Young v Young [2014] TASSC 24

Rochefoucauld v Boustead [1897] 1 Ch 196; Organ v Sandwell [1921] VLR 622, followed.

Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470, referred to.

Judgment Number: [2014] TASSC 24

1. This case concerns a very unfortunate dispute between a mother and her daughter over the beneficial ownership of the house in which the daughter lives. The plaintiff, Wendy Young, is the daughter of the defendant, Joan Miriam Young. The property in question was purchased in the defendant's name in early 2002. The defendant paid the full purchase price with her own money, became the registered proprietor on completion of the purchase, and remains the registered proprietor. The plaintiff has lived in the house and been the occupier of the property ever since that purchase.
2. The plaintiff contends that she and her mother agreed before the purchase that her mother would purchase a house for her; that each of them intended that the plaintiff would be the beneficial owner of the property; that the property in question was chosen and purchased pursuant to that arrangement; that the defendant therefore holds the property upon an express trust for the plaintiff; and that that trust exists and is enforceable even though the defendant put nothing in writing as to the plaintiff's beneficial ownership of the property. On that basis, the plaintiff is seeking an order that the defendant transfer the property to her.
3. The plaintiff is also pursuing an alternative claim based on proprietary estoppel. She contends that the defendant made representations to the effect that she (the plaintiff) would be the beneficial owner and entitled to have the property transferred to her; that she was thereby induced to believe that she was the beneficial owner; that she acted to her detriment in reliance upon that belief; that the defendant knew and intended that she would act in reliance upon that belief; and that the defendant is therefore estopped from asserting title to the property.
4. The defendant did not give or adduce evidence. She contends that the evidence does not establish that she ever intended that her daughter was to be the beneficial owner of the property, or to believe that she was. She contends that no express trust came into existence; that the plaintiff's claim must fail because the requirements of writing imposed by ss36 and 60(2) of the Conveyancing and Law of Property Act 1884 are not satisfied; and that her daughter has not suffered any detriment of a kind that could ground a proprietary estoppel claim.

1. The evidence-in-chief of the plaintiff and her witnesses was contained in affidavits. That evidence was largely unchallenged. The parts of the plaintiff's evidence relating to the creation of a trust can be summarised as follows:
   • She married in November 1997, but that relationship ended in separation in August 2000. There was one child of the marriage. During the marriage the plaintiff and her husband purchased a property at Franklin with money provided by the defendant. They gave a mortgage over the property to the defendant. After the separation, the Franklin property was sold. All the proceeds of sale were paid to the defendant.
   • In December 2001 the plaintiff was living at Kettering in rented accommodation with her child and the defendant was visiting from Sydney. On 19 December 2001, the day that the defendant was to return to Sydney, they had lunch together in a restaurant at Salamanca Square in Hobart. During the lunch the defendant said words to the effect of, "I want to buy you a house. It would be your house to do with as you wish, but I want to be sure that you are safe and never in this situation again."
   • As the lunch continued, both parties looked at the property advertisements in a newspaper, and the defendant said, "I thought that I was going to have a real battle with you about this, but I was determined that you would accept this gift of a house. I'm so relieved that it's going to be OK."
   • In the weeks that followed, the plaintiff looked for a suitable house, and spoke to the defendant by telephone on a number of occasions. During one telephone call the defendant said words to the effect of, "You need to get something perfect that you and Brodie [the plaintiff's child] can live in for a long time. You need to be completely happy with it because it is your house. I'm just paying for it. You have to live in it so you have to be sure you are happy with it."
   • The plaintiff looked at a number of properties. She selected the house in question. It is in Kingston. She negotiated with the vendor. A price of $117,000 was agreed upon. The defendant had authorised her to go as high as $125,000.
   • At the time of the purchase, the plaintiff was having difficulties with her estranged husband. She did not want him to know where she was living. She had had her name removed from the electoral roll. The defendant suggested putting the property in her name, rather than the plaintiff's, so that it would be more difficult for the husband to find her. The plaintiff agreed. The defendant said that she could transfer the title into the plaintiff's name when she was ready; and that it was the plaintiff's house and always would be.
   • At the suggestion of the defendant, the plaintiff instructed a legal practitioner named John Lewinski to act on the purchase. The defendant provided the purchase money. The plaintiff took it to him in the form of a bank cheque. The plaintiff checked the boundaries of the property. On 20 March 2002 the plaintiff and her child started moving in. They have lived there ever since.
   • In the years since the purchase of the property, the defendant said on a number of occasions that the title to the property could be transferred into the plaintiff's name when she was ready, but that that would cost about $10,000. (I infer that that was a reference to stamp duty and legal costs.) On those occasions the plaintiff responded to the effect that it made no difference to her; that they both knew that it was her (the plaintiff's) house; and that she would be in a position to arrange the transfer when she had a job and some money.
   • The defendant visited the plaintiff between 23 December 2009 and 7 January 2010. During that visit the defendant retrieved the certificate of title from Mr Lewinski's office and gave it to the plaintiff, saying words to the effect of, "Look Wendy, even though this doesn't have your name on it we both know it is yours so you should decide what to do with it. It won't be long before you are in a position to change it into your name."
   • The defendant has never asked for the return of the certificate of title.
2. The plaintiff has a former partner named Trevor Cooke. They did not live together, but were partners from 2002 for some 7½ years. He swore an affidavit in which he stated that, before doing some repair work on the Kingston property in about 2004, he spoke to the defendant who said words to the effect of, "No, you don't have to worry about me. It's Wendy's house and you can do what you want to it."
3. Counsel for the defendant submitted that the evidence in this case falls short of establishing that the defendant intended the plaintiff to be the beneficial owner of the Kingston property. He argued that the evidence went no further than establishing that the defendant had purchased a house so that her daughter and grandchild could live in it. I disagree. There were certainly some pieces of evidence, not mentioned above, that were equally consistent with an intention that the plaintiff was to be the beneficial owner and an intention that the plaintiff was to get no more than permission to live with her child in the house. However, on the basis of the evidence that I have summarised above, I am satisfied that both parties intended that the plaintiff was to be the true owner of the house, and that they decided that the defendant would take title to the house only for the purpose of making it harder for the plaintiff's estranged husband to find her.

1. As I have said, the defendant sought to rely on s36 of the Conveyancing and Law of Property Act. That section reads as follows:

"(1) No action may be brought upon any contract for the sale or other disposition of land, or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorized.

(2) This section applies to contracts whenever made, and does not affect the law relating to part performance or sales by the Court."

1. The plaintiff is not seeking to rely upon "any contract for the sale or other disposition of land, or any interest in land". Her claims are not based on any contract at all. Section 36 is therefore irrelevant.
2. More significantly, the defendant is seeking to rely upon s60(2) of the same Act. That subsection reads as follows:

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;

(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust, or by his will; and

(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing, or by will -

but this provision does not affect the creation or operation of resulting, implied, or constructive trusts."

1. The only relevant disposition of any interest in land was the disposition by the vendor who sold the land for $117,000. The critical question is whether that disposition took effect as an absolute disposition to the defendant, or as a disposition to the defendant as trustee for the plaintiff. The purpose of s60(2)(c) is to prevent hidden oral transactions in equitable interests and to enable trustees to identify the persons to whom they are accountable: Vandervell v Inland Revenue Commissioners [1966] UKHL 3; [1967] 2 AC 291 at 311. There was certainly no disposition of any equitable interest or subsisting trust within the meaning of s60(2)(c).
2. A declaration of trust within the meaning of s60(2)(b) occurs when an absolute owner declares himself or herself to hold a piece of land, or an interest in land, upon trust for somebody else. That is to say, s60(2)(b) applies only when a settlor or testator intends to create a trust in relation to his or her freehold property. That was not the situation in this case.
3. The facts of this case bring it within the scope of s60(2)(a). There was a disposition of all the vendor's interest in the property. The plaintiff contends that that transaction resulted in the creation of the equitable interest that she claims to have in the property. But for s60(2)(a), such an interest could be created orally.
4. Section 60(2) is the modern re-enactment of s7 of the English Statute of Frauds 1677. It has long been established that an express trust of land may be proved by oral evidence when the statutory writing requirements are being used as an instrument of fraud.
5. Thus in Rochefoucauld v Boustead [1897] 1 Ch 196, Lindley LJ, delivering the judgment of the English Court of Appeal, said at 206:

"It is further established by a series of cases, the propriety of which cannot now be questioned, that the Statute of Frauds does not prevent the proof of a fraud; and that it is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself. Consequently, notwithstanding the Statute, it is competent for a person claiming land conveyed to another to prove by parol evidence that it was so conveyed upon trust for the claimant, and that the grantee, knowing the facts, is denying the trust and relying upon the form of conveyance and the Statute, in order to keep the land himself."

1. The plaintiff in that case had conveyed certain estates in Ceylon to a defendant who later became bankrupt. The Court of Appeal held that the defendant had taken title to the estates as a trustee for the plaintiff, subject to a lien for his expenditure on the estates. It was held that the trust thus created was an express trust; that s7 of the Statute of Frauds was not satisfied; and that the defendant was precluded from relying on the Statute of Frauds because of the principle referred to in the passage I have quoted.
2. That case was followed by the Full Court of the Supreme Court of Victoria in Organ v Sandwell [1921] VLR 622. That case concerned a house property in a Melbourne suburb that had been purchased in the name of a woman. The purchase money had come from her bank account, but the trial judge found that that money had been her husband's money. The woman died. She left a will appointing her brother as her executor, and leaving her husband only a life interest in the property. The husband sued the executor, asserting that his wife had purchased the property as trustee for him and herself as joint tenants. The trial judge found as a fact that she had purchased the property as a trustee for herself and her husband. The Full Court held that, although the statutory requirement of writing had not been satisfied, the husband was entitled to succeed. At 630 Irvine CJ, reading the judgment of the Full Court, said:

"It has long been settled law that a man shall not be allowed to set up the Statute of Frauds ... as an instrument of fraud. ... What may be the precise limits to be assigned to the operation of this doctrine, and how much actual operation it may leave to the Statute in cases of verbal agreements to create trusts, may be difficult to define. But it is clear that the doctrine takes out of the Statute cases in which any person has become possessed of the property of another upon an agreement to hold that property on certain trusts, and where he or his representatives insist upon claiming to possess the property free from such trusts. To make use of the Statute to smother the proof of such an agreement is itself a fraud."

1. In Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470 a question arose as to whether a bankrupt's interest in a residential property was held in trust for her children. At the time of her divorce, her solicitor had signed a document called "Terms of Settlement" acknowledging that she would hold her then home "or such other residence as she may later acquire" on trust for the children. The principle that a statutory requirement of writing was not to be used as an instrument of fraud was considered in an appeal to the Full Court of the Federal Court, though the appeal was decided on another point. At 479 Jenkinson J said:

"... equity regards as a fraud denial of the trust by a person taking an interest in land as trustee and permits the beneficiary of the trust to prove it by parol evidence and enforces the trust against the trustee and those claiming through the trustee. 'The fraud which brings the principle into play arises as soon as the absolute character of the conveyance is set up for the purpose of defeating the beneficial interest, and that is the fraud to cover which the Statute of Frauds or the corresponding provisions of the Law of Property Act 1925, cannot be called in aid in cases in which no written evidence of the real bargain is available' (Bannister v Bannister [1948] 2 All ER 133 at 136)."

1. At 481 - 482 Sackville J, with whom Tamberlin J agreed, said:

"The authorities support the principle that, where land is transferred to a person absolutely, but the transferee undertakes to hold it on trust for another person, the beneficiary may prove the existence of the trust by parol evidence and obtain remedies requiring the trustee to give effect to the trust: Rochefoucauld v Boustead at 206; Last v Rosenfeld [1972] 2 NSWLR 923. The better view is that such a trust is not enforced as a constructive trust, but as an express trust. The beneficiary is entitled to prove the express trust because to do otherwise would be to allow the statute to be used as an instrument of fraud."

1. His Honour cited comments of Brennan J in Bloch v Bloch [1981] HCA 56; (1981) 180 CLR 390 at 402 - 403, which support that final proposition. The children in Di Pietro had given no consideration for any equitable interest in real estate, just as the plaintiff in this case has given no consideration for the interest that she claims to have. It is clear that none of the judges in Di Pietro saw that circumstance as a reason not to follow Rochefoucauld v Boustead.
2. There is no reason for me not to follow the authorities that I have referred to. When the Kingston property was transferred to the defendant, she and the plaintiff intended that she was to hold it on trust for the plaintiff. Although s60(2)(a) was not satisfied in relation to the creation of the plaintiff's equitable interest in the land, the defendant may not rely on that provision because to do so would be to use the statute as an instrument of fraud. The plaintiff is therefore entitled to succeed in this action.
3. I therefore need not analyse the plaintiff's alternative claim based on proprietary estoppel. I am inclined to think that that claim has a major weakness. I very much doubt that the plaintiff, relying on her mother's representations as to her intentions concerning the property, acted to her detriment in any significant way. Her former partner, Mr Cooke, may have acted to his detriment by doing a lot of unpaid work making improvements to the house, but I very much doubt that that detriment is significant for the purposes of the doctrine of proprietary estoppel.
4. I order that the defendant transfer to the plaintiff all of her right, title and interest in the land referred to in writ.