Byrnes & Anor v Kendle

[2010] HCATrans 322

[2010] HCATrans 322

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A23 of 2010

B e t w e e n -

MARTIN FRANCIS BYRNES

First Appellant

JOAN WILHELMINA BYRNES

Second Appellant

and

CLIFFORD FRANK KENDLE

Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 8 DECEMBER 2010, AT 12.00 PM

Copyright in the High Court of Australia

MR D.M.J. BENNETT, QC:   May it please the Court, I appear with my learned friend, MR A.L. TOKLEY, for the appellants.  (instructed by Haarsma Lawyers)

MR M.A. FRAYNE, SC:   If the Court pleases, I appear with my learned friend, MR N.J. FLOREANI, for the respondent.  (instructed by Corsers Lawyers.

FRENCH CJ:   Yes, Mr Bennett.

MR BENNETT:   If the Court pleases.  Your Honours, there are two principal issues in this case, both fairly straightforward issues arising out of the law of trusts.  The first concerns a trustee’s duty to collect rent and the second concerns what amounts to an acquiescence.  There is a third issue raised by the notice of contention, which I will deal with in reply, as to whether there was a trust at all.  That was an issue upon which we succeeded before the Full Court.  There are some other issues about quantum and adjustments and what orders should be made if your Honours are in our favour and about costs.  Those matters will be dealt with my learned friend, Mr Tokley.  The two matters to which I address myself in‑chief are, first, the trustee’s duty to collect the rent and, secondly, the question of acquiescence.

In relation to the trustee’s duty, may I start by dispelling what we would describe as a non‑issue which is the proposition suggested in paragraph 25 of our learned friend’s submissions that the respondent was a “bare trustee”.  The paragraph in my friend’s submissions commences with the words, “whilst labels are not of particular assistance” and we rather endorse those words.  The characterising the respondent as a bare trustee does not assist for a number of reasons.  First, he was not a bare trustee.

GUMMOW J:   Should we not look at the trust instrument?

MR BENNETT:   Yes, certainly.  I will be doing that in a moment.  The starting point, your Honour, is ‑ ‑ ‑

HEYDON J:   The absurdity rule is this - the question is, “Was the man required to recover any rent?”  Answer, “No, he was a bare trustee, therefore he was not required to recover any rent.”  That is a circular form of reasoning, if reasoning is the right word.

MR BENNETT:   That is what is put against us.  Yes, your Honour.  We say, firstly, he was not a bare trustee because he had an interest in the trust property.  That arose in two ways.  First, he owned the legal estate and half of it was in his own right, but more importantly there was a contingent remainder in his favour, an equitable contingent remainder which was in the trust property itself in the half that was held on trust for the second appellant.

I will just show your Honours what appears in the documents themselves.  There are two of them.  One appears at page 134 of the appeal book in volume 1, and your Honours see at about line 38:

NOW IT IS HEREBY DECLARED AND ACKNOWLEDGED

That he:

stands possessed of and holds one undivided half interest in the Property as tenant in common upon trust –

for the wife.  Then there are two equitable contingent remainders in each case in the other half and they are in identical terms.  If one predeceases the other:

then during his lifetime and while he continues to own the remaining undivided half share . . . [he] shall be entitled to the use and enjoyment of [her] Interest -

and a precisely converse one.

GUMMOW J:   Now, this is Torrens title, is it?

MR BENNETT:   Yes, it is, your Honour.

GUMMOW J:   So, insofar as this trust is enforced in the face of the register, it is as a personal obligation within the exceptions to indefeasibility?

MR BENNETT:   Yes.  There is, I think, a caveat which ‑ ‑ ‑

GUMMOW J:   There is a caveat, is there?

MR BENNETT:   Yes, there was, your Honour.  I think it has been removed now. 

GUMMOW J:   Do we have the caveat?

MR BENNETT:   It was not in evidence, I am told. 

GUMMOW J:   There was an application to remove it, was there not?

MR BENNETT:   And it was removed, your Honour.  It was removed by consent.  Now, I do not want to spend a lot of time on the bare trust issue.  There is a discussion of it by your Honour Justice Gummow in Herdegen v Federal Commissioner of Taxation (1998) 84 ALR 271. At pages 281 to 282, commencing in paragraph 15, your Honour analyses the term “bare trust” and your Honour says at line 23:

Today the usually accepted meaning of “bare” trust is a trust under which the trustee or trustees hold property without any interest therein, other than that existing by reason of the office and the legal title as trustee, and without any duty or further duty to perform –

There is a useful comment at line 45 on that page where your Honour quotes from Professor Waters, Law of Trusts in Canada:

“It is of course true that so long as a trustee holds property on trust he always retains his legal duties, namely to exercise reasonable care over the property, either by maintaining it or by investing it; he cannot divest himself of these duties -

and so on.  So it does not assist to point out that there were no express active duties imposed in this case, and to describe it as a bare trust is inaccurate.  Certainly, describing it that way does not preclude the existence of other duties.

There was also a discussion in your Honour Justice Heydon’s edition of Jacobs’ Law of Trusts in Australia, the seventh edition at paragraph [315] where there is a general discussion of the concept of bare trusts, and your Honour and Mr Leeming refer to Corumo Holdings v C Itoh Limited – we have not given your Honours references and I do not need to – it is reported in 24 NSWLR 370 – and at page 398 the authors point out that that case referred to the fact that it is almost impossible to imagine a trust in which the trustee has no “active duties to perform”.

So by definition when one talks of a bare trust one is talking of one where there were no active duties in the trust deed.  Certainly one cannot simply say there are no active duties here, therefore there are not any, which seems to be the way in which the respondent seeks to use the concept of a bare trust. 

There was also reference to it in the judgment of this Court, and I will not take your Honours to it at the moment, I will be taking your Honours to the case later, in CGU Insurance Ltd v One.Tel Ltd, but I will take your Honours to that later for a different purpose.  There is a discussion in paragraph [36] of the concept of bare trust.

Now, your Honours, it is our submission that where a trustee lets property, and in most situations the trustee has a duty to let property, there is certainly a duty to collect the rent, a fortiori in this case where the trustee lets it to his son.  There are a few cases I can very briefly remind your Honours of before coming back to the general principle, which is what is important here.  There is a case called Earl of Egmont v Smith – your Honours need not go to it unless your Honours wish to – it is (1877) 6 Ch D 469.

That was a vendor purchaser dispute, and the vendor had let the property pending completion, and there was some problem about the date for completion while the tenant was in possession and matters of that sort.  The court held that, first, the purchaser had agreed to the letting, and secondly, there is a dictum which is that in any event the trustee had a duty to let.  The trustee there, of course, was merely a vendor under an uncompleted contract for sale, so it was a very narrow type of trust with no relevant duty spelt out, except of course the duty to convey to the purchaser at the proper time.

The court there was under no doubt that the trustee in that situation had a duty to let, which goes further than the duty we rely on here; the duty to collect rent once one has let.  At the bottom of page 475 the Master of the Rolls said:

As a trustee it is his duty to keep the property in a proper state of cultivation, reasonable regard being had to incurring a liability on his part.  No one can pretend for a moment that a trustee of farms performs his duty by allowing those farms, situate, perhaps in one of the finest counties in England –

That was Buckinghamshire.  I do not know what that has to do with it –

and readily lettable, to remain unlet and run the risk of losing the rent.  It cannot be pretended for a moment that a trustee performs his duty who does that, or that a trustee who does that voluntarily and knowingly will not expose himself to a serious liability to the cestui que trust who loses his rent.

So there was early authority for it.  There is a recent decision in the Supreme Court of New South Wales.  We have handed your Honours some additional authorities.  This one is called Howling v Kristofferson.  It is a decision of Justice Cohen unreported on 14 October 1992.  This was an executor who, before transferring the property to the beneficiaries, let it to his son and failed to collect rent.  It is a case with considerable resemblance on the facts to this case.  Nothing turns on the fact that he was executor, rather than trustee because at page 4 of 7 at about line 6 his Honour says:

There is no doubt that an executor, like a trustee, is bound to invest money in the estate –

So the executor was clearly being treated as a trustee and the relevant paragraph is on page 5 of 7, about two‑thirds of the way down the page:

In my opinion the executor was bound to realise as much profit from the house as was reasonable.  In circumstances where there was not to be an immediate sale it seems to me that it would have been reasonable to have tried to obtain some rent for the benefit of the estate.  The sale took place in July 1991 so that there was a delay of eight months –

Eight months is seen as a period during which he is bound to let.  Then on the next page, page 6 of 7 at point 5, his Honour says:

I am accordingly of the opinion that in the circumstances the defendant should have taken the appropriate steps to ensure that rental was obtained from the premises and his failure to do so represented a breach by him.  The declaration sought in para 1 of the summons was to the effect that the defendant, by allowing his son to reside in the premises, acted in breach of his duty as executor.  I do not regard that as a breach.  The failure of the defendant was in not obtaining rent –

That is the basis on which his Honour then finds.  There are two cases which I have also handed to your Honours and which I do not propose to spend much time on but which deal with the accounting by a trustee on the basis of what he would have received but for his wilful default.  Such an order is…..the trustee account on the basis of what you would have received but for wilful default is apparently ordered whenever one can find an instance of wilful default. 

The first of those cases is Meehan v Glazier Holdings (2002) 54 NSWLR 146, a decision of the NSW Court of Appeal. At page 163, paragraph 65 in the judgment of Justice Giles, his Honour says:

It is then necessary to return to what amounts to wilful default, and to ask whether the matters found by Austin J were instances of wilful default.  In an accounting by a trustee, the underlying concept is that through breach of trust the trustee has failed to obtain for the trust that which would have been obtained if the trustee’s duties had been discharged.  There may be simple failure to get in an asset of the trust; sale of a trust asset at an undervalue . . . failure to obtain rent for a stranger’s occupation of a trust property . . . The breach of duty need not be conscious wrongdoing . . . But wilful default is not co‑extensive with breach of trust:  there may be a breach of trust which is not wilful default –

Here, of course, one has total failure, except for two weeks, to collect rent.  One gets the same sort of result, set out perhaps more clearly in an early case called Partington v Reynolds, which we have given your Honours the reference to, 4 Drewry, 253 and volume 62 of the reprint at page 98.  At page 99 of the reprint, just before page 256 of Drewry’s Reports, the Vice‑Chancellor says:

There are two different modes of accounting, to which an executor or administrator may be subjected by the Court –

and that applies, we would submit, to a trustee today –

and accordingly there are two different forms of decree in use to compel him to account.  The one is a decree compelling him to account only for what he has received of the testator’s or intestate’s personal estate ; [256] the other is a decree compelling him to account, not only for what he has received, but also for what he might, without his wilful neglect or default, have received, although he has not received it.

Then there is a discussion of the distinction.  We submit this is a case in that category.

HAYNE J:   What was claimed here?

MR BENNETT:   Is that the property was left.

HAYNE J:   No, what was claimed in the proceedings here?  Was a claim made for accounting on wilful default?  Was claim made for account?  What was the claim?

MR BENNETT:   I think that it was merely for account as far as is relevant but it was for the specific amount.

HAYNE J:   It does not emerge with great clarity, I think at least from page 4 of the appeal book.  Perhaps it is elsewhere, is it?

MR BENNETT:   Yes.  This is, of course, in a court which is not a court of strict pleading in the District Court.  It seems to be included in paragraph 6, what is called “a full accounting”, and “monies due . . . as a result of the accounting”.  Certainly, the issue litigated was the issue of rent.

HAYNE J:   But rent – well ‑ ‑ ‑

MR BENNETT:   The rent that was not collected.  There are a couple of other references I might give your Honours in this general area.  In Breen v Williams 186 CLR 71 at 137 at about point 4 of the page your Honour Justice Gummow says:

Where an express trust has been effectively constituted -

Then there is reference to managing:

a trust business, the trustee is required both to observe the terms of the trust and, in doing so, to exercise the same care as an ordinary, prudent person . . . The trustee is, of course, a fiduciary.  But the above obligations arise from a particular characteristic, not of fiduciary obligations generally, but of the trust.  This is the holding of the legal title to property with duties to deal with it for the benefit of charitable purposes or for one or more persons, at least one of whom is not the sole trustee.

A duty to manage a trust business is included in that category and a fortiori where there is a question of rent.  I said I would return to the CGU Case 84 ALJR 576, a decision earlier this year not yet in the Commonwealth Law Reports. It is CGU Insurance Ltd v One.Tel Ltd (in Liq) [2010] HCA 26. At page 581 in paragraph [36] the Court comprising five Justices of this Court said this:

The primary judge described the trust on which the Trustee held the rights under the Policy which Mr Greaves assigned to it as a “bare trust” after the termination of the Deed.  Let that be assumed.  The trustee of a bare trust has no interests in the trust assets other than those which exist by reason of the office of trustee and the holding of legal title.  Further, the trustee of a bare trust has no active duties to perform other than those which exist by virtue of the office of the trustee –

Those words, of course, are crucial –

with the result that the property awaits transfer to the beneficiaries or awaits some other disposition at their direction.  One obligation of a trustee which exists by virtue of the very office is the obligation to get the trust property in, protect it, and vindicate the rights attaching to it.  That obligation exists even if no provision of any statute or trust instrument creates it.  It exists unless it is negated by a provision of any statute or a trust instrument.

and, of course, it does not.  That was a case where the trust property was a chose in action, a cause of action and, of course, there is only one thing one can do with a cause of action and it was held the trustees had the duty to do that, namely to sue.  But that is analogous, we would submit, where the property is, as here, real estate which is leased and as to which rent is owing. 

There is no suggestion that there was any reason, other than the obvious family reason for not collecting the rent.  There is some evidence that the son did not have sufficient money to pay a lump sum of $8,000 at one stage, but there is no suggestion that he was unable to pay the much smaller amount of rent involved in this case.  Anyway, that is not put as an argument against us.  So for those reasons, it is our submission that there was a duty on the trustee to collect the rent and to account to us for half of it.  The second issue in the case concerns alleged acquiescence and I should start by taking your Honours to what the ‑ ‑ ‑

GUMMOW J:   Just before you do that, what is the particular passage in the Full Court which you say displays error on your first point?

MR BENNETT:   Yes, what the Full Court did was to say, in effect, this could have been achieved by simple co‑ownership by conveying half to her.  Therefore, we treat them as co‑owners and we attribute to the trust the characteristics of co‑owners rather than of a trust.

HEYDON J:   It is paragraphs 35 to 38, is it not?

MR BENNETT:   Yes, it is, 33 and following.  The reasoning really appears in the first lines of paragraph 36:

If the device of a trust had not been used -

It is described as a “device”.  Then it says, if the device had not been used she:

would have appeared on the Title as a tenant in common -

Now, that is not quite right.  If the device had not been used, she might not have appeared there at all.  The property is in his name.  What is being said there is that if it had not been done by way of trust, there is another way in which he might have chosen to proceed.  We have a two‑word answer to that, he “did not”.  That is the end of it.  One does not say, “One might have done something other than create a trust, therefore, we will treat it as if it was not a trust at all”.  There is no basis for doing that.  There is no case that justifies that.

CRENNAN J:   I think there was an explanation, was there not, which was as to why a trust was used, which was that there were beneficial interest rates for former Defence persons?

MR BENNETT:   No, your Honour, with respect.  It is the opposite.  That was the situation in Jolliffe which I will take your Honours to in reply in relation to whether there was a trust where this Court said that where there was a provision in banking legislation that said that one could not have more than one savings account and the person ‑ ‑ ‑

CRENNAN J:   I was referring to the facts of this case, although I may be mistaken.

MR BENNETT:   Well, your Honour, the facts of this case – the Defence Service Homes aspect ‑ ‑ ‑

CRENNAN J:   Yes, it is in the judgment in dealing with the facts, yes.

MR BENNETT:   Yes, it is, your Honour; it is totally irrelevant.  The aspect of the case dealing with the Defence Service Homes was that that was the reason it was put in his name.

CRENNAN J:   Well, I mean, it is relevant to your point that there was a deliberate choice to have a trust arrangement rather than have a tenancy in common.

MR BENNETT:   In that sense, yes, your Honour.  It is not a case where one creates a trust in order to create a false impression.  It is not a case where a person wishing to pretend not to be the owner declares a trust that he does not intend.  This is a case where the person intends there to be co‑ownership, puts the legal estate in his name, and then uses the trust to get back to what he has always intended, namely, that it be 50 per cent held for her. 

So here the trust is what is intended rather than what is not intended.  That is why I was distinguishing the facts of Jolliffe, which as I say I will come to in reply.  That was the savings account case where a man opened two savings accounts and declared one to be in trust for his wife, because if it was in trust for someone else you were allowed to have two accounts, and the court said, well, he never intended it to be in trust for her, he said he did not, and it was purely a device to get a fiscal thing.

The court there was able to ignore the trust and say his intention was not to create it at all, but here it is the exact opposite.  Here the fiscal consequence is the reason why the property is in his name alone and the trust is to rectify that rather than to cause it; it is the exact opposite to Jolliffe.  If your Honours consider it more convenient, and my friend does not object, I can deal with the notice of contention now because it is related to the first argument.

FRENCH CJ:   Yes, you can proceed on that basis.

MR BENNETT:   Yes, I will do that, your Honours.  Well, the trial judge’s finding is at page 771 of the appeal book, and at paragraph 33 his Honour says this:

In my view, this case turns upon Mr Kendle’s intention.  In determining whether or not an express trust has been created the court may look at evidence outside the Trust Deed to determine the intention of the alleged settlor.  The Acknowledgement of Trust signed in 1997 did not create an express trust of which Mrs Byrnes was a beneficiary.

I do not understand what that sentence is meant to mean when that is exactly what the document does, and your Honours see the document is - if your Honours look at either of the two declarations of trust, it is quite clear that it is exactly what they do.  The first one at page 134 ‑ ‑ ‑

HEYDON J:   Which we have already been through.

MR BENNETT:   Your Honours have, but your Honour says:

The Acknowledgement of Trust . . . did not create an express trust ‑ ‑ ‑

HEYDON J:   Yes, quite.  That is flaw number one.  Flaw number two is, the evidence of someone in a witness box in relation to a perfectly clear deed of trust is not admissible. 

MR BENNETT:   Precisely, your Honour.

HEYDON J:   This is not a rectification suit.

MR BENNETT:   No.  Nor is it a case where what is alleged is sham or anything like that.  Nor does he allege anywhere in his evidence or is he found to have alleged that at the time he signed it he intended not to create a trust or did not intend to create a trust.  His evidence was he did not remember signing it and he did not remember the $18,000 referred to in it and that is all.

GUMMOW J:   This decision referred to in the footnote on page 771 of Justice Perry, does that, in fact, say what is attributed to it?

MR BENNETT:   No, your Honour.  We did not think that it did and we have not referred to it.  I can have that decision brought to point if your Honour wishes this afternoon.

GUMMOW J:   It might be worthwhile, I think.

MR BENNETT:   But, it did not seem to us to assist in relation to the proposition.  His Honour goes in paragraph 33:

When Mr Kendle signed that document he intended only to acknowledge that, upon eventual sale of the property, half of the net proceeds would belong to his wife.

That proposition comes from nowhere.  There is not a single word of evidence that supports that.  But his evidence says that he does not remember signing it.  That view is consistent with the way he viewed the arrangement.  Then he refers to one question where he is asked if he accepted that he was trustee and he answered:

“Yes. May I make a statement here?

GUMMOW J:   Where are you reading from, Mr Bennett?

MR BENNETT:   I am sorry, your Honour, page 772.  He is quoting the respondent:

“Yes.  May I make a statement here?  To me that was automatic [sic] reaction, she was my wife, we were partners so naturally half of it was hers.”

If anything, that indicates an intention that half of it should be held on trust for her.  It certainly does not lead to the proposition in the middle of the preceding paragraph.  I can show your Honours the actual relevant evidence.  I will not spend a lot of time on this.  At page 91, line 20, he is shown the first of the documents.  He agrees that he signed it.  Then at line 16:

Q.Do you now understand that, as at 1 August 1989, you had signed a document in which you said that you held a one undivided half interest in the property and the property is the Brighton property.

A.Yes.

Q.You held that on trust for your wife.

A.Yes.

Q.And you accept, do you not, that you were a trustee in respect of that one undivided half interest for your wife.

A.Yes.  May I make a statement here?  To me that was automatic reaction, she was my wife, we were partners so naturally half of it was hers.

GUMMOW J:   The words “that was”, line 26, are referring back to the creation of a trust.

MR BENNETT:   Yes, your Honour, presumably.  “I took the view that half, because she was my wife, half should be hers”.  Then there is some material about the $18,000, and on the next page, his Honour asked the question at line 12:

Q.Are you saying that you don’t remember signing the document that you are looking at.

A.I don’t remember signing the document, I don’t remember receiving $18,000 from Joan.

Then there is more reference to the signature and the document.  Your Honours, that ‑ ‑ ‑

FRENCH CJ:   Which document are we talking about there?

MR BENNETT:   It is the first of them, your Honour, the first of the two.  The second was simply, in effect, making it applicable to a second property which was bought with the proceeds of the first.

FRENCH CJ:   I just noticed in the points of defence and set‑off at 21 and 22 in response to the amended points of claim he admitted to signing the document but then said it did not comply with the provisions of the Law of Property Act and had not been stamped.

MR BENNETT:   Yes, those matters are no longer pressed.  I understand the stamping appears ‑ ‑ ‑

FRENCH CJ:   No, how did the question of intention arise?

MR BENNETT:   I am sorry?

FRENCH CJ:   How did the question of intention to form a trust arise at trial?

HAYNE J:   No defence and non est factum.

MR BENNETT:   There was not, his Honour just took that view.  There is also a short reference at page 116 of the transcript at line 1 where he is cross‑examined about a letter, and he is asked at the top of the page:

Q.It would seem from that letter that you accepted that you were a trustee in respect of that property.

A.       Yes.

Q.       For your wife.

A.       Hm hm.

Then his daughter who is a McKenzie friend, I think, says:

DAUGHTER:           He is not following what you are trying to say.  He is not following it.

Then the matter goes off.  There was a letter at page 257, which is the letter being referred to, where his solicitors write, and at the top of the second page of the letter, which is page 257, they say:

In relation to the general issues, it is our view that our client is a trustee and can undertake any process a trustee normally would and this does not strictly require a beneficiary’s consent to the sale process.

So the solicitors are asserting against the beneficiary that he is a trustee who is entitled to act accordingly.  Now, in these circumstances it is – I also should mention, page 129 of the transcript – no, of the transcripts of the appeal which I will hand to your Honours.

This is in the course of argument in the Full Court - I am sorry, in the course of argument before his Honour, I am sorry, at the bottom of the page.  Mr Frayne submits at line 31:

The documents presumably had no significance to him as, on his evidence, Mrs Byrnes was his wife –

And his Honour correctly interrupts and says –

HIS HONOUR:        He would have acknowledged the trust without any documents.

MR FRAYNE:          Yes, he would have.  The formality of it all really is a matter of no moment to him.

HIS HONOUR:        Meant nothing to him, obviously.

MR FRAYNE:          Yes.

That seems to be the extent to which there was any submission about the absence of a trust.  The way the Full Court dealt with that is not surprisingly fairly brief and it dealt with it at page 824 in the judgment of the Chief Justice at paragraph 28:

Trust relationship

I cannot agree with the Judge’s decision on this point.  In my opinion the Acknowledgement constituted Mr Kendle a trustee for Mrs Byrnes, he being the trustee for her of an interest as tenant in common, with a life interest . . . The terms of the Acknowledgement are clear.  So are the terms of the earlier Acknowledgement.  Mr Kendle might not have fully understood what he was doing, but that is neither here nor there.

Then there is the same passage cited –

In a general way Mr Kendle understood what was being done, and in no way resiled from it.

And that is my submission –

Mr Frayne’s submission, accepted by the District Court Judge, was that everything turned on Mr Kendle’s subjective intention, and that he was intending only to acknowledge that upon sale of the property half of the proceeds would belong to Mrs Byrnes.  It seems to me that Mr Kendle’s evidence indicates that he knew that he was creating an interest in the property to be held for Mrs Byrnes at the time he signed the Acknowledgement, and not merely upon a later sale of the property.

Then there is a reliance on Jolliffe, which I have mentioned to your Honours.  That is The Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178. That is a case where there is a very short judgment by Chief Justice Knox and Justice Gavan Duffy which seems to be wider than was necessary for the facts of the case in any event.

GUMMOW J:   There is a longer one by Justice Isaacs.

MR BENNETT:   And a very long judgment by Justice Isaacs, which we submit this Court has indicated later is to be relied on in preference to the majority.  One does not need formula to overrule it because the remarks against me are substantially dicta and this Court has, as I will show your Honours in a moment, indicated that the judgment of Justice Isaacs is more useful.  But, your Honours, see the passage relied on is:

We know of no authority, and none was cited, which would justify us in deciding that by using any form of words a trust can be created contrary to the real intention of the person alleged to have created it.

Well, there is not the slightest evidence or finding to that effect here –

In our opinion the law is accurately stated in Lewin on Trusts . . . “It is obviously essential to the creation of a trust, that there should be the intention of creating a trust –

But that does not mean that the settlor has to be aware of what a trust is and it is sufficient if he has the general intention of creating an interest –

and therefore if upon a consideration of all the circumstances the Court is of opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated”.

HEYDON J:   That means all the relevant circumstances.

MR BENNETT:   It does, your Honour, including the document, as the court goes on not surprisingly to say:

But Mr Frayne’s submission appears to treat this as calling for an enquiry into a subjective state of mind and understanding, without regard to other matters.  He ignores the effect of the document that Mr Kendle signed, and Mr Kendle’s own understanding of its effect.

When there is a written document, the terms of that document are a significant matter for consideration –

We put it more highly than that, but I do not need to to affirm this passage –

as is the context in which the document came into being, and the relationship –

Then there is a reference to Associated Alloys 202 CLR 588. That is on our supplementary list; your Honours have it. At pages 605 to 606, I am starting a little before the passage that has been cited. At paragraph 33 the judgment of Justices Gaudron, McHugh, Gummow and Hayne, your Honours say this:

In Commissioner of Stamp Duties (Q) v Jolliffe, Isaacs J considered that a party who had used the term “trustee” for the title of a savings bank account could not be heard to deny the trust and to assert an absolute entitlement . . .  The majority (Knox CJ and Gavan Duffy J) held that the respondent was not excluded from averring ‑ ‑ ‑

GUMMOW J:   If you are reading Associated Alloys, you have to bear in mind a lot of what was said there was in the majority judgment.  It is designed to meet what seems to be in the foundation of the dissenting judgment that there was no relevant distinction between a trust and a charge.

MR BENNETT:   Yes.  Your Honours, at the bottom of that page, halfway through paragraph 34, about six lines from the bottom, the Court says:

But where the existence of a trust is explicit –

as here –

the absence of an express obligation to keep trust moneys separate does not deny the trust.  Rather, there being a trust, it follows that equity imposes various obligations and duties on the trustee.

and one is to keep it distinct, et cetera.  Then on the next page:

In the present case there is nothing to suggest, at this subjective level, that the parties in their written instrument did not mean what they said, or did not say what they meant.  There is no suggestion of a sham. 

That is the way one looks at it.  One does not start in saying ‑ ‑ ‑

GUMMOW J:   Or non est factum maybe.

MR BENNETT:   Yes, your Honour, precisely.  One does not start by  saying there is some independent obligation on the plaintiff to prove the intention of the settlor ‑ ‑ ‑

FRENCH CJ:   That is how it seems to be put in the ‑ there is a non‑admission of the trust in paragraph 7 of the defence and then the questions about the acknowledgement of debt and then, I think, in the contentions now for the respondent, it is put that, really, it was on you to show intention.

MR BENNETT:   Yes.

FRENCH CJ:   Anyway, we might leave it at that point until 2 o’clock, Mr Bennet.

MR BENNETT:   If your Honours please.

FRENCH CJ:   The Court will adjourn until 2.00 pm.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.02 PM:

FRENCH CJ:   Yes, Mr Bennett.

MR BENNETT:   If your Honour pleases.  Your Honours, I can deal with acquiescence fairly briefly.  The relevant facts are found by the trial judge and it seemed to be in dispute.  At the top of page 774 his Honour says this, the top line on the page:

Kym lived in the house for a little over six years.  For all of that time, or nearly all of it, she was fully aware that he was not paying rent.  Further, during those 6 years, she was present at numerous discussions with her son and her husband at which Martin Byrnes spelled out his view that Mr Kendle owed a duty to Mrs Byrnes to collect rent from Kym.  She was well aware of the rights her son claimed for her but, for the sake of matrimonial harmony, she took no action.

Then there was this total non sequitur –

I find that, although unwillingly, she consented to her husband’s decision –

Now, one asks rhetorically, what is there about spelling out the view that he owed a duty to collect the rent that it amounts to a consent not to press for it?  It is the precise opposite and that is the foundation of the acquiescence.  There is another passage at page 769 which does not add to it very much, in paragraph 20:

Mrs Byrnes and Mr Kendle were both upset at Kym’s failure to pay rent.  So was Martin Byrnes.  On occasions the three of them discussed the problem but Mr Kendle took no action.

That is the trustee took no action to recover the rent –

To use his own words, he “just let the problem drift”.  Nor did Mrs Byrnes take action.  She chose not to do so for the sake of matrimonial harmony.

One asks again rhetorically, what is she supposed to have done?  We know that she could not sue for the rent or insist on the rent being paid; beneficial owner cannot recover rent.  If one needed an authority for that, which we do not, it is Schalit v Joseph Nadler Ltd [1933] 2 KB 79 at 83 to 84. But even without that it is fairly obvious; an equitable owner who is not the lessor cannot sue for rent.

So when one says she took no action, although protesting, what is meant is she failed to bring these proceedings.  There is absolutely nothing else it can mean.  So what one is talking about is laches rather than acquiescence and, of course, laches was not pleaded, but in any event it could not succeed without evidence of detriment and there was not the slightest suggestion of evidence of detriment, so there is no basis on which one could now convert the finding to a finding of laches, but it is simply not acquiescence.  As to what is acquiescence – I do not propose to spend a lot of time on this – there is a discussion in Spellson v George (1992) 26 NSWLR 666. There are discussions in a few places which refer to it. At page 679 at about a third of the way down the page there is a reference to Underhill which says that:

the rule, to which there are several provisos, is that:  “A beneficiary who has assented to, or concurred in, a breach of trust, or who has subsequently released or confirmed it, or even acquiesced in it, cannot afterwards charge the trustees with it.”  It is obvious from this passage and from the authorities cited in the footnotes that this defence covers a number of distinct, but superficially similar, situations.

First, the matter which disqualifies the beneficiary from bringing an action may be something that the beneficiary has done before or eo instanti with the breach.

There is a reference in the next paragraph to being:

clear that a person who has induced or encouraged the breach of trust –

That is not our situation.  Over the page, the second line:

It is, however, clear that mere knowledge of a pending breach of trust and a failure to protest will not in itself amount to an operative consent to or participation in that breach . . . at least until a time when the beneficiary is called upon to make some election.

After some further discussion at the bottom of that page:

Accordingly it is quite clear that the degree of co‑operation by a beneficiary in a breach of trust which will disqualify that beneficiary from bring proceedings has never been defined with precision.

That was a reason for not striking out in that case.  There are some other short statements in the case which give hints as to what it means.  At 682 between B and C it is pointed out that if you intend to consent but do not communicate it you have not consented.  That is fairly obvious, but in any event it is talking about consent, otherwise the discussion is fairly general.  There are short discussions in Jacobs’ Law of Trusts in Australia at page 618 where in paragraph [2236] about line 10:

Quite apart from these provisions, a beneficiary who has assented to, or concurred in, or who has subsequently released or acquiesced in a breach of trust, cannot charge the trustee –

That rather suggests that acquiesced is ejusdem generis with assent, concurrence and release –

provided that at the time of the assent, concurrence, release or acquiescence, as the case may be, the beneficiary was sui juris, and did the act –

So all four, including acquiescence, are put as doing an act.  Well, it is certainly not suggested that the beneficiary here did any act.  What he did was for the sake of matrimonial harmony failed to sue while making her protest repeatedly on the findings making the protest.

Now, my learned friends say this is an issue of fact found against us, but, of course, there is no adverse finding of primary fact.  The adverse finding is what the primary facts amount to and that is squarely within what could be dealt with on appeal in accordance with Fox v Percy and cases of that nature. I assume your Honours do not need me to take you Fox v Percy. It is (2003) 214 CLR 118 at 127 to 129. So we submit there is nothing which assists in relation to that. The Full Court seems simply to have picked up the ultimate findings and treated them as findings of fact. That appears at page 828, beginning at paragraph 46 where the Chief Justice says:

In any event, as I noted earlier in these reasons, the Judge found that Mrs Byrnes “cooperated” in the breach, or as I would put it, that she concurred or acquiesced in the matter being let drift. 

Translation to facts found, did nothing but protested –

The Judge made a clear finding of fact in that respect, which finding was not really challenged on appeal.

Well, it was not a finding of fact.  It was an ultimate conclusion from findings of fact which went the other way.  Then there is a quotation from Jacobs’ Law of Trusts in Australia set out, which I have taken your Honours to, and Spellson is referred to. Then at paragraph 49, he says:

To my mind, acquiescence and consent better describe the conduct or inaction by Mrs Byrnes, rather than the expression “cooperation”.

So consent is a better description for inaction:

It would be one thing if, after a little time, Mrs Byrnes had begun to protest, or if she had protested over a period and then, seeing that Mr Kendle was immovable, had acquiesced.  But on the Judge’s finding, although there was some reluctance on her part, she was well aware of the issue and acquiesced in the decision not to press for rent.

That is only on what one might describe as the ultimate finding, not on any primary finding of fact –

Mrs Byrnes herself acknowledged in evidence that she did not interfere, did not want to upset “the equilibrium”, and was prepared to go along with the situation because the tenant was Mr Kendle’s son.  She agreed that she let the situation go, and that she should have done something about it.

But we rhetorically say so what.  That is just deferring bringing the action.

I agree with the Judge’s findings in this respect, and would uphold his conclusion that even if Mr Kendle was under a duty to take steps to enforce payment, Mrs Byrnes acquiesced in that breach –

This is in the face of the finding about protests and, your Honours, in our respectful submission, there is no adverse finding of primary fact and what he said just cannot get there.  I should show your Honours very briefly what the actual evidence was on which the judge formed his conclusion.

At page 287 in Mrs Byrnes’ affidavit she refers to – I am sorry, this is Martin Byrnes’ affidavit.  At paragraphs 26 to 27 he refers to the relevant conversations and Mr Kendle deals with them at page 478 where he says – it is in the other volume – he says:

As to paragraph 26 I say that I infrequently spoke with Mr Byrnes by telephone and conversations to the effect of the matters in paragraph 26 may have occurred although I have no specific recollection of those conversations.

77.As to paragraph 27 I say Mr Byrnes came by sometimes and infrequently to visit us and I do not recall when he visited.  I deny that Mr Byrnes told me that I was a trustee of my wife’s half interest in the property and I had an obligation to ensure the property was properly rented and maintained.

That is the primary material on which the judge expressed his conclusions at paragraph 769 and 774.  So we submit that there is just no basis for the finding on acquiescence to stand.  Our learned friends refer in paragraph 4.2 of their submissions to an argument based on offer to settle, which is in some way said to bar us.  Paragraph 4.2 of their submissions:

The first appellant’s evidence –

That is Mr Byrnes –

led in re‑examination by his counsel, was to the effect that in relation to the collection of rent . . . the first appellant offered to the respondent “that as long as [he] could get the property sold and we get a fair price for a half share, that I would let go of the other claims.  I offered to do that, if they sold the property and gave me a half share … … notwithstanding everything that happened,

notwithstanding the breaches of trust and so on, that I would let it go”.

Whatever significance that offer had, it was never sued on as a contract.  It was never accepted.  It clearly lapsed due to events and the money still has not been paid to us and it is a complete irrelevancy.  I think that is one of the reasons that it has been included in the appeal books some interminable correspondence about settlement which your Honours are not otherwise interested in.  That paragraph on its own clearly cannot operate in any way to bar our claim.  So for those reasons, none of the defences of acquiescence or consent or whatever can have any operation.

GUMMOW J:   What do you say about set off?

MR BENNETT:   Sorry, your Honour.

GUMMOW J:   There is a point taken about set off.

MR BENNETT:   Yes.  Your Honours, my learned friend, Mr Tokley, will deal with the question of set off and the question of what orders are appropriate if the Court is in our favour on the appeal and there are some issues of costs arising in that area as well which he will deal with.  He will do that now if it is convenient, your Honours.

FRENCH CJ:   Thank you, Mr Bennett.  Yes, Mr Tokley.

MR TOKLEY:   Thank you, your Honour.  Your Honours, can I just respond first of all on the question of set off.  Your Honours may have seen from both the trial judge’s judgment and also the Full Court judgment that neither of the two judgments actually deal with the question of set‑off, which is very unfortunate because it leaves us in the position where there are not the sort of findings of fact that one would want to have the matter dealt with in this Court.  The matter of set‑off was mentioned but at the end of the day no particular findings of fact made by the trial judge. 

It was not raised by the respondents to this appeal in the Full Court either in their notice of appeal or in their notice of contention.  It was only raised orally and in the written submissions that were filed in the argument and for that reason, the Full Court did not deal with the question of set‑off.  Your Honours will find at page 830 of the appeal book, which is appeal book volume 2, in paragraph 58 the reasons why the Full Court declined to deal with the question of set‑off.  Your Honours will see in the last sentence of that paragraph:

To dispose of the claim now would involve reopening the hearing to embark upon consideration of matters that were not raised by Mr Kendle in his Notice of Cross Appeal nor in his separate Notice of Contention.

There were extensive oral submissions made before the trial judge which are not reproduced in the appeal books about the question of set‑off and the short point was that a set‑off raised did not seek to impeach the title of the plaintiffs in the matter and for that reason, there was no proper basis in equity.

GUMMOW J:   Could you say that again?

MR TOKLEY:   I am sorry, your Honour?

GUMMOW J:   There was no proper basis?

MR TOKLEY:   There was no proper basis for a set‑off, yes.

GUMMOW J:   Because?

MR TOKLEY:   There was no attempt to impeach the title, to use that expression, of the plaintiffs in the matter.  It was accepted orally in the Full Court below that where a trustee ‑ ‑ ‑

GUMMOW J:   The theory being that it was and inequitable set‑off.

MR TOKLEY:   Yes, your Honour.  If my recollection serves me correctly, it was pleaded as an equitable set‑off.  At page 24 of the appeal book volume 1 your Honours will see under the heading “Equitable Set Off” the plea there.

HEYDON J:   Ground 2 would collapse if Mr Bennett’s submissions about acquiescence succeeded, would it not?

MR TOKLEY:   Yes, your Honour.

HEYDON J:   Ground 1 seems to be merely a statement of general conclusion.

MR TOKLEY:   Yes, your Honour.

HEYDON J:   Ground 3 is really a trustee’s claim for indemnity, is it?

MR TOKLEY:   In effect, your Honour, yes.  If I may just add, the period identified in ground 3 which is the period from 1994 to 12 September 2008, the relevant period for the purposes of this case was from – I think it is December 2002 to September 2008.  So the trustee has sought to make a claim for a period of time when both husband and wife were in occupation of the premises and to bring the moneys claimed into account by going back to an earlier period of time.  In that respect, there could be no set‑off because there was no rent being collected from the premises.

HEYDON J:   Can I just get the conclusion to which are driving.  The written submissions of the appellants, paragraph 66 onwards, say:

it would preferable for this Court not to remit the matter to the Full Court for further hearing but to decide the point on the basis of the Memorandum –

which I think begins on page 810.

MR TOKLEY:   Yes, your Honour, for this reason, the ‑ ‑ ‑

HEYDON J:   What follows in 67 and 68 do not really tell us why you should tick one column or the other nor does the memorandum itself, does it?

MR TOKLEY:   No, your Honour is quite right.  For that reason I think the preferable course of action is probably to remit the matter to the Full Court for it to be dealt with by the Full Court.

GUMMOW J:   That assumes there is something that attracts the jurisdiction for equitable set‑off?

MR TOKLEY:   Yes, exactly, your Honour.

GUMMOW J:   What is it said to be?

MR TOKLEY:   Your Honour, that is the question.

GUMMOW J:   There has to be some impeachment.

MR TOKLEY:   Exactly, your Honour.

GUMMOW J:   What is it said to be, as you understand it?

MR TOKLEY:   Yes, as I understand it, thank you, your Honour.  As I understand it, the mortgage payments – the outgoings of rates, taxes, mortgage payments whilst the son was in occupation whilst the premises were being rented out.

HAYNE J:   What, as items to be taken to account in drawing the accounts of the trustee?

MR TOKLEY:   Yes, your Honour, as that.

GUMMOW J:   That is a different matter.

MR TOKLEY:   It is a different matter, your Honour.  Yes, it is.  Your Honour is quite right, the submissions that were put in the court below was that there was nothing upon which the title could be impeached and for that reason, there was no basis for an equitable set‑off to be made.  As his Honour Justice Hayne said, it goes to the question of taking account, so your Honour is right.

GUMMOW J:   What would be the answer to bringing it into account on taking accounts?

MR TOKLEY:   Our view, your Honour, and it is set out in the memorandum of counsel supplied – the joint memorandum supplied to the Full Court – our view was that there would be a positive balance in favour of the appellants once the outgoings were taken into account.  The view of the respondent, I think I am right in saying this, is that there would be a negative balance and that comes about, we say, because the respondent would set‑off against the wife’s entitlement to rent, the full amount of the outgoings, so at the end of the day the wife is left with a negative balance.  We say that is an incorrect basis.

HEYDON J:   Just to get things in proportion as to how strikingly important this case is for the economy, the negative amount was $69.07.

MR TOKLEY:   Yes, your Honour.  On that point, if I could invite your Honours to page 809 of appeal book 2.  If I may briefly explain, your Honours.  At the request of the Full Court a joint memorandum from counsel was supplied to deal with the questions of the rent received or rent that should have been received and the outgoings in respect of that rent.  If I could just invite your Honours, please, to pages 812 and 813, this might be of assistance to your Honours.  Your Honours will see on page 812 in the square box entitled D.1, which is about halfway down the page about line 25, your Honours will see that both parties accept that the rental for the period of time during which the son was in occupation would have been $36,150.00, and that can be seen on both the left‑hand column and the right‑hand column.  Your Honours will see on the next page, which is page 813, that the amounts that could be set‑off against that, not using the equitable set‑off but the amounts, the outgoings, again we are at about line 25, were agreed at $17,707.69.

GUMMOW J:   Why would it have to go back?

MR TOKLEY:   Well, your Honour, that is one reason why we say it would be preferable for the matter to be dealt with by this Court.  We say that the net result is stated in the left‑hand column in paragraph 10, that is, after the outgoings are taken into account each of the parties would be entitled to a half share of some $9,000‑odd.  In the column opposite that, what has happened to reach the result of $367 is that the respondent seeks to set‑off only against the wife’s half share the full amount of the outgoings, leaving her with only $367.31.  If I can explain for the assistance of your Honours the rest of the memorandum and why it is that it may cause a problem?

HAYNE J:   Just before you do that, I understand the premise for the memorandum to be identified in paragraph 1 at page 811, is it?

MR TOKLEY:   Yes, your Honour.

HAYNE J:   Treating this as a defensive set‑off to a claim for rent as though it were, what, money claimed for rent?

MR TOKLEY:   Yes, your Honour.  It is, my learned leader reminds me, an inaccurate expression.  If I can put it this way, your Honour.  In the Full Court – unfortunately we do not have the transcript of submissions before the Full Court – but my recollection is that that is the way in which it was treated during the course of argument.  If I can put it this way, your Honours. Because nothing was said in the notice of contention or the notice of appeal when the matter came before the court, it was not one of the grounds on which the court was being asked to rule, so it simply came up during the course of oral submissions and then at the request of the Full Court the memorandum was produced.

Your Honours, if I can just complete dealing with the memorandum.  At page 814 your Honours will see the heading “D.2 Calculation for the Period 1994 to January 2007”.  As I mentioned in answer to your Honour Justice Heydon’s question about paragraph 3 under the heading “Equitable Set Off”, the respondent seeks to take the contribution back to a much earlier point in time and we say that even if they could establish a set‑off, that would be impermissible.  At page 815 under the heading “E. Period from Kym Kendle’s Eviction”, et cetera, after the son vacated the premises the grandson then moved in to occupation, but there was a period of time between the son moving out and the grandson moving in, and the calculations done there are on the basis of the grandson’s occupation of the premises. 

There is a finding of fact in our favour in that respect.  It is one of the few findings of fact, I think, that were of assistance to us, and that is at page 769 of the appeal book in paragraph 22 of the judgment of the trial judge in the last sentence of that paragraph where his Honour made the finding that the grandson moved into the Rachel Street premises paying a certain amount of rent., and so on.  It is that period of time that is dealt with under the heading E and, in particular, it is dealt with in paragraphs E.1 and E.2.  If I may explain the difference between the calculations for E.1 and E.2.  In E.1 the parties differed over what was the relevant period of time.  The appellant maintained it was submitted that the relevant period of time was from January 2007 to September 2008.  The respondent maintained that the period of time was from July 2007 to September 2008.

Your Honours, the differences in amounts claimed by the appellants and respondents can be see on page 816 in paragraph 16 where the appellants claim that the balance due to them is just over $3,000 whereas the respondents claim on the right‑hand column in the paragraph above, they say there is a deficit of $354, and again, that is because the respondent seeks to set off the whole of the amount as against the wife’s entitlement only.

Your Honours, at page 817 there is a summary of what the appellants seek in the matter and your Honours will see - that is in paragraph 20 at page 817, paragraph F, “Summary”.  There are three items there – a, b, and c.  Your Honours, c is no longer taken into account for the reason that that was a claim that was made and prosecuted both at trial and in the Full Court, but the Full Court ruled that there was no evidence as to whether that amount was owing or not, and your Honours will have seen from the appeal book that we sought to reopen the decision on the basis that there had been a misapprehension of fact on that matter.

FRENCH CJ:   So you are setting the entitlement to $12,301.62?

MR TOKLEY:   Yes, your Honour, and that would be the amount that - we would respectfully seek an order from the Court for that amount.  Your Honours, in terms of the relief, we received from the trial judge – and your Honours will find the relevant order at page 780 of the appeal book – your Honours will see that the first order was that:

There be a declaration that the Defendant holds one half of the net proceeds of the sale of the property . . . on trust for the First Plaintiff.

Although we have received that declaration, we have received no order that the moneys actually be paid to us.  I think it was contemplated by the trial judge that that would happen as a matter of course because if one goes to page 774 of the appeal book, in paragraph 44, the very last sentence:

It remains only for the solicitor to distribute those moneys equally between Mr Kendle and Martin Byrnes -

because half of the net proceeds of sale were being held on trust for the parties in the respondent’s solicitor’s trust account.  I think what then happened, although it is not apparent, I think, from the papers in the appeal book, is that because the respondent received a cost order in his favour the moneys remained in the trust account and remain in the trust account to this day pending the outcome of the appeal.

HAYNE J:   What, if any, order do you ask us to make in respect of the declaration that was made at trial?

MR TOKLEY:   That declaration should remain, your Honour.  It was not set aside by the Full Court.  The appeal to the Full Court by the appellants was dismissed but there was no order setting aside paragraph 1 so the declaration should be made and if convenient to the Court an order that the respondent’s solicitors or the respondent – an order that the respondent’s solicitors pay the moneys that they hold in trust in respect of that declaration to the first plaintiff.  Your Honours, that deals with the joint memorandum of counsel and whether it would be preferable for the matter to be remitted or dealt with by this Court.  As your Honours can see, there is a very ‑ ‑ ‑

FRENCH CJ:   How does the relief you seek fit within the remedies sought in your points of claim at page 17?  Line those up ‑ ‑ ‑

MR TOKLEY:   Yes, thank you, your Honour.  Your Honour, the paragraph at page 17, paragraph 35.1, that is the first paragraph – subparagraph is tantamount to the declaration that his Honour has made.  The proceeds of sale I think are $62,340‑odd or something like that.  I can give your Honours the precise amount in a minute.  The second declaration is consistent with the relief that we seek.

GUMMOW J:   It is really 35.3 and 35.4.  That has to be understood as requiring some counting.

MR TOKLEY:   Yes, your Honour.  Your Honours, that is the remedy sought in the statement of claim.  The amended summons which claims the formal relief that we are seeking is reproduced at pages 28 and 29 of the appeal book.  There was an earlier one that your Honour Justice Hayne referred to, I think.  Your Honours will see that on page 28, the declaration that was sought.  Your Honours need not concern yourself with paragraphs 2 or 3.  Paragraph 4 was carried out.  That is where the sale proceeds remain to this day.

HAYNE J:   In court?  The proceeds are in court?

MR TOKLEY:   I am sorry, your Honour, I misread that.  I thought it said it was - they were paid into the solicitor’s trust account.  I beg your pardon.  Thank you, your Honour.  Paragraph 5 is the order that we sought but we have not yet received and paragraph 6 is the order for accounting.

Your Honours, there is a very small point about the question of costs.  It is put against us that the appropriate forum for this claim would have been the Magistrates Court of South Australia, but, with respect, that is incorrect.  The Magistrates Court jurisdiction is a statutory jurisdiction.  It is limited by amount and the maximum amount that could be claimed in the Magistrates Court in respect of any case other than a motor vehicle accident is $40,000, so this claim would have exceeded the jurisdiction limit of the Magistrates Court.  I have made copies for your Honours of the relevant section.  If I could just provide that to your Honours.  Your Honours will see in section 8(1)(a)(ii), “in any other case – $40,000”.

HEYDON J:   The amount you are claiming is less than – I see, 40,000.

MR TOKLEY:   Yes, your Honour.

HEYDON J:   Yes.  You are entitled to half the value of the house.

MR TOKLEY:   Yes, we are entitled to half the value of the house.

HEYDON J:   Which was $62,000.

MR TOKLEY:   $62,000, yes, your Honour.

HEYDON J:   Half of 62 is 31.

MR TOKLEY:   Sorry, beg your pardon, your Honour, 62 was half.

HEYDON J:   I see.

MR TOKLEY:   I am sorry, your Honour, yes.

HEYDON J:   I see nothing in your written submissions on this cost question.  Where is it raised by the respondent?  In paragraph 48, is it?

MR TOKLEY:   It is raised by the respondent at paragraphs 45 to 48 of the written submissions of the respondents and it is dealt with in paragraph 10 of our reply.  The point about the jurisdictional limit of the Magistrates Court was not mentioned.

GUMMOW J:   Sorry, what paragraph in the reply?

MR TOKLEY:   Paragraph 10 of the reply, your Honour.  Your Honours will also see that we have given your Honours the reference as to why the matter started in the District Court and why it remained there during the whole period of time.

GUMMOW J:   Am I right in thinking that – just going back to this memorandum at page 817 – I think you said to the Chief Justice that on an accounting you would be claiming (a) plus (b)?

MR TOKLEY:   Yes, your Honour, that would be the end result of an accounting.

GUMMOW J:   Yes.  You would seek us to achieve a result whereby we treated that as the right figure here?

MR TOKLEY:   Yes, your Honour.  If it was convenient for the Court to do so, yes.  We say that would be the end result of an accounting.  Your Honours, one of those peculiar situations where because of the findings in the first trial, none of the relief that we sought save for the declaration as to the half share was given to us and then on appeal to the Full Court because the appeal was dismissed, none of the relief that we sought was addressed.

GUMMOW J:   The moneys representing the proceeds of sale, they are in a solicitor’s trust account, are they?

MR TOKLEY:   Yes, they are, your Honour.

GUMMOW J:   Invested, presumably, in some way?

MR TOKLEY:   That is a good question, your Honour.  I am not sure whether they have been invested, but they may have been.  I am not sure, but I will have to find out.

GUMMOW J:   I am not sure what the rules in South Australia are about that investment activity.

MR TOKLEY:   I think sometimes, your Honour – I can check it – but I think it is either under the practice or the trust accounting rules the solicitors are actually entitled to keep the interest on the amounts that they hold as opposed to giving the interest to the clients whose money they hold.

GUMMOW J:   Would there be any need for us to make an order directed to the solicitors?

MR TOKLEY:   There should not be, your Honour, given the declaration that we have had in our favour, there should not be.  One would expect them to honour the Court’s declaration.  Unless I can be of further assistance to the Court, thank you, your Honours.

FRENCH CJ:   Thank you, Mr Tokley.  Yes, Mr Frayne.

MR FRAYNE:   If it pleases, I seek to address the issues in descending order of matters favourable to the respondent, that is, to deal with the most favourable matter to the respondent first and move through - most favourable finding and move through to the least favourable which probably relates to the issue of costs at the end.  I hope to do that as quickly as I can.

The first matter that I seek to deal with, if the Court pleases, relates to the matters raised in the notice of contention, appeal book page 854, ground 1, and that, in essence, relates to the findings of fact of the trial judge that the respondent had no intention to create a trust by the signing of the acknowledgement.  The submissions which are in writing in relation to that, are addressed at paragraphs 4.1, paragraphs 34 to 38.  I do not propose to take the Court to the detail of those, other than by overview.  The matters that I put in relation to that are, in essence, that the trial judge made a finding of fact in relation to Mr Kendle’s intention which you have already been taken to by Mr Bennett.  That is at paragraph 33 on pages 771 and 772.

GUMMOW J:   The question is, is the evidence led to that end admissible?

MR FRAYNE:   Your Honour, the evidence ‑ ‑ ‑

GUMMOW J:   In the face of that instrument?

MR FRAYNE:   Yes.  I submit so, and I will explain in a moment why.  The evidence that was led in relation to that was in cross-examination, in essence, by Mr Tokley and the Court has been taken to that evidence and it is referred to in the judgment of the trial judge.  The trial judge refers in his judgment to a decision B&M Properties, and that is referred to in appeal book 771 in the footnote.

GUMMOW J:   This is Justice Perry’s decision I was asking about.

MR FRAYNE:   Yes, it is, if the Court pleases, and I have had copied for the Court a number of decisions including B&M Property Enterprises. The judgment is unreported. It bears the notation [2001] SASC 75, a judgment of 22 March 2001. The court in that case was dealing probably with the reverse of the situation in this case and that is where a person was seeking to claim that they had signed an acknowledgement of trust to protect certain assets the acknowledgement of trust – first, if I can identify the acknowledgement of trust which is referred to in paragraph 10. It was sought to claim that that acknowledgement of trust was in essence a sham. At paragraph 20 of the document, Mr Pettingill sought to raise the right to remain in certain premises by reason of acknowledgement of trust and paragraph 21 refers to the defence. The court then considered certain evidence and concluded at paragraph 28 that, “Mr Scott Pettingill was a most unimpressive witness.”

The court at paragraph 42 reached a conclusion that, “Scott Pettingill’s evidence on all material issues unless it is intrinsically likely or supported by other evidence” - I am sorry, it was rejected unless it was supported for other reasons.  The court at paragraphs 50 and 51 reflected upon the declaration of trust as being not genuine documents.  His Honour then reviewed various evidence and came, at paragraph 86, to consider certain matters of law.  At paragraph 122 it came to this:

I add that I have at times been concerned at the application of the parol evidence rule, which it might be thought would operate to exclude evidence of an intention on the part of B & M inconsistent with the contents of the declaration of trust.

123     However, Starr v Starr –

that is [1935] SASR 263 –

is authority for the proposition that parol evidence is admissible in a case such as this, to show that the declaration was never intended to operate as a binding declaration of trust.

His Honour considers Starr v Starr in paragraphs 124, 125 and 126.  I draw the Court’s attention to that.  I have had provided to the court also a copy of the judgment of Justice Napier in Starr v Starr [1935] SASR 263 and the relevant paragraph appears to be at page 266 at about point 3 on the page and following.

FRENCH CJ:   On your pleadings, are you making any case in the District Court other than beyond the objections that were taken to be acknowledged in the deed itself in relation to the Law of Property Act and stamping of the deed, are you taking any point other than non‑admission of the existence of a trust?

MR FRAYNE:   No, neither point.

FRENCH CJ:   So you were not making a positive case in relation to ‑ ‑ ‑

MR FRAYNE:   No positive case.  The bundle of material that I have provided to the Court also includes two decisions – I am uncertain as to whether they are reported – two decisions from New South Wales.  The first is a judgment of Chief Justice Young in Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 and on appeal Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72. I would seek to come to those decisions by an indirect route by taking you to another document that I have provided to the Court and that is a judgment of Justice Weinberg in Owens v Lofthouse [2007] FCA 1968. I am uncertain again whether this judgment has been reported, but it is a judgment of 12 December 2007.

An issue that arose in relation to the last decision was an argument about the onus of establishing the existence of a trust.  I am looking at paragraph 47 onwards.  At paragraph 52 there is reference to Chief Justice Young in Hyhonie and the Court of Appeal in Hyhonie.  At paragraph 54 there is a summary of Chief Justice Young’s deliberations at paragraph 34 and 36 of Hyhonie.  He refers to:

the onus of establishing a trust is on the person who alleges it –

The commentary of Justice Weinberg continues at paragraph 55.  His Honour referred to Commissioner of Stamp Duties (Queensland) v Jolliffe and he refers to the extract that has been read to the Court previously by my friend.  At paragraph 56 he refers to Chief Justice Young observing certain matters, which I invite the Court to read, but pass over.  I refer to paragraph 57 which ‑ ‑ ‑

GUMMOW J:   Just stopping you there for a minute.  I think Mr Bennett said to us that if it comes to the point, he would seek us to depart from the majority in Jolliffe.  What do you say to that?

MR FRAYNE:   The majority in Jolliffe has been affirmed in the subsequent decision, which is on the respondent’s list of authorities.

GUMMOW J:   For a long time it has been regarded as an odd decision…..treated rather gingerly in Kauter v Hilton 90 CLR 86 at 100.

MR FRAYNE:   The decision that I am reaching for is Kauter v Hilton (1953) 90 CLR 86 at page 100. The passage that I was seeking is about point 3 on page 100.

HEYDON J:   Speaking of very informal transactions, not where you have a solemn document headed “memorandum of trust” which speaks the language of trust throughout, it does not affirm the meaning of the majority of Jolliffe’s Case that you would have to extract from the case in order to win.  Any of the other authorities you have taken us to seem to be sham cases, Mr Justice Napier’s, for example.

MR FRAYNE:   Yes.

HEYDON J:   This is not a sham case.

MR FRAYNE:   No, it is not.

HAYNE J:   You have to get to the point, do you not, of saying that a deed inter partes can be treated by one of the parties to that deed by saying, “Yes, I signed it but I didn’t mean it”.  That is a rather bold proposition.

MR FRAYNE:   I acknowledge the force of that, but that is what my understanding is of the reasoning of the court in Jolliffe.

HAYNE J:   “I did not mean it, I do not fall within the doctrines of non est factum, but I can walk away from it though I have signed it” - a pretty large proposition.

MR FRAYNE:   The matter, I agree, is a large proposition.  It is one that in my submission is supported by Jolliffe.  If I can just continue with the matters that are summarised in Owens v Lofthouse, the matters continue in paragraph 57 with a reference to Jolliffe and a consideration of Associated Alloys and Kauter v Hilton.  In paragraphs 58 and 59 there is reference to the New South Wales Court of Appeal’s consideration of the issue, and an observation in paragraph 60 that “the High Court declined to grant special leave to appeal”.

There is reference at paragraph 61 to Dr Glover who was one of the counsel referring to Hyhonie 28 CLR 191 line 12 and is suggesting that it was wrongly decided and the Court of Appeal were per incuriam because they ignored the parol evidence rule which was a matter which, I think, was raised by Justice Heydon earlier.

GUMMOW J:   It was raised by Justice Isaacs, too, with some vigour, I think. 

MR FRAYNE:   The issue was considered in Owens v Lofthouse in paragraph 62 onwards, and reference was made at paragraph 67 to Starrv Starr, which I have already taken the Court to, and at paragraph 70, to B&M Property Enterprises and an extract from Justice Perry in B&M Property Enterprises is set out at paragraph 70 and then at paragraph 71 there is a reference to Dr Glover submitting:

that the majority judgment in Jolliffe did not state the law correctly –

and an observation that that decision has been applied in certain cases which are set out in paragraph 71. 

GUMMOW J:   What is the answer to what Justice Isaacs says at page 191, 28 CLR, about line 12, he says:

The second reason for not admitting ‑ ‑ ‑

MR FRAYNE:   Clearly, Justice Isaacs thinks differently from those of the majority.

GUMMOW J:   I know he did.  The question is whether he was not right, or, to put it another way, did the majority answer his point?  I do not think so.

FRENCH CJ:   It seems to amount to this, that if you plead a defence to a plea of a declaration of trust evidenced in a formal document, acknowledgement of trust and you go no further than simply say “I do not admit there is a trust”, the plaintiff has to bring in – the onus is on the plaintiff to bring in positive evidence of your intention.  That is the consequence of the way you run this case and the propositions you put, is it not?

MR FRAYNE:   Yes.  That is the consequence of the submissions that I put, if the Court pleases.  In relation to the matters relating to Mr Kendle’s intention, I have taken the Court to the findings of fact of the trial judge at appeal book 771 to772.  The Full Court at appeal book 824 to 826 took a different view and they took the view that it was the terms of the document which was the matter of substance.

It is my submission that on the authorities, at least to date, the issue of intention is one to be proved by the plaintiff.  In relation to the evidentiary matters, the Court has been taken to several at appeal book 91 and 92.  Can I just add additional references on Mr Kendle’s affidavit and at paragraphs 25 and 26 of his affidavit at appeal book 473.  It gives additional information in paragraphs 24 and 25 as to his knowledge at the time.  That is in addition to the matters that are referred to by the trial judge.

HEYDON J:   It is exactly why we have trust documents, to cope with the fact that people later say they have no recollection of them.  I am not against these things, but this would be a huge boon to the Bar if you were right.  It would mean that every case involving a trust – why stop at trust?  Why not have conveyances and all sorts of other things?  It would just lead to an argument about conversations and secret and unexpressed mental states.  It really would totally damage title to property.

MR FRAYNE:   I move on.

HAYNE J:   If you are allowed to.  In the field of contract you would need to take account of Toll v Alphapharm 219 CLR 165, particularly at 184, paragraphs 54 and following, about the effect of signing a contract. I thought we had dealt with Toll v Alphapharm since it was decided.  I cannot bring to mind the case.  I thought it was Agricultural and Rural Finance v Gardiner, but I cannot find it in there.  There is, I think, a further decision of the Court, relatively recently, where we said, if you sign a document, then non est factum, we understand.  Beyond that, we are starting to struggle.  I delayed your moving on.

MR FRAYNE:   The next matter that I take the Court to is if by signing the acknowledgement there was an intention to create a trust, then by the terms of the acknowledgement there were no active duties for Mr Kendle to perform in relation to the rent.  The written submissions in relation to that are at paragraphs 15 to 28 and I do not pause to take the Court to those.  Can I just add some additional matters.

The way that this matter has been pleaded by the plaintiffs/appellants can be seen from the points of claim.  The points of claim commence at appeal book 9 and the matters relating to duties commence at paragraph 22 at the bottom of appeal book 1 at page 12.  The duties are characterised as fiduciary duties as pleaded by the appellants or the plaintiffs.  The particulars which are given at the top of page 13, the relevant ones appear to be 22.1:

The defendant had a duty to do all things necessary to obtain rent form the Rachel Street Property.

Perhaps 22.5, 22.6 and 22.7.  The matters about which it is alleged that there was a breach of various things is referred to at paragraph 23.  There is a claimed agreement between Mr Byrnes and Mr Kendle which is interposed at paragraph 24 which is earlier referred to in the pleadings which I have not taken the Court to.  Then in paragraph 26 the particulars of the breach are paragraph 26.1, failure:

to do all things necessary to obtain rent from the Rachel Street Property –

Then with a bit more particularity, 26.6, 26.7, 26.10, 26.11 and probably 26.12.  The matters that were relied upon at the trial by way of authority and considered by the trial judge and are, in effect, two authorities.  The first was Howling v Kristofferson and the second, which has been mentioned today, Storti & Storti.  Those matters appear from appeal book 772 and 773 where his Honour considers the cases relied upon and the trial judge found them not of assistance.  It appears that the appellants ‑ ‑ ‑

HEYDON J:   It is simply not good enough, with respect, for his Honour to say at the bottom of page 772 that “each case will depend upon its circumstances”.  It is axiomatic that a trustee of a trust, in which some of the property is rentable property, has a duty, other than in the very short term, to seek to obtain a tenant for it and extract rent from the tenant.  What is wrong with that proposition?

MR FRAYNE:   I was proposing to put a contrary proposition, your Honour.  What I was proposing to put was that it is necessary to look at the circumstances in which the trust arises and the circumstances of the parties to ascertain what, if any, positive duties apply.

HEYDON J:   Is this the reasoning of the Full Court?

MR FRAYNE:   In part. 

HEYDON J:   What is there in these circumstances that excludes that general duty of a trustee to extract rent?

MR FRAYNE:   If I can endeavour to do it in this way, if the Court pleases.  The property, which is the subject of the claim, was the matrimonial home between 1995 and 2001.  It was after some claimed agreement by Martin Byrnes, the son, that they moved from the matrimonial home to another property at Graetz Street and it was claimed, but not established, that there was an agreement that the move to Graetz Street was the basis upon which Graetz Street was purchased to enable the Rachel Street property to be rented.  The trial judge found that there was no such agreement. 

In relation to the arrangements for the renting of the Rachel Street property the trial judge made certain relevant findings, in my submission, and they include paragraphs 15 and 16 at page 768 of the appeal book.  To summarise, in relation to the Graetz Street property there was an arrangement for Martin Byrnes to buy it:

Mrs Byrnes and Mr Kendle would live in it.  They would not pay any rent.  They would keep the Rachel Street property, rent it out, and use the rental moneys to supplement their incomes.

Then at paragraph 16:

Martin Byrnes, his mother and Mr Kendle had agreed that they would not use an agent for the renting out of Rachel Street.  They agreed that Mr Kendle would find a tenant and would collect the rent.  I find that, with Mrs Byrnes’s knowledge, Mr Kendle rented the house to his son Kym.  The agreed rent was $125 per week.  Kym paid rent for two weeks only.  That rent was paid in cash.

In relation to those matters, and I wish to take the Court to certain matters in the Full Court’s judgment as well, it is claimed on behalf of the appellants that, in effect, Mr Kendle was the moving party in relation to the renting of the premises.  Can I take the Court to Mr Kendle’s evidence at appeal book page 474, in particular if I just identify the paragraphs rather than detaining the Court - in relation to paragraphs 32, 33, 34 and 36.  In relation to the information known to Mrs Byrnes I take the Court to appeal book page 97 ‑ ‑ ‑

FRENCH CJ:   What are we dealing with here?  Are we dealing with his duties as a trustee or are we dealing with acquiescence?

MR FRAYNE:   No, what I am seeking to do is the basis upon which the property was rented.

FRENCH CJ:   Some of this is historical in terms of the non‑collection of rent.

MR FRAYNE:   Yes, it is.  It is, yes.  In addition, I would seek to take the Court to the Full Court’s consideration at appeal book 826 and 827 and the matters which are referred to at paragraphs 38 and 39:

When Mrs Byrnes and Mr Kendle moved to Graetz Street there was no affirmative duty on Mr Kendle to let out the property at Rachel Street.  The question of whether the property was rented was a matter for both parties, and neither of them was under any obligation to take the initiative.

The Judge found that Mrs Byrnes was aware of the proposal to rent the property to Mr Kendle’s son, and the clear inference is that she agreed to and acquiesced in that proposal.  In this respect, the Judge did not accept Mrs Byrnes’ evidence.  This is not to say that she was pleased with the idea, but the effect of the Judge’s findings, supported by the evidence, is that she did not protest.  In the circumstances, particularly bearing in mind the relationship of the parties, that was enough.  They had agreed to let the property to the son.

At paragraph 40, the conclusion that Mr Kendle did not allow “his interests and his duty as trustee to conflict” and paragraph 42, in relation to what happened thereafter.  So it is my submission that against the background of the particular circumstances of this case that where it was that Mrs Byrnes and Mr Kendle were both involved in the task of deciding to rent the premises and to whom and knowing the situation in relation to the return in relation to the rent, that there was no positive duty upon the trustee as alleged in relation to the duty to recover rent.

FRENCH CJ:   So, does it come down to this?  Is it your submission, adopting the reasoning of the Full Court, that his duties as a trustee were defined, in part, by a relationship with the beneficiary that was more closely akin to that of co‑ownership than that of a trustee/beneficiary relationship?

MR FRAYNE:   That is right, yes.

HEYDON J:   What you need is evidence that the parties said to themselves, we will not rent out this property.  If they had had such conversations or reached such an agreement, that would have excluded the general duty of the trustee to rent it out.  The problem is the evidence actually was the other way.  They agreed that it should be rented out.  Now, that leaves the general duty of the trustee surviving.

MR FRAYNE:   To a particular person who, with the knowledge of Mrs Byrnes, had over the period that the rent was not being paid resulted in subsequently acquiescence.

HEYDON J:   You have got to divide up things analytically.  One, was there a trust?  Two, what were the duties of the trust, and, three, was there breach and if so, was there acquiescence?  We are on number two at the moment.  What do you say about Mr Bennett’s criticism of Chief Justice Doyle’s reasoning?  They could have just had a co‑ownership arrangement.  That would have led to a certain conclusion.  They chose to use the device of the trust.  That should lead to the same conclusion.  He said that is quite fallacious.  What is harsh about that criticism?

MR FRAYNE:   My short riposte is that the Chief Justice’s approach was an appropriate one.

FRENCH CJ:   If they had had a co‑ownership arrangement, would he have got the benefit of the Defence service interest rate?

MR FRAYNE:   The Defence home loans?

FRENCH CJ:   Defence home loans, yes. 

MR FRAYNE:   The evidence suggests the reason for the property remaining in Mr Kendle’s name was because of the belief that he would not have had or they would not have had the benefit of the cheap Defence home loans.

FRENCH CJ:   There was nothing on the record about what the actual conditions upon which those loans were made available were?

MR FRAYNE:   There was no evidence to indicate that that was, in fact, the case, that there would be a disadvantage to them.  The mortgage was paid throughout the period by Mr Kendle from his resources and there is some extracts from the home loan records before the Court, but they do not go to the issue that you have raised, Chief Justice.  The trial judge made that finding in relation to the home loan at page 772 paragraph 10.

The matters in relation to the trustee’s duty that had been put by Mr Bennett include an observation that Mr Kendle is not a bare trustee.  There are at least a colloquial and a technical method of analysis of a bare trustee and the Court has been taken to at least two of those.  One relied upon with the qualifications that are stated in the text is paragraph 315 of Jacobs’ which the Court has already been taken to. 

The matters which the Court has also been taken to as establishing a duty in the circumstances include the Earl of Egmont v Smith.  The Court was taken to a passage at page 475 of that decision and I wonder whether the Court could also read at an appropriate time the passage which appears immediately above that which Mr Bennett took the Court to.  It commences at about 475 at about halfway down the page:

Now I have to consider the position in law of a vendor who, having sold estates subject to yearly tenancies –

et cetera.  Then about halfway through the next paragraph:

What is the legal position? . . . That it is his duty and obligation to relet ‑ ‑ ‑

GUMMOW J:   It said that the vendor in a special sense is a constructive trustee for the purchaser.  I agree with you that it is not Mr Bennett’s strongest plank because – he has an even stronger plank though, he has an express trust.

MR FRAYNE:   Yes, well, we know express duties ‑ ‑ ‑

GUMMOW J:   What Sir George Jessel was talking about was the nature of this relationship between vendor and purchaser after contract and before completion, was he not?

MR FRAYNE:   Yes.

GUMMOW J:   He was using the word “trust”, of course, but a large number of cases ever since have said it is trust in a special sense.  Mr Bennett does not have a trust in a special sense.  He has a full‑blooded express trust by a written instrument.

MR FRAYNE:   The passage that I was seeking to take the Court to is the next few words:

He is certainly a trustee for the purchaser –

to the bottom of the page.  My friend, Mr Bennett, also referred to the decision of Howling v Kristofferson, and he referred the Court to certain passages at pages 5 of 7 and 6 of 7.  Can I take the Court to page 4 of 7?  The passage at the top of that page also needs to be recognised.  It indicates:

The plaintiff’s claim was based on the duty of an executor –

et cetera.  The last two sentences:

On that principle it was submitted that the executor should get a reasonable return by way of rent from the assets where their sale is to be delayed.  There is no apparent clear authority for this but it would seem to follow from the principle to which I have referred and it was not disputed by the defendant in these proceedings.

So the authority which is proffered is one where apparently it was either not contested or conceded, and in my submission does not assist.  Another authority which I wish to take the Court to quickly is CGU Insurance v One.Tel.  The Court was taken to paragraph [36], and the reference was made to the asset being held on trust in that case as a chose in action, and it was put that that was an analogous situation to a person holding real estate.

In my submission, that is overstating the position in this respect, that in relation to a chose in action all that can be done in relation to it is either to prosecute it or not, and as I understood the court the object was that it should be prosecuted.  In relation to land, depending upon what it is that is sought to be done with the land, rental may not be an appropriate duty.  Those are the only matters that I propose to put in relation to the topic of duty.  In relation to the topic of acquiescence, the position of the respondent is that there was a clear finding by the trial judge and a clear ‑ ‑ ‑

GUMMOW J:   Wait a minute.  We need to know what “acquiescence” means.

MR FRAYNE:   Yes.

GUMMOW J:   Is there any reference at any stage in the South Australian courts to Orr v Ford?

MR FRAYNE:   No.

GUMMOW J: In 167 CLR 316 where there is the most detailed discussion by Justice Deane, in particular at pages 338 and at the top of page 340. He treats the preferred understanding of the term “acquiescence” as meaning this. It refers:

to conduct by a person –

which I think would be Mr Bennett’s client –

with knowledge of the acts of another person, which encourages that other person reasonably to believe that his acts are accepted (if past) or not opposed (if contemporaneous) –

Or to put it another way, acquiescence is:

deliberate and informed) inaction or standing by which encouraged another reasonably to believe that his assertion of rights and consequent actions were accepted or not opposed.

Now, that seems to be consistent with the way Mr Bennett was putting it to us and then you have to measure the findings of fact against that sort of criterion.  He says they do not measure up.

MR FRAYNE:   In my submission, they do.  The findings of fact are at paragraph 42 on page 773.  The Court has been taken to them and the matters of standing by and knowledge are all matters which are, in my submission, summarised in that paragraph.

FRENCH CJ:   Just coming back for a moment to the way it was pleaded, it was pleaded solely on the basis – I am looking at 23, paragraph 19 – that the second plaintiff made no objection to the defendant and the second plaintiff refrained from seeking any redress and this has resulted in prejudice to the defendant.  Then it swept in waiver and estoppel as well.  But that I understand to be the basis of the case in acquiescence as put at trial.  Is that right?

MR FRAYNE:   Paragraph 19, your Honour?

FRENCH CJ:   Yes.

MR FRAYNE:   Paragraph 19 is the pleading in relation to acquiescence.

FRENCH CJ:   Yes.  That is right.

MR FRAYNE:   Yes.  The submission that I put on behalf of the respondent is that there was a clear finding of fact by the trial judge, agreed to by the Full Court, and they appropriately applied the law in relation to acquiescence at paragraph [2236] of Jacobs, which is set out at paragraph 47 of the judgment of the Full Court, which is at page 828.

It is put against the respondent that it was Mr Byrnes who made all of the decisions, and that he was the moving party in relation to all of the decisions in relation to the rent.  I have taken the Court to the references to Mr Kendle’s – I withdraw that.  It was put that it was Mr Kendle’s responsibility - that all of the decisions were made by him, and that is in paragraph 4 of the reply.  I have already taken the Court to Mr Kendle’s evidence at appeal book 474.  Can I also add appeal book page 97, lines 14 to 19, and appeal book 99, lines 10 to 38, and in relation to Mrs Byrnes’ evidence, her evidence is at appeal book page 74, lines 4 to 24, page 75, lines 23 to 30, and appeal book 59 to 60.  Can I draw the Court’s attention also to the findings at appeal book 769 at paragraphs 20 and 42?

CRENNAN J:   What do you say about his evidence at 475, paragraph 36 at the top of the page, in this context of acquiescence?

MR FRAYNE:   Page 475, at the bottom of the page.

CRENNAN J:   Paragraph 36 is at the top of the page.  It gives evidence that Mrs Byrnes and he:

hoped that Kym would pay rent arrears to us eventually, but he did not.  My wife and I did not take any action until 2007 when we with help of my family we caused Kym to leave the property.

Which suggests that neither of them were abandoning the idea that Kym would pay the arrears of rent.

MR FRAYNE:   There was a hope.  I suppose that is to be read also with paragraphs 33 and 34.

CRENNAN J:   It just raises an issue about whether the wife’s acquiescence was only in relation to the timing of the collection of the rent.  In other words, she was not acquiescing in abandoning any claim to the rent.

MR FRAYNE:   I think that is Mr Bennett’s point, that at some point there was the possibility that the rent could be sought.  The issue appears to be from the paragraphs that I have taken the Court to that Kym did not have any financial resources to make payment.  Wishful thinking.  The next matter that I wish to take the Court to is in relation to the matter of Mr Byrnes.  Mr Byrnes was asked some questions by his counsel which is set out ‑ ‑ ‑

FRENCH CJ:   This is still under the heading of “acquiescence”?

MR FRAYNE:   Yes, it is.  Perhaps I should put it into context.  Mr Byrnes assigned and the court found assignment of the rights in March 2007 and at some later time, in the middle of the year, Reece came to occupy the premises and the other member of the family had been removed from the premises.  Mr Tokley at appeal book pages 51 and 52 asked Mr Byrnes about his course of action.  The point commences at about line 13.  I invite the Court to read line 13 to the bottom and then over to the top on the next page to line 20 and what he says at about line 6 on page 52:

I was endeavouring to get the matter fixed to settle it and I offered to Cliff and to his family members that as long as we could get the property sold and we get a fair price for a half share, that I would let go of the other claims.  I offered to do that, if they sold the property and gave me a half share.

Now, it is the respondent’s position that that occurred, that the property was sold for a price that Mr Byrnes agreed to and that throughout the proceedings until the issue of costs bit the defendant’s position was whoever is entitled to the proceeds of the sale, Mr Byrnes or Mrs Byrnes, but not both, are entitled to the half proceeds.  So that is an indication of the assignee’s position in relation to the claims for rent. 

FRENCH CJ:   He is saying he will let them go.  The premise of that is that they had been maintained up until then.  How does that feed into your acquiescence argument and particularly the way it is pleaded?

MR FRAYNE:   It supports it, in my submission.  Mrs Byrnes was not seeking to pursue the rent and neither was Mr Byrnes.  If the Court pleases, the next matter which is of relevance in the descending order is the issue of the set‑off.  So if there is a breach of trust, the defendant says that the costs of maintaining the land so that it could be rented to gain income should be offset, and that is the purpose of the joint memorandum, which is before the Court and to which the Court has already been taken.  The joint memorandum is at page 810 and following.  The document has a number of sources.  The sources date to exhibit D.6, which is part of the material before the Court, and I do not want to take the Court to that.

From exhibit D.6 certain schedules have been prepared and they are referred to in paragraph 2, Schedules 1, 2, 3 and 4.  Those schedules for some reason were not annexed or not included in the appeal books but have been provided in certain supplementary material for the Court.  The position of the respondent is that he has paid throughout the period of the claim for rent the council rates, the insurance payments, the mortgage payments and the water payments and without those payments being made, the property would not be available for rent, could not be available for rent, because it would otherwise presumably have to be sold, and so the benefit that is sought, namely the rent, should be the subject of the burden of the outgoings for the premises.

The appellants have for one version of calculations, which are set out on the left‑hand side of the joint memorandum and the respondents have another version, which is set out on the right‑hand side.  My friend has taken you to those briefly.

FRENCH CJ:   So far as the period of Kym Kendle’s occupation 2002 to January 2007 is concerned, just glancing at it very quickly, there does not seem to be any real difference in any of the actual figures as distinct from questions of characterisation.

MR FRAYNE:   That is so, as the document indicates, in relation to two qualifications.  Firstly, it appears from the period that Kym Kendle was in actual occupation there is some reservation about whether he commenced in January 2002 or some later date, and the material in relation to that is set out in a footnote to the appellants’ outline.  There is no precise date which has been found by anyone, and can be found, about when that occurred, but the pleading of the plaintiffs at the time was December 2002, so the calculations, with the benefit of hindsight, might be too favourable to the appellants.  I draw that to the attention of the Court. 

The other thing that I draw to the attention of the Court is that the figures have been calculated on an assumption that throughout the whole of the period, the sum of $140 per week would have been earned by way of rent, and that is referred to in footnote 5 on page 812.  There was no evidence of what would have happened if the property had not been occupied by the person, Kym Kendle. 

So the amount which is calculated under D.1 is the maximum that could have been recovered during that period of $36,150.  The reasoning process of the respondent is that the appellant would only be entitled to half of that, so if you are looking on the right‑hand side, $18,075.  Against that, Mr Kendle has paid all of the expenses, and what the respondent says is that therefore, there would be only a minor or modest amount in favour of the appellant, as shown in the right‑hand column in paragraph 10 ‑ ‑ ‑

HEYDON J:   Would one not take all the rent here $36,150 as that which on various assumptions ought to have been received and “set‑off” against it all the expenses which is $17,707.  That gives you a balance and then the spoils are divided equally?  Why should the appellants’ half of the rent bear the whole burden of mortgage payments, water payments, insurance payments and rates payments?

MR FRAYNE:   The alternative is that Mrs Byrnes has not contributed anything to the outgoings, but is seeking to get half of the rent.  So that the submission I am making ‑ ‑ ‑

HEYDON J:   At least today all she is seeking is half of the net rent.  There would not be any rent, notionally, if it were not for the outgoings. 

MR FRAYNE:   That is right.

HEYDON J:   So if rent were to come into the extent of $36,000, do you not net it by taking off all the outgoings and share it equally?

MR FRAYNE:   Mrs Byrnes or her son, Martin, has contributed nothing to the outgoings, so they are getting a benefit of half the rent.

HEYDON J:   I cannot understand that.  I will try to, but I cannot understand that.

MR FRAYNE:   The proposition that I put is to obtain the rent, whatever it may be, Mr Kendle has contributed all of the outgoings.  So if you adopt the process that your Honour has suggested that you deduct all of the outgoings and then take the net and divide that equally, Mrs Byrnes or Martin Byrnes gets half of the net rent without contributing anything by way of the outgoings for the whole of the period.  Mr Kendle has paid all of the outgoings and he gets half of the net rent, having contributed all of the outgoings, and Mrs Byrnes or her son get the other half of the rent, having contributed nothing.  So the burden is being borne by Mr Kendle.

HEYDON J:   No, it is being borne equally.  It is no point me going on like this.

MR FRAYNE:   I am endeavouring just to articulate the respondent’s position.  In relation to the period in the calculation in D.2, can we indicate that that is the calculation that, in effect, backdates the contribution for the rent.  I do not press that.

FRENCH CJ:   We can disregard D.2?

MR FRAYNE:   You can disregard D.2.  In relation to the position with Kym Kendle, the issue, as my friend has indicated, is the starting point, January 2007 or July 2007.  The court made a finding, as my friend identified, at appeal books 769, paragraph 22, line 41. that the period of rental occurred from July 2007.  So it is my submission that the respondent’s calculation reflects the findings of the court in item E.1 and the appellants’ submission overstates it.

FRENCH CJ:   In any event, it is undisputed fact that the grandson commenced occupation in July 2007?

MR FRAYNE:   That was the court’s finding and I do not dispute it.

FRENCH CJ:   Yes.  The appellant is not contesting that fact‑finding.  As I understand it, the appellants’ are saying the calculation, the claim for rental order, start at the point at which Kym Kendle vacated?

MR FRAYNE:   They do, apparently, yes.

FRENCH CJ:   That reflects an asserted breach of duty by the trustee in not letting the premises?

MR FRAYNE:   Apparently, yes.  If the respondent’s calculations are correct there is no balance due.  If the appellant’s calculations are correct there is a modest sum due, under $15,000.  That leads to the issue of the costs.  The position of the respondent is if the Court is against the respondent in relation to all issues and revisits the issue of costs, the matter should reflect firstly the position in relation to these proceedings, that the matter should properly have been brought – if there is an order of $12,000‑odd in favour of the appellants, should properly have been brought in the Magistrates Court and that there was a usual rule that – there is a rule of court that there is no cost to be awarded unless they ‑ ‑ ‑

GUMMOW J:   Well, there is a problem about equitable jurisdiction in the Magistrates Court, is there not?

MR FRAYNE:   No, in my submission.

GUMMOW J:   Well, the practice we were handed seems to suggest it.

MR FRAYNE:   The matters are referred to in the respondent’s outline. 

GUMMOW J:   It is for a liquidated claim.  It is not for the taking of accounts.  So there is some equitable jurisdiction, but not an exhaustive one it seems to me.  He claimed on account.  It is not - the taking of an account.  It is not a claim for a sum of money in the ordinary understanding, I do not think.

MR FRAYNE:   Those matters also ‑ ‑ ‑

GUMMOW J:   And I can understand why.

MR FRAYNE:   Those matters also can be dealt with.

GUMMOW J:   Some of these estate disputes would be the last thing that should be engaging a busy magistrate.

FRENCH CJ:   What is a minor civil action by the way?

MR FRAYNE:   A minor civil action, I think, is one below a threshold of $5,000.

FRENCH CJ:   Okay.

MR FRAYNE:   I have referred in my outline at paragraph 48.3 to certain provisions of the Magistrates Courts Act.  I do not take the Court to them but they are sections 8, 30 and 32.  Those are my submissions.

HEYDON J:   What do you say to the submission in the appellant’s reply that it was agreed that the trial be heard by the District Court?  Mr Tokley ‑ ‑ ‑

MR FRAYNE:   Simply directed that the matter should proceed in the District Court.

GUMMOW J:   There was a caveat question, was there not?

MR FRAYNE:   That was discharged before the orders were made about the matter proceeding.  The caveat issue arose by the appellants instituting the proceedings ex parte seeking an order for an extension of a caveat which was then on the following day discharged and a claim was made at that time for certain proceeds which were agreed to be paid into the trust account of the solicitor and the orders were made about how the matter should proceed thereafter.  Those orders are contained in the appeal book and if I can just direct the Court to them.  They are at ‑ ‑ ‑

HEYDON J:   Page 762.

MR FRAYNE:   Page 762, that is correct.

HEYDON J:   Order No 2 is that the trial take place in this Court.

MR FRAYNE:   That is so.

HEYDON J:   Was that opposed?

MR FRAYNE:   No, it was part of the process to ‑ ‑ ‑

HEYDON J:   It is rather late, now, to be taking a cost point, is it not?

MR FRAYNE:   No.  The cost point is if you do not get a judgment above a particular sum under the rules of that court you do not get your costs.

HEYDON J:   There is no discretion at all to depart from that?

MR FRAYNE:   No, there is a discretion, if the Court pleases.

HEYDON J:   All right, I see.

MR FRAYNE:   Yes.  The usual rule, the usual process is if you get under $15,000, you do not get your costs.

HEYDON J:   Why should we not exercise the discretion in favour of the appellants?

MR FRAYNE:   They have got to establish a basis for it.  In my submission, the appropriate place for this litigation was, if it was in the District Court, they run the risks of no costs.

GUMMOW J:   In circumstances where you were denying the existence of the trust and denied to this minute.

MR FRAYNE:   Those are my submissions, if the Court pleases.

FRENCH CJ:   Yes, thank you, Mr Frayne.  Yes, Mr Bennett.

MR BENNETT:   Your Honours, there is very little I wish to reply in relation to – the first is, my learned friend relied on a number of matters to suggest that there was some special circumstances to why there was no obligation on the trustee to collect rent.  None of those circumstances suggested that.  Indeed, the fact that there had been a suggestion that the property would be rented and the fact that there were continuous complaints about the rent not being collected rather suggests the contrary, but there is nothing in the circumstances, we would submit, which overrides the normal situation.

In relation to acquiescence, I should have referred to Orr v Ford in‑chief, but to make it clear that we, with respect, adopt the passage from Justice Deane which was referred to in that case.  The important point about that definition is that is refers to misleading someone by standing by.  Now, there is no suggestion that our failure to bring proceedings misled anyone by standing by, particularly in view of our constant protests about the failure to collect rent.

HAYNE J:   But did it permit the circumstances to continue, that is, did it put off the day of ejectment?

MR BENNETT:   Not as I understand it, your Honour.  If we are saying you have a duty as trustee to collect the rent, the implication from that is, and, if it is not forthcoming, to take the obvious step.  There is no ‑ ‑ ‑

HAYNE J:   Well, the question is has the inaction or, if you like standing by, put the other party in a situation where it would be inequitable or unreasonable to place him.

MR BENNETT:   Yes, and, your Honour our inaction is only the failure to commence proceedings against the trustee for an account.  There is no suggestion, and no evidence suggesting that the trustee said to himself, “I do not need to collect the rent or eject him because I am not being sued for an account in relation to rent”.  Such a proposition would have been a surprising one and, of course, it was not put or made.

HAYNE J:   Not even to insist, “Look, this cannot go on.  You have to bring it to a head”?

MR BENNETT:   In my respectful submission, one does not need to go that far.  If one sees a trustee committing a continuing breach, which is the case here, and one complains about it, where does one find the further duty to commence proceedings forthwith if one complains and says to the trustee, as the trial judge found, “This is your duty, you must do it”?  The word “insist”, with respect, goes further than is required.  There is not an acquiescence merely because one does not insist.  The converse of acquiescence is consent, not fail to insist.  So, in my submission, on the findings made by the trial judge, at page 774, there was simply no acquiescence.  Of course, there is the evidence of the trustee at page 100 of the appeal book where he is asked at the bottom of that page about the notice to quit that was given, line 35:

Q.This was a notice that could have been given at an earlier point in time.

A.Could have been, yes, but I deferred it.

He does not say, “I took it from my wife’s inaction that I did not need to do anything.”  As I say, and I keep repeating it, but it was not inaction, it was protesting and protesting is just inconsistent with acquiescence. 

HAYNE J:   Could I take up with you the question of outgoings?

MR BENNETT:   Yes, I will ask Mr Tokley to reply in relation to that.

HAYNE J:   By all means, yes.  Mr Tokley, the outgoings in respect of the property were met entirely by Mr Kendle, were they?

MR TOKLEY:   Yes, that is my understanding, your Honour.

HAYNE J:   What allowance, if any, do you make in your calculations for that fact?

MR TOKLEY:   In response to the questions that were put to my learned friend, Mr Frayne, by his Honour Justice Heydon earlier, the contribution of the wife, the beneficiary, is that she has a 50 per cent share in the interest in the property so that the property that is being rented belongs to her and to the trustee - her contribution is a 50 per cent share. 

To come back to your Honour Justice Hayne’s question, the outgoings were paid by the trustee, but the understanding – I think there is a passage of evidence I can take your Honour to if your Honour would give me a moment to find it – but the understanding between husband and wife was that the costs of their living together were borne by them with the wife providing sustenance, paying for all the sustenance, whilst the husband lived in the subsequent property, the Graetz Street property, rent free.  There is no evidence, I think I can say – although I have not checked the transcript – there is no evidence to the effect that the wife made any substantial contribution by way of mortgage repayments or water or electricity or gas or the like.

HAYNE J:   Absent some special arrangement of the kind to which you allude, would you accept that the cost of the expenses in respect of this property would ordinarily fall upon those interested in the property in equal shares?

MR TOKLEY:   Yes, absent a special arrangement, yes, your Honour.  That would be right.  If I can just pick up his Honour Justice Heydon’s point, at the end of the day, and the memorandum reflects this, what has happened is that the gross rental has had, at least on our side of the calculation, has had deducted from it the gross outgoings.

HAYNE J:   But there is no allowance in that, I think, for equalisation of the liability to expenses which you, in your immediately preceding answer, accepted would ordinarily fall equally on interests absent special agreement?

MR TOKLEY:   Yes, correct, your Honour.

GUMMOW J:   How would that then affect the summary?

MR TOKLEY:   From our point of view, it does not, your Honour, because for the reason that I gave his Honour Justice Hayne, that my understanding is that the arrangement between husband and wife – if I have a moment, I can probably find the passage – was that the wife paid for the sustenance whilst they were living in the other property and whilst they were living there rent free.  So although there is no direct financial contribution in a sense that there is no direct payment towards mortgage, nevertheless, the wife bearing the sustenance costs is her contribution towards the living expenses.

GUMMOW J:   Where do we see that?  We had better be ‑ ‑ ‑

MR TOKLEY:   It is probably in two places, your Honour.  Probably both in the affidavit of Mrs Byrnes and also in, I think, her oral evidence as well. 

FRENCH CJ:   This was the matter in respect of which, I think, the Full Court said at paragraph 58 that – the Chief Justice said that he:

would not be prepared to make a decision in respect of this aspect of Mr Kendle’s case without hearing further submissions as to the evidence, if any, relevant to the basis upon which Mr Kendle assumed responsibility for outgoings –

which is what you are on about.

MR TOKLEY:   Yes, your Honour.

FRENCH CJ:   So there was no finding of fact at trial level in relation to this for the reasons you have already ‑ ‑ ‑

MR TOKLEY:   Yes, your Honour, and the difficulty one had was that the point then was raised, I think, in the written submissions filed in the Full Court were then raised orally.  The Full Court was not expecting such an argument to be advanced and for that reason could not deal with it during the course of the Full Court hearing and so deferred it, as your Honour has pointed to in paragraph 58.  There is, unfortunately, a number of pieces of evidence.  Would it be of assistance to the Court or could I seek leave to just put in a short written note to that effect and provide the written references, the page references to the parts of the evidence where it was stated that Mrs Byrnes paid for the sustenance ‑ ‑ ‑

FRENCH CJ:   What are we meant to do with that?  Is this evidence which is not in dispute or is there a contest about it?

MR TOKLEY:   That is a good question, your Honour.

HAYNE J:   In round numbers, if this point is right, it will come down to about $700 we are fighting about, I think.  I think that is the rough calculation.

MR TOKLEY:   At the most, your Honour, it would come ‑ ‑ ‑

HAYNE J:   Never trust a lawyer with a calculator and what that says about a judge without a calculator, I leave to you.

MR TOKLEY:   I am sorry, your Honour.  I am not sure, with great respect, that would be right. 

HAYNE J:   Nor am I, Mr Tokley, nor am I.

MR TOKLEY:   By way of assistance to the Court, your Honour the Chief Justice is right.  The difficulty that one faces is the lack of findings because neither the trial judge nor the Full Court expressly turn their minds to these questions of the ‑ ‑ ‑

FRENCH CJ:   Was it fought out at trial in any way by cross‑examination?  You say there was evidence‑in‑chief relevant to it?

MR TOKLEY:   Yes, your Honour.  It was accepted, I think, from the point of view at trial that there were outgoings.  There is no question of that and the appellants do not dispute that Mr Kendle paid the outgoings in respect of the property.  That was not disputed, but there were also questions about the living arrangements between the parties and who paid for what and that is dealt with at trial level.  Oddly that did not - for reasons we have already been through – translate into the trial judge’s finding of fact.

FRENCH CJ:   Can I just ask, also, again I am sorry to harp back to the pleadings - the pleading is at page 24, I think, in paragraph 3.

MR TOKLEY:   Yes, your Honour.

FRENCH CJ:   Was there any response filed to that?

MR TOKLEY:   No, your Honour.  There was no reply filed because the practice in South Australia is that in the absence of a reply all matters are put in issue.

FRENCH CJ:   I see.

MR TOKLEY:   Yes.  Your Honour can take it that paragraphs 1, 2 3 and 4 under the heading “Equitable Set Off” were put in issue by the appellants in the absence of - there is a rule.  I can provide the Court with the reference to the rule if need be.  I am conscious of the time, your Honours.  Would your Honours pardon me?

FRENCH CJ:   I think the best course, Mr Tokley, might be if you were to give us written submissions within a reasonably short period and also, of course Mr Frayne to reply, and also an indication of how the schedule would look if you were wrong in your contention, from the appellants’ perspective.

MR TOKLEY:   Yes, your Honour.  Certainly, your Honour.

FRENCH CJ:   How soon can you do that?

MR TOKLEY:   At best, given the Christmas period, I think seven days, your Honour, if I could have seven working days?

FRENCH CJ:   All right.  Maybe seven days.  Mr Frayne, what about you?

MR FRAYNE:   I am – the respondents, two working days, your Honour.

FRENCH CJ:   Let us suppose, if you can give us your submissions by, say, let us see – Wednesday is the 15th.

MR TOKLEY:   Yes, your Honour.

FRENCH CJ:   Say, by the 15th?

MR TOKLEY:   By the 15th, your Honour, yes.

FRENCH CJ:   And then you no later than the 17th - you say two days you can do it in?  Yes, all right.

GUMMOW J:   I think there is a judgment in Lacey v Hill in 8 Ch 441, and I think by Justice Powell(??) in Anmi v Williams in [1981] 2 NSWLR 138, which has the comforting thought that in some

circumstances it is necessary to administer the remedy of account to provide “a rough code of justice”.

MR TOKLEY:   Yes, your Honour.

GUMMOW J:   We may be in that territory.  Judges have been pressed into a corner before today, and that is what the Chancery judges said, and may be saying it again.

MR TOKLEY:   Yes, I am grateful to your Honour.  If your Honour will just pardon me for one moment.  I am sorry, your Honours, I cannot find it immediately, but ‑ ‑ ‑

FRENCH CJ:   Yes, all right.

MR TOKLEY:   Thank you, your Honour.  Unless I can be of further assistance to the Court.

FRENCH CJ:   Thank you, Mr Tokley.  Yes?

MR BENNETT:   Your Honours, may I have leave just to say one very short thing that I omitted to say in reply in relation to the decision of Justice Perry?

FRENCH CJ:   Yes.

MR BENNETT:   That is that that case concerns a very different situation.  It is a quasi-fraud situation, a quasi-sham situation where a company makes a declaration of trust over an asset in favour of the director who is causing it to do it, and in that situation it is fairly easy, one would have thought, to go behind the declaration of trust, as his Honour did for a number of reasons, and in my respectful submission, despite one or two rather widely expressed sentences in that case, it is not sufficient to establish my learned friend’s proposition.

FRENCH CJ:   Yes, thank you, Mr Bennett.  The Court will reserve its decision.  The Court adjourns until 4.30 pm for pronouncement of orders.

AT 4.14 PM THE MATTER WAS ADJOURNED