Bennie v The Public Trustee - [2017] SASC 175

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BENNIE v THE PUBLIC TRUSTEE & ORS
[2017] SASC 175
Reasons of Judge Dart a Master of the Supreme Court
22 November 2017
PROCEDURE - COSTS - SECURITY FOR COSTS - POVERTY
The plaintiff claims that a property is held on a constructive or resulting trust - he asserts payment of the full purchase price - strength of the case is unclear - plaintiff unable to pay costs if unsuccessful in the claim - on balance, the interests of justice require payment of security for costs.
Supreme Court Civil Rules 2006 r 194; Supreme Court Rules 1987 r 100.01(e); Statute 2 Hen. (1495) 7 c 12, referred to.
Calverley v Green (1984) 155 CLR 242; Collins v Emacord Autos Pty Ltd SASC S6418 3 November 1997; Cook v Whellock (1890) Vol 24 Q.B.D. 658; Dwyer Maxted v Canning Vale [2005] SASC 80; Pacific Acceptance Corp Ltd v Forsyth (No 2) [1967] 2 NSWR 402; Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd & Ors (1992) 57 SASR 180; Ulowski v Miller [1968] SASR 277; Wagner v Mears (1829) 37 E.R. 947, considered.

BENNIE v THE PUBLIC TRUSTEE & ORS
[2017] SASC 175
JUDGE DART:

The fourth, fifth and sixth defendants are beneficiaries of the Jean Bennie Family Trust (“the Trust”). They have applied for an order that the plaintiff provide security for the costs of the action. The plaintiff alleges that a residential property at Ceduna (“the property”) is held on trust for him. That property is the main asset of the Trust.
For the reasons that follow, the plaintiff should provide security for costs in the amount of $35,000.00
Background factual matters
Mr Clarence Bennie and his wife, Jean Bennie, the second defendant, were farmers at Wirrulla. Their son, Neil Bennie, is plaintiff. He had one brother, Greg Bennie, who passed away some years ago. Greg Bennie left a wife and two children. They are the fourth, fifth and sixth defendants.
From about 1972 the plaintiff and his father conducted the farming business at Wirrulla. The plaintiff had a one quarter interest in the farming property and his father held the other three quarter interest. The land was sold in 1992. The farming enterprise was initially carried on by the plaintiff in partnership with his mother and father. As from 10 July 1979 the farming business was conducted by a company, Bennie Partners Proprietary Limited (“Bennie Partners”) and the partnership ceased to trade. The plaintiff says that his parents were initially directors and shareholders of the company. The ASIC company search does not disclose that, but does show that the plaintiff’s brother was a shareholder. In any event, the company was deregistered in 1997.
The plaintiff deposed to the fact that he offered to buy his parents a house, so that they could retire. He says he offered to do so on the basis that, once they no longer required the property, it would become his. He…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bennie v The Public Trustee

Details

AGLC: Bennie v The Public Trustee [2017] SASC 175
Case: [2017] SASC 175
Decision Date: 22 November 2017

CaseChat Overview and Summary

The case of Bennie v The Public Trustee involved the plaintiff, Clarence Bennie's son, who sought to establish that a property was held on a constructive or resulting trust for him. The property in question was initially settled by the plaintiff's parents, with a loan from the Bank of Adelaide, and later transferred to a discretionary family trust. The plaintiff claimed that he had paid the full purchase price for the property, which would support his claim for a trust. However, the evidence suggested that the plaintiff's parents paid the purchase price, and there was doubt as to whether the plaintiff had contributed at all.

The primary legal issue the court had to decide was whether the plaintiff should provide security for costs given his inability to pay costs if he were unsuccessful in his claim. The court had to balance the interests of justice with the potential prevention of the plaintiff from pursuing his claim. The court also had to consider the strength of the plaintiff's case and the likelihood of his success.

The court held that the plaintiff should provide security for costs in the amount of $35,000. The court considered the plaintiff's inability to pay costs if unsuccessful, and the strength of the plaintiff's case. Although the plaintiff had a cogent cause of action, the court found that there was considerable doubt as to whether he had contributed to the initial acquisition of the property. The court found that on balance, the interests of justice required the plaintiff to provide security for costs.

The court ordered that the plaintiff provide security for costs in the amount of $35,000. The court emphasised that it was a grave thing to prevent a person from being able to prosecute a claim, but that the interests of justice required the order in this case.

Orders

Orders of the court

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Background

Background to the litigation

For the reasons that follow, the plaintiff should provide security for costs in the amount of $35,000.00Background factual matters Mr Clarence Bennie and his wife, Jean Bennie, the second defendant, were farmers at Wirrulla. Their son, Neil Bennie, is plaintiff. He had one brother, Greg Bennie, who passed away some years ago. Greg Bennie left a wife and two children. They are the fourth, fifth and sixth defendants. From about 1972 the plaintiff and his father conducted the farming business at Wirrulla. The plaintiff had a one quarter interest in the farming property and his father held the other three quarter interest. The land was sold in 1992. The farming enterprise was initially carried on by the plaintiff in partnership with his mother and father. As from 10 July 1979 the farming business was conducted by a company, Bennie Partners Proprietary Limited (“Bennie Partners”) and the partnership ceased to trade. The plaintiff says that his parents were initially directors and shareholders of the company. The ASIC company search does not disclose that, but does show that the plaintiff’s brother was a shareholder. In any event, the company was deregistered in 1997. The plaintiff deposed to the fact that he offered to buy his parents a house, so that they could retire. He says he offered to do so on the basis that, once they no longer required the property, it would become his. He says that his parents accepted the offer. The plaintiff alleges the circumstances are such as to give rise to the property being held for him by reason of a constructive or resulting trust. He also deposed to the fact that, in March 1979, his parents selected a property for him to purchase for them for their retirement. Settlement on the property occurred on 10 May 1979. A loan of $15,000 was provided to the parents by the Bank of Adelaide. It is not clear how the balance of settlement funds were paid, but it is clear that the contract settled and the plaintiff’s parents became joint registered proprietors of the property. The plaintiff’s father passed away in 1994 and his mother became the sole proprietor by reason of survivorship. The next event in respect of the property was the settlement of the Trust, which occurred on 5 February 1995. The second defendant caused the Trust to be created, which is a discretionary family trust. As mentioned, it is called the “Jean Bennie Family Trust”. The trust deed has been exhibited.[1] It was prepared by a well-known firm of solicitors. On 8 February 1995 the property was transferred from the second defendant to her brother and herself, as trustees of the Trust. The capital and income beneficiaries of the Trust are the second, fourth, fifth and sixth defendants. [1] Affidavit of Neil Clarence Bennie sworn 31 January 2017, FDN2, Exhibit 2L. On the application of the second defendant orders were made by consent in this Court on 8 April 1998 replacing the trustees. The Public Trustee was appointed at that time, and remains, trustee of the Trust. Shortly thereafter the second defendant moved to the Far West Senior Citizens Village in Ceduna. Criteria for security for costs

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

It seems probable that orders for security for costs against impecunious natural persons will become less infrequent now that the test is not special circumstances but the interests of justice. That said, it must be recognised that it is a grave thing to prevent a person, who is able to articulate a cogent cause of action, from being able to prosecute that action. That will always be a very significant factor in weighing what is in the interests of justice.Consideration of the issues The first issue to be considered is the strength of the claim being advanced by the plaintiff. The plaintiff says the property is held on a constructive or resulting trust for him. In a letter before action sent to the Public Trustee, it was asserted by the plaintiff that he paid the full purchase price for the property when it was acquired. That letter was dated 12 June 2014. Clearly enough, a person who contributes the full purchase price for a property would often be in a position to make a claim that that property is held on trust for him or her, even if the legal title was held by another.[12][12] Calverley v Green (1984) 155 CLR 242 at 255. There is a practical difficulty with the plaintiff’s claim, which to my mind creates a doubt as to its strength or genuineness. What the contemporaneous records disclose is that the plaintiff’s parents’ settled on the property and obtained a loan from the Bank of Adelaide to permit them to do so. The purchase price was $40,000.00. The loan amount was $15,000.00. No doubt there were other fees involved in settling on the property. The plaintiff deposed in his affidavit that he does not know the source of the balance of the purchase price paid at settlement. That is a critical issue. If his parents paid the money from their own funds, the plaintiff contributed nothing to the purchase price at settlement. That serves to undermine the main building block of the plaintiff’s claim. The plaintiff deposed to the fact that he financed the acquisition of the property by way of a transaction in March 1980. That is ten months after settlement on the property. In his affidavit, the plaintiff asserts that a particular transaction in March 1980 was in effect payment of the purchase price of $25,000 plus other amounts. There is no explanation for the delay of ten months. Nor does the affidavit say the $25,000 was paid to his parents. The defendants have produced evidence from the plaintiff’s former wife who says that the transaction entered into in March 1980 related to the purchase of a house at Paralowie in Adelaide. It appears to have been the matrimonial home, or at least a home for the plaintiff’s wife. The relevant bank statement of the plaintiff and his wife, dated 7 July 1980, shows the loan amount as being for a settlement. It also shows a debit for stamp duty and registration. This seems consistent with the defendants’ allegation. On the material before the Court there appears to be considerable doubt as to whether the plaintiff contributed to the initial acquisition of the property in any way at all.