Byrnes v Kendle [2011] HCA 26 3 August 2011 A23/2010
ORDER
1. Appeal allowed with costs.
2.Orders 1 and 3 of the orders of the Full Court of the Supreme Court of South Australia sealed 20 January 2010 be set aside and in place thereof it be ordered that:
(a) the appeal to the Full Court be allowed with costs; and
(b)the orders of the District Court made on 31 March 2009 and order 1 of the orders made on 22 June 2009 be set aside and in place thereof:
(i)declare that the solicitors for the respondent, Clifford Frank Kendle, be at liberty to account for the moneys held by them in trust pursuant to order 4 of the orders of the District Court made on 11 September 2008 by paying thereout to the first appellant, Martin Francis Byrnes, or as he may direct in writing, the sum of $73,534.70 and by paying the balance to Mr Kendle, or as he may direct in writing;
(ii)order that:
(A)Mr Kendle pay the costs of the appellants on a party and party basis of the trial and all applications filed in the District Court action; and
(B)the action otherwise be dismissed.
On appeal from the Supreme Court of South Australia
Representation
D M J Bennett QC with A L Tokley for the appellants (instructed by Haarsma Lawyers)
M A Frayne SC with N J Floreani for the respondent (instructed by Corsers Lawyers)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Byrnes v Kendle
Equity – Trusts and trustees – Express trusts constituted inter vivos – Where respondent by deed declared one half of property held "upon trust" for second appellant – Whether respondent a trustee – Whether evidence extrinsic to deed relevant to intention to create trust.
Equity – Trusts and trustees – Powers, duties, rights and liabilities of trustees – Liability for breach of trust – Where trustee leased trust property – Whether duty to collect rent – Whether breach of duty to fail to collect unpaid rent – Where beneficiary knew trustee failed to collect rent and was told trustee had duty to collect rent – Whether beneficiary consented to or acquiesced in breach – Whether trustee entitled to set-off outgoings and improvements to property in taking of accounts.
Words and phrases – "acquiescence", "bare trust", "consent", "estoppel", "express trust", "intention", "upon trust".
In proceedings commenced in the District Court of South Australia in September 2008, Martin Byrnes and his mother, Joan Byrnes, alleged that, between 2002 and 2007, Mrs Byrnes' estranged husband, Clifford Kendle, had committed breaches of trust in relation to a house and land at 10 Rachel…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Byrnes v Kendle [2011] HCA 26
Case
[2011] HCA 26
Decision Date
CaseChat Overview and Summary
The case of *Byrnes v Kendle* involved an appeal to the High Court of Australia by Mrs Byrnes and Mr Martin Byrnes (her son) against Mr Kendle. The dispute concerned the nature of a trust allegedly created by Mr Kendle in a deed concerning a jointly owned property, and whether Mr Kendle, as trustee, had breached his duties by failing to collect rent from a portion of that property.
The High Court was required to determine whether Mr Kendle, by executing the 1989 Deed, had effectively declared himself a trustee of one half of the Brighton property for the benefit of Mrs Byrnes. Further, the court had to consider whether Mr Kendle had breached his trustee duties by failing to collect rent from the property, and if Mrs Byrnes had, through her inaction and knowledge, consented to or acquiesced in such a breach. Finally, the court needed to ascertain the extent to which Mr Kendle was entitled to set off outgoings and improvements made to the property in the taking of accounts.
The court reasoned that the language of the 1989 Deed, specifically the phrase "upon trust," clearly indicated Mr Kendle's intention to create an express trust. The deed established a beneficial interest for Mrs Byrnes in one half of the property, with Mr Kendle holding that interest as trustee. The court found that Mr Kendle's failure to collect rent constituted a breach of his duty as trustee. However, the court also considered the context of the matrimonial relationship and the lack of evidence of reliance by Mr Kendle on Mrs Byrnes' inaction, concluding that there was no effective acquiescence or consent on her part to the breach. The court allowed the appeal, setting aside previous orders and directing that a specific sum be paid to Mr Martin Byrnes on behalf of Mrs Byrnes from funds held in trust, with the balance to be paid to Mr Kendle.
Orders
Orders of the court
1. Appeal allowed with costs.
2. Orders 1 and 3 of the orders of the Full Court of the Supreme Court of South Australia sealed 20 January 2010 be set aside and in place thereof it be ordered that:
(a) the appeal to the Full Court be allowed with costs; and
(b) the orders of the District Court made on 31 March 2009 and order 1 of the orders made on 22 June 2009 be set aside and in place thereof:
(i) declare that the solicitors for the respondent, Clifford Frank Kendle, be at liberty to account for the moneys held by them in trust pursuant to order 4 of the orders of the District Court made on 11 September 2008 by paying thereout to the first appellant, Martin Francis Byrnes, or as he may direct in writing, the sum of $73,534.70 and by paying the balance to Mr Kendle, or as he may direct in writing;
(ii) order that:
(A) Mr Kendle pay the costs of the appellants on a party and party basis of the trial and all applications filed in the District Court action; and
(B) the action otherwise be dismissed.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
FRENCH CJ
(dissent)
GUMMOW AND HAYNE JJ
HEYDON AND CRENNAN JJ
Mrs Byrnes' inaction, if it can be called that, is to be understood by reference to the matrimonial relationship and the fact that a member of Mr Kendle's family was at the centre of his ongoing failure to insist on the rental payment. There was no acquiescence in the relevant sense, there was no evidence of reliance by Mr Kendle upon Mrs Byrnes' inaction. In any event, given the circumstances, it could not be said that it was not fair and equitable for Mrs Byrnes to be permitted to complain of a breach of trust by Mr Kendle. Conclusion The appeal should be allowed. I agree with the reasons of Gummow and Hayne JJ in relation to the allowable set offs which Mr Kendle can claim and with the orders that their Honours propose. The second appellant (Mrs Byrnes) and the respondent (Mr Kendle) married in 1980. She was then aged 60 and he about 57. Each had adult children by previous marriages. The first appellant (Mr Martin Byrnes) is the son of Mrs Byrnes and Mr Kym Kendle is the son of Mr Kendle. Mr Martin Byrnes is a solicitor and his mother took advice from him. Mrs Byrnes and Mr Kendle separated early in 2007 after some 26 years of marriage. They have not divorced and there has been no settlement of property under the Family Law Act 1975 (Cth). In 1984 Mr Kendle purchased a home unit at Brighton in South Australia being the property comprised and described in Certificate of Title Register Book Vol 4063 Folio 848, with finance provided under the scheme established by the Defence Service Homes Act 1918 (Cth)[58]. Mr Kendle became the sole registered proprietor. In 1989, at the instigation of Mr Martin Byrnes, Mrs Byrnes and Mr Kendle executed an instrument with respect to the Brighton property ("the 1989 Deed"). The operative provisions were as follows:"1.Subject to clause 2, [Mr Kendle] stands possessed of and holds one undivided half interest in the Property as tenant in common upon trust for [Mrs Byrnes] absolutely ('the [Byrnes] Interest').2.If [Mrs Byrnes] shall predecease [Mr Kendle], then during his lifetime and while he continues to own the remaining undivided half share in the Property as tenant in common ('the [Kendle] Interest') [Mr Kendle] shall be entitled to the use and enjoyment of the [Byrnes] Interest. This clause shall entitle [Mr Kendle] to a life interest in the [Byrnes] Interest subject to early termination upon disposal of the [Kendle] Interest.3.If [Mr Kendle] shall predecease [Mrs Byrnes], then during her lifetime and while she continues to own the [Byrnes] Interest [Mrs Byrnes] shall be entitled to the use and enjoyment of the [Kendle] Interest. This clause shall entitle [Mrs Byrnes] to a life interest in the [Kendle] Interest subject to early termination upon disposal of the [Byrnes] Interest."This instrument was so framed and executed as to be a deed pursuant to s 41 of the Law of Property Act 1936 (SA) ("the Law of Property Act"). Section 41(2) required attestation by at least one witness who was not a party, sub‑s (3) provided that delivery was not necessary, and sub‑s (5)(b) provided that an instrument so signed by an individual and attested was a deed if, as was the case here, the instrument was expressed to be sealed.[58]See Nelson v Nelson (1995) 184 CLR 538 at 568-570; [1995] HCA 25.
Ratio Decidendi
Legal Principle Established
Established by:
GUMMOW AND HAYNE JJ,
HEYDON AND CRENNAN JJ