Supreme Court of WA|2005-02-18|Before: Mr J

Powell v In De Braekt [2005] WASC 8 (18 February 2005)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : POWELL -v- IN DE BRAEKT [2005] WASC 8

Practice and procedure - Summary judgment - Strike out statement of claim - Limitation period - Doctrine of laches - Turns on own facts

Cia de Seguros Imperio v Heath (REBX) Ltd & Ors [2000] EWCA Civ 219; (2001) 1 WLR 112

Dey v Victorian Railway Commissioners (1949) 79 CLR 62

Renowden v McMullin & Ors [1970] HCA 24; (1970) 123 CLR 584

Secretary, Department of Social Security v Agnew & Anor [2000] FCA 59; [2000] 96 FCR 357

Soar v Ashwell (1893) 2 QB 390

Baburin v Baburin [1990] 2 Qd R 101

DoCarmo & Ford Excavations Pty Ltd [1984] HCA 17; (1984) 154 CLR 234

Jakovljevic v Doslov [2000] WASCA 131

Kidner v Department of Social Security [1993] FCA 587; (1993) 18 AAR 545

Mayne v The Public Trustee [1945] HCA 38; (1945) 70 CLR 395

Menz & Anor v Same [2000] WASC 288

Morgan v Banning (1999) 20 WAR 474

Parsons and Parsons v McBain [2001] FCA 376; (2001) 109 FCR 120

Radonich v Radonich [1999] WASC 165

Soar v Ashwell [1893] 2 QB 390

Wardley v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514

1 ACTING MASTER CHAPMAN: The defendant by chamber summons filed on 5 October 2004 seeks the following orders:

"1. The Defendant have leave to apply for summary judgment under O 16 r 1 of the Rules of the Supreme Court.

2. Summary judgment be entered for the Defendant and the Plaintiff's action be stayed or be dismissed against the Defendant under O 16 r 1 of the Rules of the Supreme Court.

3. Further and in the alternative, the Amended Statement of Claim be struck out in its entirety without liberty to replead, and the action be dismissed against the Defendant under O 20 r 19 of the Rules of the Supreme Court and under the inherent jurisdiction on the ground that it is an abuse of the process of the Court.

4. Further and in the alternative, the Plaintiff's claim that she is the beneficiary of an express trust, contained in the Indorsement on the Writ of Summons, filed 17 May 2004, be stayed or be dismissed against the Defendant under O 20 r 19 of the Rules of the Supreme Court and the inherent jurisdiction on the grounds that:

(a) it discloses no reasonable cause of action against the Defendant; and,

(b) it is an abuse of the process of the Court.

5. The Plaintiff pay the Defendant's cost of the action, including this application, on an indemnity basis to be taxed if not agreed."

2 As to the principles to be applied, counsel for the defendant referred to Dey v Victorian Railway Commissioners (1949) 79 CLR 62 where at page 91 Dixon J said:

"The application is really made to the inherent jurisdiction of the court to stop the abuse of its process when it is employed for groundless claims. The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process."

3 I accept that to summarily intervene the case to do so must be very clear. The defendant in this case argues that it is.

4 In determining this matter counsel for the defendant contends that there are a number of issues which need to be resolved and he lists them as follows:

1. The basis of the plaintiff's relief against the defendant is in the form of a declaration or equitable compensation on the basis that she is a beneficiary of an express trust or a constructive trust.

2. If the basis for relief is that the plaintiff is a beneficiary of an express trust has that been abandoned by the filing of the amended statement of claim? It is accepted that an express trust is referred to in the endorsement of the claim but it is submitted it is not referred to in the statement of claim.

3. If the only claim is for relief by way of a constructive trust then the claim is statute barred and consequently will be dismissed under O 16 r 1 or struck out pursuant to O 20 r 19.

4. If the claim is that the plaintiff is the beneficiary of either an express or constructive trust then the claim is defeated by the doctrine of laches.

5 As to the issue of the express trust the defendant makes the following submissions:

2. Alternatively, even if the claim has not been abandoned it cannot be maintained by virtue of s 34 of the Property Law Act which has not been complied with, and

3. The nature of the relief sought can only relate to a constructive trust and not an express trust.

6 As to the first point counsel for the defendant concedes that the writ of summons refers to an express trust as is evident when one examines the document. It is submitted when one goes to the statement of claim it does not plead sufficient facts to identify that creation of a trust and then the subsequent breach of the trust. Further, when you look at the prayer for relief it is said that although it refers to a trust the statement of claim does not refer to an express trust.

7 In support of his argument counsel for the defendant referred to Renowden v McMullin & Ors [1970] HCA 24; (1970) 123 CLR 584 where at page 609 Owen J said:

"The result of omitting from a statement of claim a cause of action which was covered by the writ is correctly stated in Odgers on Pleading and Practice, 19th ed (1966), at p 171 as being that, ' ... if a plaintiff in his statement of claim omits all mention of a cause of action or a claim for relief which is stated in his writ, he will be deemed to have abandoned it'. And again, at p 179, the pleader is warned that he should "remember that a statement of claim supersedes the writ; hence if some special form of relief be claimed on the writ, and not in the statement of claim, it will be taken that so much of that claim is abandoned". In support reference is made to Harries v Ashford [1950] 1 All ER 427. To the same effect is a statement in Bullen and Leake's Precedents of Pleading, 9th ed at p 33. After pointing out that under the then English rule corresponding to the Victorian O 20, r 2, a plaintiff may alter, modify or extend the claim indorsed on the writ without amending that indorsement, the learned editors go on to say, 'On the other hand, if the plaintiff when drafting his statement of claim omits all mention of a cause of action or a claim for relief which is stated on his writ, he will be deemed to have abandoned it (Cargill v Bower (1878) 10 Ch D 502 at 508; followed in Lewis v Durnford (1907) 24 TLR 64)'. Again, in Halsbury's Laws of England, 3rd ed, vol 30, at pp 34-35 it is said,

'Where a plaintiff in his statement of claim omits part of what he claims in his writ, he will be deemed to have abandoned that part (Harries v Ashford, following Cargill v Bower), and he may be refused leave to amend the statement of claim to restore his earlier claim (Cellular Clothing Co Ltd v G White & Co Ltd (1952) 70 RPC 9'."

8 It is of interest to note that on two occasions the words, "omits all mention of a cause of action or a claim for relief" are mentioned. It is true the statement of claim makes no reference to an express trust nor does it mention a constructive trust. It simply refers to a trust.

9 Whilst I accept the statement of claim does not specifically refer to an express trust that is not the same thing as omitting all mention of a cause of action or a claim for relief of that nature. Having said that, if such a claim for relief is intended to exist under the current pleading it is not particularly clear.

10 The second point put forward by the defendant is that pursuant to s 34 of the Property Law Act 1969 any express trust should be evidenced in writing and there is no plea to this effect.

11 Thirdly, it is submitted by the defendant that on the facts pleaded it would not be open to a court to find that an express trust exists. I consider this argument has some force. It is further submitted that the facts could only support a constructive trust which the defendant submits is statute barred. Counsel for the defendant accepts that if the trust were an express trust the Limitation Act 1935 would not apply by virtue of s 25(2) of the Supreme Court Act 1935. With that I would agree. He then argues that s 25(2) of the Supreme Court Act 1935 does not affect the operation of limitation periods with respect to constructive trusts and therefore s 47(1) of the Limitation Act 1935 would apply and that any exceptions contained in that section do not apply in this case.

12 Whether or not a limitation period would be relevant would depend on the period from when it would run. The plaintiff argues any time would run from the alleged breach of the promise by the defendant. But the defendant argues that the cause of action does not rely upon any breach but rather relies upon the creation of an equity based upon alleged promises, alleged detriment and alleged reliance and as a consequence the equity arose in 1984 and not in March 2003 as is alleged by the plaintiff. The plaintiff submits the reliance and the detriment are continuing and that is the way the case is pleaded. This, in my view, is an issue which is not clear and not appropriate to be dealt with summarily.

13 The defendant further argues that a constructive trust claim may be commenced without there having been an alleged breach. As a general proposition I think such an argument is open but that is not necessarily an end to the matter. In Secretary, Department of Social Security v Agnew & Anor [2000] FCA 59; [2000] 96 FCR 357 the Court said at [18]:

'Equity acts consistently and in accordance with principle. The old maxim that equity regards as done that which ought to be done is as applicable to enforce equitable obligations as it is to create them and, notwithstanding that the constructive trust is remedial in both origin and nature, there does not need to have been a curial declaration or order before equity will recognise the prior existence of a constructive trust: cf Scott, Law of Trusts (3rd ed, 1967), Vol V, par 462.4. Where an equity court would retrospectively impose a constructive trust by way of equitable remedy, its availability as such a remedy provides the basis for, and governs the content of, its existence inter partes independently of any formal order declaring or enforcing it.'

See also Re Jonton Pty Ltd [1992] 2 Qd R 105 and Zobory v Commissioner of Taxation [1995] FCA 1226; (1995) 64 FCR 86 at 91-92. Those cases also indicate that the court has a discretion to modify the prima facie date on which the trust takes effect. We would adopt the view of A J Oakley that 'in the absence of any judicial order to the contrary, a constructive trust will take effect from the moment at which the conduct which has given rise to its imposition occurs: Oakley, Constructive Trusts (3rd ed, 1997), p 5. See also Pawlowski, pp 12, 130-132. Compare Re Sabri; Ex parte Brien v Australia & New Zealand Banking Group Ltd (1996) 21 Fam LR 213 at 223-229. In the present case there is no reason, such as third parties in need of protection, to defer the inception of the trust, and accordingly it came into existence when the conduct which gave rise to its imposition occurred."

14 It seems to me to be at least open to argument on the facts of this case that if the Court finds there is a constructive trust it can modify the prima facie date upon which the trust takes effect.

15 The defendant further argues that if s 47 of the Limitation Act 1935 does not apply then in a suit in equity it will be applied by analogy. In this regard I was referred to Soar v Ashwell (1893) 2 QB 390 where at page 396 Bowen LJ said:

"An express trust can only arise between the cestui que trust and his trustee. A constructive trust is one which arises when a stranger to a trust already constituted is held by the Court to be bound in good faith and in conscience by the trust in consequence of his conduct and behaviour. Such conduct and behaviour the Court construes as involving him in the duties and responsibilities of a trustee, although but for such conduct and behaviour he would be a stranger to the trust. A constructive trust is therefore, as has been said, 'a trust to be made out by circumstances.' It is not unreasonable in the latter class of cases, where the liability of a stranger to the trust arises form his conduct and depends on the proof of his contemporary acts, that time should run in favour of the person to be charged. In such cases conflicts of evidence are possible or probable, and to deny to the person to be charged the shelter or benefit of a period of limitation would be obviously dangerous and unjust.

Although this general principle of justice has been authoritatively laid down in Courts of Equity, there has been some variety and inconsistency both in the language used about constructive trusts and in the line of demarcation that has been drawn between the cases of express and constructive trusts."

16 I do not consider the state of the law is as clear as counsel for the defendant would argue and in my view, it would not be appropriate to deal with the question of the application of any limitation period to the pleaded facts in a summary way. This is supported by the quote from Spry's Equitable Remedies to be found at page 120 - 121 of Cia de Seguros Imperio v Heath (REBX) Ltd & Ors [2000] EWCA Civ 219; (2001) 1 WLR 112 where it is said:

"a statute of limitations may be raised by analogy in defence to a claim that is brought in the exclusive jurisdiction of a court of equity, such as in proceedings for the enforcement of a trust, rather than in its auxiliary or concurrent jurisdictions. ... What is regarded by courts of equity as a sufficiently close similarity for this purpose involves a question of degree, and reference must be made to the relevant authorities. The basis of these principles is that, in the absence of special circumstances rendering this position unjust, the relevant equitable rules should accord with comparable legal rules."

17 In these circumstances, I do not consider it just to enter judgment at this interlocutory stage nor to strike out the statement of claim. This is a case which requires the facts to be aired to enable the Court to do justice between the parties.

18 As to the question of a doctrine of laches I do not think it is appropriate to deal with this at this interlocutory stage. One of the issues to be considered will no doubt be the question of when the cause of action arose. For the reasons I have already expressed I do not consider that question is clear and ought not be determined at this stage. It follows that the question of the doctrine of laches should also await the trial of the action when all the relevant facts can be considered and justly disposed of.

(1996) 21 Fam LR 213

Powell v In De Braekt [2005] WASC 8

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Powell v In De Braekt [2005] WASC 8 (18 February 2005)

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