Cockburn v Coburn

[2005] NSWSC 993

CITATION:	Cockburn v Coburn [2005] NSWSC 993 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	19 & 20 May and 11, 15 & 19 July 2005
JUDGMENT DATE :	30 September 2005
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	That a constructive trust be declared.

CATCHWORDS:	EQUITY [103] - Trusts and trustees - Constitution and classification of trusts in general - Implied trusts - Constructive trusts - Independent of intention - Particular cases - Mother transfers titles of land to son to facilitate borrowing by him on the basis that he will retransfer titles to her when mortgages discharged.
LEGISLATION CITED:	Real Property Act 1900 ss 93 & 96
CASES CITED:	Birmingham v Renfrew (1937) 57 CLR 666 Last v Rosenfeld [1972] 2 NSWLR 923 Ogilvie v Ryan [1976] 2 NSWLR 504 Rochefoucauld v Boustead [1897] 1 Ch 196 The Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 Jacobs' Law of Trusts in Australia (6th ed, 1997) [1301], [2104], [2105]
PARTIES:	Alma Jean Cockburn (P) Diana Margaret Coburn (D & XC) Gary Cockburn (XD)
FILE NUMBER(S):	SC 1735/04
COUNSEL:	I D Faulkner SC and L W F Chan (P & XD) D A Smallbone and C A Franklin (D & XC)
SOLICITORS:	Warren McKeon Dickson (P & XD) M J Woods & Co (D & XC)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

FRIDAY, 30 SEPTEMBER 2005

1735/04 ALMA JEAN COCKBURN v DIANA MARGARET COBURN

JUDGMENT

1 HIS HONOUR:

ISSUES

2 These proceedings concern three blocks of land at Bateman’s Bay on the South Coast of New South Wales being Lots 52, 53 and 54 Wharf Road, Surfside (“the subject property”). Prior to the events recounted below the registered proprietor was the plaintiff Alma Jean Cockburn. The present registered proprietor is her son Brian Manners (also known as Brian Manners-Cockburn and Brian Cockburn) (“Brian”), who died on 8 March 2002. The defendant is his widow and administrator, Diana Margaret Coburn. The plaintiff alleges that the title passed from mother to son in circumstances which created either a contractual obligation in the son to retransfer the subject property to the plaintiff or led to it being held by him (and therefore by the defendant) on constructive trust for the plaintiff. The plaintiff’s other son, Gary Cockburn (“Gary”), lives and has lived for many years on the subject property. The defendant by cross claim claims his removal from the land by judgment for possession.

3 The issues have been agreed between the parties as follows:

1 Existence of oral agreement/constructive trust
Defence Issues
2 Statute of Frauds
3 Is agreement a collateral contract excluded by parol evidence rule?
4 Estoppel by deed
5 Indefeasibility of title
6 Right to indemnity
7 Limitations
8 Laches
Reply to Defence
9 Part performance
10 Unconscionability
11 Admissions by conduct
Cross Claim, Defence thereto and Reply thereto
12 Defendant’s entitlement to possession
13 Was there agreement or encouraged expectation as to a proprietary interest in land?
14 Estoppel
15 Statute of Frauds
16 Indefeasibility
17 Limitations
18 Laches
19 Right to indemnity

These, as stated by the parties, are very elliptical. I shall expand upon them, where appropriate, later in this judgment, rather than here, since many of them, upon the findings I make, will become redundant.

THE EVIDENCE

4 The facts of the matter are as follows. The plaintiff was born on 25 July 1920, so was 75 in 1995 and is 85 now. In 1995 she was the registered proprietor of Lot 51 Wharf Road, Surfside, as well as of the subject property (Lots 52, 53 and 54). The four lots are referred to together as “the Surfside land”. She was also at that time the registered proprietor of several lots of land at Mogo, also on the South Coast (“the Mogo properties”). The Surfside land was subject to a mortgage to the Commonwealth Bank of Australia to secure a loan then standing at about $175,000.

5 The plaintiff deposed that in 1995 she had a conversation with Brian to the following effect:

“BM: ‘ Honey I am in money trouble .’
AC: ‘ I haven’t got any ready cash but I’ll help you if I can .’
BM: ‘ I need you to lend me some properties so that I can obtain money using the properties as security. I will be responsible for payment of the mortgage .’
AC: ‘ Well I don’t like doing this but, if you are in trouble I’ll loan you the deeds for the Surfside lots (referring to the Surfside Properties).’

I then handed Brian the deeds to the Surfside Properties, which I took from one of my bags.

BM: ‘ I will need you to sign some mortgages later. Thanks mum [sic], I’ll see you later .’”

6 Thereafter she signed a mortgage of the Surfside land under which moneys were advanced by Mark Spencer & Co Pty Ltd (“Mark Spencer”). The person who dealt on behalf of Mark Spencer was one Markovic. These moneys were used in the first instance to pay out the existing mortgage and pay the costs of borrowing. The settlement statement shows that some $38,000 was paid to Boral Pty Ltd. The plaintiff alleges that this was to satisfy a debt of Brian’s, but the defendant does not concede this.

7 In mid 1997 there is evidence that a transaction occurred, as to which there is little detail in the evidence. Joseph Smith, the plaintiff’s then solicitor, deposed that in about June 1997 he acted for the plaintiff in respect of loans raised on the security of some of the Mogo properties. He said that at that time he had a conversation with Brian to the following effect:

“BM: ‘ I am borrowing money on this title deed to get money to pay some of my debts and some for Mum .’
JS: ‘ What is your Mum getting out of this? ’
BM: ‘ I’ll give her what I can. ’”

8 The obligations to Mark Spencer were not kept up and on 22 October 1997 Mark Spencer obtained judgment against the plaintiff for possession of the Surfside land and some of the Mogo properties. It threatened to sell under its power of sale. An auction was held on 29 November 1997, but the highest bid of $115,000 (perhaps for the Surfside land alone) was not accepted. In any event the sale of the Surfside land did not proceed.

9 Joseph Smith deposed that in about October or November 1997 he had a conversation with Brian to the following effect:

“BM: ‘ I can borrow money on the properties that you can’t borrow .’
JS: ‘ I am not prepared to advise Alma to give security over her properties for the purpose of your borrowings unless the majority of the loan funds go to her. I believe it will be better to sell the land than to borrow monies as you propose. ’
BM: ‘ If she sells the land, she will not get the money on the sale that I can borrow. She could not possibly raise as much money as I can get. ’”

Furthermore, in about November or December 1997 Joseph Smith was present at a meeting in his office with the plaintiff, Brian and Gary. Brian and Gary engaged in a heated argument which appeared about to mature into a physical fight, when Gary walked out. Joseph Smith then had a further conversation with Brian as follows:

“BM: ‘There’s not enough security at Mogo. I need access to Wharf Road to borrow more money. ’
JS: ‘ Mrs Cockburn does not want to give you Wharf Road. She only wants you to use Mogo. Almost all the money you are borrowing is being taken by you. You have to improve the ratio of your mum’s share. ’
BM: ‘ I’m the only who can borrow not her. I’m the only one who can make the repayments. I cannot give her anymore. ’
JS: ‘ What are you doing with the money? You are borrowing on your mother’s properties. ’
BM: ‘ I need the money. I have debts which need to be repaid. I have to make it work to pay them back. I pay the interest. She can’t borrow the money. ’
JS: ’ We should be doing a new financial plan for you. This no good from Alma’s viewpoint. ’”

10 At about this time, Brian negotiated to borrow $200,000 from the Westpac Bank on the security of Lot 51 alone. Mark Spencer agreed that, if it received this sum, it would release Lot 51 from its mortgage; would keep a mortgage over the subject property to secure its remaining loan balance of $91,600; and would desist from enforcement action.

11 Late in January 1998 Joseph Smith received a letter from Mark Spencer’s solicitors, Lyons and Lyons, which indicated that the Surfside properties had been or would be transferred by the plaintiff to Brian. This led him to telephone the plaintiff and have the following conversation with her:

“JS: ‘I have received a letter from a firm of solicitors relating to loans to be secured by your land at Wharf Road, Surfside. Do you have any instructions for me?’
AC: ‘I’m helping Brian out …… he is my son and I have got to help him. He needs money to pay his debts and he can’t borrow enough on the land at Mogo. He also needs the Surfside lots as security for his loans. I have transferred that land to him to help him.’”

12 Several days later the plaintiff telephoned him and the following conversation took place:

“AC: ‘ Mr Smith, I want to make sure that I get my title deeds back from Brian when the loans he has taken out on my properties at Surfside are repaid. ’
JS: ‘ There will be stamp duty implications in relation to that. ’

The conversation with Alma then continued:

JS: ‘ What you should do when you have established that the loans have been taken out is put a caveat on the title to the Surfside properties to protect your interests. You’ll have to get the loans completed first otherwise they wont [sic] go through but after the loans have gone through, we’ll put a caveat onto [sic] ensure that you get the title deeds back .’”

13 The plaintiff deposed that in early February 1998 she had a conversation with Brian. This estimate of the time of the conversation may not be correct and it may have occurred earlier than that. She said that the terms of the conversation were as follows:

‘BM: ‘I have approached Westpac for a loan to repay Markovic. To get the $200,000.00 from the bank I will need the Wharf Road deeds to be transferred into my name. (I understood Brian’s reference to the “Wharf Road deeds” to be a reference to the Surfside Properties) The bank will not lend you the money and they will not lend it to me if the property stays in your name. You will need to transfer the properties to me so that I can borrow the money from Westpac. When I pay the money back to the bank, I will transfer them back and all the deeds for Wharf Road will go back to you.’
AC: ‘I will agree to transferring the Wharf Road properties to you provided I get them back when the loan is repaid.’
BM: ‘Yes. Markovic can keep the Mogo land as security and it will also be transferred back to you after I discharge the loans.’
AC: ‘Alright, so long as I get my deeds back.’”

14 In February 1998 the plaintiff transferred the titles to the Surfside land to Brian. The subject properties were transferred by one transfer dated 19 February 1998, which was registered on 24 February 1998. The consideration was stated to be $24,000. The title shows that there was a separate transfer of Lot 51, which was registered on 25 February 1998, although that transfer is not in evidence. Only Lot 51 was mortgaged to Westpac to raise the loan of $200,000. This was used to reduce the Mark Spencer borrowing to about $91,600. The plaintiff signed a finance facility agreement with Mark Spencer as a borrower at this time, although she did not receive any money. Equally she swears that she did not receive the $24,000 which was stipulated as consideration for the transfer by her of the subject property. There is no evidence to suggest that she received any consideration for the transfer of Lot 51.

15 Despite the conversation recounted in [12] above, caveats were not lodged immediately. But on 9 February and 5 October 1999 caveats were lodged on the plaintiff’s behalf over the subject property claiming an interest by way of constructive trust. It seems that the second caveat was lodged because the plaintiff feared that Brian was proposing to try to remove the first caveat by the use of a forged document.

16 The terms of the Westpac mortgage over Lot 51 were not met and about June 1999 the Bank sold Lot 51 under its power of sale to satisfy its mortgage debt.

17 There was always a cottage on Lot 51. Gary moved into that cottage in 1969 and has lived on the Surfside land ever since. An unusual feature of the Surfside land is that about half of it is below mean high water mark and is inundated. The proportion of the subject property affected is more than half and has grown over the years. The cost of works to exclude the water from the subject property is beyond the Cockburn/Coburn family. In June 1999, removed from his dwelling on Lot 51 by the Westpac sale, Gary erected a shed as a temporary dwelling on Lot 52. In February 2000 he constructed a permanent loft type dwelling (“the barn”) on Lot 52. He has lived in the barn and has occupied the whole of the subject property ever since. It seems clear that Brian did not during his lifetime object to Gary’s occupation of the subject property after the title had been transferred to Brian. Nor did Brian object to Gary building the shed or the barn on land of which Brian was by then the registered proprietor.

18 Gary deposed that before building the shed he had a conversation with Brian as follows:

“Gary: ‘ You have to get this money fixed up and give the land back to Mum .’
Brian: ‘ Sit tight, It’ll [sic] be right. ’
Gary: ‘ I’m going to build a barn on lot 52, I’ve got approval from the Council. ’
Brian: ‘ Yeah, so what. ’”

Gary further deposed that in about 2001 he had the following conversation with Brian:


“Brian: ‘Will you have Mum take the caveats off the land at Surfside so I can give one block the flick and I can fix everything up and the rest will be returned to her.’

I understood Brian to be referring to the caveats on Lots 52, 53 and 54 and to his wish to sell one of those lots.

Gary: ‘ No, it’s all over. The land has to be returned to Mum. You’ve already got rid of everything (I was referring to those items of the Plaintiff’s land which Brian had previously mortgaged and sold to pay his debts). Mum has nothing left. ’

Brian then started swearing at me and said words to the following effect:

Brian: ‘ Markovic will sell the place and you’ll lose it all. ’”

19 After the sale of Lot 51, Brian did not in fact meet many of the obligations under the Mark Spencer mortgage. This mortgage was in fact paid out after his death by the plaintiff out of the proceeds of sale of the remaining Mogo properties.

20 The evidence shows the current value of the subject property to be $160,000.

21 The plaintiff, Gary and Joseph Smith gave oral evidence before me. It was submitted that Gary’s credit was compromised by self interest. There is no doubt that he was self interested, and his evidence should be viewed with caution. However, it was not demonstrated to be inaccurate and is not implausible. In general, I accept his evidence, including his accounts of conversations with his brother. I found Joseph Smith an impressive and apparently disinterested witness, whose evidence I accept, particularly as to the purport of conversations he engaged in and the deterioration of the plaintiff’s state of mind. Cross examination about his evidence set out in [7] above did not detract from that evidence.

22 The witness whose credit is most under challenge is the plaintiff. When she was cross examined it became apparent that her mental processes were decayed. Thus, within the space of a few minutes, there was a fact which she remembered, then was unable to remember, then was able to remember again. The state of her mind was such that, had it been the same in 2004 when her affidavits were sworn, one would have grave doubts as to the quality of the instructions that were given for her affidavits, which are lucid on their face. However, two witnesses were called as to the deterioration of her quality of mind in the last year. One was Joseph Smith. He deposed that it was he before whom her 2004 affidavits were sworn, having been prepared in Sydney by the solicitors who were by then acting for her and sent to Bateman’s Bay for swearing. He deposed that she apparently understood the affidavits at that time and that her presentation in court in 2005 was greatly different and deteriorated in comparison with her presentation a year ago. Gary gave evidence to similar effect. He timed her deterioration from the death in May 2004 of her partner of 54 years (whom she had married three weeks before his death).

23 There are additional objections to her credit. She states that in 1995 she “handed Brian the deeds to the Surfside Properties, which I took from one of my bags”. If by the deeds she meant the certificates of title, that is unlikely to be true, as one would expect them at that time to have been held by the existing mortgagee. Perhaps she was mistaken as to what she handed him, or perhaps she did not hand him anything on that occasion.

FINDINGS OF FACT ON CONTESTED MATTERS

24 The 1995 transaction is not entirely easy to understand. A large part of the money raised was used in discharge of obligations of the plaintiff. But some $38,000 was paid to “Boral Pty Ltd”. The plaintiff swears this was not her debt and that she had no dealings with any such company. There is nothing in the evidence which casts doubt on this. I find that the $38,000 was paid in settlement of a debt of Brian’s. Further, although evidence as to the raising of money on the Mogo properties in 1997 is exiguous, I find that other money was raised on the Mogo properties in 1997 and expended, at least in part, on debts of Brian’s. In other words, the $38,000 to Boral was not the only debt of Brian’s paid out of money raised on the security of property of the plaintiff. I rely in this regard on the evidence of Joseph Smith set out in [7] above and evidence of various other conversations in which Brian participated.

25 I have said that I accept the evidence of Joseph Smith and Gary Cockburn.

26 I find that no money was paid to the plaintiff by way of consideration for the transfers of the Surfside land. She says so, and there is no evidence to the contrary.

27 Despite the difficulties in her evidence, I accept the plaintiff’s versions of her conversations with Brian in 1995 and 1998 as substantially correct. She had two sons, with whom she maintained active relationships. In relation to the 1995 transaction, I accept that that was entered into at the request of and substantially for a purpose of Brian’s. There is no evidence that the then mortgagor was pressing for a discharge of its mortgage. In relation to the 1998 conversation, which led to the transfer of the titles, it seems to me against the probabilities that she would simply give outright to Brian in 1998 the land on which her only other child, Gary, had been living for almost 30 years. The transaction was necessary because the mortgagee that Brian had introduced into the situation in 1995 was pressing. It is true that Brian appears to have undertaken an obligation to pay all the new mortgage debt on the Surfside land, a large part of which was previously owed by her to the Commonwealth Bank. But it would seem that he had raised other money on the plaintiff’s property and the transaction was undertaken in a situation that was becoming desperate.

28 Also of importance in my acceptance of the plaintiff’s evidence concerning the 1998 transaction is the evidence of Joseph Smith and Gary as to conversations with Brian and (in Joseph Smith’s case) the plaintiff, both before and after the transaction. I find that those conversations took place substantially in the terms in which they deposed to them. Those conversations are consistent with the plaintiff’s version that the transfers were made on the basis that the Surfside land would be retransferred, rather than that they were made by way of gift. Caveats were placed on the titles by the plaintiff in Brian’s lifetime, claiming an interest by way of constructive trust.

29 I have not failed to take into account the fact that Brian, who was the only other witness of the central conversations with his mother and with other persons, is dead. I have borne in mind Dixon CJ’s reminder “that one story is good until another is told, but a testator is dead and cannot tell his”: The Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20. Nor have I forgotten that the plaintiff bears the onus of proof.

30 The matter is not an entirely easy one. But on all the material I find that it is established that Brian represented that the transfers were necessary to obtain mortgage finance; that the plaintiff clearly evinced an intention that she was transferring the legal titles for the limited purpose of enabling finance to be raised; that it was not her intention to part with her beneficial interest in the land transferred; that Brian was well aware of and accepted this intention of the plaintiff; and that the basis on which the titles were transferred was that, on the discharge of the mortgages over the land, Brian would retransfer the titles to her.

ISSUE 1

31 This is whether the plaintiff has established an oral agreement for the retransfer by Brian to the plaintiff of the subject property or that the subject property was held by Brian upon a constructive trust for her.

32 The declaration of a constructive trust in circumstances such as the present depends on the principle stated as follows in Jacobs’ Law of Trusts in Australia (6th ed, 1997) [1301]:

“In the case of a constructive trust, the inquiry is not as to the actual or presumed intentions of the parties, but as to whether, according to the principles of equity, it would be a fraud for the party in question to deny the trust. As Cardozo CJ put it, ‘When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee’: Beatty v Guggenheim Exploration Co 122 NE 378 at 380 (1919), applied by Mason J in Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 at 108.”

33 The principle is often applied in (but is not limited to) the area of promises to make wills. It was in that context that Dixon J said in Birmingham v Renfrew (1937) 57 CLR 666 at 688 – 689:

“ The result is a disposition of property made upon the faith of the survivor’s carrying out the obligations of his contract. It is an element which brings such a case under the equitable jurisdiction for the prevention of fraud. The best known example of fastening equities upon property because of a testamentary disposition made in reliance upon an understanding or promise is that which is very clearly stated by Lord Warrington in Blackwell v Blackwell : (1929) AC at p 341 – ‘It has long been settled that if a gift be made to a person or persons in terms absolutely but in fact upon a trust communicated to the legatee and accepted by him, the legatee would be bound to give effect to the trust, on the principle that the gift may be presumed to have been made on the faith of his acceptance of the trust, and a refusal after the death of the testator to give effect to it would be a fraud on the part of the legatee. Of course in these cases the trust is proved by parol evidence, and such evidence is clearly admissible.’ Of this rule Lord Westbury says in McCormick v Grogan (1869) LR 4 HL at p 97: - ‘The jurisdiction which is invoked here by the appellant is founded altogether on personal fraud. It is a jurisdiction by which a court of equity, proceeding on the ground of fraud, converts the party who has committed it into a trustee for the party who is injured by that fraud.’ A little later, he says: ‘And if an individual on his deathbed, or at any other time, is persuaded by his heir-at-law, or his next of kin, to abstain from making a will, or if the same individual, having made a will, communicates the disposition to the person on the face of the will benefited by that disposition, but, at the same time, says to that individual that he has a purpose to answer which he has not expressed in the will, but which he depends on the disponee to carry into effect, and the disponee assents to it, either expressly, or by any mode of action which the disponee knows must give to the testator the impression and belief that he fully assents to the request, then, undoubtedly, the heir-at-law in the one case, and the disponee in the other, will be converted into trustees, simply on the principle that an individual shall not be benefited by his own personal fraud’ (1869) LR 4 HL at p 97.”

34 Dealing with the matter more generally, Hope J (as his Honour then was) said in Last v Rosenfeld [1972] 2 NSWLR 923 at 929 - 930

“…… There are a substantial number of reported decisions where the oral trust so enforced was a simple trust, the alleged trustee giving no consideration and taking the land absolutely for the beneficiary; see, for example, Hutchins v Lee (1737) 1 Atk 447; 26 ER 284; Childers v Childers (1857) 1 De G & J 482; 44 ER 810; Re Duke of Marlborough; Davis v Whitehead [1894] 2 Ch 133. In some cases, the conveyance or transfer to the alleged trustee was expressed to be for valuable consideration, but the consideration was not in fact paid: Davies v Otty (No 2) (1865) 35 Beav 208; 55 ER 875; Haigh v Kaye (1872) 7 Ch App 469; Resoul v Mitchell (1924) 27 WALR 78. On other occasions the alleged trustee had expended his own money upon the acquisition of the property but upon terms that he acquired the property as trustee for the beneficiary and had a lien for the moneys he had expended: Rochefoucauld v Boustead [1897] 1 Ch 196; Lincoln v Wright (1859) 4 De G & J 16; 45 ER 6. In other cases, a consideration had been paid by the trustee for the purchase of the land, but he had acquired it on terms that he should hold as trustee to some limited extent for the vendor. Bannister v Bannister [1948] 2 All ER 133 was such a case, and so was Booth v Turle (1873) LR 16 Eq 182, where there was a contract in writing for the sale of a lease at an agreed price, but it was orally agreed between the parties that the vendor should retain the beneficial interest in a stables forming part of the property. This was held to constitute a trust in respect of that part of the property, and the vendor's rights in respect of it were enforced. In both Bannister v Bannister [1948] 2 All ER 133 and Booth v Turle (1873) LR 16 Eq 182 the purchaser-trustee had paid something less than a full consideration for the property because of the beneficial interest reserved to the vendor, but this fact seems only to have constituted an evidentiary circumstance supporting the beneficiary's claim, and not to be a necessary element for the application of the general principle. ……”

See also Ogilvie v Ryan [1976] 2 NSWLR 504 per Holland J at 518 – 519.

35 Whilst it is not necessary for the promise relied on by the transferee to have contractual force, the principle applies whether or not the transferee’s obligation flows from a contract. As Hope J said in Last v Rosenfeld supra at 935 – 936:

“Nextly, I do not think that the fact that the plaintiffs have to prove and rely upon an oral promise for valuable consideration prevents them from succeeding …….. there seems ample authority for the proposition that the relevant principles apply even though the plaintiff’s right and the defendant’s obligation flow from a contract. The passages from Hargrave’s Juridical Arguments quoted by Dixon J in Birmingham v Renfrew (1937) 57 CLR 666 at p 685, relate to the application of those principles to cases where there has been an oral contract. Again, in Bannister v Bannister [1948] 2 All ER 133, there was no written contract of any kind, and the whole basis of the defendant’s claim was that the oral contract under which she sold to the plaintiff included a promise by the plaintiff that she should be entitled to a life interest in part of the property sold. The mortgage cases involve proving an oral agreement that the alleged consideration was a loan and the conveyance a security for repayment, and no doubt in many of the agency cases there was consideration. No doubt something more than a mere contract must be proved, but it is difficult to imagine that the fact that there is valuable consideration for the purchaser’s promise precludes the intervention of the court in those cases where fraud of the relevant type has been established.”

Again see Ogilvie v Ryan per Holland J at 525 – 526.

36 In other words, where the preconditions for the existence of a constructive trust are made out in circumstances such as these, the constructive trust will arise, whether or not the communications between the parties gave rise to a contract and whether or not the contract is enforceable. Even if the plaintiff had to seek to enforce an oral contract, the principle in Rochefoucauld v Boustead [1897] 1 Ch 196 would prevent the defendant from relying on the Statute of Frauds.

37 A close analogy to the present case is presented by Last v Rosenfeld supra. There, two couples owned a house property in common. One couple transferred their share to the other on the basis that, if the transferees did not at the expiry of one year live in the house, they would transfer the share back to the first couple for the price of $8,500. This transaction was held to create, when the original transfer was effected, a constructive trust enforceable in equity.

38 Upon the principle stated above and expatiated on in those cases and in light of the findings contained in [30], I hold that, upon the transfer of the subject property to Brian, he held it on a constructive trust to retransfer it to the plaintiff after the discharge of the mortgages on the Surfside land. On the facts I have found, in the words of Cardozo CJ (see [32] above), the holder of the legal title may not in good conscience retain the beneficial interest in the land. That conclusion does not depend upon there being an enforceable contract relating to the land between the plaintiff and Brian. In light of my view that a constructive trust arose, I do not propose to deal with any claim in contract.

ISSUES 2, 3 AND 7

39 In view of that conclusion, Issues 2 and 3, as to whether the contract was unenforceable by reason of the Statute of Frauds or whether proof of a contract to retransfer was prevented by the parole evidence rule, do not arise. Equally, Issue 7, as to whether enforcement of a contract to retransfer is barred by the Limitation Act 1969 (“the LA”), does not arise. Issue 9, as to part performance, depends on the finding of a bar under the LA and also falls away.

ISSUES 4 & 5

40 The argument as to estoppel by deed (Issue 4) was not really developed and, insofar as it was, appeared to relate to a claim based on the existence of a contract. The argument as to indefeasibility of title (Issue 5) appeared to be based on the defendant’s registration as proprietor pursuant to a transmission application under s 93 of the Real Property Act 1900 (“the RPA”). However, the terms of s 96 of the RPA dispose of that argument.

ISSUE 6

41 Issue 6 concerns the effect of the administrator’s right to indemnity. As I have decided that the subject property was held by Brian and is now held by the defendant in trust for the plaintiff, the ordinary rights of a trustee to be indemnified in respect of necessary expenditure by the trustee on the trust property apply, including the right to be indemnified by a sole beneficiary personally: see Jacobs’ Law of Trusts in Australia (6th ed, 1997) [2104], [2105]. This can be dealt with, hopefully by agreement, after the delivery of this judgment. What I have said is not meant to deal with any question of costs. Costs may be argued at a later date.

ISSUE 8

42 Issue 8 is as to laches. As I have already noted, the plaintiff caused caveats to be lodged on the titles of the subject property. Although there was a delay after the original conversation between the plaintiff and Joseph Smith on this subject, the first caveat was lodged on 9 February 1999, during Brian’s lifetime. He could have applied for its removal at any time after that. The plaintiff had thereafter protection by way of caveat. On the receipt of lapsing notices, she brought the proceedings by summons filed on 2 March 2004. Any expenditure by Brian or his administrator in respect of the subject property can be cured by a condition giving effect to the right of indemnity discussed in [41] above. In the circumstances, no case for refusal of relief by reason of laches has been made out.

CROSS CLAIM

43 In view of the above findings, the cross claim fails. The declaration of the trust provides a defence to the claim for possession. Issues 10 to 19 do not need otherwise to be addressed.

CONCLUSION

44 There should be appropriate orders in relation to my decision that a constructive trust exists. There should be judgment for the cross defendant on the cross claim. Short minutes should be brought in at a convenient time. Consequential matters and questions of costs may be raised then.

**********

07/10/2005 - Typographical error in case number - Paragraph(s) Coversheet