PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –
ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL –
SUMMARY JUDGMENT FOR
DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – where
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL –SUMMARY JUDGMENT FORDEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – wherethe defendants applied for summary judgment under rule 293 of the UniformCivil Procedure RulesEQUITY – TRUSTS AND TRUSTEES – IMPLIED TRUSTS –CONSTRUCTIVE TRUSTS – COMMON INTENTION – where the plaintiffs’parents obtained a loan to purchase a half‑share in property in 1985– where the plaintiffs repaid the loan by monthlyrepayments – wherethe plaintiffs alleged that the half-share of the property was held pursuant toa common intention constructivetrust – meaning of constructive trust
– where the land was transferred to one of the children for natural love
and affection
in 2014 – where the plaintiffs alleged that the land was
received with knowledge of the common intention constructive trust
– first
limb of Barnes v Addy – knowing receipt of trust property
REAL PROPERTY – TORRENS TITLE – INDEFEASIBILITY OF TITLE
– EXCEPTIONS TO INDEFEASIBILITY – common law in personam
exceptions to indefeasibility – Land Title Act, section
185(1)(a) – where the defendants argued that the plaintiffs’ case
was bound to fail as the knowing recipient was
the registered proprietor of the
land – where the common law in personam exception to
indefeasibility does not assist in relation to the first limb of Barnes v
Hourigan v Trustees Executors & Agency Co Ltd & Ors (1934)
51 CLR 619
[1934] HCA 25, cited
Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC
413, considered
LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517
[2002] WASCA
291, cited
Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133,
cited
Monto Coal 2 Pty Ltd & Ors v Sanrus Pty Ltd as trustee of the QC
Trust & Ors [2014] QCA 267, cited
Muschinski v Dodds (1984-1985) 160 CLR 583
[1985] HCA 78,
cited
Orr v Ford (1988-1989) 167 CLR 316
[1989] HCA 4, cited
Pettitt v Pettitt [1969] UKHL 5
[1970] AC 777, cited
Riches v Hogben [1985] 2 Qd R 292, cited
Sidhu v Van Dyke (2014) 251 CLR 505
[2014] HCA 19, cited
Super 1000 Pty Ltd v Pacific General Securities Ltd [2008] NSWSC
1222, cited
The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2008] QCA 224,
cited
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
[1992]
HCA 55, cited
White v Tomasel [2004] 2 Qd R 438
[2004] QCA 89, cited
Judgment (132 paragraphs)
[1]
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - SUMMARY DISPOSAL - SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS - where the defendants applied for summary judgment under rule 293 of the Uniform Civil Procedure Rules
[2]
EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - CONSTRUCTIVE TRUSTS - COMMON INTENTION - where the plaintiffs' parents obtained a loan to purchase a half‑share in property in 1985 - where the plaintiffs repaid the loan by monthly repayments - where the plaintiffs alleged that the half-share of the property was held pursuant to a common intention constructive trust - meaning of constructive trust - where the land was transferred to one of the children for natural love and affection in 2014 - where the plaintiffs alleged that the land was received with knowledge of the common intention constructive trust - first limb of Barnes v Addy - knowing receipt of trust property
[3]
REAL PROPERTY - TORRENS TITLE - INDEFEASIBILITY OF TITLE - EXCEPTIONS TO INDEFEASIBILITY - common law in personam exceptions to indefeasibility - Land Title Act, section 185(1)(a) - where the defendants argued that the plaintiffs' case was bound to fail as the knowing recipient was the registered proprietor of the land - where the common law in personam exception to indefeasibility does not assist in relation to the first limb of Barnes v Addy
[4]
EQUITY - EQUITABLE REMEDIES - EQUITABLE COMPENSATION - where the plaintiffs argued that they would still have a claim for equitable compensation even though registration defeated the proprietary interest they claimed in relation to the first limb of Barnes v Addy
[5]
ESTOPPEL - ESTOPPEL BY CONDUCT - PROPRIETARY ESTOPPEL - where the plaintiffs relied on the proprietary estoppel claim to ask the Court to impose a trust over the land - where the plaintiffs alleged that the 2014 transfer of the land was inconsistent with the plaintiffs' assumptions based on the 1985 arrangement - where the plaintiffs alleged the defendants' silence encouraged their belief in this assumption - where the defendants did not own the land at the time the representation or assumption was made - where the plaintiffs had an expectation of ownership based on their mother's representation, not representations by the defendants - where the defendants were not trustees or fiduciaries
[6]
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - GENERALLY - where the defendants filed an application seeking that amendments to the plaintiffs' statement of claim be disallowed - Uniform Civil Procedure Rules, rule 379 - where the defendants alleged that the amendments to the statement of claim changed the factual and legal basis of the plaintiffs' case - where the factual matters relied on in the plaintiffs' case occurred in the 1980s - where the plaintiffs only became aware of the facts giving rise to their claims in 2019 - where the delay caused by amendment was not significant and caused no specific prejudice - where there was no delay on the part of the plaintiffs to justify disallowing amendments to the statement of claim
[7]
LIMITATION OF ACTIONS - GENERAL MATTERS - STATUTES OF LIMITATION GENERALLY - STATUTES OUSTING APPLICATION - STATUTES AND RULES RELATING TO AMENDMENT OF ORIGINATING PROCESSES AND PLEADINGS - where the defendants alleged that the amended pleading raised new causes of action - where rule 376 of the Uniform Civil Procedure Rules did not apply as the amended pleading sought equitable remedies
[8]
EQUITY - GENERAL PRINCIPLES - EQUITABLE DEFENCES - LACHES AND DELAY - where the plaintiffs' failure to protect their own interests was relevant to the laches defence - where the defendants argued there had been prejudice because of the delay since the factual matters occurred in 1985
C Jennings QC, with S Russell for the respondents/plaintiffs
[40]
Creevey Russell Lawyers for the applicants/defendants
[41]
[1] The defendants made an application on 21 May 2021 for summary judgment, or for an order that the proceeding be permanently stayed. It came on before me on 3 June 2021. I adjourned it on the basis that the plaintiffs had changed solicitors and the new solicitors had received instructions, and the file, only the previous day. It came back before me on 29 July 2021. By that time, the plaintiffs had filed an amended statement of claim. This caused the defendants to file another application (17 June 2021) asking that the amendments to the statements of claim be disallowed - r 379 of the UCPR. I will deal with this application first.
[42]
Application to Disallow Amendments to Pleadings - r 379 UCPR
[43]
[2] The defendants submitted that the plaintiffs' filing an amended pleading was an attempt to change the statement of claim so as to resist the relief sought in the application filed 21 May 2021. I think that may be accepted. It was submitted on behalf of the defendants that it was in some way improper to have filed a new pleading while waiting for the adjourned summary judgment application to come on. I cannot see that it was. The rules give the parties the ability to file amended pleadings without leave - r 378. This matter was not a supervised case, or on the commercial list. It had come on in the applications list and been adjourned to a date to be fixed in the applications list; it was not part heard before me I accept that where a matter is under the supervision of the Court, say on a supervised case list or the commercial list, the right to amend without leave might be lost.[1]
[3] The plaintiffs rely upon cases such as Chen v Australian & New Zealand Banking Group Ltd & Anor[2] to the effect that the Court's jurisdiction on a summary judgment application should not be exercised where a plaintiff might improve its position by amending its pleading. The fact that the plaintiffs chose to amend their pleading only after a summary judgment application was brought may be something which goes to costs, but I cannot see that it was improper for the plaintiffs to act as they did.
[4] It was also said on behalf of the defendants that the amendment should be disallowed because in January and April 2021 the defendants had written complaining about the statement of claim and the plaintiffs' previous lawyers had rejected the complaints. In fact those solicitors had gone further; they signed a certificate of readiness for trial and threatened an application to have the proceeding listed for trial. Delay is a matter to be considered in deciding whether or not to disallow an amendment and no doubt conduct of a party associated with that delay is also relevant. Here, some of the factual matters relied upon to make the plaintiffs' case occurred some time ago, in the 1980s. In such a case delay in the conduct of the proceeding may be more relevant. However, there was no particular prejudice relied upon by the defendants as having been caused by the changing attitudes on the part of the plaintiffs' solicitors, or the extra delay caused by the plaintiffs seeking to better articulate their case.
[44]
[24] The defendants applied for summary judgment pursuant to r 293 of the UCPR. That rule permits a defendant to obtain summary judgment if the Court is satisfied that the plaintiff has no real prospect of succeeding on all or parts of its claim - subrule 2(a) - and there is no need for a trial - subrule 2(b).
[25] Both the plaintiffs and defendants swore affidavits going to the merits of the plaintiffs' claim. Marilyn swore that she recalled Verona wanted the Dayboro property to be kept within her family (rather than shared with Audrey), and that for that reason she and Arnold agreed to help Verona buy out Audrey's share of the property. That is consistent with what the plaintiffs say about the 1985 arrangement. However, Marilyn denies the remainder of the arrangement as the plaintiffs plead it; she denies there was a common intention that all the children would contribute and would thereby gain a proprietary interest in the land, either immediately, or at a later time. She swears that at some date which she does not precisely recall, Verona provided her and Arnold with a copy of the 2005 Will. Although she does not directly say so, it seems from her affidavit that she knew of the 2008 lease and the option to purchase it contained. She swears that at some time, probably when the land was transferred to Arnold, she and Arnold paid Verona and Ronald the sum of $50,000 in cash. They were not provided with a receipt. She says that it was her understanding that Verona was to pay that money to the plaintiffs, but she does not know whether or not that happened.
[26] The 2005 Will is an exhibit to Marilyn's affidavit. It refers to Arnold's health problems and the fact that he has "paid for extensive improvements to the home". The Will continues, "to ensure Arnold has a secure place to live in the future and to ensure that he is duly recompensed for the financial and other contributions he has made and subject to clause 6(e) of this Will I give my property at 57 McKenzie Street, Dayboro to Arnold." Clause 6(e) of the Will contains an acknowledgment by Verona that the plaintiffs "have contributed cash to help me purchase my property. I therefore charge this bequest with the direction that Arnold pay [the plaintiffs] the sum of fifty thousand dollars ($50,000), such money to be divided equally among those children." The acknowledgment at cl 6(e) of the Will is consistent with the alleged 1985 arrangement so far as it involves the children contributing cash to help Verona buy Audrey's share of the property. The bequest to Arnold is inconsistent with the alleged common intention that there be a trust of the property in favour of the plaintiffs and Arnold. No doubt it bears on what the 1985 arrangement was, and also upon whether or not the bequest to Arnold was a breach of that arrangement.
[45]
"Subject to clause 3.3 of this Will, I give my property at 57 McKenzie Street, Dayboro ... to my son Arnold ... I have made this bequest for the following reasons:
[46]
(a) Arnold has been living on the property for many years during which he has paid for extensive improvements to the home on the property. He has:
[47]
(b) I wish to ensure Arnold has a secure place to live in the future as he has serious health problems and has no means of buying a home in which to live.
[48]
(c) I also wish also to ensure that Arnold is duly compensated for the financial and other contributions he has made to the property.
[49]
(d) I wish also to recognise and acknowledge that Arnold and his wife have provided me and my late husband with care and comfort over many years and have offered to care for me now and in my later years.
[50]
(e) However, in making this specific bequest, I have taken into consideration my other children and have therefore left them the residue of my estate equally.
[51]
3.3 I acknowledge that my children [Arnold, Valerie, Carolyn, Terry and Gregory] made an interest free loan to me in the sum of $27,000 to help me purchase the property. I therefore charge the bequest made in clause 3.2 of this Will with the direction that Arnold pay Valerie, Carolyn, Terry and Gregory the sum of $40,000, such money to be divided equally among them."
[52]
[31] A solicitor's note from April 2012 contains relevant information about this Will. It begins with the words, "Verona confirmed that she thought it was time that this Will was reviewed given that there is still some unrest about the fact that Arnold is to receive the Dayboro property." The file note continues, "She acknowledged that she was comfortable with the entire contents of the 3.2 clause and the 3.3. She wanted the sum that he was to repay the children reduced to $40,000 given that he was also one of the children who had provided money in years gone past for her to purchase the property at Dayboro."
[32] A further file note from May 2012 records an attendance on Verona and Arnold together. It says that the solicitor had taken instructions from Verona a couple of weeks ago to the effect that she wanted some sort of security that the other children would not be making claims against Arnold or her estate for any monies that Arnold might have needed to pay Verona during his lifetime for the occupancy of the property at Dayboro. The solicitor refers to having prepared a deed concerning Arnold's occupation of the land at Dayboro. The deed is not in evidence before me.
[33] Marilyn's affidavit shows that Verona made another Will in 2014 and, apparently in association with that, made a statutory declaration which gives her views as to the deserts of her children. It is apparent that, at that stage, she was close to Arnold and Marilyn and that she felt sorry for them. As to the matters the subject of this litigation, that statutory declaration records that, "Arnold and Marilyn do not own their own home and have been living in the Dayboro property since 1991. This property was originally my parents' property and when my mother died she left it in her Will to my sister and me. I paid my sister $38,000 for her interest in the property and then owned the property outright. I raised the $38,000 by a gift of $11,000 from my husband's Superannuation, and the balance of $27,000 was paid off by each of my five children paying $130 per month from 24 January 1986 to 2 April 1990." The statutory declaration records that Arnold and Marilyn paid the outgoings for the Dayboro property and improved it in various ways. The statutory declaration continues:
[53]
19. In my previous Will made in 2005, I wanted to ensure that Arnold had a secure place to live after I died and also I wanted to recompense him for all the financial and other contributions he had made to me during my life. I bequeathed him this property and charged it with the obligation for him to pay his siblings a total amount of $50,000 for their financial assistance to me for the purchase from my sister.
[54]
20. In 2008, I was concerned that Arnold actually received the property in my lifetime or at least be assured that he would receive it on my death by my Will, without any claims on it from my other children. I sought advice from Centrelink but was unable to transfer the property to Arnold because of Centrelink's deeming provisions.
[55]
21. As I could not transfer the property to Arnold I granted him a Lease and an option to purchase the property for $50,000.
[56]
24. I have always wanted Arnold to receive the property on my death.
[57]
25. I am hurt by the constant rumours among my other children that 'Arnold is squatting in the Dayboro property and living off his mother'.
[58]
26. I have given serious consideration to this and want to transfer my interest in the Dayboro property to Arnold now. He has applied significant amounts of his own labour and money to upgrade the house and I do not believe he should be required to pay any money for ownership of it. I wish to make an outright gift of the property to Arnold.
[59]
34. I am concerned that my other children will not understand my motives for gifting the property to Arnold, but I desperately wish to do what is best for me and make my own decisions about what assets I have. I have always had the intention of giving Arnold this property and I want to ensure I do this now while I have the capacity to make the gift.
[60]
[34] A few days after making the statutory declaration, Verona made a new Will leaving her assets to the plaintiffs and explaining, "I have made no provision for my son Arnold Ronald Merker as I have already provided for him during my lifetime".
[35] It was the defendants' submission that these statements made by Verona were admissible pursuant to s 92 of the Evidence Act 1977 (Qld). The statements certainly support the fact that the plaintiffs did contribute to the purchase of the Dayboro land. As noted above, they bear upon whether or not it was part of that arrangement that the plaintiffs were to obtain a proprietary interest by so doing, and whether or not Verona was breaching the 1985 agreement as to their proprietary interests.
[36] The four plaintiffs all swear that there was an arrangement made in about 1985 as a result of which they all paid $130 a week to repay the loan which allowed Verona to purchase Audrey's share of the Dayboro land. They all recall a family meeting where this was discussed. While recollections differ somewhat, there is evidence that the arrangement was that if the Dayboro property was sold while their parents were alive, 50 per cent of the sale proceeds would be received by the five siblings in equal shares; if the property was still in their parents' possession on death, it would be left to the five siblings in equal shares.
[37] The defendants submitted that the affidavit evidence of the plaintiffs as to what was said at these meetings was inadmissible hearsay having regard to Dale v Haggerty.[4] I do not think this case supports the proposition. The plaintiffs give evidence of what was said in conversations in or around 1985. The evidence is not hearsay; it is direct evidence to prove the arrangement.[5]
[38] The defendants submitted that the plaintiffs' monthly payments of $130 from 1985 were to secure the discharge of a registered mortgage, not to acquire a beneficial interest in the land. The dicta relied upon in does not support that submission; the plaintiffs' payments were contributions to the purchase price of the Dayboro land.
[61]
[39] The plaintiffs' primary claim is that the 1985 arrangement gave rise to a common intention constructive trust. They cited the cases of Pettitt v Pettitt[7] and Gissing v Gissing[8] as supporting the idea that this type of constructive trust is not a remedial trust (ie., having effect only by reason of an order of the Court) but an institutional trust (ie., having an existence from the time of the facts which the Court construes as creating the trust). I accept that is correct.
[40] The law relating to constructive trusts has produced many opinions in the cases and texts. In Allen v Snyder[9] Glass JA stated the relevant principles as at that date. He said:
[62]
"Trusts may be express, implied or constructive. An express trust of land is not enforceable unless it is evidenced in writing and signed by the party able to declare the trust ... An implied trust (also called a resulting trust) arises where the legal owner has provided none or only part of the purchase price. A resulting trust is presumed in favour of the party providing the money. His beneficial interest is proportionate to his contribution. ... Constructive trusts arise where it would be a fraud for the legal owner to assert a beneficial interest. Unlike express and implied trusts, which reflect actual intentions, they are imposed, without regard to the intentions of the parties, in order to satisfy the demands of justice and good conscience. ...
[63]
It is into this settled framework of doctrine that it is necessary to fit recent decisions involving disputes between spouses when the matrimonial home is in the name of one of them, but the other claims an interest. Pettitt v Pettitt and Gissing v Gissing are two decisions of the House of Lords, each of which rejected a claim by a spouse to a beneficial interest in the matrimonial home held in the name of the other. In the course of their judgments their Lordships expressed numerous obiter opinions, of which I believe the following represents a consensus.
[64]
(1) The Court merely declares the rights of the parties, and has no power to vary them in accordance with considerations of fairness: Pettitt v Pettit ...
[65]
(3) In the absence of writing to prove an express trust, the Court will give effect to an agreement as to the manner in which the beneficial interest is to be held: Gissing v Gissing. The oral agreement so enforced is one under which the claimant spouse, by contribution of one kind or another, has facilitated the acquisition of the home ...
[66]
(4) The common intention to which the Court gives effect may be expressed in such an oral agreement, or it may be inferred from the conduct of the parties: Gissing v Gissing. What is enforced is an actual intention, inferred as a matter of fact: ibid, not an imputed intention which they never had, but would have had, if they had applied their minds to it. ...
[67]
(5) The Court gives effect to the trust created by the agreement or common intention that, if the spouses contribute as contemplated, the beneficial interest will be held in accordance with their agreement or common intention: Gissing v Gissing." - pp 690-691.
[68]
[41] Some 40 years later, having completed a similar review of the law in Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc,[10] McMillan J said:
[69]
"The second class of constructive trust is a common intention constructive trust, which is distinct from the joint venture constructive trust. The court will construe a common intention constructive trust where:
[70]
(a) there is an actual or inferred common intention of the parties as to their beneficial interest in a property;
[71]
(b) there has been detrimental reliance on that common intention by the claimant; and
[72]
(c) it would be an equitable fraud on the claimant to deny his or her interest in the property.
[73]
The onus of proving such a trust lies on the party asserting the beneficial interest against the legal owner.
[74]
The parties' intentions can be found or inferred from the party's contemporaneous words and conduct, also having regard to the surrounding circumstances and context in which they were uttered or performed. The relevant intention may arise after the property has been acquired. The intention to be established need not designate a specific share of the property; it is sufficient that the claimant should have a beneficial interest.
[75]
The cases considering this form of constructive trust have commonly concerned persons in a domestic relationship, but the principle can be applied to disputes between parties to a commercial relationship.
[76]
A common intention constructive trust creates substantive rights and is not merely a remedy that arises when a court makes a declaration to that effect. The trust will generally take effect from the moment at which the conduct giving rise to its imposition occurs. The interest created may, however, be deferred in accordance with principles governing priority between competing equitable interests.
[77]
There is considerable doctrinal debate on how a common intention constructive trust should be appropriately characterised. Some say it is more appropriately characterised as an express trust because it is based upon the parties' intentions. Others say it is more accurately characterised as an aspect of equitable estoppel. The classification of this form of trust as a constructive trust admittedly does not sit comfortably with the observation of Deane J in Muschinski v Dodds that constructive trusts differ from other forms of trust in that they arise regardless of intention. It has nonetheless been observed that '[t]here is ample authority that a constructive trust may be based on the common intention of the parties'. Despite the evident taxonomical confusion, it appears from the authorities that a common intention constructive trust has a role to play distinct, albeit not always mutually exclusive, from a joint endeavour constructive trust and a constructive trust arising from equitable estoppel. The common intention constructive trust will enter centre stage where the formalities for a contract or express written trust are not satisfied, and the other paths are either not pleaded or are not satisfied." - [402]-[406]. (footnotes omitted)
[78]
[42] The plaintiffs have put on enough evidence on this application to satisfy me that they have an arguable case that the 1985 arrangement gave rise to a common intention constructive trust whereby Verona held half the Dayboro land on trust for the plaintiffs and Arnold through her lifetime and for them after her death.
[79]
[43] Establishing a common intention constructive trust would have assisted the plaintiffs had they discovered a breach of that trust during Verona's lifetime. They could have sought remedies against her as a defaulting trustee. By the time the plaintiffs discovered what they assert is a breach of trust however, Verona had died and the land had passed first to Arnold, and then to Marilyn.
[44] In an attempt to overcome these problems, the plaintiffs rely on the rule in Barnes v Addy:[11]
[80]
"Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court with Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees." (my underlining)
[81]
[45] As discussed in Farah Constructions Pty Ltd v Say-Dee Pty Ltd,[12] there are two limbs to the rule, each separately underlined above. So far as the first limb is concerned, the High Court in Farah Constructions explained, "Lord Selborne LC's expression was 'receive and become chargeable'. Persons who receive trust property become chargeable if it is established that they received it with notice of the trust."
[46] The plaintiffs' pleading is in two stages. First that, "by their involvement, consent or acquiescence to" the transfer from Verona to Arnold, Arnold and Marilyn sought to benefit themselves; did in fact benefit themselves by receiving the fee simple estate in the Dayboro land for no consideration; benefitted themselves at the expense of the plaintiffs, and "knowingly participated in Verona's breach of the trust". The participation is pleaded to be receiving the fee simple - paragraph 24I(c)(i)A.
[47] There is a separate plea that, "by her involvement, consent or acquiescence to" the transfer from Arnold to Marilyn and Arnold as joint tenants, Marilyn sought to benefit herself; did benefit herself by receiving an interest in the Dayboro land for no consideration; benefitted herself at the expense of the plaintiffs, and "knowingly participated in Arnold's breach of trust". The participation is pleaded to be receiving the interest in the Dayboro land - paragraph 24L(c)(i)A.
[48] On the facts proved on this summary judgment application the plaintiffs do have an arguable case that both Arnold and Marilyn received the Dayboro land with knowledge of the common intention constructive trust alleged by the plaintiffs. This arguable case satisfies the first limb of Barnes v Addy.
[49] I have difficulty with the pleading that, in Arnold's taking a transfer of the Dayboro property, he participated in Verona's breach of trust. There is no evidence that Arnold did more than receive a transfer of the Dayboro land, and pay for it, on Marilyn's version of events. This does not amount to more than knowing receipt - the first limb of Barnes v Addy. The same can be said for the transfer by Arnold into a joint tenancy with Marilyn, and Marilyn's becoming registered as owner of the whole interest in the land by survivorship.
[82]
"(1) A registered proprietor of an interest in a lot holds the interest subject to registered interests affecting the lot but free from all other interests.
[83]
(a) is not affected by actual or constructive notice of an unregistered interest affecting the lot; and
[84]
(b) is liable to a proceeding for possession of the lot or an interest in the lot only if the proceeding is brought by the registered proprietor of an interest affecting the lot.
[85]
(3) However, subsections (1) and (2) do not apply -
(b) if there has been fraud by the registered proprietor, whether or not there has been fraud by a person from or through whom the registered proprietor has derived the registered interest."
"(1) A registered proprietor of a lot does not obtain the benefit of section 184 for the following interests in relation to the lot -
[90]
(a) an equity arising from the act of the registered proprietor;
[91]
[52] There was no suggestion that there had been fraud within the meaning of s 184(3)(b) of the Land Title Act.
[53] In recommending the introduction of s 185 as part of the Land Title Act, the Queensland Law Reform Commission said this as to s 185(1)(a):
[92]
"The concept of indefeasibility under the Torrens system does not alter the equitable principle that a person will be bound by interests created by that person.
[93]
... This clause is intended to reflect the current law on the equitable exception to indefeasiblity."[14]
[94]
[54] The defendants submitted that s 185(1)(a) was a code. I think this is contrary to authority. In White v Tomasel[15] Davies JA said, "Section 185(1)(a) was not intended to do more than state the existing law. Accordingly it is appropriate to look at the previous law with respect to the meaning of this exception."
[55] The plaintiffs' case is not that they have an equity arising from the act of either Arnold or Marilyn. They plead that they have an equity which arises from the actions of, and promises made by, Verona, so in my view s 185(1)(a) does not assist them, and nor does the case law on the equitable exception to indefeasibility.
[56] The in personam exception to indefeasibility cannot assist the plaintiffs so far as they rely on the first limb of Barnes v Addy. In Farah Constructions the High Court explains that a claim under the first limb of Barnes v Addy, while a recognised equitable cause of action, was not such an exception. The High Court cited Tadgell JA in Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd, "here it is not possible to escape the circumstance that, if there was a 'knowing receipt' by the appellant, it was a receipt by virtue of registration under the Transfer of Land Act."[16] The High Court referred to the judgment of Pullin J in LHK Nominees Pty Ltd v Kenworthy drawing a distinction between a "primary wrongdoer, attempting to ignore an obligation to share or convey the land with or to the plaintiff" and a "party who merely had notice of an earlier interest or notice of third party fraud".[17]
[57] I cannot see that the plaintiffs in the present case are entitled to a proprietary remedy based on proving that Arnold (or Marilyn) was a knowing recipient of trust property pursuant to the first limb of because after transfer of the land to Arnold, he had the benefit of of the In the words of r 293(2)(a), the plaintiffs have no real prospect of succeeding on this part of their claim. As the conclusion rests on a matter of law, after assuming the plaintiffs prove all the facts they seek to rely upon, there is no need for a trial before this point is determined - s 293(2)(b).
[95]
[61] The plaintiffs argued that even if registration defeated the proprietary interests which they claimed, they would still have a claim for equitable compensation. This point was conceded as arguable by counsel for the defendants in argument - t 1-15. I think there is support for that in Super 1000 Pty Ltd v Pacific General Securities Ltd.[20] Although it is strictly obiter, White J said:
[96]
"So far as the personal remedy is concerned, a third party will be personally liable as a constructive trustee to pay equitable compensation if either the first or second limb of Barnes v Addy ... is satisfied: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd(1996) 39 NSWLR 143, 153."
[97]
[62] The plaintiffs characterise much the same facts as are relied upon to make the constructive trust claim discussed above on an alternative basis as a joint venture constructive trust. This is based on the idea that from 1985, until Arnold and Marilyn moved into the Dayboro property, the plaintiffs, Arnold, and their parents were engaged in a joint venture, namely the purchase and rental of the Dayboro land. They say that the joint venture failed without attributable blame and that therefore they are entitled to have the Court assist them by the imposition of a remedial constructive trust of the Dayboro land in their favour. The plaintiffs rely on Muschinski v Dodds[21] and Baumgartner v Baumgartner.[22]
[63] There is no evidence of how the rent received from the Dayboro land was (or was to be) applied before Arnold and Marilyn began to live there. Further, the defendants have a strong argument that the facts show a joint venture which was abandoned by mutual agreement to allow Arnold and Marilyn to live on the Dayboro land, rather than a joint venture that failed. Factually this claim is weak.
[64] There is also the legal complication that until the Court decides to grant a remedial trust, no trust exists. While a Court may grant a remedy in terms of imposing a constructive trust, and may declare that the trust has been in existence before the date of the judgment, it does seem to me that there are difficulties with the plaintiffs' claim that, before the Court intervened to impose the trust, Arnold and Marilyn were liable under the rule in Barnes v Addy. Even if that problem can be overcome, for the reasons discussed above, s 184 of the Land Title Act must defeat this claim so far as it is a basis for the proprietary relief the plaintiffs seek. For the reasons given above, the defendants are entitled to summary judgment on this part of the claim.
[98]
[65] In Sidhu v Van Dyke[23] French CJ, Kiefel, Bell and Keane JJ said this as to the type of proprietary claim which the plaintiffs advance here:
[99]
"In Giumelli v Giumelli, it was said that the category of equitable estoppel that is usually traced back to the decisions in Dillwyn v Llewelyn and Ramsden v Dyson is now a 'well recognised variety of estoppel as understood in equity', which affords relief 'found in an assumption as to the future acquisition of ownership of property ... induced by representations upon which there had been detrimental reliance by the plaintiff.'"
[100]
[66] The plaintiffs relied on their proprietary estoppel claim as a basis to ask the Court to impose a trust over the Dayboro land. As Keane J explained in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd & Anor, "In Giumelli, this Court explained the doctrinal basis of relief by way of proprietary estoppel as involving the recognition of a constructive trust of property whereby the legal title of the owner of property is subjected by order of the court to limitations necessary to meet the requirements of good conscience."[24]
[67] The defendants said that the affidavits filed on behalf of the plaintiffs did not address the proprietary estoppel claim. It is true that there is almost nothing in the affidavits as to such matters as assumptions, expectations, or reliance upon them. Nonetheless, I think they show a substantial enough factual substratum to demonstrate that the proprietary estoppel case is not, as the defendants' counsel put it, "a pleader's flourish", but that there is a sufficient case to be made in the context of a summary judgment application.
[68] On the facts here, the plaintiffs would have had a case based on proprietary estoppel against Verona on the basis that she departed from the assumption or expectation relied upon. In an attempt to claim that relief against Arnold, and then Marilyn, it is pleaded that Arnold and Marilyn knew that the plaintiffs had an assumption or expectation based on the 1985 arrangement, and knew that Verona, and Arnold, were acting inconsistently with the assumption. Arnold and Marilyn did nothing to inform the plaintiffs of these matters and "thereby encouraged the plaintiffs' persistence in the assumption". As a consequence, the plaintiffs remained ignorant until the transfers to Arnold and Arnold and Marilyn were registered. It is pleaded that in those circumstances it would be unconscionable for Marilyn to insist on her strict legal rights.
[69] The basis asserted for a proprietary estoppel against Arnold or Marilyn is misconceived and, in my view, has no real prospect of success. It was Verona who owned the land over which the plaintiffs claim an interest. It was Verona who made the representation or encouraged the expectation on which the plaintiffs relied to give them an interest in the land. As discussed above, I cannot see that there was an obligation on Arnold or Marilyn to speak when they knew that Verona intended to act inconsistently with the 1985 arrangements; they were not trustees or fiduciaries. By that time many years had passed since the plaintiffs had repaid the loan used to purchase the land. Arnold and Marilyn's silence after 2005 could not be said to have encouraged the plaintiffs to act to their detriment on the basis that they expected their actions would result in their obtaining an interest in the Dayboro land. At the time they stayed silent they did not own the land. After Verona transferred the land to Arnold, he had the benefit of the indefeasibility provisions.
[70] The defendants submitted that I should regard the claims made as contractual claims and that they were statute-barred. It is possible that an arrangement like the 1985 arrangement will be construed as a legally binding contract, rather than a loose family arrangement. The question depends upon intention. Matters relevant to establishing intention in such circumstances are discussed by McPherson J in Riches v Hogben.[25] Here however, the plaintiffs do not plead a case in contract and do not claim relief based on contract. The plaintiffs plead equitable claims for which there is no statutory period of limitation.
[71] There is a question as to whether I should apply a period of statutory limitation by analogy.[26] Equity will not apply a limitation period by analogy if that would result in unconscionability. I think that any argument as to unconscionability needs to be determined after a trial - see r 293(2)(b) of the UCPR.
[103]
[72] The defendants argued that they were prejudiced by the very long delay since the family arrangements were made in 1985 and the deaths of Ronald, Verona and Arnold. These are certainly very significant prejudices both as to defending the claims made by the plaintiffs and also as to proving the assertion made by Marilyn that $50,000 cash was paid to Ronald and Verona as consideration for the transfer of the Dayboro land. As well, Marilyn says that Arnold and she spent money maintaining the Dayboro land and improving it, and paying outgoings in relation to the land. She says she no longer has these records. The defendants say that the plaintiffs could have documented the 1985 arrangement or acted in accordance with it by, say, lodging a consent caveat. Their failure to protect their own interests is relevant to the laches defence.
[73] It was common ground between the parties that in assessing delay, and its effect, in the context of a laches claim, the relevant time is that at which the plaintiffs came to know of the facts giving rise to the equitable claim.[27] The plaintiffs swear that they did not become aware of the transfer to Arnold, and subsequent transfers, until mid‑2019. Further, it is part of their claim that Arnold and Marilyn knew of the facts relevant to their claim but did not inform them. The behaviour of a defendant during the period of delay is "material to the justice of allowing or depriving the plaintiff of an equitable remedy (Lindsay Petroleum Co v Hurd[1874] UKLawRpPC 1; (1873-74) LR 5 PC 221 at 239‑240)."[28]
[74] The plaintiffs relied upon cases which caution against determining statute of limitation points at an interlocutory stage.[29] Given that questions of laches will depend not just on factual findings as to delay, but also as to prejudice and the behaviour of Arnold and Marilyn during the period of delay, I think those cases apply a fortiori here.
[75] It seems to me in these circumstances that the laches defence is one which ought to go to trial, see r 293(2)(b).
[104]
[76] The defendants relied upon the power of a superior court to stay proceedings which are an abuse of process. It was acknowledged that the jurisdiction was one to be exercised only in exceptional circumstances. Here, it was submitted that the defendants could not receive a fair trial. Emphasis was placed on the very long delay since relevant facts occurred in 1985 and it was submitted that any witness who might have been able to provide factual contradiction to the plaintiffs' claim had died. I accept that these are significant points. Documents such as the 2005 and 2012 Wills, the 2008 lease, the statutory declarations made by Verona, and the solicitors' file notes in some way mitigate these problems. Further, it is apparent from what is said in Marilyn's affidavit that, to some extent, she accepts the factual premises relied upon by the plaintiffs in relation to what happened in about 1985.
[77] Because laches is available to the defendants as a defence to the claim, and because there is an available limitation period by analogy, it seems to me that I should not permanently stay this proceeding. The trial judge will have the advantage of seeing all the available evidence and assessing the witnesses' recollections. It may be that at the end of the day a laches or limitations defence succeeds, but I do not think I ought to deprive the plaintiffs of a trial by staying the proceeding now.
[78] The defendants mounted an independent argument on behalf of the second defendant. It was said the estate was fully distributed and/or had no assets so that the proceeding should be permanently stayed against it. There might be a case for such a stay. However, on this application the factual material proved by the defendants did not assure me of these factual matters. Arnold's Will is not exhibited, and Marilyn barely deals with this topic in her affidavit.
[105]
[79] I give summary judgment for the defendants against the plaintiffs on the proprietary claims made in this proceeding, that is, on paragraphs 1 and 3 of the prayer for relief in the amended statement of claim, which is Court Document 22. I will hear the parties as to costs.
[106]
[1]The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd[2008] QCA 224, [38] per Keane JA. Although cf Monto Coal 2 Pty Ltd & Ors v Sanrus Pty Ltd[2014] QCA 267, [65].
[5] The plaintiffs swear that they were not aware of the facts giving rise to their claims until 2019. The proceeding was commenced in 2020 and I am not satisfied that there has been such contumelious delay or other poor behaviour on the part of the plaintiffs, or their former solicitors, as to justify disallowing these amendments to the statement of claim.
[6] Next the defendants said that the amendments to the statement of claim raised a new case which was "fundamentally different" from the old case and that the new case was statute barred. At this point it is necessary to descend into the rather complicated facts the plaintiffs plead in this proceeding. I will outline the facts in the amended statement of claim. I will use the parties' first names, no disrespect is intended.
[7] Land in Dayboro is the subject of the claim. It was owned by Vera. She left it by her Will to her two children, Audrey and Verona. In or about January 1985, it was proposed that Audrey transfer her half-interest in the land to Verona. Verona was married to Ronald. Verona and Ronald could not pay Audrey's asking price ($34,000), nor did they have the ability to repay a loan to purchase the property.
[8] In 1985 Verona and Ronald, and their five children (the plaintiffs and Arnold) met on several occasions. At the meetings Verona said that she wished to buy Audrey's half‑share in the property, but that she and Ronald could not afford it. Verona and Ronald asked their five children whether they would each acquire a 10 per cent share in the property. Verona and Ronald asked their children whether, if Verona and Ronald obtained a loan, the children would make the monthly repayments until that loan was repaid. Verona and Ronald proposed that if their children did do that, the children would own 50 per cent of the property in equal shares as between themselves. Further that, if the property was sold during the lifetime of Verona and Ronald, half the proceeds of sale would go to Verona and Ronald, and half would go to the children to be distributed among them in equal shares. Otherwise Verona and Ronald proposed that the property would pass to the children in equal shares on the death of Verona and Ronald.
[9] The pleading continues, "following an opportunity to discuss the [above] invitation with their respective spouse, which relevantly included Arnold speaking with [his wife] Marilyn about the [above] invitation", the five children agreed to the proposal put forward by Verona and Ronald. It is pleaded that thereafter each of the five children paid the sum of $130 per month to repay a loan (used to buy Audrey's half‑share) in the name of Verona and Ronald. It is pleaded that so far as Arnold was concerned, the payments were made by Arnold and Marilyn.
[10] In January or February 1985, Audrey transferred her share in the Dayboro land to Verona for the sum of $34,000, which sum Verona and Ronald had borrowed. This meant that Verona was the sole registered proprietor. It is pleaded that because of the arrangement described at [8] above, Verona held the property, or at least one-half share in it, on trust for the five children pursuant to a common intention constructive trust. It is further pleaded that Marilyn knew of that trust and/or held the common intention herself and was, through Arnold, in a position to benefit financially from the common intention.
[11] From the end of 1990, Arnold and Marilyn struggled financially. In April 1992, Arnold was declared bankrupt. Verona agreed with Arnold and Marilyn that they could move into the Dayboro property until they got back on their feet. Arnold, Marilyn and their children moved into the Dayboro property in early 1992. They paid no rent. Verona told the plaintiffs of this.
[12] In 2000, Arnold suffered from kidney failure and because of this illness, Verona let him, Marilyn, and their family, continue to reside in the Dayboro property rent-free. The plaintiffs knew of this. They may not have been happy about it, but none of them formally objected.
[13] In 2005, Verona made a Will leaving the Dayboro property to Arnold but charging the bequest in the sum of $50,000 to be divided equally amongst the other four children. In 2008, Verona executed a 20 year lease with Arnold as lessee which included an option to purchase the Dayboro property for $50,000. It is pleaded that the Will and the lease were contrary to the common intention and therefore a breach of trust by Verona. It is said that Arnold and Marilyn knew of these documents but did not inform any of Arnold's siblings of them. Marilyn admits this later point in her affidavit on the summary judgment application.
[14] Ronald died on 27 February 2011.
[15] In February 2014, Verona transferred the property to Arnold for natural love and affection. Later that same year, Arnold transferred it to himself and Marilyn as joint tenants. Both these transfers were registered. It is pleaded that the transfer to Arnold was a breach of the common intention trust and that Marilyn knew of it. Further, it is pleaded that the transfer to Arnold and Marilyn as joint tenants was with knowledge of Verona's breach of trust. The pleading continues that, as a result of these matters, Arnold and Marilyn held the property on a constructive trust for the plaintiffs.
[16] Arnold died in September 2020. His share of the Dayboro land passed to Marilyn, who is now the registered proprietor. Verona died in October 2020.
[17] Before the recent amendments, it had been pleaded that it was unconscionable for Marilyn to retain the property. It had been pleaded that the unconscionability arose from a common intention that the Dayboro land would "eventually pass" to the five children in equal shares and not to any one of them to the exclusion of the others. In those circumstances it had been pleaded that Arnold held the property on trust for himself and his siblings in equal shares and that by transferring the property to his wife Marilyn he breached that trust, and that Marilyn knowingly received her share of the property so that it would be unconscionable for her to retain it. The plaintiffs sought a declaration that Marilyn holds the property, or alternatively half of it, on trust for them and Arnold's estate. Alternatively, the plaintiffs sought equitable compensation in an amount equal to 80 per cent of the value of the Dayboro land.
[18] The relief sought in the amended pleading has not changed, but as described above, both the factual basis and legal construction of the claim has. The pleading now alleges that from the time of the 1985 agreement Verona held the Dayboro land, or alternatively one half of it, pursuant to a common intention constructive trust on their behalf. That is, the pleading now alleges that the 1985 agreement meant that the five children immediately had an equitable interest in half the Dayboro land in equal shares. The previous pleading had been ambiguous as to when the plaintiffs acquired an equitable interest in the land. It had simply alleged that "eventually the whole of the property would pass to the children in equal shares". It had said at paragraph 12(a) that Verona and Ronald had offered their children the chance to "buy out Audrey's 50% interest in the property by each of you acquiring a 10% share in the property" and had alleged that from the time of Verona's transfer to Arnold he held the property on trust for himself and his siblings. However, it did not clearly assert an equitable proprietary interest in the plaintiffs from 1985, although it had expressly pleaded that the 1985 arrangement gave rise to a common intention.
[19] An alternative claim based on proprietary estoppel was originally pleaded. That pleading has been retained, but a factual change has been made to it. It was originally pleaded that the 1985 arrangement amounted to a representation that Verona would cause the Dayboro land to be transferred to the five children in equal shares either by way of inter vivos transfer or testamentary gift. It is now pleaded that the 1985 arrangement was a representation that the five children owned 50 per cent of the property in equal shares and that they continued in that assumption. It is now pleaded that Marilyn ought to have disabused them of their continuing assumption, from the time of the 2005 Will.
[20] I return to the defendants' submission that the amendments to the statement of claim raised new causes of action which are time barred, and thus required leave. The prayer for relief, and the claim, have not changed. One of the bases for equitable relief - enforcement of a common intention trust - has been made express, whereas the former pleading was ambiguous in this regard. The factual bases for that claim and for the proprietary estoppel claim have been augmented and better articulated.
[21] Rule 376 applies in relation to an application for leave to amend a pleading to add a new cause of action, "if a relevant period of limitation, current at the date the proceeding was started, has ended". In this proceeding the plaintiffs seek equitable remedies. The expression "limitation period" is defined in Schedule 3 to the UCPR to mean a limitation period under the Limitation of Actions Act 1974 (Qld). It seems to me that there is no applicable period of limitation, so that r 376 does not apply. Even if it did, I think that leave would be appropriate because, although there are new facts pleaded and arguably a new cause of action (the assertion of a common intention trust), the new pleading relies upon substantially the same facts as the former pleading.[3]
[22] I will not disallow the amendments to the statement of claim. While there are a number of amendments, and they do change the factual and legal basis upon which the plaintiffs' claim is put, substantially the same facts are relied upon by the plaintiffs as were relied upon in the previous pleading. Much time has passed since 1985 and three important witnesses have died. However, the plaintiffs swear they did not know of their cause of action until 2019. Further, there is a distinction to be made between the time which has passed since 1985 and the delay which will be occasioned by the amendments to the statement of claim. The latter is of relatively short duration and no particular prejudice is said to flow from it alone. It may be that an equitable defence of laches succeeds at the end of the day, based on the time passed since the 1985 agreement, and the death of relevant witnesses, see below. However, in all the circumstances here, I would not prevent the plaintiffs better pleading their case.
[23] The last point made by the defendants as to why I should disallow the amendments to the statement of claim was that they lacked utility because the claim must fail. There is an obvious overlap here with the summary judgment application originally brought by the defendants. I prefer to deal with the viability of the plaintiffs' claim in considering the summary judgment application.
[27] Marilyn's affidavit exhibits the 2008 lease from Verona to Arnold. It contains an option to purchase the Dayboro land for $50,000.
[28] Marilyn's affidavit exhibits a Will made by Verona in 2008. It contains a clause saying, "I have not purposefully made [sic] any provision for my son Arnold Ronald Merker as he has received the benefit of my interest in the property at 57 McKenzie Street, Dayboro in recognition for the financial and personal contributions he has made to me, my husband and the Dayboro property during my life." On the evidence before me at least, Verona had not disposed of the Dayboro property to Arnold at that stage.
[29] Marilyn's affidavit exhibits documents which show that in April 2011 Arnold and Marilyn accompanied Verona to see a solicitor. The purpose of the visit was so that she could give Arnold a Power of Attorney. It is recorded that on this occasion Verona asked the solicitor whether she could give the Dayboro land to Arnold. This was discussed and she was to consider what to do. It appears that she wanted to give it to him, but was worried it would prevent his receipt of social security.
[30] Then there was a Will made by Verona in 2012 which provided:
[50] The defendants argued that even if one were to assume a constructive trust effective from the time of the 1985 arrangement, and that Arnold was a knowing recipient within the first limb of Barnes v Addy, registration of his transfer meant that the plaintiffs' case was bound to fail.[13] I think this is correct. Section 184 of the Land Title Act 1994 (Qld) provides:
[58] There will be cases where an exception to indefeasibility can be established by proving a personal equity based on the second limb of Barnes v Addy for that involves more than knowing receipt; it involves assistance with knowledge in a dishonest and fraudulent design on the part of the trustee. The phrase "dishonest and fraudulent" is to be understood by reference to equitable principles. I have discussed the words "participated in" in the plaintiffs' pleading (above) and concluded that their case is no more than a case of knowing receipt. There is no allegation of fraud or dishonesty. The plaintiffs' written submissions only relied on the first limb of Barnes v Addy,[18] and so did their oral submissions.[19]
[59] It is pleaded that Arnold and Marilyn knew of the existence of the 2005 Will and the 2008 lease; did not inform the plaintiffs of these documents, which indicated a willingness of Verona to depart from the 1985 agreement, and that they continued to reside on the property. Had these documents been brought to the plaintiffs' attention, they would have had the opportunity to assert the claims they now make while Verona was the registered proprietor of the Dayboro land. But I cannot see that Arnold and Marilyn had a duty to inform the plaintiffs. They were not fiduciaries, and their staying silent is lesser conduct than knowing receipt of the land when it was transferred to them.
[60] The other factual matter pleaded which must bear on how equity regards the conduct of Arnold is that he is alleged by the plaintiffs to have participated in the 1985 arrangement. That is, he is alleged to have participated in the events which the plaintiffs claim should be construed as establishing their equitable property interests. In that respect Arnold is different from an unconnected third party who obtains registration knowing that this will defeat an equitable interest. Even so, I cannot see that those facts bring him within the second limb of Barnes v Addy, or within the words of s 185(1)(a) of the Land Title Act.