Byrnes v Kendle - [2009] SASC 385

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
BYRNES & ANOR v KENDLE
[2009] SASC 385
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Nyland and The Honourable Justice Vanstone)
18 December 2009
EQUITY - TRUSTS AND TRUSTEES - EXPRESS TRUSTS CONSTITUTED INTER VIVOS - DECLARATION OF TRUST - NECESSITY FOR INTENTION
Respondent purchased residential property in his own name - respondent signed "acknowledgement of trust" acknowledging that he held an undivided half interest in the property as tenant in common upon trust for appellant - whether respondent held part of his interest in the property on trust for the appellant.
HELD: having regard to the terms of the written document, which are a significant matter for consideration, the context in which it came into being, and the relationship between the parties, the respondent held a half interest in the property as tenant in common on trust for the appellant.

EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES
Respondent leased property to son - son did not pay rent to respondent, and respondent did not take action to collect rent from son - whether respondent was in breach of duty as trustee by renting property to son and by failing to collect rent from the son.
HELD: the duties of a trustee in a particular case depend on the terms of the trust, the nature of the trust, and the circumstances in which it operates - having regard to the nature of the property the subject of the trust, namely, an interest in a property as a joint tenant, the fact that the respondent held the remaining interest in the property as a joint tenant absolutely, and the legal relationship between joint tenants, there was no duty on the respondent to rent the property or to collect rent from a tenant to whom the property had been leased.

EQUITY - TRUSTS AND TRUSTEES - POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES - LIABILITY FOR BREACH OF TRUST - EFFECT OF REQUEST OR ACQUIESCENCE OF CESTUI QUE TRUST
Whether, assuming the respondent was in breach of duty as trustee by renting the property to his son and by failing to collect rent, the appellant had acquiesced in the breach and is now precluded from charging the respondent with the breach of trust.
HELD: court must examine all of the circumstances to determine whether it is fair and equitable that a beneficiary should sue the trustee when the trustee relies upon the consent or acquiescence of the beneficiary in a breach of trust - appellant aware that respondent had leased property to son and aware that son was not paying rent, but acquiesced in decision not to press for rent and, in the circumstances, could not now require respondent to account for unpaid rent - appeal dismissed.
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In Liq) (2000) 202 CLR 588; Spellson v George (1992) 26 NSWLR 666,…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Byrnes v Kendle

Details

AGLC: Byrnes v Kendle [2009] SASC 385
Case: [2009] SASC 385
Decision Date: 18 December 2009

CaseChat Overview and Summary

The case of Byrnes v Kendle involved a dispute between the parties over the declaration of an express trust concerning a residential property. The respondent had purchased the property in his own name, but later signed an "acknowledgement of trust" which acknowledged that he held an undivided half interest in the property as a tenant in common, upon trust for the appellant. The appellant sought a declaration that the respondent held part of his interest in the property on trust for her. The matter was heard by the Supreme Court of South Australia, which dismissed the appeal and cross-appeal.

The primary legal issue in this case was whether the respondent held part of his interest in the property on trust for the appellant. This involved examining the terms of the "acknowledgement of trust" and determining if it constituted a valid declaration of trust. The court had to consider whether the respondent had the necessary intention to create a trust and whether the trust was properly constituted.

The court found that the "acknowledgement of trust" did not constitute a valid declaration of trust. The acknowledgement did not explicitly state that the respondent held the property on trust for the appellant. Additionally, there was no evidence of a clear intention to create a trust, and the document did not comply with the necessary formalities. The court held that the respondent did not hold part of his interest in the property on trust for the appellant.

The court also dismissed the cross-appeal against the order as to costs, finding that the appellants had not acted imprudently in rejecting settlement offers made by the respondent. The court did not consider the appellants' attitude and decision to be unreasonable.

The final orders of the court were to dismiss the appeal and cross-appeal, and to affirm the orders made by the trial judge. The respondent was not required to hold any part of his interest in the property on trust for the appellant. The appellants were not liable for the respondent's costs on an indemnity basis.

Orders

Orders of the court

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Background

Background to the litigation

I would dismiss the appeal. I set out my reasons below.Facts It is not necessary to deal in any detail with the history of the marital relationship. This was a second marriage for both parties. When they married Mrs Byrnes was 60 years of age, and Mr Kendle 57 years of age. Each of them had adult children from their previous marriages. Mr Byrnes, Mrs Byrnes’ son, is a solicitor, and from time to time he gave legal advice to his mother relating to her property and affairs. In 1984 Mr Kendle bought and paid for a home unit at Brighton. It was registered in his name because by doing so he was able to obtain a loan at favourable rates. Mr Kendle and Mrs Byrnes lived in the home unit. Mrs Byrnes gave evidence, that the Judge accepted, of contributions by her to their expenses, including a payment of $14,000 to Mr Kendle in July 1989. At the instigation of Mr Byrnes, Mrs Byrnes and Mr Kendle on 1 August 1989 executed an “Acknowledgment Of Trust” in terms more or less identical to the Acknowledgement, but relating to the property at Brighton. The reason for this was to protect Mrs Byrnes’ interests, having regard to payments made by her to Mr Kendle. There is nothing surprising about this. The property at Brighton was sold in 1994 or 1995, and Mr Kendle bought the house at Rachel Street, Murray Bridge. The price was $47,500, and the proceeds of the sale of the Brighton property were applied towards the purchase. There was no evidence that Mrs Byrnes made any cash contribution to this purchase. There is no evidence that Mr Kendle made a cash contribution. The property was again registered in Mr Kendle’s name so that he could obtain a loan at advantageous rates. Before moving into the house, the parties carried out some renovations. The Judge found that Mrs Byrnes contributed $7,000 to this, and Mr Kendle contributed $14,000. As already mentioned, the Acknowledgement was executed in 1997, again at the instigation of Mr Byrnes. Again, there is nothing surprising about this. In 2001 Mr Byrnes bought a house at Graetz Street Murray Bridge. He agreed that Mrs Byrnes and Mr Kendle could live in it rent free. It was anticipated that they would rent out the property at Rachel Street. The Judge found specifically that Mr Byrnes did not buy the property at Graetz Street in reliance on any undertaking by Mr Kendle to collect rent in respect of the property at Rachel Street: [15]. Mr Kendle let the property at Rachel Street to his son. The Judge found that this was done with Mrs Byrnes’ knowledge: [16]. However, after a week or so the son failed to pay the agreed rent. The Judge found that Mrs Byrnes and Mr Kendle were both “upset” about this: [20]. However, on the Judge’s findings Mr Kendle failed to take action, and Mrs Byrnes did not press the issue. The Judge said that she “… chose not to do so for the sake of matrimonial harmony”: [20]. In about April 2003, Mr Kendle increased the amount secured by the mortgage on the Rachel Street property by $10,000. Of that, $2,000 was used for the joint purposes of Mr Kendle and Mrs Byrnes, and the other $8,000 was lent to his son: [17]. In his evidence Mr Kendle did not claim that the loan was discussed “in depth”. The effect of his evidence is that he informed Mrs Byrnes about the proposed loan, but did so without taking care to ensure that she was agreeable.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Mr Kendle claimed costs on an indemnity basis, because the appellants had refused an offer of settlement which reflected Mr Kendle’s attitude at trial. The Judge did not consider that the appellants acted imprudently in rejecting that and other offers made by Mr Kendle, and declined to award indemnity costs. I agree with the Judge. In all of the circumstances I do not consider the appellants’ attitude and decision to have been unreasonable. I would dismiss the cross-appeal against the order as to costs.Conclusion I would dismiss the appeal and cross-appeal. NYLAND J: I agree with the reasons of the Chief Justice. I would dismiss the appeal and the cross-appeal. VANSTONE J: I agree with the orders proposed by the Chief Justice and with his reasons.

Ratio Decidendi

Legal Principle Established

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