Supreme Court of WA|1999-06-02|Before: Owen J, Kechnie J

Sullivan v McMahon & Anor [1999] WASC 84 (2 June 1999)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SULLIVAN -v- McMAHON & ANOR [1999] WASC 84

Caveat - Extension of time - No new principles - Turns on own facts

Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137

Eng Mee Yong v Letchumanan [1980] AC 331

Giacci Bros Pty Ltd v Tyrell, unreported; SCt of WA; Library No 980106; 18 February 1998

Girando v Girando, unreported; SCt of WA; Library No 970444; 27 August 1997

Hooper v Australia & New Zealand Banking Group Ltd (1996) 5 Tas R 398

Kerabee Park Pty Ltd [1978] 2 NSWLR 222

Kitay v Strathfield Holdings Pty Ltd (1998) 27 ACSR 716

Queensland Estates Pty Ltd v Co-ownership Land Development Pty Ltd [1969] Qd R 150

1 McKECHNIE J : A mother and daughter were once very close with each other and also with the grandmother of the daughter. They have now become estranged. They dispute title to a property at unit 2, 15 Rupert Street, Maylands, registered in the daughter's name. The mother has lodged a caveat claiming an interest in a share of the land as the sole beneficiary of a constructive trust said to arise for reasons set out in the statutory declaration accompanying the caveat. In due course the mother was served with a notice from the Registrar of Titles giving her 21 days to commence proceedings to extend the operation of the caveat. She duly commenced those proceedings naming her daughter as the first defendant.

2 The caveat has been extended pending this hearing. The mother by originating summons seeks orders that a 26-36ths share in the estate or interest in fee simple in lot 2 on strata plan 4797, being the whole of the land comprised in certificate of title volume 2094, folio 949, be transferred by the daughter to the mother free from any encumbrance and that operation of caveat G928438 lodged by the mother over the said property be extended until then. The matter is brought on for determination as a preliminary point: The validity of the caveat and whether it should be extended.

3 Pursuant to the Transfer of Land Act 1893, s 138D, the Court may make orders if satisfied that the caveator's claim has or may have substance. The factors to be taken into account by a court under the predecessor to this section have been examined extensively by Owen J in Custom Credit v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 48 - 50.

4 The onus rests on the caveator, in this case the mother, to show that there is an arguable case as to a caveatable interest.

5 There is a significant factual dispute as disclosed by the affidavits between the mother and the daughter. While I note that the daughter strongly disputes the existence of a trust, I propose to determine the matter on the material filed on behalf of the mother, including her sworn evidence today, except where there is common ground.

6 For the reasons which I expressed in Cruz v Osborne [1999] WASC 8, I consider that regard may be had by the court to both the caveat and to the statutory declaration. Application has been made to amend the caveat. While I am amenable to that course, I can only do so if satisfied that the claim has or may have substance.

7 The caveat claims an interest as follows: "An estate or interest in fee simple of a share in the land as sole beneficiary of a constructive trust the trustee of which is the registered proprietor".

8 The caveat is arguably defective in that the precise share of the property allegedly held on trust is not specified. However, by par 6 of the statutory declaration the interest is specified as the 26-36ths share. The combination of the caveat and the statutory declaration sufficiently specifies the interest claimed. If not, the foreshadowed amendment will remedy it.

9 That is not, however, the end of the matter. Where other facts are known the Court is entitled to examine the whole of those facts to determine whether it is satisfied that the claim has or may have substance. This test is similar to that guiding the Court on questions of interlocutory injunctions; that there is a serious question to be tried. I accept and adopt, with respect, the examination of the issue by Buss C in Jandric v Jandric [1999] WASC 22 at 16 and following.

"I/WE Doreen Vernon Sullivan OF 68 Clarence Street, Mt Lawley do solemnly and sincerely declare that

1. The nature of the estate or interest in fee simple I claim is a share in Lot 2 on Strata Plan 4797 being the whole of the land comprised in Certificate of title Volume 2094 Folio 949 ('the land') the registered proprietor of which is my daughter, Gloria Doreen McMahon who resides at 70 Clarence Street, Mt Lawley.

2. The title to the estate or interest in the land claimed by me arises by virtue of the fact that I am the sole beneficiary of a constructive trust, the trustee of which is my said daughter who holds my estate or interest in the land as trustee.

3. The constructive trust referred to above came into existence as follows:

(a) During or about 1982 and 1983 I was in the process of getting divorced from my husband, Mr J J Sullivan.

(b) At the time our common home situated in Bayswater in the State of Western Australia was sold and it became necessary for me to acquire a new place of residence. After consultation with my late mother, Rose Hynes, and my said daughter, I decided to purchase a new home for myself with the financial assistance of my mother and my said daughter who would each have an interest therein proportionate to their contribution.

(c) It was further decided, after consultation with my mother and my said daughter, that when purchasing a new home for myself, that home would be registered in the name of my daughter with a view to keeping that property from becoming involved in my divorce proceedings which were then still pending.

4. Pursuant to that decision, and in May 1983, I purchased the land, being a unit in Maylands in the said State, and my daughter signed the relevant contract for the sale of the land which was ultimately registered in her name. The purchase price of the land was $36,000 to which I contributed $14,000, my said daughter $10,000 and my mother $12,000. It was clearly understood and acknowledged at the time by all three of us that my daughter would hold the land as registered proprietor thereof and also as trustee for myself and my mother in respect of our shares in the land, being fourteen thirty sixths and twelve thirty sixths respectively.

5. I lived in the unit on the land from 1983 until my mother became ill in 1988 when I moved into her home where I have resided since.

6. On the death of my mother in 1988, I acquired her share in the land by virtue of the fact that I was her sole beneficiary in terms of her Will. Accordingly, from the date of death of my mother in 1988, I effectively became the owner of a twenty six thirty sixths share in the land.

7. At all material times I have remained in control of the land and the said unit which has remained unoccupied from the time I vacated it in 1988 until the present. I have always paid the usual proprietary charges relating thereto and only in 1997, for the first time, did my said daughter begin to make a contribution to those charges as well.

8. I recently ascertained that my said daughter has borrowed money from the National Australia Bank on security of a mortgage over the land without reference to me at all. This she has done possessed of the knowledge that at all times I held the duplicate original Certificate of Title to the land, which I still have in my possession."

11 Paragraph 4 asserts a direct contribution by the mother of $14,000; by the grandmother of $12,000; and by the daughter of $10,000. A reader of the statutory declaration would be justified in reaching the view that the contribution was made to the purchase price.

12 In the affidavit filed in support of the originating summons and sworn on 8 February 1999 the mother confirmed the correctness of the statutory declaration. However, two days later the mother swore a second affidavit. In that affidavit she purported to explain the contribution. She deposed that it was not made at the time of the settlement of the property. The mother asserts the following movement of funds as supported by documents: mother to grand-daughter, 26 March 1982, $14,565.67; 31 March 1982, $7485, a total of $22,050.67. From the grandmother to the daughter on 2 April 1982, $14,565; on 12 May 1982 $8000, a total of $22,565.

13 This amount of $22,565, if all paid to the daughter by the grandmother, does not accord with the plaintiff's affidavit of 9 March 1999 in answer to the daughter's affidavit. The daughter's affidavit at par 19 says:

"In about 1981, my grandmother gave me an amount of money which was probably $36,000 or thereabouts. In that year we had no income from the farm and I had been diagnosed with cancer. There were no words of trust or condition associated with the transfer of those funds. I would use the money for emergencies but then repay it on the basis that, although there were no conditions associated with the transfer, the funds would nevertheless be available for my grandmother in times of need."

14 In response to that the plaintiff at par 6 of her affidavit of 9 March says:

"I refer to paragraph 19 of First Defendant's Affidavit. The amount of money given to First Defendant in or about 1981 was approximately $50 000.00 and represented almost all the money owned at the time by myself and my late mother, Mrs Hynes. First Defendant was to hold the money for myself and my mother and was not permitted to use it without our authority or direction. First Defendant was given control of the money at the time because of my divorce which was then pending and my concern that these funds, or a portion thereof, may be claimed by my husband."

15 That response does not dispute that a transmission of money from the grandmother to the daughter occurred. Only the amount was in dispute. There is a significant difference between $50,000 and $22,000. Furthermore, the transactions deposed to in the 10 February affidavit were in 1982, although this latter point may not be greatly significant due to the passage of time.

16 The mother also advanced money direct to the daughter. There is a payment on 20 April 1982, $8363.90, and that was the only payment made prior to the purchase of the property in 1983. Subsequent to the purchase, on 18 November 1983, an amount of $14,075 was advanced, making a total of $22,438.90. In the affidavit she does not explain the source of funds. She, however, confirms an agreement. In the affidavit of 10 February 1992 the mother deposes, par 12:

"At the time of the purchase of the property my mother, the First Defendant and myself discussed and agreed that it would be best if the First Defendant held the property in her name. It was also agreed that the property would be owned by all of us in accordance with our individual contributions to the purchase price notwithstanding the fact that the First Defendant was the registered proprietor thereof. Subsequently, when my mother died in 1988 and probate issued in my favour I failed to mention in the Statement of Assets and Liabilities filed in my mother's estate her interest in the property. I did not do this deliberately. I made no mention of such interest because my mother, like me, was not the registered owner of a share of the property. I failed to understand at the time that this fact notwithstanding she nevertheless, like me, had an interest in the property, which interest I inherited as my mother's sole beneficiary, and that such interest should have been reflected on the Statement of Assets and Liabilities filed by me in her estate."

17 The important thing about that affidavit is that she asserts again that there was an agreement.

18 As it stood on the affidavits, the evidence filed by the mother discloses that in 1982 she transferred sums of money to the grandmother and the daughter in order to put it beyond reach of her husband in the property settlement then pending. The mother asserts in her affidavit of 10 February 1999 that her contribution to the purchase of the house namely $14,000 was not made until 12 January 1984. What she says at par 10 is as follows:

"The reason I paid $14 075.00 to the First Defendant so long after settlement of the property was that it was the amount which constituted my contribution to the purchase price and costs of the property. This I did notwithstanding the fact that the First Defendant had enough money on hand received from myself and my mother, and contributed by herself, to effect settlement of the property and to take transfer thereof in or about June 1983. In effect I simply replenished my funds already held by my daughter which she was to invest on my behalf for the benefit of myself and my mother."

19 The oral evidence given by the mother today amplified her affidavits. She testified that she and the grandmother had an interest in a share under an estate known as the Durkin Estate from which, after some 17 years, they began receiving money. In 1981 or 1982 there remained about $50,000 belonging to the grandmother and the mother. On the advice of her lawyer and accountant she transferred the money via the grandmother to the daughter in order, it would appear, to defeat her husband's claims in the divorce proceedings.

20 The grandmother used portion of the money to build a new house on land owned by her at 68 Clarence Street, Mount Lawley. Although the money was transferred, eventually the mother was to get it back. She testified that she needed a new place to live because the property in which she was living, the matrimonial home at Bayswater, was going to be sold. There were no discussions whatever about shares in the land at the time when it was bought. It was just bought with cash directly from the daughter and put into her name.

21 The mother found the unit and lived in it until the grandmother had a stroke in 1988. She has paid the rates, taxes and outgoings until 1997 and has made improvements. When the matrimonial home was sold, she paid $14,075 to replenish the kitty and to pay a portion of the settlement fees.

22 In cross-examination the mother admitted swearing a false statement as to her assets and liabilities in the Family Court. She suggested that on the settlement following the sale, if the grandmother had been alive, the money would have been divided three ways. Because of the death the proceeds would be divided in half. That evidence of her view of the division does not accord with the evidence of a 26-36ths share held by her.

23 The evidence disclosed in the affidavits is quite different from that disclosed in the statutory declaration or in her oral evidence and raises a wide range of issues. If a trust is to be construed from the circumstances outlined in the affidavit of 10 February 1999, it does not seem to me to be a trust in relation to the land which had been purchased earlier. At most it may in due course be construed a trust in respect of the money. Before a constructive trust is imposed, the Court should first decide whether, having regard to the issues in the litigation, there is an appropriate remedy which falls short of the imposition of a trust Guimelli v Guimelli (1999) ALJR 547 at 549 par 10.

24 In my opinion the statutory declaration has now been shown to be wrong. On the totality of the circumstances now deposed to, the claim by the caveat in respect of the share represented by the $14,000 has no sufficient substance.

25 The statutory declaration asserts that the grandmother contributed the sum of $12,000 to the purchase of the land. There is no documentary evidence to support this assertion. It now appears to be contrary to the mother's evidence that there was no agreement. In the absence of documentary evidence I can take some account of the daughter's affidavit. She deposes that in 1981 she was given a sum of money, $36,000 or thereabouts, as a gift from her grandmother. I have already referred to this passage in her affidavit. As I have said, the amount is not denied. The actual transmission is not denied by the mother, though its purpose is.

26 When the grandmother died the mother became executrix and sole beneficiary under the will. In the statement of assets sworn in 1989, as the mother has deposed in her affidavit, the share is not disclosed, yet 10 years later it is claimed. It is explained as a mistake or being overlooked. In my view, the claim for a $12,000 share by nature of an inheritance does not have sufficient substance.

27 I am unimpressed by the mother as a credible witness. On her own testimony she was prepared to lie in the Family Court, having engaged in a transaction with the intention of defeating the interests of her husband. The statement of assets and liabilities sworn to in 1989 did not disclose the interest she now swears to, even though she says this was a mistake. The statutory declaration is misleading at the least, as is her affidavit of 8 February 1999 swearing to the correctness of it.

28 Her testimony today that there was no discussion whatever about the shares in the property contradicts her affidavit of 10 February 1999, particularly par 12. Her explanation about the extra $75 of the $14,000 being "probably" and then "definitely" payment of the portion of the settlement agent's fees is unconvincing.

29 In determining whether the claim has or may have substance it is unusual to resolve disputed questions. Here, however, I am able to form a view as to the mother's credibility from her evidence alone and it is not a favourable view.

30 Counsel for the mother raises various matters which, it is argued, give rise to a serious question to be tried as to the existence of a constructive trust on the basis of unconscionability. Counsel points in summary to three matters:

(1) The provision of funds for the purchase of the property;

(2) The purchase of the unit for the purpose of accommodating the mother;

31 Counsel also points to the daughter's affidavit, par 28, as of significance. That paragraph reads as follows:

"I note that my mother alleges an agreement at the time of the purchase of the property in Rupert Street. There is no issue that the property was purchased as a place in which my mother could reside. The purchase of the property in my name continued a pattern of asset holding intended to produce a family succession. I expressly deny:-

a) any arrangement whereby I was to be a trustee of an undivided share for my mother; and

b) any amount paid by my grandmother towards the purchase; and

c) any agreement with my grandmother that I held a portion of the property at Rupert Street on trust for my grandmother."

32 The words are ambiguous and they may relate to an earlier portion of the affidavit where she outlines the history to some degree of the properties in Clarence Street, Mount Lawley. I do not construe the paragraph as an acknowledgment of a trust.

33 I acknowledge the force of the observation of Wright J in Hooper v ANZ Banking Group Ltd (1996) TR 398 at 404 where he says:

"In my opinion, the nature and purpose of a caveat is such that technical deficiencies in its form and content should not be allowed to deprive a bona fide claimant from obtaining the advantage and breathing space that prompt notification of his claim to the Registrar should, in principle, permit him to achieve. This does not mean that a fallacious claim should be allowed to clog the title or that imprecision or obfuscation should be rewarded, but if Stout CJ was correct in Plimmer v St Maur (1907) 26 NZLR 294 when he said:

'In my opinion the caveat cannot be set aside unless the claim to the estate appears to be without any validity. If there is a reasonable question to argue the court should not remove the caveat, but permit the matter to be litigated.'

(and, with respect, I think he was) the Court should not destroy or impede a bona fide claim either by declining to amend an arguably deficient caveat or by removing it from the Register."

34 In the present case the basis for the claim is said to be an equitable interest as a result of a constructive trust brought about by an express agreement. The evidence to that agreement is now contradictory. The mother as to the contributions of $14,000 and $12,000 has significantly moved away in her evidence from that which she disclosed in the statutory declaration. The mother's evidence is in many respects unsatisfactory, such that I would hesitate to accept her evidence of the basis upon which money was advanced to the daughter in 1981, at least insofar as moneys said to have been advanced by the grandmother.

35 I make no comment as to whether in due course the mother will succeed in an action for unconscionable behaviour by the daughter or whether in turn the Court would grant relief as against the land. Suffice to say that in its present form, read with the statutory declaration or even in the amended form proposed, I do not consider that the claim made by this caveat may have sufficient substance to justify extending. In the circumstances of this case, I do not consider it is capable of amendment to bring it in line with the actual evidence because of the unsatisfactory nature of the evidence. In consequence, the plaintiff's claim for an extension of the caveat is dismissed.

Sullivan v McMahon & Anor [1999] WASC 84

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Judgment (72 paragraphs)

Sullivan v McMahon & Anor [1999] WASC 84 (2 June 1999)

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