Bank of Western Australia Ltd v Studman
[2000] WASC 287
•28 NOVEMBER 2000
BANK OF WESTERN AUSTRALIA LTD -v- STUDMAN & ANOR [2000] WASC 287
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 287 | |
| Case No: | CIV:1588/2000 | 20 NOVEMBER 2000 | |
| Coram: | MASTER SANDERSON | 28/11/00 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Amendments disallowed Leave to enter consent judgment refused | ||
| PDF Version |
| Parties: | BANK OF WESTERN AUSTRALIA LTD MARGARET ANN STUDMAN CHARLES PHILIPPE LOUIS NILAND as Administrator of the Estate of RONALD VICTOR STUDMAN (DEC) in Bankruptcy |
Catchwords: | Practice and procedure Application to disallow amendments to statement of claim Application for leave to enter consent judgment Property law Effect of Family Court order to transfer property to one party on joint tenancy Power of holder of property subject to a trust to consent to judgment |
Legislation: | Rules of the Supreme Court, O 21 r 3(1), O 21 r 4(1) O 43 r 16 |
Case References: | Berdal v Burns [1990] WAR 140 Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672 Harris v Walker (1969) 14 FLR 167 Dalgety Australia Ltd v Rubin, unreported; SCt of WA; Library No 5485; 24 August 1984 General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125 Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986 Public Trustee v Grivas [1974] 2 NSWLR 316 Re Johnstone [1973] QdR 347 Wright v Gibbons (1949) 78 CLR 313 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
MARGARET ANN STUDMAN
First Defendant
CHARLES PHILIPPE LOUIS NILAND as Administrator of the Estate of RONALD VICTOR STUDMAN (DEC) in Bankruptcy
Second Defendant
Catchwords:
Practice and procedure - Application to disallow amendments to statement of claim - Application for leave to enter consent judgment - Property law - Effect of Family Court order to transfer property to one party on joint tenancy - Power of holder of property subject to a trust to consent to judgment
Legislation:
Rules of the Supreme Court, O 21 r 3(1), O 21 r 4(1); O 43 r 16
(Page 2)
Result:
Amendments disallowed
Leave to enter consent judgment refused
Representation:
Counsel:
Plaintiff : Mr A R Beech
First Defendant : Ms H E Prince
Second Defendant : Ms H E Prince
Solicitors:
Plaintiff : John A Pease
First Defendant : Ginbey & Co
Second Defendant : Ginbey & Co
Case(s) referred to in judgment(s):
Berdal v Burns [1990] WAR 140
Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672
Harris v Walker (1969) 14 FLR 167
Case(s) also cited:
Dalgety Australia Ltd v Rubin, unreported; SCt of WA; Library No 5485; 24 August 1984
General Steel Industries Inc v Commissioner for Railways NSW (1964) 112 CLR 125
Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986
Public Trustee v Grivas [1974] 2 NSWLR 316
Re Johnstone [1973] QdR 347
Wright v Gibbons (1949) 78 CLR 313
(Page 3)
1 MASTER SANDERSON: This is the return of two chamber summonses. The first in time is the plaintiff's application seeking leave to enter by consent judgment against the second defendant. The second chamber summons is the first defendant's application to disallow amendments made by the plaintiff to its statement of claim. The plaintiff made the amendments pursuant to O 21 r 3(1). The first defendant's application to disallow the amendments is made under O 21 r 4(1). To understand the nature of the applications it is necessary to say something of the facts of the case.
2 The plaintiff is a bank which it alleges has lent money to the first defendant and her then husband, Ronald Victor Studman, the loan being secured by mortgage registered over land and buildings situated at 36 Parnell Avenue, Marmion ("the property"). Mr Studman died on 4 December 1995. His estate is bankrupt. The second defendant appears as the administrator of the deceased's bankrupt estate. The plaintiff alleges that there has been default under the terms of the mortgage and it now seeks vacant possession of the property.
3 On 16 October 1995 the Family Court of Western Australia, by consent, made the following orders by way of property settlement and for spousal maintenance (annexure "MAS3" to the first defendant's affidavit sworn 24 August 2000):
"1. The husband transfer to the wife all his right, title and interest in the property known as and situate at 36 Parnell Avenue, Marmion more particularly described as:
Lot 286 on Plan 10960 and being the whole of the land comprised in
Certificate of Title Volume 1385 Folio 629.
2. The husband indemnify and keep indemnified the wife and render her absolutely harmless in relation to all and any costs, liabilities and expenses in relation to and associated with mortgages E346317, E452466, E452467 and E452468 to the Rural & Industries Bank of Western Australia (now BankWest) registered against the title of the said property, including payments under the same.
3. The husband shall discharge each and every mortgage referred to in paragraph 3 (sic) hereof and have such mortgages discharged on the title of the said property
(Page 4)
- within 3 years after the date of making of these orders. … "
4 On 27 June 2000 the plaintiff sought summary judgment against both defendants. The first defendant filed an affidavit sworn 24 August in opposition to the summary judgment application. Without going to that affidavit in any detail, it is sufficient if I say that the first defendant said by way of defence, that she was not aware of the terms of the mortgage, that she received no independent advice prior to signing the mortgage documents and that she gained no benefit from mortgaging the property in favour of the plaintiff: See par 24 to par 35 of the affidavit. In the circumstances the first defendant says it would be unconscionable for the plaintiff to attempt to exercise its rights pursuant to the mortgage with respect to her interest in the property. The plaintiff accepts quite reasonably, on the basis of the evidence filed on behalf of the first defendant, that she has an arguable defence to the plaintiff's claim. In the circumstances the plaintiff has not pursued its summary judgment application against the first defendant.
5 By its amended statement of claim filed 28 September 2000 the plaintiff, inter alia, added par 3A, par 3B and to amend par 4. The added paragraphs and the amended paragraph (without including the words deleted) read as follows:
"3A. By order dated 16/10/95 ('Family Court Order'), the Family Court of Western Australia ordered, amongst other things, that the Deceased transfer to the first defendant all his right, title and interest in and to the Property.
3B. The effect of the Family Court Order was to sever the joint tenancy pleaded in paragraph 3 and thereafter the respective interests of the first defendant and the Deceased in the Property were as tenants in common in equal shares.
4. On 4/12/1995 the Deceased died and his interest in the Property became an asset of his deceased estate."
6 It is against the background of those amendments that the plaintiff and the second defendant seek leave to enter consent judgment. The terms of the consent judgment, relevantly, read as follows:
(Page 5)
- "1.1 The second defendant do within 14 days after service on him of this judgment give to the plaintiff possession of ALL THAT piece of land being Lot 286 in Plan 10960, the whole of the land in certificate of title volume 1385 folio 629, situate at and known as 36 Parnell Way, Marmion, Western Australia."
7 The first defendant says that the amendments made by the plaintiff to its statement of claim ought be disallowed. The first defendant's primary submission is that as a consequence of the property being held by the first defendant and the deceased as joint tenants, on the death of the deceased all interest in the property passed to the first defendant by way of survivorship. Consequently, it was submitted, the second defendant has no interest in the property, the proposed amendments do not accurately reflect the true position between the plaintiff and the first defendant and indeed the position postulated by these amendments is unarguable. On that basis the amendments ought not be allowed and consequently the consent judgment ought not be entered.
8 The plaintiff responds by saying that as a consequence of the Family Court order made on 16 October 1995 the joint tenancy of the first defendant and the deceased was severed. After the date of making of the order the parties held their interests as tenants-in-common. Consequently, on the death of the deceased, his interest in the property as a tenant-in-common with the first defendant passed to his estate. The present second defendant as administrator of that estate is entitled to deal with the deceased's interest in the property. It is said that the amendments are in a proper form and that the consent judgment ought be entered.
9 The first defendant says in response to these submissions that the order made by the Family Court required the transfer of the deceased's interest in the property to the first defendant. It was submitted that as this had not been done there had been no severing of the joint tenancy. Essentially counsel submitted that the joint tenancy was not severed unless and until the necessary documents were prepared and the register was adjusted accordingly.
10 This issue can be resolved quite simply. A judicial decree or order that one joint tenant transfer his share to his co-tenant operates to sever the jointure. As a proposition of law this is beyond question and is supported by numerous authorities such as Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672 per Meagher JA at 680 and Harris v Walker (1969) 14 FLR 167. As a consequence, the joint tenancy of the
(Page 6)
- first defendant and the deceased was severed on 16 October 1995. The fact that the register was not amended is of no consequence. At the date of the death of the deceased he had an interest in one-half of the property as a tenant-in-common.
11 But that is not the end of the matter. Counsel for the first defendant submitted that if the effect of the order of 16 October 1995 was to sever the joint tenancy then after the date of the order the deceased held his interest in the property on trust for the first defendant. Accordingly, although the legal interest in the property may have passed to the second defendant on the death of the deceased, the first defendant was beneficially entitled to the deceased's interest in the property. Accordingly, it was submitted, the amendments to the statement of claim did not accurately reflect the true position as between the first and second defendants and ought not be permitted. Further, it was submitted that the second defendant was purporting to deal with the deceased's legal interest in a half-share of the property in a way which was inconsistent with the first defendant's equitable interest in the property. On this basis it was said that the consent orders ought not be permitted.
12 These submissions made on behalf of the first defendant can best be considered by taking them in two parts. Once again, the first part of the submissions presents no problem. It is clearly correct that after 16 October 1995 the deceased held his half-interest in the property on trust for the first defendant. The decision of Commissioner Williams QC in Berdal v Burns [1990] WAR 140 supports such a conclusion. The order of the Family Court makes it plain that after the making of the order the deceased had no beneficial interest in the property. Indeed, he might perhaps be regarded as a trustee of an express trust; if not, after the making of the order he was certainly a constructive trustee of his interest in the property. To do justice to counsel for the plaintiff there was really no serious argument to the contrary on this aspect of the first defendant's submissions.
13 It must follow then that the amendments made to the statement of claim and in particular the amendments effected by par 3B and par 4 cannot stand. It is not true to say that the deceased's interest in the property became an asset of his estate on his death. The deceased had no beneficial interest in the property as at the date of his death. He did have a legal interest but that can hardly be said to be an asset of the estate. Accordingly, the amendments to the statement of claim ought be struck out.
(Page 7)
14 Counsel for the plaintiff submitted that even if the amendments to the statement of claim were disallowed, the plaintiff and the second defendant were entitled to have entered a consent judgment. It was submitted that a conclusion that the second defendant held only a legal and not a legal and equitable interest in the property, did not prevent the parties reaching the agreement that was embodied in the consent judgment. This raises the second aspect of the submissions put by counsel for the first defendant. The question can be posed in this way - does the fact that the first defendant has a beneficial interest in the deceased's interest in the property prevent the second defendant as holder of the legal interest in the property from dealing with it in a way which is consistent with the terms of a registered mortgage? Counsel for the plaintiff submitted that it did not. It was said that any equity which may have arisen such as would prevent the plaintiff enforcing the mortgage against the first defendant's half-interest in the property arose in 1990. No equity in the first defendant could ever have arisen with respect to the deceased's interest in the property. It was submitted, therefore, that the second defendant was at liberty to deal with the legal interest in the property according to the terms of the mortgage. Entry of the consent judgment should therefore be permitted.
15 The answer I think is this. If the second defendant holds the deceased's interest in the property as a consequence of an express trust created when the Family Court orders were made by consent, then the terms of the trust are that the legal title is to be transferred to the first defendant. The position is much the same if the deceased held his interest in the property as a constructive trustee - the second defendant must also be a constructive trustee and he has knowledge of the terms of the trust. In either case, it must be open to question whether the terms of the trust give the second defendant the right to deal with the property in the way he has purported to do in the consent judgment. That is not to say that at some stage the plaintiff may not be entitled to the relief it is seeking as against the second defendant. Rather, it raises the question of the power of the second defendant to consent to the order in its present form.
16 I am not satisfied that this is a proper case of the exercise of the court's power under O 43 r 16. To adapt the wording of r 16(2) I would not direct the Registrar to settle, sign and seal the order in accordance with the terms of consent.
17 I will hear the parties as to the precise form of orders and as to costs.
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