Plaintiffs v Defendant

2 The hearing before me was concerned primarily with the Order 53 proceeding for the summary recovery of the property by Queenbridge against Ms Duman. That procedure is only appropriate in "clear cases": see per Nettle J in Williams v Rampino[1]. In Melbourne Anglican Trust Corp v Green Tree[2] Vincent J said that the jurisdiction should be exercised with great care "and certainly never where any real question could be seen to arise concerning its application". Summary judgment under Order 53 may be available even if there is a factual dispute provided, as Tadgell JA said in Pappas v Bowmark Pty Ltd[3], it "may be possible to resolve such a dispute quite readily and fairly".

3 In this case there is a dispute over the entitlement of Ms Duman to the property. She asserts a trust in her favour which Queenbridge, as registered proprietor, denies, as does Mr Moar. They contend that she has no interest in the property other than that she had been a licensee who has remained in occupation without the licence or consent of the owner. It is asserted on her behalf that the facts establish either an express or constructive trust for her benefit, or a gift of the property to her. The principal concern in the Order 53 proceeding is, therefore, whether the claim by Ms Duman can readily and fairly be resolved against her on the material as filed.

4 There is certainly no instrument in writing as required by s.53 of the Property Law Act 1958 to establish her claim over the property. A trust of land may still be enforceable despite a lack of writing if, inter alia, it is a constructive trust or the statute is being used as an instrument of fraud: see, for example, Muschinski v Dodds[4]; Allen v Snyder[5]. The existence of an express trust requires an inquiry into the common intention of the relevant parties and differs from a constructive trust which arises by operation of law "often without reference to the intentions of the parties concerned and indeed largely contrary to the desires and intentions of the constructive trustee:" see Jacob's Law of Trust in Australia[6]. A constructive trust may arise where the assertion of a legal right to a property would constitute unconscionable conduct where, for instance, the party asserting a legal right to property would deny the other party's contribution to a joint endeavour which fails.

5 The evidence available thus far for the existence of either trust is not great although there is some, and the contrary evidence is far from satisfactory or persuasive. The evidence of Ms Duman is her assertion that Mr Moar said that the property was purchased by him for her. It is clear that the property was purchased for use by her in the context of what appears to have been a loving relationship between the two of them which commenced some time towards the middle of 2004. It was purchased at auction by Mr Moar on 26 February 2005 with the Contract of Sale showing the purchaser as "Max Moar and or nominee". On 18 March 2005 Mr Moar completed a nomination form nominating Queenbridge as the purchaser. Ms Duman does not appear to have been aware of that nomination and, indeed, there is no evidence of any actual knowledge on her part concerning the name in which the property was acquired. It may not matter but I note also that the nomination form does not purport to identify any trustee capacity pursuant to which Queenbridge was nominated as substituted purchaser. It is now contended, however, in untested evidence, that Queenbridge is the corporate trustee of the Max Moar Queenbridge Trust ("the Queenbridge Trust") and that the property was purchased in that capacity and for the benefit of the beneficiaries of the Queenbridge Trust who do not include Ms Duman.

6 One undoubted fact is that the property was acquired at auction by Mr Moar and was used, as it was intended, by Ms Duman in connection with the relationship she then had with Mr Moar. At the time of its acquisition, and of its use, the property appeared to have been intended as the permanent place at which Mr Moar and Ms Duman would enjoy their domestic relations. That use was at very least condoned and adopted by Queenbridge to the extent (if any) that it exercised judgment independent of Mr Moar. Her evidence included discussions with him of a permanent relationship in which they would have children. He did maintain a separate apartment, but on her evidence, they would eat, watch the television, and go to bed at the property and would spend almost all of their evenings together alone with Mr Moar staying overnight about six or seven nights a week. It seems to me, therefore, that there is some evidence to establish an express intention to benefit Ms Duman that needs to be tested before it can confidently be said that there was not an express intention at least as between Mr Moar and Ms Duman that the property was acquired at least in some part for her benefit sufficient to create an equitable interest in her favour.

7 It is said on behalf of Queenbridge and Mr Moar that the "only evidence relied upon for a declaration of trust is presumably the equivocal statements of [Mr] Moar prior to and at the auction" of the property. This, however, may understate the evidence available which, in my view, includes the undoubted circumstances of Ms Duman moving into the property and its dedication for the exclusive use of the two of them in so far as, and to the extent that, they enjoyed domestic relations. Counsel for Mr Moar and Queenbridge relied heavily upon an email from Ms Duman to Mr Moar dated 29 March 2007 which, it is said, is contrary to an assertion made by her now that the property was for her. It is true that the email expresses an awareness of a necessity to leave the premises but I am far from confident that what she wrote was because she did not think that there had been statements earlier by Mr Moar that the property should be the place in which they would enjoy their domestic relations permanently. It is, I think, possible to read the email as little more than a resigned statement of a mistaken belief on her part that she was not legally entitled to remain on the property at a time when she had not yet received legal advice. In any event, it seems to me that it is a matter that requires investigation and is unsuitable for resolution in Order 53 proceedings.

8 It is said, however, that the statements of Mr Moar are not those of Queenbridge and that it made no declaration on its behalf in favour of Ms Duman and, indeed, that Queenbridge was never capable of declaring the property in trust for her without being in breach of the Queenbridge Trust and that Ms Duman was entirely ignorant of the existence of Queenbridge until mid June 2007. Each of these assertions may ultimately lead to a successful resolution on behalf of Queenbridge but I am far from satisfied that they do not raise serious questions to be investigated. The fact that Queenbridge might be in breach of the Queenbridge Trust if it had declared a trust of the property for Ms Duman is not an answer to whether a trust was declared by Queenbridge either expressly or by conduct: that issue is not governed by whether it could do so without being in breach of trust but, at best, by whether it had done so notwithstanding a breach of the Queenbridge Trust. More important, however, is the precise relationship between Mr Moar and Queenbridge including the basis upon which Queenbridge was substituted as nominee under the Contract and the extent to which whatever Mr Moar may have said was necessarily adopted by, or said for, Queenbridge.

8 The relationship between Mr Moar and Queenbridge has not yet been tested but there is some evidence which points to Queenbridge being little more than a conduit for the will of Mr Moar. In paragraph 13 of his affidavit of 4 July 2007 he deposes to his intention to transfer the property to one of his children at some future time. The language he adopts in paragraph 13, and elsewhere, is suggestive of a transfer of the property as being within his gift, disposition and domain as if Queenbridge's legal ownership, will and decision making was a mere formality if not irrelevant. In paragraph 8 of a draft affidavit tendered as part of the affidavit of Mr Zwier dated 12 July 2007 the only reason (albeit said to be only one of them) why Queenbridge was the entity which acquired the property was said to be because it had accumulated tax deductible losses that could be offset "against any future sale of the investment property". The suggestion being, it seems, that the acquisition of the property as an investment property by Queenbridge would make Ms Duman the fortunate recipient of a tax advantage available to Queenbridge pro tem.

10 There is no evidence at all of any of these matters ever having been communicated to Ms Duman and indeed, her ignorance of the role of Queenbridge is, as I have indicated, relied upon by Queenbridge and Mr Moar against her. The state of the evidence is thus consistent with the proposition that Queenbridge was acting as the conduit for Mr Moar and was doing so through the agency of Mr Moar. It is now contended by Queenbridge and Mr Moar that the former should be looked at as a legal person separate from Mr Moar and, of course, it must; but that separate legal person which at all times acted through Mr Moar at no stage did anything to dispel any expectation or understanding in Ms Duman that its apparent (or at least possible) alter ego may have created of an entitlement in the property. Indeed, even if Queenbridge is taken as a separate legal entity, the fact is that it knew of the use and occupation of the property by Mr Moar and Ms Duman as the place to enjoy their domestic life together and permitted it to continue. It may be that Queenbridge will be found to have adopted and consented to the arrangements entered into by Mr Moar with Ms Duman: to date there is no evidence of Queenbridge having previously asserted claims to any right contrary to those asserted by Ms Duman. Queenbridge appeared to allow a course of dealing between Mr Moar and Ms Duman in relation to the property to continue and to do so without demur or objection; Queenbridge, as registered proprietor, was a party to that course of conduct

11 The evidence relied upon to establish contribution for the purpose of a constructive trust is similarly not great, but Ms Duman does point to some detriment in her conduct to sustain the relationship with Mr Moar. She appears, at very least, to have provided a warm and loving relationship for Mr Moar at the property registered in the name of Queenbridge. She provided meals and a home when he sought it there and, it seems, it was sought and provided frequently. She has claimed loss of advantage in pursuing other options for work or in divorce proceedings against her former husband. Mr Moar may have been the primary recipient of these, but I cannot exclude Queenbridge having wanted to benefit Mr Moar by allowing the property as the place of the relationship between Mr Moar and Ms Duman. Although they do not seem to be strong claims, they are ones which I think she is entitled to put and have tested at trial. The inappropriateness of judgment under 0rder 53 is increased in my view by the hearsay nature in which the evidence has been given.

12 It is not necessary for me to consider whether there is any substance in the allegation of a gift although I should indicate that I do not regard any of the material available to me as sufficient to establish that a gift of the property was made. The highest the evidence currently goes is to suggest an intention that the property would be available for Mr Moar and Ms Duman between them on some ill-defined basis and proportions. In saying that I should emphasise that I make no finding other than that the issues on the materials as they currently stand merit testing and investigation before a confident conclusion can be reached one way or another.

13 In these circumstances I cannot confidently conclude that neither an express trust nor a constructive trust could be found against Queenbridge at a trial hearing of the proceeding. It follows that I do not consider the procedure available under Order 53 to be an appropriate means by which the issues should be determined. I will dismiss the Order 53 proceeding as it serves no further purpose in resolving the dispute between the parties that is not capable of resolution in the other proceedings. However, I will reserve the question of costs arising in that proceeding and on the injunctive proceeding sought by Ms Duman.

14 The contrary claims by Ms Duman for interlocutory relief must similarly fail: it may be that the material against her does not establish a clear case to warrant an order under Order 53 but the evidence of her claim is not sufficient to establish a prima facie case in her favour. In any event I would not make interlocutory orders in her favour because I do not consider that the balance of convenience justifies that course. At best her evidence is that she has an interest in the property and not that she is entitled to the whole of the property. The funds to purchase the property were provided by Mr Moar by way of a loan to Queenbridge and, it would seem, that there are other claimants with interests to the property: Queenbridge, Mr Moar and the beneficiaries of the Queenbridge Trust. The property is valued at around $2,000,000 and is expected to generate substantial rental income. There is insufficient basis to maintain a claim by her that she must be permitted to remain in that property and a sound basis for the claim that the property be sold or rented at a commercial rent subject, of course, to conditions to ensure that her interests are protected.

It is next relevant for me to consider the Orders sought in the amended summons in proceeding No. 7062 of 2007 on behalf of Queenbridge for possession of the property and the removal of the caveat which has been lodged by Ms Duman. An order is sought pursuant to s.90(3) of the Transfer of Land Act 1958 to remove caveat No. AF144160H lodged by Ms Duman over the Certificate of Title of the property, being the Certificate of Title volume 10859 Folio 956. In Beiser v Topoljski[7] Kaye J said at [23]:

"All of those circumstances make it questionable whether the plaintiffs at trial will be able to establish the relevant breach of trust now asserted by them, if they do succeed in establishing that Topoljski has been overpaid his share of entitlement to the profits from the joint ventures. As Mr Stirling correctly points out, there is a distinction between one partner innocently receiving an overpayment of an amount, and, on the other hand, that partner wrongfully and in breach of trust procuring payment to him of an amount to which he is not entitled. Only in the latter case might it be said that a breach of trust has occurred. Thus the claimed breach of trust in this case in my view, on the materials currently before me, rests on quite a weak factual foundation. Of course, this application has been conducted on affidavit, without the opportunity for the deponents of the affidavits to be cross-examined. It is with caution that I proffer any assessment of any merits of the claim of the plaintiffs. Nonetheless, the plaintiffs have sought to sustain the caveat lodged by the third plaintiff on material which, it seems to me, provides a real basis to doubt that the plaintiffs will be able to make out their claim to a breach of trust in this case."

"The Court's power under s.90(3) of the Transfer of Land Act is discretionary. On the materials which have been put before me the plaintiffs' claim to a constructive trust clearly has difficulties. On the other hand, as I have concluded, the balance of convenience does not favour the maintenance of the caveat. In those circumstances it is my conclusion that the first and second defendants are entitled to an order, on their summons dated 27 October 2006, for removal of the caveat lodged by the third plaintiff over the property."

See also Westpac Banking Corporation v Dimopoulos[8] per Osborne J and Goldstraw v Goldstraw[9] at [30] per Dodds-Streeton J.

16 The state of the material does, in my opinion, justify the discretionary grant of an order for possession of the property and to remove the caveat for the reasons already mentioned. Ms Duman may have a claim in respect of the property but her claim can adequately be preserved by the grant of an order upon conditions which will preserve her rights in the event that her claim is successful against Mr Moar and Queenbridge. In the draft affidavit of Mr Moar exhibited to the affidavit of Mr Zwier it is said that Queenbridge now intends to sell the property as soon as possible and that it is capable of being rented for an amount in the vicinity of $2,000 per week. I accept that Queenbridge should be allowed to sell or rent the property and that Ms Duman's rights can adequately be protected by a condition that the proceeds of any sale or rent from the property be retained in a separate and identified account until the hearing and determination of the proceedings in which the entitlement of the property is determined. Senior counsel for Mr Moar and Queenbridge has indicated that he has instructions to give an undertaking as to damages.

17 Accordingly I intend to make orders to the following effect:

(b) The costs of the proceeding are reserved until the hearing and determination of proceedings No. 7062 of 2007 and No. 7163 of 2007.

(a) Queenbridge be given possession of the property within 60 days and caveat No. AF144160H lodged by Ms Duman over the land in Certificate of Title Volume 10859 Folio 956 be removed subject to:

(i) each of Mr Moar and Queenbridge providing undertakings in the usual form to pay any damages that may be suffered by Ms Duman by reason of this order; and

(ii) suitable arrangements being put in place to ensure that the proceeds of any sale or rent of the property be held in a separate and identifiable trust account pending the hearing and determination of proceeding No. 7062 of 2007 and No. 7163 of 2007.

C) In proceeding No. 7163 of 2007 I make no interlocutory orders and reserve the question of costs.

[1] [2002] VSC 343 at [16].

[2] (29 May, 1997, BC 9702239).

[4] [1985] HCA 78; (1985) 160 CLR 583.

[5] (1977) 2 NSW LR 685.

[6] (7th Edition, Butterworths) J D Heydon & M J Leeming [1301].

[7] [2006] VSC 415.

[8] [2006] VSC 10.

[9] [2002] VSC 491.