Kai Tak Pty Ltd pay the costs of his appeal, including the defendant's Summons dated 23 December 2004, for leave to file the Amended Notice of Appeal, because the defendants had "not advanced a single credible argument to support the reversal of Justice Harper's Order requiring Kai Tak to pay Acquilina's costs".

[58] Donald Campbell & Co v Cave [1927] AC 372, 812; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (Gaudron, Gummow and Kirby JJ).

[59] Underhill & Hayton, The Law Relating to Trusts and Trustees (16th ed, 2003) 148 and the cases therein referred to.

[60] Scott & Fratcher, above n 26, [26].

[61] (1874) LR 18 Eq 11.

[62] Ibid 13-14. See also White v Shortall [2006] NSWSC 1379, [211] (Campbell J).

[63] H Ford & W Lee, Principles of the Law of Trusts (1996) [2010].

[64] Grant v Grant [1865] EngR 662; (1865) 34 Beav 623, 55 ER 776, 777 (Romilly MR); Re Cozens [1913] 2 Ch 478, 486 (Neville J); Anning v Anning [1907] HCA 13; (1907) 4 CLR 1049, 1080 (Higgins J); Allen v Commissioners of Inland Revenue (1925) 133 Law Times 9, 13 (Lord Buckmaster); Corin v Patton [1990] HCA 12; (1990) 169 CLR 540, 580 (Deane J); Underhill & Hayton, The Law Relating to Trusts and Trustees, (15th ed, 1995) 128. I leave to one side any principles of estoppel.

[65] Scott & Fratcher, above n 62, [26].

[66] Ibid [26.3]-[26.5]. See also Walters, Law of Trusts in Canada, (3rd ed, 2005) 134-5.

[67] See the authorities discussed in Commissioner of Stamp Duties v Jolliffe [1920] HCA 45; (1920) 28 CLR 178, 188 (Isaacs J) and Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86.

[68] [1925] 1 Ch 651.

[69] [1908] HCA 16; (1908) 6 CLR 22.

[70] [1925] 133 LTR 9.

[71] Above [45].

[72] Above [7].

[73] In Re Armstrong [1960] VicRp 34; [1960] VR 202, 205 (Herring CJ).

[74] Above [63].

[75] Re Armstrong [1960] VicRp 34; [1960] VR 202, 205 (Herring CJ).

[76] Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86, 101 (Dixon CJ, Williams and Fullagar JJ).

At a glance

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Cases Cited (14)