James v Moussa [2026] NSWSC 704 | Case summary

James v Moussa [2026] NSWSC 704 | Case summary | Zoe

Court

Supreme Court of NSW

Decision date

2026-06-19

Before

Emmett J

Catchwords

EQUITY — Trusts and trustees — agreement for purchase of 10% interest in property with terms as to co-ownership — purchase price paid in full but legal title not transferred — whether parties agreed to terminate the agreement — where purchase price not repaid — whether proposed purchasers’ share continued to be held on trust after termination EQUITY — Equitable interests in property — Nature of equitable interest — where contract terminated after purchase price paid in full but before transfer of legal title — where purchase price not repaid to proposed purchasers — nature of proposed purchasers’ interest following termination of purchase contract EQUITY — Equitable charges and liens — Purchaser’s lien — whether proposed purchasers had an equitable lien over the proposed purchase property to secure repayment of proposed purchase price following termination EQUITY — Tracing — Mixed funds — Purchaser’s lien — where lien arose in respect of 10% of 2 lots that were subsequently consolidated and subdivided into 7 lots — where 5 out of 7 subdivided lots non-fraudulently sold to third parties — whether purchasers’ equitable lien over 10% of the 2 remaining lots, or whether the equitable lien in the 2 remaining lots extends to the value of 10% of all 7 lots LIMITATION OF ACTIONS — Equity — Application of limitation periods directly or by analogy — whether either or both of ss 14 and 42 of the Limitation Act apply directly or by analogy –– distinction between real and personal actions — whether s 42 of the Limitation Act applies to action to enforce purchaser’s lien — whether ss 14 and 63 of the Limitation Act apply directly or by analogy to action to enforce purchaser’s lien — whether action to enforce purchaser’s lien is a cause of action ‘founded on contract’ or quasi-contract for the purposes of s 14 of the Limitation Act LIMITATION OF ACTIONS — Suspension of time — Fraud and concealment — whether any fraudulent concealment of any cause of action has been demonstrated — proof of allegations of fraud — whether a reasonable person in the plaintiff’s position would have made further inquiries — date at which the plaintiff, exercising reasonable diligence, would have discovered any fraud EQUITY — Defences — Laches — where claim brought nearly 12 years after termination of contract following death of proposed co-purchaser — where no record of co-purchaser asserting interest to defendants while alive — where surviving plaintiff had no direct dealings with the defendants at all but dealt with the defendants solely through the now-deceased co-purchaser — where defendants forced to meet a claim based on inference and indirect evidence — where conduct of deceased co-purchaser raise questions that can no longer be satisfactorily answered — whether delay has caused material prejudice to the defendants — whether laches is available where a provision of the Limitation Act applies directly or by analogy EQUITY — Defences — Acquiescence or abandonment — whether any acquiescence or abandonment in respect of a purchaser’s lien

Source

Original judgment source is linked above.

Catchwords

EQUITY — Trusts and trustees — agreement for purchase of 10% interest in property with terms as to co-ownership — purchase price paid in full but legal title not transferred — whether parties agreed to terminate the agreement — where purchase price not repaid — whether proposed purchasers’ share continued to be held on trust after termination EQUITY — Equitable interests in property — Nature of equitable interest — where contract terminated after purchase price paid in full but before transfer of legal title — where purchase price not repaid to proposed purchasers — nature of proposed purchasers’ interest following termination of purchase contract EQUITY — Equitable charges and liens — Purchaser’s lien — whether proposed purchasers had an equitable lien over the proposed purchase property to secure repayment of proposed purchase price following termination EQUITY — Tracing — Mixed funds — Purchaser’s lien — where lien arose in respect of 10% of 2 lots that were subsequently consolidated and subdivided into 7 lots — where 5 out of 7 subdivided lots non-fraudulently sold to third parties — whether purchasers’ equitable lien over 10% of the 2 remaining lots, or whether the equitable lien in the 2 remaining lots extends to the value of 10% of all 7 lots LIMITATION OF ACTIONS — Equity — Application of limitation periods directly or by analogy — whether either or both of ss 14 and 42 of the Limitation Act apply directly or by analogy –– distinction between real and personal actions — whether s 42 of the Limitation Act applies to action to enforce purchaser’s lien — whether ss 14 and 63 of the Limitation Act apply directly or by analogy to action to enforce purchaser’s lien — whether action to enforce purchaser’s lien is a cause of action ‘founded on contract’ or quasi-contract for the purposes of s 14 of the Limitation Act LIMITATION OF ACTIONS — Suspension of time — Fraud and concealment — whether any fraudulent concealment of any cause of action has been demonstrated — proof of allegations of fraud — whether a reasonable person in the plaintiff’s position would have made further inquiries — date at which the plaintiff, exercising reasonable diligence, would have discovered any fraud EQUITY — Defences — Laches — where claim brought nearly 12 years after termination of contract following death of proposed co-purchaser — where no record of co-purchaser asserting interest to defendants while alive — where surviving plaintiff had no direct dealings with the defendants at all but dealt with the defendants solely through the now-deceased co-purchaser — where defendants forced to meet a claim based on inference and indirect evidence — where conduct of deceased co-purchaser raise questions that can no longer be satisfactorily answered — whether delay has caused material prejudice to the defendants — whether laches is available where a provision of the Limitation Act applies directly or by analogy EQUITY — Defences — Acquiescence or abandonment — whether any acquiescence or abandonment in respect of a purchaser’s lien

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: James v Moussa [2026] NSWSC 704

Hearing dates: 5 March 2026, 23-26 March 2026, 8 May 2026

Date of orders: 19 June 2026

Decision date: 19 June 2026

Jurisdiction: Equity - Real Property List

Before: Emmett J

Decision: Dismiss the third further amended statement of claim.

Catchwords: EQUITY — Trusts and trustees — agreement for purchase of 10% interest in property with terms as to co-ownership — purchase price paid in full but legal title not transferred — whether parties agreed to terminate the agreement — where purchase price not repaid — whether proposed purchasers’ share continued to be held on trust after termination
EQUITY — Equitable interests in property — Nature of equitable interest — where contract terminated after purchase price paid in full but before transfer of legal title — where purchase price not repaid to proposed purchasers — nature of proposed purchasers’ interest following termination of purchase contract
EQUITY — Equitable charges and liens — Purchaser’s lien — whether proposed purchasers had an equitable lien over the proposed purchase property to secure repayment of proposed purchase price following termination
EQUITY — Tracing — Mixed funds — Purchaser’s lien — where lien arose in respect of 10% of 2 lots that were subsequently consolidated and subdivided into 7 lots — where 5 out of 7 subdivided lots non-fraudulently sold to third parties — whether purchasers’ equitable lien over 10% of the 2 remaining lots, or whether the equitable lien in the 2 remaining lots extends to the value of 10% of all 7 lots
LIMITATION OF ACTIONS — Equity — Application of limitation periods directly or by analogy — whether either or both of ss 14 and 42 of the Limitation Act apply directly or by analogy –– distinction between real and personal actions — whether s 42 of the Limitation Act applies to action to enforce purchaser’s lien — whether ss 14 and 63 of the Limitation Act apply directly or by analogy to action to enforce purchaser’s lien — whether action to enforce purchaser’s lien is a cause of action ‘founded on contract’ or quasi-contract for the purposes of s 14 of the Limitation Act
LIMITATION OF ACTIONS — Suspension of time — Fraud and concealment — whether any fraudulent concealment of any cause of action has been demonstrated — proof of allegations of fraud — whether a reasonable person in the plaintiff’s position would have made further inquiries — date at which the plaintiff, exercising reasonable diligence, would have discovered any fraud EQUITY — Defences — Laches — where claim brought nearly 12 years after termination of contract following death of proposed co-purchaser — where no record of co-purchaser asserting interest to defendants while alive — where surviving plaintiff had no direct dealings with the defendants at all but dealt with the defendants solely through the now-deceased co-purchaser — where defendants forced to meet a claim based on inference and indirect evidence — where conduct of deceased co-purchaser raise questions that can no longer be satisfactorily answered — whether delay has caused material prejudice to the defendants — whether laches is available where a provision of the Limitation Act applies directly or by analogy EQUITY — Defences — Acquiescence or abandonment — whether any acquiescence or abandonment in respect of a purchaser’s lien

Parties

Applicant/Plaintiff:

James

Respondent/Defendant:

Moussa

Legislation Cited (6)

Cited:** Conveyancing Act 1919(NSW)

Limitation Act 1969(NSW)

Limitation Act 1974(Qld)

Real Property Act 1900(NSW)

Property Act 1900

Property Limitation Act 1833

Cases Cited (38)

[2003] NSWSC 175

[2005] NSWSC 15

Cases Cited: Ag-Exports (Australia) Pty Ltd v Export Finance and Insurance Corporation [2003] NSWSC 175
Americana Leadership College v Coll [2005] NSWSC 15
Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870
ANZ Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478
Baulkham Hills Hospital v GR Securities (1986) 40 NSWLR 622
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Brisbane City Council v Amos (2019) 266 CLR 593; [2019] HCA 27
CE Heath Underwriting and Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (unreported, VSC, 3 August 1995 per Batt J)
Chang v Registrar of Titles (1976) 137 CLR 177; [1976] HCA 1
Chattey v Fardale Holdings (1996) 75 P&CR 298
Clurname Pty Ltd v McGraw-Hill Financial, Inc [2017] FCA 1319
Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53
Gardiner v Wong [2026] NSWSC 461
Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10
Glasson v Fuller [1922] SASR 148
Golden Mile Property Investments Pty Ltd v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237; [2015] NSWCA 100
Green v Gaul [2007] 1 WLR 591; [2006] EWCA Civ 1124
Harvey v Harvey [2024] NSWSC 624
Hewett v Court (1983) 149 CLR 639; [1983] HCA 7
Jerome v Kelly (Inspector of Taxes) [2004] 1 WLR 1409; [2004] 2 All ER 835
Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164; [1987] HCA 20
Kerr v Bechara (No 3) [2015] FCA 708
Kibble v Fairthorne [1895] 1 Ch 219
Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6
Li v Ye [2025] NSWCA 227
Lindsay Petroleum Co v Hurd (1874) LR PC 221
Naaman v Jaken Properties Australia Pty Ltd (2025) 281 CLR 635; [2025] HCA 1
New Galaxy Investments Ltd v Thomson (2017) 18 BPR 36,811; [2017] NSWCA 153
Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400
Re Oatway [1903] 2 Ch 356
Re Stucley; Stucley v Kekewich [1906] 1 Ch 67
RnD Funding Pty Ltd v Roncane Pty Ltd (2023) 297 FCR 91; [2023] FCAFC 28
Rose v Watson (1864) 11 ER 1187
Seymour v Seymour (1996) 40 NSWLR 358
Shepherd v Doolan [2005] NSWSC 42
Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462
Twigg v Twigg (2022) 402 ALR 119; [2022] NSWCA 68

Before coming to the issues that arise for determination in these proceedings, it is convenient to set out primary facts which are, for the most part, uncontentious.
As matters stood after August 2008, Mr Moussa was the registered proprietor of Lot 13 in DP 8858 and Christanelle was the registered proprietor of Lot 14 in DP 8858, which at the time together comprised the Monterey Property.
Although in 2008 the Monterey Property comprised only two lots (Lots 13 and 14), seven town houses were constructed on the land, known as units 1 to 7. As at August 2008, those seven units were the subject of seven separate leases to Defence Housing Australia (“DHA”).
At the time, Mr Moussa and Christanelle had each given a mortgage over their respective Lots to Westpac Banking Corporation.
At some point in the second half of 2008, Mr Moussa and Mr James had a discussion about Mr James (either on his own or with the plaintiff) acquiring a 10% interest in the Monterey Property for a purchase price of $600,000.
On 22 October 2008, Mr James sent an email to Mr Moussa with the subject “Big Bucks”. This attached a spreadsheet with an “Investment Calculation” for what Mr James described as a “10% partnership of $6m”. The spreadsheet includes foreshadowed interest costs, outgoings (land tax, council rates and insurance) and then anticipated deductions for depreciation. From this, Mr James calculated total monthly loss, monthly “out of pocket cost” and a “Tax Return 43%”, the point apparently being that the “Tax Return” exceeded the monthly out of pocket cost. I infer that Mr James regarded the reduction in tax that would flow from him being able to deduct the losses (including depreciation) as a “Tax Return”, and that this was at least one of the things that made the investment attractive to Mr James. Mr James’ spreadsheet also indicated that he budgeted for legal costs of $1,500.
By the beginning of February 2009, it appears that Mr James and the plaintiff were both giving serious consideration to paying together $600,000 for a 10% interest in the Monterey Property. On 5 February 2009, Mr James sent Mr Moussa a draft Memorandum of Understanding stated to be between “Melvyn/Verity James” and “Wasfy Moussa”. It included the following clauses:

Mr Moussa was a very unsatisfactory witness, but I do not find that he gave knowingly false evidence, let alone that he did so in furtherance of a fraud.
He gave evidence that was frequently confused and confusing. English is a second language for him, and he was often imprecise in his language.
Despite the plaintiff’s submissions to the contrary, I do not find that he was sophisticated in relation to legal or financial matters. He often did not understand the distinctions lawyers might draw between different aspects of a transaction. He did not appear to understand the difference between a bankruptcy notice and the sequestration of his assets. His evidence that he paid no attention to legal matters but left them to his lawyers or trustee in bankruptcy had the ring of truth. Cross-examining counsel did not explore with Mr Moussa his appreciation of the consequences of his bankruptcy and its annulment, but none of his answers suggested he had a clear grasp of this.
It was plain to me that he did not understand the distinction cross-examining counsel sought to draw between a transaction recorded in the MOU (which was terminated) and a transaction by which he agreed to give the Jameses 10% of the Monterey Property. As I have found, that distinction was misplaced at law, so I do not find that surprising. In circumstances where Mr Moussa regarded it as a single transaction, and where the objective circumstances support that perception, the confusion in his answers on this topic are perfectly understandable, including agreeing with inconsistent propositions when those propositions were put to him by cross-examining counsel.
He had a very poor memory of relevant events – itself not unsurprising given their age. On a number of occasions, Mr Moussa answered confidently in terms that could not be true but where it made no sense for him to lie. I had the clear impression that, at various times, he misunderstood the question, leaped to a conclusion without thinking about it, or gave a reconstruction. These are all things that honest witnesses do. They may impact the reliability of their evidence but do not of themselves bespeak dishonesty.
Mr Moussa frequently started answering before counsel had finished asking the question, which reinforced my impression that he had not taken the time to understand the question, but was making assumptions about what the question was and then answering the question he assumed he was being asked.
One matter which undoubtedly reflects poorly on Mr Moussa is his verification of pleadings which cannot be true, and which it does not appear that he can have believed to be true at the time he swore the verifying affidavit. Mr Moussa’s first-filed defence, dated 1 December 2021 includes denials and assertions of fact on a range of topics, including – amongst other things:
the positive assertion of a conversation in September or October 2008 in which Mr James and Mr Moussa agreed that Mr James would not participate in Lots 13 and 14 but might join in purchasing the next door block (a conversation which Mr Moussa accepts never occurred and which is plainly inconsistent with the objective evidence);
denial of any other conversations between Mr James and Mr Moussa about Lots 13 and 14;
denial that the parties executed the Real Property Act 1900 (NSW) transfers in early February 2009;
denial that the Jameses paid $600,000; and
denial of the MOU.
The denials in subparagraphs (2) to (5) were inconsistent with the accepted facts. The defendants maintained those denials after being provided with copies of the transfers and the MOU (among other documents) and in subsequent defences, notwithstanding the evidence that was adduced, including after Mr Moussa’s affidavit evidence had been served, which was plainly inconsistent with these pleadings. Each of these assertions and denials was the subject of cross-examination. Mr Moussa conceded that a number of these denials were, in fact, false, but asserted that they were readily explicable on varying grounds, ranging from his poor memory at the time of verifying the defence, a difference in opinion as to the legal principles or facts underlying the falsehood of certain assertions, or on the basis that he was not aware of, or was not the author of, certain components of the defence. In each of these cases, it is clear that if Mr Moussa had given careful consideration to the defence and the available documentation at the time, he would have appreciated that those and other pleadings were not maintainable.
Mr Moussa’s explanation for the untrue pleadings in his defence was unsatisfactory and showed a lack of regard for the gravity of court process. But having seen that he is suggestible, prone to reconstruction, confused in his language and often misunderstands what he is being asked, I can understand how a lawyer might come to draw up a defence, honestly believing it reflects Mr Moussa’s instructions, and how Mr Moussa may come to verify it without taking care to read it carefully (or perhaps at all) first. The fact that subsequent defences included the same false denials and false allegations even though they were obviously contrary to the evidence (including Mr Moussa’s own affidavit evidence) only serves to reinforce the conclusion that Mr Moussa and his legal team approached the pleadings with regrettable carelessness. Plainly, each time an amended defence was served, close attention was not paid to all of the substantive denials and allegations in the pre-existing document. To be clear, this is to be deplored. Such conduct significantly affects the reliability of the evidence of the party who verifies the pleading, and it may in an appropriate case support a finding of dishonesty. But it does not require a finding of dishonesty, and I am not persuaded that such a finding is warranted in the circumstances of this case.
It follows from the foregoing that Mr Moussa was not at all a reliable witness. I am unable to place weight on what he said in the witness box, whether it supports his case or is adverse to it, to the extent that it departs from the written record. But I do not conclude that he was dishonest or gave deliberately false evidence.

I accept that the Jameses acquired an equitable interest in the Monterey Property upon payment of the proposed purchase price of $600,000, that is, on 2 March 2009. The nature of that interest requires attention to the equitable remedies available to protect that interest: Golden Mile Property Investments Pty Ltd v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237; [2015] NSWCA 100 (“Golden Mile”) at [99]. The transaction fundamentally involved the purchase or proposed purchase of a 10% interest in the property and an agreement about what the parties would do with that property as co-owners. A purchaser’s equitable interest “reflects the extent to which equitable remedies are available to protect [their] contractual rights”: Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 at 191; [1987] HCA 20. The availability of equitable remedies in this case cannot be separated from the terms and operation of the MOU.
When the Jameses transferred $600,000 on 2 March 2009, that was in contemplation of a transaction the terms of which would be recorded in a memorandum of understanding. The draft MOU had been emailed by Mr James to Mr Moussa on 5 February 2009. That draft stated in cl 1 that the Jameses agreed to pay $600,000 for a 10% share in the property, and in cl 2 that they would be “responsible for payment of the associated NSW stamp duty for changing ‘title’ as above”. The drafting of proposed cl 2 (which became cl 3 in the executed MOU), with the reference to a change of title “as above”, indicated that the change of title was to be pursuant to the contractual promises in proposed cl 1 (which became cl 2 in the executed MOU).
The surrounding circumstances make it likely that it was Mr James who propounded the draft MOU. There was every reason to expect that Mr James would prepare the first draft of the MOU which was to record the proposed transaction in which he and his daughter were to acquire 10% of the property. The objective evidence indicates that Mr James was the primary driver of the transaction – Mr Moussa had already acquired and developed the property. It was Mr James who had prepared the spreadsheet sent to Mr Moussa on 22 October 2008 under cover of an email with the subject line “Big Bucks”. I would infer that Mr James at that time was enthusiastic about what he perceived to be an opportunity to participate in the investment. In Mr James’ email of 22 October 2008, Mr James budgeted $1,500 for legal costs. Consistent with this, the plaintiff gave affidavit evidence that her father told her he had consulted a solicitor, and that the solicitor had advised him that he could complete the purchase himself “as long as the sale was recorded in writing and that all parties registered a transfer”. In those circumstances, I do not accept as reliable Mr Barrie’s recollection that Mr James told him, in Mr Moussa’s presence, that it was Mr Moussa’s lawyer who drafted the MOU.
On 12 February 2009, the parties executed the two transfers. The terms of the draft MOU provide the likely reason why the two transfers were not registered immediately. Proposed cl 4 stated that the Jameses “agree that Mr Moussa can use the property asset as collateral for his loan for the property”. It was known to all parties that there was an existing mortgage over Lots 13 and 14 in favour of Westpac Banking Corporation. One may readily infer that the bank might not agree to the registration of the transfers, and that the parties proceeded on the basis that signed transfers would be held but not registered at least for the time being. I accept the defendants’ submission that it is inherently unlikely that Mr Moussa would have kept the transfers or that the Jameses expected Mr Moussa to register the transfers immediately. It is much more probable that the Jameses – who appreciated the need for registration of the transfers – held the executed transfers pending registration.
The proposed purchase price was transferred on 2 March 2009. On 17 March 2009, the parties executed the final version of the MOU. It included cl 5, which was in the same terms as cl 4 of the draft, that is, it recorded the Jameses’ agreement that Mr Moussa could use the property asset as collateral for his loan. The final MOU also included a number of other clauses, including cl 23:

In the present case, a trust is the “legal mechanism which is appropriate to give legal effect to the relationship” only in the sense that a “trust” describes the relationship between the vendors and the purchasers as to the 10% interest after the purchase price had been paid, but before the transfer of legal title was completed. As with the situation considered by Jacobs J in Chang v Registrar of Titles, the foundation of the relationship between the Jameses and Mr Moussa was contractual.
I am satisfied that the interest the parties intended the Jameses to have is the interest that a purchaser has in property after they have paid the purchase price but before the property has been legally transferred. The parties’ execution of the transfers under the Real Property Act evinced an appreciation that registration was the final step to effect transfer of legal title, a proposition consistent with what the plaintiff says her father told her at the time, after consulting a solicitor. There is no reason to impute to the parties any additional intention that a trust relationship should arise independently of the transaction recorded in the MOU.
I do not accept the plaintiff’s contention that because an equitable interest arose upon payment of the $600,000 (ie, before the MOU was executed), the equitable beneficial interest that arose operated independently of the MOU, the argument being that, if so, it survived termination of the MOU. First, the payment of $600,000 was in contemplation of a memorandum of understanding. Even if there was an informal contract that arose upon execution of the transfers and payment of the purchase price (see, eg, Baulkham Hills Hospital v GR Securities (1986) 40 NSWLR 622 at 628), a reasonable person in the position of the parties would understand that the parties had agreed to make further a contract, being the MOU, in substitution – and that is what in fact occurred. Second, the execution of the transfers and the terms of the MOU evinced an intention that the purchase transaction would be completed, in due course, by registration of a legal interest.
The execution of the transfers also supports a conclusion that Christanelle was a party to the transaction. While Christanelle was not named as a party to the MOU, the looseness of the drafting (including reference to “Mr James” in cl 10 as a shorthand for the Jameses) means that one would readily construe the execution of the transfers, including by Christanelle, as evincing an intention that Christanelle would be bound by the MOU. The agreements as to renewal, pre-emption and sale in clauses 9 to 12 would make no sense if Christanelle was not also a party to the MOU. None of this detracts from my conclusion that the relationship between the Moussa interests and the Jameses’ interests had a contractual foundation, and that the interest the Jameses acquired in the property was the interest a purchaser acquires after payment of the purchase price but before transfer of legal title.
I set out below my reasons for holding that the equitable interest which the Jameses acquired included an equitable lien to secure repayment of the purchase price, and that this interest survived any termination of the MOU: Hewett v Court (1983) 149 CLR 639 at 653-654; [1983] HCA 7; Golden Mile at [100], [104].
The plaintiff is not assisted by other cases that find a constructive trust arising by common intention: see, eg, Shepherd v Doolan [2005] NSWSC 42 at [30]-[46] (even assuming such a doctrine survives in Australian law separate from the law of proprietary estoppel: cf Gardiner v Wong [2026] NSWSC 461 at [95]). An essential requirement for a common intention constructive trust is that the parties must have a common intention that the would-be beneficiary will have a beneficial interest in property legally owned by the would-be trustee: Harvey v Harvey [2024] NSWSC 624 at [23] and see the cases cited there. That is true of the parties in this case only in the sense that it is true of any situation in which the parties recognise a purchaser’s beneficial interest in property to be purchased, after they have paid the purchase price but before the property has been legally transferred. That intention cannot be understood to survive termination of the contractual relationship which formed the foundation for the beneficial interest.

Before coming to how the position changed between the parties from September 2009, I address the scope of Mr James’ actual or ostensible authority to deal with Mr Moussa on behalf of Ms James.
Ms James conducted all of her dealings with Mr Moussa through her father, Mr James. She does not give evidence of a single meeting or conversation which she attended with Mr Moussa before or after the execution of the transfers and the MOU. She did not participate in any of the email exchanges between Mr James and Mr Moussa about the transaction. She did not even attend the meeting at which Mr James and Mr Moussa signed the MOU, witnessed by Mr Barrie. Rather, Mr James brought the MOU to her afterwards and she signed the document (apparently unwitnessed by Mr Barrie).
The MOU itself was drafted in a manner that was apt to communicate that the Jameses had a single interest and that Mr James represented that interest. The title of the MOU, including in the draft sent by Mr James to Mr Moussa on 5 February 2009, said it was between “Melvyn/Verity James” and “Wasfy Moussa”. That draft referred in proposed clauses 9, 10 and 14 to “the two parties” and in cl 12 to “both parties”, plainly in terms that were intended to refer to the Jameses and Mr Moussa. In proposed cl 9, which dealt with a proposal that Mr Moussa would buy out the Jameses interest after five years, referred to Mr Moussa paying “Mr James”, although it is plainly a reference to paying the Jameses interests. All of these textual indicators appeared in the final version of the MOU. In addition, cl 1 of the final MOU was added, making it clear that Mr James and Ms James were “of the one part” and Mr Moussa was “of the other part”.
Ms James continued to deal with Mr Moussa solely through her father after execution of the MOU. She did not attend or seek the periodic six-monthly meetings required by cl 18 of the MOU. When asked about this, she indicated her belief that her father had regular meetings with Mr Moussa. Clearly, she chose to leave this to her father. At no point prior to her father’s death did Ms James ever seek to communicate with Mr Moussa directly, or participate in written correspondence between Mr James and Mr Moussa.
I am mindful that cl 19 expressly provided that each party would not, among other things, “hold out that they are … the agent … of the other party”. However, that language – especially the reference to “the other party” in the singular – is consistent with the drafting of the MOU in which there are effectively two parties – the Jameses who are “of the one part” and Mr Moussa who is “of the other part”: cl 1. Accordingly, cl 19 does not undermine an agency relationship between Mr James and Ms James.
If it were necessary to do so, I would infer that Ms James gave her father actual authority (perhaps by implication) to deal with Mr Moussa on her behalf in all respects in relation to the transaction. While Ms James gave oral evidence in chief that she did not believe the authority which she gave her father was “unrestrained” and that she did not give him authority to “divest” her interest to Mr Moussa, that evidence is inherently unreliable given the passage of time. I am unable to find that she placed any formal limit or constraint on the authority she is likely to have given, at least by implication, to her father to deal with Mr Moussa on her behalf.
It is not necessary to make a finding of actual authority – ostensible authority would suffice for Ms James to be bound by Mr James’ dealings with Mr Moussa as representative of the Jameses’ joint interest. Ms James’ conduct clearly clothed her father with apparent authority to deal with Mr Moussa on her behalf in relation to the transaction and proposed investment. I am comfortably satisfied that Ms James gave Mr James ostensible authority to deal with Mr Moussa in all respects in relation to their dealings regarding the Monterey Property, and that Ms James did nothing to communicate any limit or constraint on Mr James’ authority.

On 9 September 2009, Mr Moussa sent the email extracted at [19] above to Mr James.
Mr Moussa said, “I am terminating the MOU in place”. He said he would continue to transfer payments until the end of the calendar year, although he described this as being “out of good will”. This clearly communicated that Mr Moussa did not regard the Jameses as entitled to payments of 10% of the net monthly income from the date of purported termination, and that the payments Mr Moussa proposed to make until the end of the calendar year were not compelled by the rights between the parties. If the Jameses continued to be beneficial owners of 10% of the property, they would obviously continue to be entitled to 10% of the revenue realised from the property.
Mr Moussa’s email had the subject line, “Termination of Monterey (MOU) Agreement”. On 28 September 2009, Mr Moussa forwarded the email to Mr James and said, “[j]ust following up on below. Perhaps you should discuss this matter with your accountant/solicitor.”
On 29 September 2009, Mr James sent an email to Mr Moussa, also with the subject line, “Termination of Monterey (MOU) Agreement”, saying “[t]his should work”. The plaintiff at one point resisted an inference that the email of 29 September 2009 was a reply to the email of 9 September 2009, which had been forwarded again to Mr James on 28 September 2009. On the evidence before me, I am satisfied that the email dated 29 September 2009 was a reply to the email of 28 September 2009 and therefore to the email of 9 September 2009. The subject line and the timing (the day after Mr Moussa’s chasing email of 28 September 2009) supports this conclusion. While the plaintiff draws attention to the fact that the emails are printed from a source that includes redaction, no part of the relevant emails appears to have been redacted. The redactions appear to be because the emails were produced on subpoena from the Department of Defence. The redactions do not provide a sufficient basis for departing from the natural inference that can be drawn from the documents that have in fact been tendered before the Court.
As the plaintiff points out, the evidence does not disclose that Mr Moussa had a basis for terminating the MOU. However, that is not the question, nor would it be appropriate for me to make an affirmative finding that the purported termination was wrongful. The purported termination was agreed to by Mr James by his email of 29 September 2009, following an opportunity to take legal advice, and indeed encouragement by Mr Moussa in both his emails on 9 September and 28 September that Mr James should seek legal advice. Mr Moussa’s email communicated that ownership of the property was about to become expensive, with defects that would be costly to repair and the possibility of lengthy litigation. There is no evidence of the Jameses having any willingness to contribute to those costs. One can readily imagine, in that situation, that Mr James might have welcomed the opportunity to get out of the investment and avoid contributing to the cost of rectifying defects.
It is always open to parties to agree to terminate their contractual relationship. Consistent with that position, Mr Moussa ceased paying 10% of the net rental income to the Jameses after the end of 2009. Neither Mr James nor Ms James ever complained about that. (I return below to the contention that this was because they thought there was a dispute with DHA such that no rental income was received.)
Upon termination of the MOU by agreement, the Jameses ceased to have the rights contemplated by cl 2 of the MOU, that is, the right to transfer of a 10% interest in the Monterey Property. As developed further below, the Jameses were entitled to repayment of their $600,000 purchase price and that right was secured by an equitable lien over the property to be purchased, that is, 10% of each of Lots 13 and 14.

The context of the emails between Mr James and Mr Moussa in November 2010 includes Mr Moussa’s bankruptcy and the sale of Lot 5. Mr Moussa exchanged contracts for sale of Lot 5 on 5 July 2010. On 27 July 2010, a sequestration order was made. On 5 November 2010, the transfer of Lot 5 to the purchaser was registered. I deal below, in the context of issue 4, with the reasons why I consider it likely that Mr James knew about the sale of Lot 5 at this time, but the termination of the MOU emerges from the documentary record regardless of whether Mr James knew about this.
On 8 November 2010 at 4.46pm and/or 5.22pm, Mr Moussa’s trustee in bankruptcy wrote to Mr Moussa indicating that Mr Moussa’s solicitor was “contacting [Mr Moussa’s] known creditors, namely Westpac and Melvyn James they support an application to have your bankruptcy terminated”. At 5pm and/or 5.31pm, Mr Moussa forwarded this email to Mr James and to another colleague at the Department of Defence, Eric McCandless. I record two possible times for these emails because the Court received evidence of these emails with two different time stamps. One possibility is that the trustee in bankruptcy sent the email twice and Mr Moussa forwarded both emails successively. The parties did not place any weight on the two different time stamps.
At 5.42pm, Mr James drafted an email for Mr Moussa to send to his lawyer saying, “I wish to advise you that I have reached a settlement with Westpac and Melvyn James therefore will not need your services.” Two matters emerge from this. First, Mr James knew he was being described as a “known creditor” of Mr Moussa. Second, Mr James and Mr Moussa appear to have reached “a settlement”.
At 5.48pm, Mr James sent the email quoted at [29] above, also copying Mr McCandless, saying, “[y]our solicitor has discussed your situation with me. Therefore, I wish to advise you that I have terminated our Memorandum of Understanding (MOU) with no financial gain due to your Bankrupt Estate.”
At 6.11pm, Mr McCandless replied to Mr Moussa and Mr James saying “[t]hey have agreed to be terminated.” It is not clear from the face of the email whether Mr McCandless was referring to an agreement to the termination of Mr Moussa’s bankruptcy, or was saying that the settlement referred to by Mr Moussa involved an agreement for termination. However, the timing of the email, being later than Mr James’s email of 5.48pm, suggests that Mr McCandless was recording an agreement between Mr Moussa and Mr James as to termination of the MOU.
On 18 November 2010 at 10.11am, Mr Moussa forwarded further correspondence, two letters, from his trustee to Mr James and Mr McCandless. The trustee’s letters identified the amount that would need to be paid for the bankruptcy to be annulled (the second letter being an update to add an additional sum). Mr McCandless replied to Mr James and Mr Moussa saying, “[i]t looks like they have tightened the conditions to a bankruptcy.” It seems likely that Mr McCandless’ reference to “the conditions to a bankruptcy” is a reference to the conditions for the annulment of the bankruptcy.
Mr James replied to this saying, “[i]f bankruptcy is declared, does any pending court action stop? Questions that should be asked of a specialist bankruptcy lawyer?” This email is not easy to understand. Mr James plainly knew that bankruptcy had been declared, given the email exchange on 8 November 2010 and the trustee’s correspondence of 18 November 2010 which had been forwarded to Mr James.
During cross-examination of Mr Moussa, the plaintiff’s counsel suggested that Mr James did not understand that bankruptcy had already been declared, and that the reference to a court action is a reference to the supposed litigation between Mr Moussa and the DHA in relation to the defects. While this is possible, it is difficult to reconcile this with Mr James’ apparent understanding of the situation on 8 November 2010, including after having spoken with Mr Moussa’s solicitor. It strikes me as more probable that Mr James, like Mr Moussa, was referring to the prospective annulment of the bankruptcy and asking what impact that might have on court action (the court action perhaps being the DHA litigation; perhaps the bankruptcy proceedings as Mr Moussa suggested; perhaps prospective litigation unrelated to the issues in this case). In any event, I am unable to conclude that this was an unequivocal reference to the litigation with DHA, nor can I conclude that this email records Mr James communicating a belief that he had a personal interest in the Monterey Property or in litigation involving the Monterey Property.
The plaintiff places considerable weight on the fact that Mr James, in his email of 5.48pm on 8 November 2010, referred to “no financial gain due to your Bankrupt Estate”. While the plaintiff in her evidence before me appeared to construe this as indicating that Mr James was agreeing to the termination of the MOU because of Mr Moussa’s bankruptcy, I accept what the plaintiff says in her closing submission that this is more naturally read as a statement that no financial benefit would be flowing to Mr Moussa’s estate. That would of course be a matter of greater significance in the context of a proposed annulment of bankruptcy. While such a statement leaves open the theoretical possibility that Mr James still regarded himself as entitled to an interest in the Monterey Property, it certainly does not communicate a belief that Mr James actually has such an interest.
More significantly, the email of 5.48pm communicated the termination of the MOU in simple terms, with the absence of financial gain being described as a consequence of that termination of relevance to Mr Moussa’s bankruptcy.
The email exchanges in November 2010 make it clear that there was something more to the dealings between Mr Moussa and Mr James. There is a suggestion that it involved a “settlement”. The absence of any written record of Mr James ever making a demand of Mr Moussa after this time raises the possibility that they reached some kind of settlement the result of which was that Mr James ceased regarding himself as a “creditor” of Mr Moussa. While the evidence does not permit me to make a finding as to the terms of any such “settlement”, one proposition that emerges clearly is that Mr James confirmed his position that the MOU had been terminated.

The termination of the MOU meant that the Jameses no longer had a right to insist on transfer of the legal interest in 10% of each of the Lots in the Monterey Property. This was replaced by a right to be repaid their purchase price of $600,000, together with the benefit of an equitable lien over the property to secure that repayment.
In finding that the MOU was terminated, I have taken into account the fact that Mr Moussa did not raise the purported termination of the MOU until late in these proceedings. While there is force in the plaintiff’s submission that it is inherently surprising that Mr Moussa did not recall this termination when these proceedings were first commenced in 2021, I find that proposition more plausible having seen Mr Moussa being cross-examined for several days. As I have indicated above, I am satisfied that he had no reliable recollection of what occurred, his thinking was often disorganised, and he was quick to reconstruct events erroneously. I find it easier to accept that he did not have a clear command of his dealings with Mr James many years earlier, even though he may have been confident that, one way or another, his dealings with Mr James did not leave him holding 10% of the Monterey Property for the benefit of the Jameses. In those circumstances, the only reliable evidence is the documentary evidence. (I address below the reasons why I cannot place weight on the indirect evidence of what the plaintiff’s witnesses say Mr James believed about the transaction.) The clear, express consequence of the emails in September 2009, and again in November 2010, was that the MOU was terminated by agreement.
The consequence of the termination of the MOU, like the termination of any other sale contract prior to transfer of the legal title, was that the Jameses no longer had a right to demand transfer of legal title to 10% of each of the Lots in the Monterey Property. Their equitable interest changed. Mr Moussa and Christanelle no longer held part of the property on trust in any sense for the Jameses, but they continued to hold the property subject to an equitable lien.
I reject the suggestion that it is unlikely that Mr James would agree to a termination which had the result of the Jameses losing their 10% beneficial interest in the Monterey Property. As at September 2009, it appeared that substantial costs would be incurred in connection with the property. As at November 2010, substantial costs had been incurred or were being incurred. By agreeing to the termination of the sale transaction on behalf of himself and his daughter, Mr James was avoiding the need to contribute to 10% of these costs. Indeed, one reason why Mr James stressed the absence of “financial gain” to Mr Moussa’s bankrupt estate in his email of 8 November 2010 may have been Mr James wishing to record clearly that he was not liable for 10% of the costs that were being incurred in connection with the Monterey Property.
It follows that I do not accept that Mr Moussa or Christanelle held any of the Lots on trust for the Jameses after 29 September 2009.
The right to an equitable lien is addressed in the context of issues 6 to 8 below.

The failure of the plaintiff’s claim for a breach of trust means that she cannot succeed on her contention that there was a fraudulent breach of trust (or equitable fraud) by the sale of Lots 1, 3, 4, 5 or 7.
Given the plaintiff’s contentions about fraudulent concealment, it is appropriate to deal with the substance of the plaintiff’s contention that the sale of those Lots was dishonest or showed a lack of awareness of proper standards. For the reasons that follow, I reject that contention.
The plaintiff’s contention in relation to Lot 5 is particularly difficult for her. Christanelle, through Mr Moussa, exchanged contracts for sale of Lot 5 on 5 July 2010. On 27 July 2010, a sequestration order was made in bankruptcy proceedings against Mr Moussa. On 14 September 2009, Westpac appears to have executed the discharge of mortgage, suggesting that this was the date on which Westpac was paid some or all of the purchase price. On 5 November 2010, the transfer of Lot 5 to the purchaser was registered. The evidence indicates that, at least by 8 November 2010, Mr Moussa was involving Mr James in his affairs, including Mr James having an opportunity to speak with Mr Moussa’s solicitor about Mr Moussa’s affairs. Mr Moussa’s solicitor would have known that the registered transfer of Lot 5 was a matter of public record. I find it inherently implausible that a discussion between Mr James and Mr Moussa’s solicitor could proceed – the topic of conversation apparently being Mr Moussa’s situation and the status of the MOU – with Mr James believing he was entitled to 10% of each of the Lots in the Monterey Property but with the solicitor failing to inform him that one of the Lots had just been sold.
Mr James was obviously providing assistance to Mr Moussa, including assisting Mr Moussa in his dealings with his trustee in bankruptcy. That is consistent with Mr James and Mr Moussa being friends. Mr Moussa’s solicitor appears to have had instructions to discuss Mr Moussa’s situation with Mr James. It is inconceivable that Mr Moussa could have thought he might conceal from Mr James the sale of Lot 5. There is a compelling inference, in my view, that Mr James knew about the sale of Lot 5 by 8 November 2010.
In reaching this conclusion, I have borne in mind the admissions made by the defendants in the pleadings. The plaintiff’s statement of claim (as originally filed and in subsequent iterations) pleaded at [41]:

This admission does not exclude a conclusion that Mr James learned about the sale of Lot 5 soon after the Lot was sold, on around 8 November 2010. The plaintiff’s counsel accepted during closing argument that the defence is consistent with Mr James learning about the sale after it had occurred. When I take into account the inherent likelihoods, I am satisfied on the balance of probabilities that Mr James learned about the sale of Lot 5, at the latest, shortly after the sale had been completed.
The inherent likelihood that Mr James knew about the sale of Lot 5 by around 8 November 2010 casts the subsequent evidence in a materially different light. The evidence does not suggest that Mr James was hesitant about obtaining legal advice – he budgeted for legal advice in his “Big Bucks” email in October 2008 and informed his daughter of the upshot of obtaining legal advice sometime around February or March 2009. He spoke with Mr Moussa’s solicitor about Mr Moussa’s affairs sometime around 8 November 2010 and he suggested obtaining specialist bankruptcy advice in his email of 18 November 2010. In those circumstances, for him to say nothing about Lot 5 being sold suggests that he cannot have regarded himself as having a 10% interest in Lot 5.
Given my conclusion that Mr James knew about the sale of Lot 5 – and that Mr Moussa knew this to be the case – it is inherently unlikely that Mr Moussa would have taken steps to conceal the sale of Lots 1, 3, 4 and 7 in 2012 and 2013.
Given the conclusion I have reached about the effect of the emails in September 2009 and November 2010, it was understandable – indeed accurate – for Mr Moussa to proceed on the basis that the Jameses did not own 10% of the remaining Lots. While the Jameses had a security interest in the remaining Lots, being an equitable lien, I cannot regard it as dishonest or morally obtuse for Mr Moussa to fail to appreciate this. I would expect that many people without legal training would fail to appreciate that, even after a contract for the sale of land has been terminated, the would-be purchaser has an equitable lien over the property to secure repayment of their purchase price.
Furthermore, Mr Moussa’s sale of Lots 1, 3, 4 and 7 in 2012 and 2013 was a commercial necessity given Westpac’s position. On the evidence, Westpac was taking steps to sell all six remaining Lots in one line. They had been advertised as a mortgagee sale, with the auction to take place on 17 October 2012. As a commercial matter, I can readily understand why Mr Moussa considered that he would be likely to realise better prices, and increase the prospects of being able to hold onto some of the remaining Lots, if he took control of the sale and sold lots individually, obtaining bridging finance to the extent necessary to enable him to pay out Westpac immediately.
The evidence does not permit a conclusion that Mr Moussa dishonestly concealed these sales from the Jameses, or that in failing to disclose these sales he showed a lack of appreciation of proper standards. At the times they occurred, there is no record of Mr James having made any demand in respect of the Lots or in respect of the $600,000 purchase price. The mortgagee sale had been publicly advertised. According to the information Mr James prepared for tax purposes, he made two trips to the Monterey Property in the financial year ending 30 June 2013, staying overnight. While it does Mr James no credit that he claimed tax deductions in this and other tax years for these trips when he cannot honestly have regarded that travel and accommodation as expenses incurred in order to protect or preserve his asset (a matter to which I return below), it is a reasonable inference that Mr James in fact travelled to Monterey in the years claimed. If so, it is even less likely that Mr James was unaware that four of the Lots were sold during the financial year ending 30 June 2013.
During the whole of this period, there is no written record of Mr James asserting to Mr Moussa that he had an interest in any part of the Monterey Property. Mr Moussa had clearly communicated, in September 2009, his understanding that the MOU had been terminated – and Mr James had appeared to agree. Mr James had emailed in November 2010 about having reached a settlement with Mr Moussa and the MOU being terminated. There is no objective evidence of Mr Moussa writing or doing anything that tended to suggest an appreciation that the Jameses might have a beneficial interest in the property or a residual interest in the nature of an equitable lien. Whatever the entitlements between the parties, I cannot conclude that the sale of the Lots and the failure to account for the proceeds involved any consciousness of wrongdoing, nor any taking advantage of a situation amounting to wrongdoing, nor any wilful blindness or lack of awareness of proper standards (cf Seymour v Seymour (1996) 40 NSWLR 358 at 372).
In the circumstances, even if the nature of the Jameses’ interest at the time of sale of the Lots could be characterised as one that might engage s 47 of the Limitation Act (relating to fraudulent breaches of trust), I do not accept that there was a fraudulent breach of trust by the sale of the properties or the failure to account for the proceeds.

The equitable lien arose over the property that was promised to be transferred, that is, 10% of Lot 13 and 10% of Lot 14. The essential nature of the equitable lien is that it attaches to the property which was to be purchased.
Upon Lots 13 and 14 being consolidated and subdivided into Lots 1 to 7, I would readily conclude that the Jameses acquired an equitable lien in 10% of each of Lots 1 to 7. In RnD Funding Pty Ltd v Roncane Pty Ltd (2023) 297 FCR 91; [2023] FCAFC 28 at [47]-[113], Derrington J held (Beach and Halley JJ agreeing) that an equitable proprietary interest is sufficient for an entitlement to trace, that is, to assert by way of tracing an interest in property that is properly regarded as the substitute or derivative of the original piece of property. His Honour identified at [51] a simple mode of tracing, being “direct substitution”. Consolidation of Lots 13 and 14, and subdivision into Lots 1 to 7, would appear to be a form of direct substitution.
At [113], his Honour expressly declined to decide whether “lesser equitable interests such as an interest in the nature of equitable lien” would attract the same entitlement. However, his Honour expressly recognised that the holders of “equitable security interests” were entitled to trace in equity. While the position may be different for different kinds of equitable lien, it seems to me that the statements cited above from Rose v Watson and Re Stucley warrant the conclusion that equity would treat a purchaser’s lien in the same way as an express equitable charge. Accordingly, I conclude that, following consolidation and subdivision, the Jameses were entitled to assert their equitable lien to the same extent in the pieces of property that had been substituted, that is, an equitable lien in respect of 10% of each of Lots 1 to 7.
This is consistent with the way Derrington J encapsulated the position in RnD Funding at [108]: that which is traced is “the proprietary right or interest which attaches to any new property acquired in the same proportion as it bears to the cost of that property’s acquisition”.
The plaintiff seeks a stronger tracing remedy. The plaintiff wants to assert that, because Lots 1, 3, 4, 5 and 7 were sold, the plaintiff should be permitted to assert an equitable lien in the remaining Lots 2 and 6 to the value of 10% of all seven Lots. Indeed, the plaintiff goes so far as to assert that “equity entitles [her] to choose the path of tracing which will produce the most favourable outcome”.
I do not accept this, nor does the plaintiff cite an authority for it.
While the plaintiff relies on authorities such as Re Oatway [1903] 2 Ch 356, dealing with the mixing of trust funds with a trustee’s personal funds, the plaintiff cites no authority for the proposition that this reasoning can be translated to specific items of property such as Lots 1 to 7 in the Monterey Property. It amounts to asserting that, although the Jameses only had an equitable lien over 10% of each of Lots 1 to 7 upon the date of registration of the subdivision, the sale of the Lots effectively enlarged the equitable interest in the remaining Lots.
In Twigg v Twigg (2022) 402 ALR 119; [2022] NSWCA 68 at [243], Brereton JA (Bell CJ and Payne JA agreeing) rejected a contention that there is a presumption that all property acquired by the recipient of trust property are traceable proceeds except insofar as the contrary is proven. His Honour observed that the cases invoked are specifically concerned with mixing, and stand for the proposition that “if a man mixes trust funds with his own, the whole will be treated as the trust property, except so far as he may be able to distinguish what is his own”.
It may be that, where mixed funds are concerned, the tracing outcome is the same for equitable proprietary interests falling short of a trust. However, that provides no support for a contention that a claimant can deploy reasoning from cases involving mixed funds when they have a percentage equitable interest in items of specific property such as parcels of land. Justice Brereton’s rejection of a similar argument in Twigg v Twigg is to the contrary.
I see no basis in principle (or the substantive justice of this case) to conclude that the sale of Lots 1, 3, 4, 5 and 7 altered the position. Mr Moussa held property subject to an equitable lien, but he and Mr James had already agreed that the MOU would be terminated. I have already found that Mr James made no objection to the known sale of Lot 5 and there is no evidence of him doing anything to assert a proprietary interest in the remaining Lots prior to their sale. I have also held that it was not dishonest or morally obtuse for Mr Moussa to proceed on the basis that he and Christanelle were free to deal with the Lots as they saw fit. Mr Moussa as the holder of property subject to an equitable lien did not owe fiduciary duties to the Jameses: Naaman v Jaken Properties Australia Pty Ltd (2025) 281 CLR 635; [2025] HCA 1. Accordingly, it is not necessary to consider the situation in which a fiduciary’s misapplication of trust property might give rise to fresh equitable interests or a fresh trust relationship: see, eg, RnD Funding at [79]-[80].
It follows that the Jameses acquired an equitable lien in 10% of each of Lots 1 to 7, but they did not acquire any greater interest in Lots 2 and 6 after the other five lots were sold.

As part of its reasoning, the Court affirmed the longstanding distinction, reflected in the difference between ss 10 and 26 of the Qld Act, between “real” actions and “personal” actions: see the historical analysis per Kiefel CJ and Edelman J at [12], [15], [22] and [26]. Real actions – that is, actions against the res or the property itself – were generally only available at common law against land (putting to one side the Admiralty in rem jurisdiction which has its own lineage). Chief Justice Kiefel and Edelman J observed in Brisbane City Council at [12] in respect of the Real Property Limitation Act 1833 (UK) (references omitted), “[t]he real claims to recover money were by sale of the land or by rent obtained from occupation of the land. It was held that the shorter six year limitation period applied to any personal action, with the longer 20 year limitation period applying to any real claims”.
Their Honours explained that understanding this distinction between “real” actions and “personal” actions showed why the decision of the Qld Court of Appeal in ANZ Banking Group Ltd v Douglas Morris Investments Pty Ltd [1992] 1 Qd R 478 was consistent with the Court’s central holding that a defendant is free to rely on the shorter of two limitation periods, if they both apply to the cause of action at stake. In Douglas Morris Investments, an action to enforce a scrip lien against shares was held to be subject to the longer limitation period in s 26 (on the basis that it was akin to an action to recover possession) but not subject to the shorter limitation period for personal actions. In regarding this as “real” claim, Kiefel CJ and Edelman J appear to have analysed the action as, in substance, an action in rem or a proprietary action. This no doubt reflects the fact that s 26 (like s 42 of the NSW Act) applies equally to real and personal property. Having concluded that it was an action to which s 26 applied, the non-application of the shorter limitation period rested on the fact that the limitation period on the personal action barred the action but not the underlying right: see the explanation of Kiefel CJ and Edelman J in Brisbane City Council at [29].
It is by no means self-evident that an action to enforce a purchaser’s equitable lien, even in respect of land, is a real action in the sense described by their Honours in Brisbane City Council. My reservation is not because equity acts in personam on the conscience of the defendant – Kiefel CJ and Edelman J advert at [14] to real claims in Chancery and in the same paragraph cite Kibble v Fairthorne [1895] 1 Ch 219, which applied the limitation period for real actions to an equitable mortgage. Rather, in Douglas Morris, the security interest was described as a “scrip lien”, but it gave the lienee a contractual power of sale which meant that the action was akin to an action for possession: see at 496. By contrast, as observed in Hewett v Court at 645 per Gibbs CJ, 653 per Wilson and Dawson JJ and 663 per Deane J, an equitable lien does not depend on possession, nor, as Deane J went on to say at 663, does it confer any title to the property. The equitable lienee’s right is to approach the Court for orders for sale of the asset but only to the extent that the amount secured remains unpaid. The right which equity is enforcing, it seems to me, is the right to be repaid the purchase price, not any associated right of possession or ownership. Nevertheless, I recognise that Kiefel CJ and Edelman J at [22] appeared to regard an action for an order for sale of land as a real action.
It may not be appropriate to confine attention to the historical division between “real actions” and “personal actions”. Section 42, appearing in Div 4 which deals with “Mortgages”, is not confined to real property. On the ordinary words of the statute, the claim to enforce an equitable lien is a cause of action to which s 42 applies. It is an action on a cause of action to recover principal money (here, the $600,000 purchase price) secured by “mortgage” as defined (ie, the equitable lien).
On one view, this cause of action arose on 2 March 2009, noting that the lien arises at the time of payment: see Rose v Watson at 1191. If so, that was more than 12 years before the plaintiff commenced these proceedings in April 2021 and the claim would be statute-barred under s 42. This strikes me as somewhat artificial, given that the potential indebtedness which the lien secured did not actually become payable until the MOU was terminated. Prior to termination, the Jameses did not have a right to demand repayment of $600,000. I am inclined to accept, as the plaintiff contended, that this cause of action arose in September 2009, which is less than 12 years before the statement of claim was filed in April 2021. The defendant accepted this in argument before me. On this basis, s 42 does not bar the plaintiff’s cause of action.

The next question is whether the cause of action to enforce an equitable lien is also a cause of action to which s 14 applies, either expressly or by analogy. This is where, in my view, particular care is necessary about the endorsement in Brisbane City Council of the reasoning in Douglas Morris Investments. At [7], Kiefel CJ and Edelman J stressed that the Court was dealing with a limitation statute which barred the remedy but did not extinguish the right. As noted above, their Honours also highlighted this in their discussion of Douglas Morris Investments at [29].
By contrast, in NSW, s 63(1) provides that, on the expiration of a limitation period “for a cause of action to recover any debt damages or other money”, the right and title of the claimant to the debt damages or other money is extinguished. This is not a case where the action is a foreclosure action or (as in Douglas Morris) an action akin to an action for recovery of possession. In such cases, it may be that the plaintiff asserts some additional right in relation to the property, being the right to foreclose or the right to possession. An action to vindicate that additional right may be regarded as more than an action to recover a debt or other money. Here, the right is to approach the Court to the extent that the secured amount is unpaid, albeit to seek orders which might be characterised as in rem, being orders for judicial sale (or, if s 66G of the Conveyancing Act 1919 (NSW) is engaged as the plaintiff contends in this case, the appointment of trustees for sale). The only purpose of the orders of the Court is to enable recovery of the debt or other money. In this sense, an action to enforce a purchaser’s lien is “a cause of action to recover any debt … or other money”, to use the language of s 63. If s 14 operates directly or by analogy to the Jameses’ cause of action, the Jameses’ right and title to repayment of the $600,000 would be extinguished and so consequently would the equitable lien.
Upon termination of the MOU, the Jameses had a common law cause of action to recover $600,000. Clause 2 of the MOU made it abundantly clear that the payment of $600,000 was “for” a 10% share of the property. On one view, it was a payment subject to a condition, with an implied contractual promise to repay the purchase price if the condition was not satisfied. That was the analysis advanced by the defendants. The better view may be that the cause of action is one for money had and received, following failure of the express condition upon which the $600,000 was paid, or perhaps following total or substantial failure of consideration. All of these causes of action are founded on contract or quasi-contract. They became statute-barred after six years and were extinguished by operation of s 63.
An action to enforce an equitable lien is a cause of action for equitable relief. Section 14 does not apply except so far as it may be applied by analogy: see s 23 of the Limitation Act. It seems to me that, at least where the cause of action is to enforce the particular kind of equitable lien that is at stake in these proceedings, equity would operate by analogy to ss 14 and 63 of the Limitation Act.
A purchaser’s lien has its foundation in contract. In New Galaxy Investments Ltd v Thomson (2017) 18 BPR 36,811; [2017] NSWCA 153 at [296], Sackville AJA (Gleeson JA agreeing) cited with apparent approval the observation in Chattey v Fardale Holdings (1996) 75 P&CR 298 and 304 that the purchaser has a lien because the payments are made on the faith of the contract and as part of the purchase price payable under the contract: see also Rose v Watson at 1191-1192.
In Hewett v Court at 663, Deane J said “[g]enerally speaking, the established examples of equitable lien are between parties in a contractual or quasi-contractual relationship. The best known are the liens which equity recognizes as arising to secure the actual or potential rights of a vendor and purchaser under a contract for the sale of real estate to payment or the balance of purchase price (vendor’s lien) or to repayment of instalments of purchase price (purchaser’s lien)”. His Honour also recognised that, while equitable lien arises by implication of equitable doctrine, its implication can be precluded or qualified by express or implied agreement of the parties. The way Gibbs CJ put it at 647 was that it was necessary “to consider the rights and obligations for which the contract provides, with a view to determining whether a lien must be implied for the protection of those rights or the enforcement of those obligations”.
I stress that I do not proceed on the basis that, merely because a cause of action has its source in a contractual relationship, that it is a cause of action “founded on contract” for the purposes of s 14(1)(a) of the Limitation Act. However, if the equitable lien secures an implied contractual promise to repay the purchase price, the implied contractual promise would be a cause of action founded on contract. And if there is no implied contractual promise to pay, then the obligation to repay the purchase price at common law is quasi-contractual.
There is a close analogy with a situation in which a sale contract provides explicitly that the purchase price will be repaid if the contract were terminated, and that the land will be charged with repayment of that amount. If that were the situation, the contract debt would be extinguished after six years (in the absence of fraudulent concealment), and the charge on the land would after that date cease to secure anything.
The equitable relief is also a close analogue to the common law claim for money had and received, where the purchase price is paid but there has been a total or substantial failure of consideration. That is a cause of action founded in quasi-contract, which is barred after six years by s 14(1)(a) and extinguished after that time by s 63. While the proprietary element of the equitable cause of action goes beyond the common law money claim, there is nevertheless a close analogy with a claim, undoubtedly founded on contract or quasi-contract, for repayment of the $600,000.
The parties were unable to point to any authority which assists in determining whether or not equity should act by analogy in the present situation. In Americana Leadership College v Coll [2005] NSWSC 15, at [10], Barrett J rejected an argument that s 14 applied by way of analogy to an equitable charge that arose based on the principles in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10. However, that was because his Honour said that particular form of relief “is not so closely allied to contract as to be comprehended by the notion of quasi contract”. For the reasons set out above, a purchaser’s lien appears to me to be in a materially different position. The purchaser’s lien is very closely allied to contract, as well as having a close analogy with the quasi-contractual common law right to recover the purchase price.
Similarly, I am conscious that in Kerr v Bechara (No 3) [2015] FCA 708 at [6] Jagot J said that, in Hewett v Court, the existence of the equitable lien “was explained as one that did not depend upon either contract, quasi-contract or possession but, as Gibbs CJ said, arose by operation of law under a doctrine of equity”. Her Honour was addressing equitable liens generally and was not addressing the question of whether equity acted by analogy, for the purposes of the Limitation Act, in respect of any particular kind of equitable lien. While the equitable lien arises by operation of law, particular kinds of equitable lien may nevertheless arise by reason of the contractual or quasi-contractual position between the parties (as Deane J appeared to recognise).
I conclude that equity should act in the present situation by analogy to ss 14 and 63 of the Limitation Act. It follows that, subject to questions of fraudulent concealment, the cause of action could not be pursued after expiry of six years from – at the latest – the date of termination of the MOU. That was either September 2015 or November 2016.

Regrettably, although he is not alive to answer the concerns I have, the evidence does not suggest that Mr James’ reported statements can be regarded as honest and reliable.
The executed transfers in respect of Lots 13 and 14 involved a substantial understatement as to the purchase price – a combined purchase price of $400,000 not $600,000. This is despite $600,000 having been the agreed purchase price since October 2008. The persons with an interest in understating the purchase price were the Jameses, who knew they would be paying stamp duty. On the evidence, stamp duty was only paid on a purchase worth $400,000. Ms James gave evidence when asked that she did not notice this discrepancy in purchase price. This evidence could be reconstruction, but even if true it shows a striking lack of attention by her. More seriously, it is very difficult to accept that Mr James, who was the likely author of the transaction, could have done this accidentally. Given his experience with the Department of Defence and the attention he was paying to the transaction with Mr Moussa, I find it difficult to accept that there was an error or an oversight in Mr James signing the transfers and paying stamp duty as though it were a $400,000 transaction. An intention to mislead the Commissioner of State Revenue would be consistent with Mr James budgeting for legal advice, seeking legal advice, but then deciding to proceed with the transaction on its face without a lawyer being involved.
Mr James’ tax returns, which were in evidence, also disclose untrue statements or over-claims for deductions. As I indicate above, Mr James claimed tax deductions in multiple years, in connection with the Monterey Property, for travelling to the property and staying in a hotel nearby. They included claims in the financial year ending 30 June 2011, 2013, 2014, 2015 and 2017. These expenses cannot actually have been associated with Mr James’ interest in the property. It is difficult to see how Mr James could have had an honest belief that he had incurred these travel expenses in connection with an interest in the property, even on the plaintiff’s case.
Mr James’ claims for depreciation in his tax returns in the later years appear difficult to justify. The amount claimed for depreciation appeared to reduce steadily from year to year until FYE 2016. Then in FY 2017, it rises to approximately the same amount as was claimed in FYE 2014, and the amount claimed in FYE 2018 and FYE 2019 are similar to the amounts claimed in FYE 2015 and 2016 respectively. It appears that in FY 2017, Mr James started claiming depreciation figures based on earlier years in the depreciation schedule. It is noteworthy that the up-tick in claims for depreciation occurred in the same year that Mr James moved to a new accountant, Ms Henderson. The Court did not receive evidence from Mr James’ previous accountant but did receive evidence from Ms Henderson. Ms Henderson said she “would have gone through” Mr James’ files from his previous accountant when she prepared his 2017 tax return, but she plainly had little recollection of what documents were there or what she saw. If Mr James had started taking depreciation figures from an earlier year in the depreciation schedule, that is something Ms Henderson may not have recognised. Ms Henderson confirmed that “pretty much the entirety” of her instructions from Mr James from year to year was that Mr James would bring a document with him in which he set out his expenses for the relevant financial year, they would go through that document together, and then Ms Henderson would use that information to prepare Mr James’ tax return.
Mr James’ tax returns say he had a 50% interest in the Monterey Property rather than a 5% interest. The only co-owner he discloses is his daughter, Ms James. This raises the possibility that Mr James may not have wished to identify Mr Moussa because he knew Mr Moussa would not recognise him as a co-owner. His tax return in respect of a different property investment appears to show an appreciation on his part that he should state his actual percentage interest in the property. I am conscious that, in his FY 2010 tax return, Mr James recorded the asset as having been purchased for $611,042 on 2 March 2009, and 50% appears to be a reference to 50% of that asset. While that is true as far as it goes, it does not explain why Mr James disclosed his daughter’s co-ownership but not Mr Moussa’s.
In addition to this, I find it remarkable that Mr James could have believed that he had a 10% interest in the Monterey Property, including a right to receive 10% of the rental income from 2010 onwards. There is no record of him communicating this belief to his putative co-owner, Mr Moussa. The idea that a dispute with DHA could have continued for multiple years, with no rent being paid whatsoever, is inherently implausible. Mr James was not a stranger to owning investment property. He had considerable experience in the Department of Defence, including responsibility for employees work under him. If Mr James thought he had a 10% stake in this dispute, it is difficult to understand why he would not seek legal assistance in relation to it. Even more significantly, Mr James must have appreciated that if he had a 10% interest in the property he had an obligation to contribute 10% to the outgoings. His involvement in preparing the MOU demonstrate an appreciation that owning property attracts expenses such as land tax and council rates. If he believed there was extant litigation with DHA, then he must also have thought there would be legal and other costs associated with it. There is no evidence of Mr James offering any money at all towards the costs or expenses associated with the Monterey Property. It is difficult in the face of this objective evidence to accept that Mr James honestly believed he owned 10% of the Lots in the Monterey Property.
The plaintiff relies on Mr James paying $1,850 to the State Revenue Office on 4 October 2012, in respect of a penalty notice in late 2011 because the owners of the Monterey Property failed to keep a clear path of travel to the fire exit, which was said to be consistent with Mr James regarding himself as a part-owner. It is difficult to place significant weight on this payment, given the absence of reliable evidence about the circumstances in which Mr James came to pay it. Mr James and Mr Moussa were friends, and Mr Moussa was in financial difficulties. There may have been any number of circumstances in which Mr James, as Mr Moussa’s friend, might have come to pay this amount. The payment is not even consistent with Mr James regarding himself as having a 10% interest – Mr James did not pay 10% of the fee, and he cannot honestly have believed that this amount was payable on the properties but no amount was payable by way of land tax or council rates.
The evidence before me, considered as a whole, raises the possibility that Mr James reached a settlement with Mr Moussa in 2010 such that he no longer regarded himself as having any interest in the Monterey Property (as indicated by the September 2009 and November 2010 emails), but he continued to prepare his tax returns on a different basis because it suited him to be able to claim deductions for purported depreciation from year to year.
I am mindful that Mr James is not able to answer these concerns. I recognise that it would be unfair to make any affirmative findings that he was dishonest in his preparation of tax returns, and I make no such finding. But all of this evidence needs to be taken into account when I ask whether I can be satisfied, mindful of the Briginshaw standard, that Mr Moussa fraudulently concealed the essential basic facts of a cause of action.
As for Ms James, on the evidence before me, Mr James sent Ms James an email each year with a spreadsheet containing what Mr James said should be Ms James’ deductions. I am prepared to accept a reasonable possibility that Ms James may simply have included these figures in her tax return from year to year without making her own inquiries. For the avoidance of doubt, I stress I make no finding that Ms James made knowingly false claims in her tax returns.
There is other evidence of Mr James’ apparent involvement in the preparation of an untrue document. The plaintiff put before the Court a draft email apparently prepared by Mr James for Mr Moussa to send to A Current Affair. There is no evidence that the draft was in fact sent by Mr James to Mr Moussa and no evidence of the date on which the document was prepared. However, even bearing in mind that the email is only in draft, it does not do the drafter any credit. The email suggests that it was written some time in the first half of 2011. It refers to a rent review by DHA in December 2009 and goes on to say that “[o]ne year later (Dec 2010)” DHA advised that the rent was to be reduced by 20%. The email is apt to convey an appreciation that rent had not been paid for the past three months (apparently the first three months of 2011). If Mr James prepared this, it would appear that he knew that Mr Moussa received rent from DHA during the year of 2010 – including the first six months before Mr Moussa became bankrupt – but Mr James never claimed 10% of those receipts. That is entirely consistent with Mr Moussa’s understanding that the MOU had been terminated and the Jameses no longer had an interest in the property. It is utterly inconsistent with the plaintiff’s contention that Mr James believed he was entitled to rent and utterly inconsistent with the plaintiff’s evidence now that Mr James believed no rent was earned on the property in the 2010 calendar year.
The email goes on to say that DHA is still withholding rent “and pushing me further into bankruptcy” and suggests that the Australian public “should be made aware of the pitfalls in leasing to the DHA and their unfair practices”. The email makes no reference to the fact that there were known building defects in late 2009 – a fact which Mr James must have known from Mr Moussa’s email of 9 September 2009. The email also makes no reference to Mr Moussa already having been bankrupt, with an annulment or termination of the bankruptcy expected – a matter also known to Mr James from the emails in November 2010.
I am left with a concern that Mr James or persons associated with him prepared a false email – perhaps some years later at a time when they had forgotten the precise chronology. The most charitable explanation is that Mr James prepared this email with no intention that it be sent to A Current Affair, in an attempt to appease his daughter or show her that he had tried to assist Mr Moussa. If Mr James prepared the email with the intention that it be sent to A Current Affair, then that may indicate a willingness to mislead a reputable media outlet to put commercial pressure on DHA to assist himself or his friend Mr Moussa. Whatever the explanation, the email is not consistent with Mr James being a reliable historian.

On 21 September 2015, Mr Moussa emailed Mr James to say, “I tried to phone you, but phone is in use. When you have a moment can you please call me.” There is no evidence of Mr James sending a further email later in 2015 or at any time in 2016. If Mr James called Mr Moussa as Mr Moussa requested, there is no evidence of what occurred in the conversation. I return to the evidence about this exchange below.
On 6 October 2017, Mr James emailed Mr Moussa to say he had just returned from a cruise and asked, “[w]hat’s happening with DHA?”.
On 10 January 2018, Mr James emailed Mr Moussa to say he was at his “coast house” with the family and wishing Mr Moussa a happy new year. Mr James also said, “hope your fortune turns around this year”. The email does not suggest that Mr James regarded his own fortunes or proprietary interests as tied to Mr Moussa’s.
In February, April, May and July 2018, Mr James emailed Mr Moussa indicating that Mr James had attempted to contact him and expressing a desire to catch up.
On 20 September 2018, Mr James sent an email saying he had not heard from Mr Moussa in a while and also saying that Mr James himself had been unwell. Mr James said, “[p]lease send me a message with what is going on”.
There is no evidence of any email communication later in 2018 or any time in 2019.
On 31 January 2020, Mr James emailed to say, “[d]o you have any news or a date for the court?”.
When asked about these emails, Mr Moussa said that the “court case” and “status conference” were references to litigation in which an occupant of the Monterey Property had injured themselves and sued each of DHA, Christanelle and a company involved in building works at the Monterey Property (being the company referred to in Mr Moussa’s email of 9 September 2009 in the context of defects).
Mr Moussa produced a consent judgment recording that proceedings with a 2011 file number were resolved on 31 March 2015 by a consent judgment involving judgment against DHA for $40,000, judgment against Christanelle for $30,000, and judgment against the builder entities for $80,000. Mr Moussa gave evidence that this was not the end of the dispute because they had to raise money to pay the consent judgment. While this may be true, it does appear from the final memorandum of fees rendered to Christanelle on 30 July 2015 that the $30,000 settlement sum was paid in June 2015.
This leaves the email on 31 July 2015 unexplained. However, given all the circumstances creating grounds to doubt Mr James’ reliability, it is too insubstantial – either on its own or alongside the other evidence – to support a finding of fraud. The lack of explanation might equally be attributable to the plaintiff having chosen to deploy the document for the first time in cross-examination, with Mr Moussa confusedly reconstructing an explanation because he could not recall what the email was actually referring to. It is also somewhat surprising, if the plaintiff’s case theory were correct, that it was Mr Moussa who tried to contact Mr James unsuccessfully on 21 September 2015, and not the other way around.
Mr Moussa was able to produce the settlement agreement, despite the plaintiff having deployed the emails for the first time in cross-examination, because the plaintiff made a call on a notice to produce, which led to Mr Moussa gathering documents under time pressure overnight between day 3 and day 4 of the trial. In those circumstances, I cannot conclude that the documents produced by Mr Moussa show the complete record.
Moreover, Mr James’ emails are strikingly negligent if Mr James believed he had a direct financial interest in the outcome of the dispute with DHA. The emails – including the lack of any sense of urgency and absence of any step by Mr James to protect his own interests – are more naturally indicative of Mr James expressing the sympathetic interest of a friend in Mr Moussa being tied up in litigation. Their friendship became more distant after Mr James retired, so it is perhaps unsurprising that Mr James went for periods of over a year at a time before checking in with his friend.
Given my concerns that Mr James may have been deliberately misleading his daughter, there could be a further explanation for the emails regarding DHA in and after 2015, being that he was sending emails to appease his daughter but did not want to write anything explicit enough that it could provoke an express denial from Mr Moussa.
The plaintiff also relies on an email sent by Mr James to Mr Barrie on 22 April 2020 in which he refers to his asserted interest in the Monterey Property and his difficulty getting hold of Mr Moussa. I do not consider that I can place weight in the plaintiff’s favour on this email. First, I know that by that time at least one other person had access to Mr James’ email account, being Ms James’ son Matthew. Ms James said that by 2019 Mr James started to have limited movements in his hands, so I do not know whether Mr James was able to send an email without assistance. Second, it is odd that Mr James would write to Mr Barrie in those terms but not to Mr Moussa himself. Third, Mr James may have been willing to draft misleading emails as evidenced by the draft email to send to A Current Affair. Fourth, the email is equally consistent with Mr James being willing to mislead his daughter because he did not wish to admit that he had agreed to terminate the MOU in 2009 or 2010 and had been making untrue claims on his tax returns since that time.
These possible explanations of the communications relied upon by the plaintiff are necessarily speculative. I make no finding that any particular explanation is to be preferred, and it is not necessary for me to do so. Ultimately, I do not conclude that these emails are corroborative of a fraud. The plaintiff bears the onus of proving the fraudulent concealment and she has not discharged that onus.
It follows that the plaintiff has not established that any limitation period is extended by operation of s 55 of the Limitation Act. I hold this view whether the cause of action being allegedly fraudulently concealed was the cause of action I have found arose but which is now barred (the cause of action to enforce an equitable lien) or the other causes of action on which the plaintiff relied (causes of action for breach of trust, breach of fiduciary duty and/or for an account).

For completeness, I address the date on which the plaintiff or her father would with reasonable diligence have discovered any fraud. This necessarily involves a degree of artificiality because I have not in fact found that there was any fraudulent concealment. However, I am able to make findings about what a person in the Jameses’ position would have done, if they believed they had a 10% interest in the property at various points in time.
A person can be said to have relevantly discovered a fraud if they know the facts capable of proving a prima facie case: Clurname Pty Ltd v McGraw-Hill Financial, Inc [2017] FCA 1319 at [78]. Ordinarily, before a person could reasonably be expected to pursue an inquiry with a view to ascertaining whether a fraud has been perpetrated, something must have put the person on notice, or raised a suspicion, in respect of that matter: Clurname at [79]. If the victim of a fraud makes no inquiries in circumstances where no occasion arose for them to do so, that is not sufficient: Twigg v Twigg (2022) 402 ALR 119; [2022] NSWCA 68 at [198].
The type of inquiry that would be expected must be assessed having regard to how a person carrying on a business of the relevant kind (here, investing in property) would act if they had “adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency”: Clurname at [79] citing Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400 at 418. The inquiry must be one which, if made, would have led to the discovery of the facts revealing the fraud: Clurname at [79] citing CE Heath Underwriting and Insurance (Australia) Pty Ltd v Daraway Constructions Pty Ltd (unreported, VSC, 3 August 1995 per Batt J).
An assessment of reasonable diligence must take place in the particular circumstances of a given case. An important feature of this case is that Ms James says she believed the MOU was on foot and was adamant that she knew nothing of its termination. Reasonable diligence by Ms James required her to take active steps to perform her part of the MOU and to understand the reason why no rent was being paid to her despite what she says was her expectation that rent should be paid. If I assume that Mr James in fact informed her of the 2009 and 2010 termination emails, this conclusion seems to me to be unavoidable. By the date of the second termination email, she knew that no rent had been paid to the Jameses’ interests for over 10 months, that Mr Moussa was having financial difficulties and that she had not been asked to perform any of her obligations under the MOU or contribute anything towards land tax or council rates. A reasonable person in her position would have made inquiries, including the straightforward step of seeking legal advice. This is a step that any reasonable person with adequate but not unlimited resources would have taken. Had she sought the advice of a minimally competent solicitor, she would have learned about: (a) the absence of any registered interest; (b) Mr Moussa’s bankruptcy; (c) the apparent implications of the agreement between Mr James and Mr Moussa to terminate the MOU; and (d) the sale of Lot 5 to a third party, which was registered on 5 November 2010. This would have disclosed the essential facts for her cause of action and would also have disclosed the facts which Ms James now says amounted to fraud (ie, the sale of Lot 5).
If one imagines a situation in which Mr James did not tell Ms James about the 2009 and 2010 termination emails, then by early 2011 Ms James was faced with a situation where she knew that Mr Moussa was having financial difficulties, that no share of the rent had been paid to her for over 12 months, and that she had not taken steps to perform her part under the MOU, including contributing to costs or attending meetings. It must have been obvious that council rates and land tax would continue to accrue. In that situation, a reasonable person in Ms James’ position would have been put on inquiry and would have sought legal advice. Had she sought legal advice at that point, she would have learned that: (a) her 10% interest was not registered; (b) Mr Moussa was bankrupt or, if the inquiry were made after June 2011, had recently been bankrupt; and (c) Lot 5 had been sold in November 2010 without her consent and without accounting to her for her share.
If a reasonable person was not put on inquiry in 2011, they must have been put on inquiry by 2013. Inquiries through a solicitor at this stage would have disclosed the sale of more of the Lots.
From February 2014, a reasonable person who believed that the MOU was still on foot would have known that the time had come for renewal or, if not renewal, payment in accordance with cl 10 of the MOU. A reasonable person who heard nothing after that time, but believed the MOU was still on foot, would have made inquiries about the consequences of cl 10, including seeking legal advice. This would have indicated that, in the absence of agreement between the parties about renewal or sale of the properties, Mr Moussa was obliged to pay the Jameses’ share of the agreed market value. Had legal advice been sought, a cursory property search would have revealed that all bar two of the properties had been sold. This must have disclosed any fraudulent concealment of the cause of action. Even if one assumes it would have taken up to 12 months after the expiry of the five year period to take advice and make these inquiries, that is February 2015. The proceedings were not commenced until more than six years after that date, in April 2021.
The distinction between this case and Twigg v Twigg at [198], in my view, is that the knowledge that Ms James actually had at these various points in time, by reason of what she should have expected from the terms of the MOU, was such that a reasonable person in her position would have made further inquiries. I am accordingly satisfied that, even if there had been fraudulent concealment, reasonable diligence would have discovered the fraud more than six years prior to the statement of claim being filed.

In my view, the plaintiff’s delay has caused material prejudice to the defendants. Most significantly, the death of Mr James leaves the defendants in a position where they are forced to meet a claim based on inference and indirect evidence. That prejudice ought not be assessed in a vacuum. The law is more than capable of dealing with a claim justly after a central participant in a disputed transaction has died. However, this is a situation where that central participant never asserted his interest while alive, having exchanged the critical emails canvassed above in September 2009 and November 2010. If Mr James were alive and seeking to assert this interest, he would have much to explain – including the undervalues on the executed transfers of Lots 13 and 14; the untrue or apparently impermissible claims in Mr James’ tax returns; the “settlement” referred to in emails in November 2010; the failure to offer to contribute to land tax, council rates or the costs of rectifying defects and litigating about the properties; how he could have believed that there was no rent received at all for over a decade; why he did not seek legal advice; how the draft email to A Current Affair came to be drafted; and the absence of any written demand or other recorded communication with Mr Moussa in which he asserted his interest over so many years. It is no longer possible to obtain a satisfactory answer to these questions.
The defendants face significant prejudice in having to meet this claim without Mr James being available to explain these matters. I am conscious that some of these questions might have been answered if Mr Moussa himself had a better and more reliable recollection of his dealings with Mr James, but in fairness to Mr Moussa it may be unsurprising why he put these transactions from his mind given the terms of the “termination” emails in September 2009 and November 2010.
If laches were available as a defence to the claim to enforce an equitable lien, then I would hold that this is a case in which the defendants have shown both delay and relevant detriment suffered by delay.
Of course, if Mr Moussa were guilty of dishonesty or equitable fraud then a laches defence would be much harder to establish. But as I have indicated above, I do not accept that Mr Moussa is guilty of dishonesty or equitable fraud.
However, a cause of action to enforce an equitable lien is prima facie subject to s 42, because it is an action to recover principal money secured by a “mortgage”, defined expansively to include a charge or lien other than a possessory lien. The plaintiff relies upon the general proposition that “laches” is confined to equitable claims which are subject to no statutory bar either expressly or by analogy: see Meagher, Gummow & Lehane at par 36–090; Green v Gaul [2007] 1 WLR 591; [2006] EWCA Civ 1124 at [39]–[40]; Sze Tu v Lowe (2014) 89 NSWLR 317; [2014] NSWCA 462 at [414] per Gleeson JA, Meagher and Barrett JJA agreeing. I have some reservation about the coherence of that proposition in the present context. Even assuming s 14 does not apply by analogy, the limitation period provided in s 42 only applies because of an expanded definition of “mortgage” in the Limitation Act and only applies because equity acts on the conscience of the ex-vendor to require the ex-vendor to recognise a proprietary interest, in the nature of a lien or charge, to secure repayment of the purchase price after a contract is terminated. If the ex-purchaser delays in a manner that would otherwise engage the doctrine of laches (ie, delay which causes prejudice such that it would be practicably unjust to give a remedy), it is not obviously coherent to me that a plaintiff should be permitted to bring their claim up to 12 years after the equitable lien arose, especially where common law claims are extinguished after six years. This may be an additional reason to conclude that s 14(1)(a) applies by analogy. However, if s 14(1)(a) did not apply by analogy, I would consider it appropriate to follow the Court of Appeal in Szu Te v Lowe, despite my misgivings and even though Justice Gleeson’s observation is strictly obiter.
On the basis that I would be minded to follow Gleeson JA in Szu Te v Lowe, the only other circumstance in which laches might arise would be if the defendants’ contention were correct that s 42 does not apply to the claim to enforce an equitable lien. As I have indicated above, s 42 appears to apply according to its ordinary language. The claim is to recover “principal money” as defined in s 11(1), being money secured by a “mortgage” as defined in s 11(1).
In light of Szu Te v Lowe at [414], if I were wrong about s 14(1)(a) applying by analogy I would reject a defence of laches.

The defendants contend that the Jameses abandoned their equitable rights by reason of the emails in September 2009 and November 2010, after which the Jameses made no claim in Mr Moussa’s bankruptcy, pursued no claim in respect of the Monterey Property, never sought to enforce the MOU and never complained to the defendants. The defendants rely on the same facts as amounting to acquiescence.
Dealing first with abandonment, the effect of the emails in September 2009 and November 2010 was the lawful termination of the MOU. In a loose sense, that might be regarded as an abandonment of the proprietary rights that the Jameses acquired under the MOU, but as I have held, an equitable interest survived that termination, being an equitable lien.
No other question of abandonment arises. No purported termination of the MOU could be construed as abandoning the equitable lien. Mere subsequent inaction in relation to the equitable lien could not amount to abandonment, nor could it be construed as a release: Fitzgerald v Masters (1956) 95 CLR 420 at 433; [1956] HCA 53.
The same must follow, it seems to me, in relation to acquiescence. Acquiescence in the strict sense implies either that the party acquiescing has abandoned his right, or that he is estopped by his conduct from asserting it: Glasson v Fuller [1922] SASR 148 at 162. Estoppel is not raised and I have addressed why I do not accept that there was any abandonment in respect of the equitable lien.
The authors of Meagher, Gummow & Lehane’s Equity, Doctrines & Remedies (5th ed, 2015) sound a note of caution at [38-015] about imprecision of terminology, with the term “acquiescence” being used in a variety of inconsistent senses. To the extent that acquiescence describes a form of release or assent, it is not available because “abandonment” is not available. To the extent that it describes a form of laches, it is not available in light of my acceptance that I should follow Sze Tu v Lowe at [414].
If I were wrong about s 14(1)(a) applying by analogy I would reject a defence of abandonment or acquiescence, so far as it concerns the claim to enforce an equitable lien.

James v Moussa

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment

Parties

Legislation Cited (6)

Cases Cited (38)

JUDGMENT

Introduction and summary

General factual background

Credibility and reliability of principal witnesses

Ms James

Mr Moussa

Issues

Issue 1: Jameses’ equitable interest in the land from March 2009

Issue 2: Consequences of the emails in September 2009 and November 2010 – termination of the MOU

Mr James’ authority to deal with Mr Moussa on behalf of Ms James

Termination of the MOU by agreement in September 2009

Confirmation in November 2010 that the MOU had been terminated

Consequences of termination of the MOU

Issue 3: Do the defendants hold any part of Lots 2 or 6 on trust for the plaintiff?

Issue 4: Was the sale of Lots 1, 3, 4, 5 and 7 a breach of trust? If so, was the breach fraudulent within the meaning of s 47 of the Limitation Act?

Issue 5: Existence and extent of equitable lien

Equitable lien in 10% of each of Lots 13 and 14

Tracing into Lots 2 and 6

Issue 6: Limitation period (express or by analogy) in respect of action on equitable lien

Brisbane City Council v Amos: “real” vs “personal” actions

Application of ss 14 and 63 of the Limitation Act by analogy

Issue 7: Was there fraudulent concealment for the purposes of s 55 of the Limitation Act?

Doubts as to Mr James’ reliability

Emails between 2015 and 2020 said to corroborate the plaintiff’s contention

Date by which reasonable diligence would have discovered any fraud

Issue 8: Laches, acquiescence or abandonment

Laches

Abandonment or acquiescence

Issue 9: Interest

Conclusion