Day v Couch

[2000] NSWSC 230

CITATION:	DAY v. COUCH [2000] NSWSC 230 revised - 18/04/2000
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 1789/98
HEARING DATE(S):	7-10/2/00
JUDGMENT DATE:	27 March 2000
PARTIES :	William Ross Day - Plaintiff Geoffery James Couch - Defendant
JUDGMENT OF:	Bryson J at 1

COUNSEL :	C. Harris - Pltf; J. Viney - Dft
SOLICITORS:	Mark Mulock & Co. - Plaintiff Geoffrey Couch - Defendant
CATCHWORDS:	TRUSTS and TRUSTEES - resulting trust where transfer without consideration - plaintiff transferred his house to his father (now deceased) for expressed consideration of $55,000 and now claimed that the true arrangement was a transfer without consideration to conceal assets if plaintiff should become bankrupt - the plaintiff succeeded on findings of fact upholding his case after lengthy consideration of facts and circumstances of dealings within the family over almost 40 years - decision on fact - consideration of - approach to facts where claim is made against estate of deceased person - illegality where the illegal purpose was not acted on.
LEGISLATION CITED:	(NSW) Conveyancing Act 1919 s37A
CASES CITED:	Plunket v Bull (1915) 19 CLR 544 Birmingham v Renfrew (1937) 57 CLR 666 Grundel v The Registrar General (1990) BPR 97-340 Charles Marshall Pty Ltd v. Grimsley (1956) 95 CLR 353 Re Cummins (dec’d); Cummins v. Thompson [1972] 1 Ch 62 Martin v. Martin (1959) 110 CLR 297 Nelson v. Nelson (1995) 184 CLR 538 Tinsley v. Milligan [1994] 1 AC 340: Lowson v. Coombes [1999] Ch 373 Payne v. McDonald (1908) 6 CLR 208 Perpetual Executors & Trustees Association of Australia Ltd v. Wright (1917) 23 CLR 185
DECISION:	See para.89

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

Monday 27 March 2000

1789/98 WILLIAM ROSS DAY v GEOFFERY JAMES COUCH

JUDGMENT

1 HIS HONOUR: Ross Nelson Day, late of Penrith, died on 5 November 1997. His last will dated 18 May 1995 appointed the defendant Mr Geoffery James Couch sole executor and trustee, and Mr Couch obtained probate on 27 January 1998. Mr Couch is a solicitor who practises in Penrith; he is unrelated to the testator and the executorship is a professional responsibility. Mr R.N. Day was about 80 years of age and he described himself in his will as “Retired Real Estate Agent, Farmer and Grazier”. He lived in retirement and had not owned any grazing property for many years. Mr R.N. Day was survived by his widow Mrs Cecilia M. Day and by their four children. 2 Mr R.N. Day suffered a stroke on or about 1 February 1994 and for practically all the rest of his life he was in hospital care, at most times at Governor Phillip Hospital, Lemongrove near Penrith. His widow Mrs C.M. Day suffers from dementia and for some years she has been in nursing home care. Her affairs are now managed by the Protective Commissioner under an order made by the Guardianship Tribunal on 22 May 1998. She is now 89 years of age and resides in the Governor Phillip Nursing Home at Glebe Place, Penrith. 3 Mrs C.M. Day has very small resources. Her income consists of pensions from Centrelink of $371.90 per fortnight and interest on money held in trust by the Protective Office. Her expenses for nursing home fees, Protective Office fees and personal expenditure use practically all her pension income. The Protective Office holds $17,205.90 as the balance of a distribution of $20,000 which was made from the assets of the testator by arrangement among the other beneficiaries. 4 The plaintiff, Mr William Ross Day, is the second of the testator’s four children. The eldest is Mrs Margaret Wilson of Blaxland who was born in March 1937. The plaintiff lives at 136 Tadmore Road, Cranebrook, near Penrith, and was born on 13 July 1938. Mrs Judith Helen Freeman of Lyons, ACT was born in January 1940 and Mr Peter Day was born on 18 August 1943. The interests created by the will of the deceased in the distributable estate are a life interest and entitlement to income given to Mrs C.M. Day and remainder interests in four equal shares to the sons and daughters. At his death the testator owned a house and land at 67 Moss Avenue, Toukley, which was valued in the Probate inventory at $250,000; after its sale, payment of rates and charges, the advance of $20,000 for Mrs C.M. Day and other expenses $199,993.16 is held on investment by Mr Couch. The other substantial asset shown in the Probate inventory is the house at 136 Tadmore Road, Cranebrook, occupied by the plaintiff. 5 The proceedings were commenced on 23 March 1998. The principal claim in the Amended Summons is a claim for a declaration that the plaintiff is the beneficial owner of the property at Cranebrook. Other claims asserting an interest in the property at Toukley have not been pressed. The plaintiff also claims a declaration that Mr R.N. Day held $67,000 from the proceeds of sale of land at Napoleon Reef near Bathurst on trust for the plaintiff; and alternative remedies relating to that sum. The plaintiff alternatively claims under the Family Provision Act 1982. 6 There were no pleadings; the proceedings were conducted on Summons. This was obviously unsuitable as there were many disputed issues of fact, the bases of the claim and the defence were complex and it was in the parties’ interest to have careful definition of issues. An unusually extensive array of irrelevant material was put on affidavit, and in retrospect the advantages which clear definition would have produced for shortening the hearing are obvious. 7 Many of the relevant events happened so long ago that it is not surprising but only to be expected that records which can now be produced should be or should appear to be incomplete or unsatisfactory, and that events which would ordinarily be recorded and capable of fairly ready proof cannot be established in that way. The evidence shows a number of dealings within the Day family which were conducted in irregular ways; for example, relatively large amounts of cash were kept on hand, or used to pay debts, there were unrecorded transactions among family members, the affairs of family members were conducted to a surprisingly large extent by other members, particularly by Mr R.N. Day, and valuable properties occupied and used by one family member were owned by another member who made little or no use of them. A general atmosphere of irregularity in dealings pervades the evidence. 8 The plaintiff claims a beneficial interest in the Cranebrook property which was not created or evidenced by any written instrument. In my view, however, the plaintiff’s claim is not barred by s.23C of the Conveyancing Act 1919 because, if the plaintiff’s factual allegations are correct, the properties were transferred without consideration which would give rise to a resulting trust in favour of the transferor. Where a resulting trust apparently arises, the true intentions of the parties, whether in writing or not, are relevant to deciding whether a resulting trust truly arises: see Charles Marshall Pty Ltd v. Grimsley (1956) 95 CLR 353 at 364-365. 9   Where a claim is made against the estate of a deceased person and knowledge of the facts on which the claim is based is no longer available to the legal personal representative of the deceased, judicial experience requires a careful approach to fact-finding, although there are no special rules relating to the burden or to the standard of proof: “[I]n cases of this sort the Court scrutinizes very carefully a claim against the estate of a deceased person. It is not that the Court looks on the plaintiff’s case with suspicion and as prima facie fraudulent, but it scrutinises the evidence very carefully to see whether it is true or untrue”: Plunket v Bull (1915) 19 CLR 544 at 548-549 per Isaacs J. In Birmingham v Renfrew (1937) 57 CLR 666, which related to mutual wills, there were also expressions of caution: see per Latham CJ at 674 and Dixon J at 681-682. See too Grundel v The Registrar General (1990) BPR 97-340 at 11,219 per McLelland J. These observations do not establish any legal standard of proof differing from the ordinary civil standard relating to the balance of probabilities, and there is no legal requirement for corroborative evidence. See too in Re Cumminsdeceased,Cummins v Thompson [1972] 1 Ch 62 at 68-69. 10 Attention and scrutiny are concentrated on the plaintiff, the probability of the facts which he claims occurred and his credibility. There are many facts and circumstances in the plaintiff’s evidence which require scrutiny; many things which he said he did and many events which he says happened do not represent ordinary prudent behaviour of well-informed people acting carefully in their own interests. In many respects conduct of the testator as shown by the evidence could also lead to much inquiry, and the fact that Mr R.N. Day was not available to give evidence was not wholly a disadvantage for the presentation of the defendant’s case; if the claim had been brought while he was alive there was a great deal for him to explain. It would be wrong to scrutinise the plaintiff’s evidence on an assumption that the deceased always behaved prudently or reasonably or properly, or that any favourable assumptions about the defendant’s case are warranted by respect or for any other reason because he is now dead. 11 It also appeared from the evidence and from the manner in which the case was conducted that there are family conflicts which may well obscure the emergence of the truth. From 1993 onwards there was conflict between the plaintiff and Mr R.N. Day over entitlements after Mr R.N. Day had disposed of a property at Napoleon Reef near Bathurst, and over the property at Cranebrook and the Toukley property. Events that occurred included lodgment of caveats over properties of which Mr R.N. Day was registered proprietor, each side consulting a solicitor, and inconclusive correspondence between solicitors. Evidence also showed clearly that there is a combative situation within the family now, as Mrs Wilson and Mrs Freeman plainly and fully support the plaintiff’s claim, and documents in evidence signed by Mrs C.M. Day before she was overtaken by dementia show that she was of the same view; whereas Mr Peter Day strongly opposes the claim and gave lengthy and for the most part inadmissible affidavit evidence to resist it. 12 Mr Peter Day spoke in his affidavits on many subjects; most of his affidavit evidence was rejected. Little of what was admitted was important. He showed great hostility towards the plaintiff’s claim, and his evidence was marked for the number of things to which he put his oath which he was unlikely to know, and the number of things which were very improbable. I place no real weight on his evidence. 13 The facts should be addressed in their social context, a family with a rural background, no-one in the family had higher education or much commercial sophistication, the sons followed manual occupations, and matters which commercially sophisticated people could be expected to record went unrecorded. The plaintiff is not a sophisticated person, his language is uncomplicated and highly vernacular, his schooling ended when he was 15 years of age and he was not trained for a trade. He supported himself by farm and rural work, mostly on family properties in association with his father, until he was about 34 years of age when he began to operate a trucking business, with three trucks at the most. This social context is of some significance for appraising whether events happened in fact; where objectively the events seem unlikely and imprudent, but the plaintiff swears they happened. 14 Before 1956 Mr W.R. Day lived with his parents and family on a sheep grazing property at Urinka via Eglinton, in the Bathurst district, which Mr R.N. Day leased and operated. At times some family members lived at The Rock near Wagga Wagga. Mr W.R. Day left school when he was about 15 and worked on the property, without wages. In 1956 Mr R.N. Day purchased “Spring Creek”, a sheep grazing property of about 1300 acres in the Oberon district, for 10,500. At about that time in a conversation between them the plaintiff told his father that he wanted to be a farmer and Mr R.N. Day said “Can you stay here with me and work this property with me? We’ll build it up together and then, out of the profits that we make, we will buy a second property for you.” Notwithstanding that his evidence on this subject was challenged, I accept the plaintiff’s evidence and find that with this assurance he stayed living and working on Spring Creek, devoting his whole energies to the property, doing general farm labouring work which was very physically demanding, for long hours and for six or seven days a week. Sometimes casual employees were employed on the property and were paid wages. The plaintiff did not receive any wages, although he received his board and support and was given money from time to time for his own purposes, not however at any rate which could be thought as representing wages. From time to time there were further discussions, and the prospect of the purchase of a second property for the plaintiff was kept before him as something which would happen when enough money had been saved up. 15 In 1964 Mr R.N. Day sold Spring Creek to the Minister of Public Works, as the State required the property for forestry purposes and had compulsory powers of acquisition. The price was 24,000. The State did not take possession of the whole property straight away. Parts were leased back, smaller parts from time to time, and continued to be occupied for several years for grazing. Mr R.N. Day then arranged the purchase of a property which came to be known as Kurraglen in the Merriwa district; the title was a settlement purchase lease of portions 222 and 223 in the Parish of Watt containing 796 acres 2 roods 27 perches, and the settlement purchase lease was transferred to Mr W.R. Day by a transfer by way of sale dated 16 March 1965. The price shown in the transfer was 19,900. Mr R.N. Day informed the plaintiff of the decision to purchase, and the plaintiff signed the transfer as transferee in the presence of Mr G.B. Peacocke solicitor at Bathurst, but all the practical arrangements for the purchase and for finance from the Rural Bank were made by Mr R.N. Day. Mr W.R. Day did not make the effectual decisions but followed decisions made by his father. Mr R.N. Day made a number of improvements at Kurraglen which increased its value. While he owned Kurraglen the plaintiff was mainly concerned in managing the remaining operations at Spring Creek, and with other farming work including contracting work on other properties, and with transporting stock and equipment between the two properties, and he was only concerned to a small extent with work at Kurraglen, which was mainly worked by his parents. 16 Mr W.R. Day continued to be the owner of Kurraglen until the property was sold in 1967; it was then transferred by a transfer signed by Mr W.R. Day to a purchaser for a consideration of $48,000. Once again all the effectual decisions were made by Mr R.N. Day, and Mr W.R. Day followed those decisions in executing the documents by which the property was sold. He did not actually handle or have the disposition of whatever funds arose on the sale. 17 A Rural Bank statement of an account conducted by Mr W.R. Day at its Bathurst branch is in evidence covering the period 16 January to 19 June 1967 and it shows that on 20 March 1967, 10 days after the date of the transfer, $45,880.20 was paid into the plaintiff’s account; this paid out the overdraft and immediately $20,000 and also interest and the discharge fee were paid out. There were several other transactions and by the end of March there was only $25.51 in the account. It is fairly certain that these entries represent the proceeds of the sale passing through the plaintiff’s bank account, repaying an earlier bank overdraft debt with interest, and some other unidentified transactions which left the account with only a nominal amount in credit. I find that these transactions were under the actual control of Mr R.N. Day although in the plaintiff’s name; the plaintiff was not actually in control of the property or the funds. This is the only bank statement sheet from 1965 to 1967 now available to be tendered. It was produced for the purpose of these proceedings by Mr Peter Day, to whom it had been given by Mrs C.M. Day who had kept control of it; it was tendered in evidence by the defendant. These circumstances support the view of the plaintiff’s part in affairs and business which the plaintiff has put forward. 18 I accept that during the years until Kurraglen was sold the plaintiff continued to work on the family properties, principally at Spring Creek, and that he was not paid or credited with a wage. I also find that he was not given any credit in the nature of partnership income, and was not treated as a partner for the purpose of sharing profits or for any practical purpose. In a situation which is familiar in rural life, he worked in the family affairs which his father controlled without his real position being clearly established, and he was provided with money and resources as he needed them without any clearly established entitlement. Some farm equipment and vehicles were purchased in his name but for purposes of the family enterprise, and they were used in that enterprise. The equipment referred to included Holden stationwagon vehicles, the first of which was purchased in 1960, a bulldozer and other rural equipment. On one occasion the plaintiff stated to an intending financier that he had monthly income of 90, but this in no way represented any regular payment or credit to him of that amount of money or of any ascertained amount of money. He did not acquire assets which were solely at his disposition or used for his benefit. The plaintiff used the farming equipment purchased in his name for the purpose of the family enterprise. He also from time to time used the equipment to work for other farmers and earned money which he kept. 19 Although the plaintiff’s name appeared as the proprietor of Kurraglen and on the bank account through which the proceeds of its sale were disposed of, his ownership was a matter of form only. He did not work Kurraglen in a manner appropriate to its owner; his parents did that. He did not take any actual part in its management, but he contributed according to his ability to work in the family enterprises, including Kurraglen only to a small extent. Mr W.R. Day did not challenge his father’s disposition of Kurraglen or in way attempt to take control of the proceeds of its disposition. He left his expectations entirely in the hands of his father. If in fact he was entitled to any claim to proceeds of the sale of Kurraglen he did not advance any such claim, and his entitlement was barred by the passage of time long before Mr R.N. Day died. 20 Mr W.R. Day’s participation in family affairs constitutes a significant contribution to Mr R.N. Day’s acquisition of property within the terms of subs.9(3) of the Family Provision Act 1982 in that he spent his early working life until the enterprises at Spring Creek and Kurraglen came to an end working without wages, with his needs being met, and with only incidental earnings from some work he did on other properties. Mr W.R. Day performed hard manual work according to his ability, but he did not manage or to any great extent participate in economic affairs which were beyond his ability. 21 After Kurraglen was sold and operations at Spring Creek came to an end the plaintiff moved into Bathurst, and earned funds in various ways, principally by bulldozing and operating other machinery on contract. The plaintiff used equipment such as bulldozers from the farming enterprise at Spring Creek, and other equipment which he acquired including a drag line, for contracting work when the enterprise at Spring Creek came to an end. The equipment which he received was not of great value except for the Mercedes Benz truck which was not new. He has a strong lifelong interest in vehicles and machinery and mechanical work. From about 1972 onwards, when he was 34, his income was derived from his own road transport business known as Day’s Transport, using a Mercedes semi-trailer, which was already some years old and had been provided by his father who paid 800 for it. 22 The plaintiff continued to operate Day’s Transport for many years and at maximum operation had three trucks. His evidence is not clear about when operation of Day’s Transport ceased but this was in recent years. He was injured in at least two motor accidents. In 1976 he was injured quite severely; he suffered significant permanent disability, and later recovered about $80,000 in damages. 23 After Kurraglen was sold Mr R.N. Day purchased the property at 990 Gold Coast Highway, Palm Beach, Queensland. Two adjoining lots were transferred to Mr R.N. Day and Mrs C.M. Day as joint tenants for a consideration of $23,000 by transfer dated 27 October 1967. The following year an adjoining lot was transferred to them, by a different vendor, in consideration of $2,700 by a transfer dated 29 March 1968. There were three flats on one lot and the two other lots were vacant. The flats were rented out, and Mr R.N. Day and his wife continued to live in New South Wales. They held the land at Palm Beach as a source of rental income and an investment until 1981. On sale the three lots were transferred to purchasers for $305,000 by a transfer dated 6 July 1981. 24 It was contended on behalf of the plaintiff that he had an interest in the Palm Beach properties and in the proceeds of their sale on the basis that he was a partner in the investment, and also on the basis that its purchase was paid for with moneys which arose from the sale of Kurraglen and belonged to the plaintiff. In my view these interpretations should not be put on the facts. 25 The plaintiff’s evidence is that about two or three years after Kurraglen was purchased in 1965 Mr R.N. Day said to him, “I think we’ll sell up and buy an investment property. We can buy a property where we’ll get a reasonable return and there’ll be no hard yakka involved”. The properties at Palm Beach were selected for purchase by Mr R.N. Day, who made all effectual decisions and arrangements connected with the purchases; Mr W.R. Day had no part in these events and in particular had no part in attending to payment for the purchases. While the Palm Beach properties were owned by his parents the plaintiff travelled to Palm Beach a number of times and did maintenance work, such as painting flats while they were unoccupied, cladding the building and mowing the lawns. Mr R.N Day encouraged him to do this and spoke to him in general terms suggesting that it was in Mr W.R. Day’s interest to do so. Mr R.N. Day collected the rents and lived off the income from the flats. He did not account to Mr W.R. Day for the income or pay him any part of the income. Mr W.R. Day was not treated in any way as an owner or part owner or partner in the flats and did not derive any material advantage from them. He was not consulted before the property was sold, and he was not consulted about the disposition of the proceeds of sale. In fact the proceeds were used in part to make gifts to Mrs Freeman and Mrs Wilson, and they were also used to purchase two houses as investment properties, in Pellion Street, Blaxland and Moss Avenue, Toukley. Mr W.R. Day was not treated in any way as having any interest in those properties, and made no claims to Mr R.N. Day on any such basis. Mr R.N. Day and his wife did not buy their own dwelling; they lived in a house at 12 Florabella Street, Warrimoo owned by Mr P. Day from 1972 until 1994. 26 The plaintiff did not ever distinctly state in evidence the terms of any oral arrangement or other arrangement which would create a partnership. The conversation between the plaintiff and Mr R.N. Day early in his working life, the later behaviour of the parties and Mr W.R. Day’s participation and contribution to his parents’ ventures over many years without wages or any other formalised entitlement to advantage do not indicate that he was a partner or part owner in the farming ventures or in the Palm Beach investment. There was no documentation or behaviour constituting a partnership agreement or evidencing that there was one, for example, by showing that Mr W.R. Day received or was entitled in some way to be credited with shares in profits. 27 There is no evidence which identifies the funds used to purchase the Palm Beach property, or shows that any money owned by the plaintiff can be traced into those purchases. In my opinion it has not been shown that the plaintiff had any resulting trust, equitable charge or other interest in the Palm Beach properties. 28   At some time, which may have been about 1971, the plaintiff purchased land at Napoleon Reef, also spoken of as at Walang, in the Bathurst district. This is a parcel which, according to the description in the Grant, contains 43.33 hectares; its title was Crown Lease and the purchase price was $4000. Mr R.N. Day made all the arrangements relating to the purchase on Mr W.R. Day’s behalf, and Mr W.R. Day paid money, which may have been $3500, to Mr R.N. Day so that he could carry out these arrangements. Mr R.N. Day dealt with the solicitor and the Crown Lands Office over the purchase, and also over the conversion of the Crown Lease to an Original Conditional Purchase. The land was never put to any active use while Mr W.R. Day owned it. The title was converted to an Original Conditional Purchase in 1971 and there was a freehold Grant in 1976; according to the Grant $428.24 was paid for purchase money. The plaintiff paid the moneys payable on conversion. 29   In 1978 Mr W.R. Day and Mrs Ingrid Helga Day who then was his wife purchased the house property at 136 Tadmore Road Cranebrook. The vendors transferred the property to them as joint tenants for a purchase price of $45,000 by a transfer dated 12 June 1978. The purchase was financed by a mortgage to CBFC Ltd. 30   The Napoleon Reef property and the Cranebrook property were transferred to Mr R.N. Day, in each case by a transfer dated 16 March 1983. The transfer for the Napoleon Reef property states that the consideration was $2000 and the transfer for the Cranebrook property states that the consideration was $55,000. The plaintiff alleges that, according to the intentions of both parties at the time of the transfers, they were not transfers of the beneficial ownership, but were transfers of the properties to be held by Mr R.N. Day on trust for Mr W.R. Day. According to these allegations the considerations expressed in the transfer are not the true basis of the transfers and were not paid. There was no agreement to sell the Cranebrook property for $55000, or to sell the property at all. There was a mortgage debt of about $30,000 or $35,000 at the time of the transfer: this was discharged by Mr R.N. Day paying it off (so I infer: there is no other way it could have been discharged) and Mr W.R. Day’s evidence is that he later repaid Mr R.N. Day the amount which had been paid to discharge the mortgage: he did this by a series of cash payments. 31   The transfer of the Napoleon Reef property (Ex 5) was registered in an unremarkable course. The transfer was stamped ad valorem, lodged for registration T586408 on 31 May 1993 and registered on 15 June 1983. 32   The transfer of the Cranebrook property was much more complex. On 16 March 1983 the registered proprietors were Mr W.R. Day and Mrs I.H. Day from whom he had by then been divorced. The transfer from Mr W.R. Day to Mr R.N. Day could not be registered until Mr W.R. Day became the sole registered proprietor. Mr W.R. Day and Mrs I.H. Day transferred the property to Mr W.R. Day solely by a transfer which bears date 30 November 1981 and was made in consideration of orders made by the Family Court on that day. This transfer was lodged for registration V78000, uplifted, re-lodged on 6 April 1984 and registered on 13 April 1984. The transfer from Mr W.R. Day to Mr R.N. Day was treated similarly; lodged V78001, uplifted, re-lodged and then registered on 13 April 1984. The Discharge of the CBFC mortgage is dated 8 December 1982. It was lodged V77999 at the same time as the two transfers, later uplifted and re-lodged, and also registered on 13 April 1984. The circumstances giving rise to re-lodgment and delay have not been explained. The defendant’s counsel contended that it was in some way significant that the Discharge of Mortgage bears date about three months before the date of the transfer. I do not regard this as significant. Anomalies like this often happen in conveyancing business. 33   The plaintiff gave evidence to the effect that at some time (and he had difficulty in establishing when it was) in or about 1983 he became concerned that there may be large claims for damages against him after a truck which he owned damaged an electricity pole and blacked out electricity supply over a wide area in the Quirindi district. He had insurance covering damage to the load, but the insurance did not cover other claims. These circumstances made him aware that all his assets were at risk for losses of his business. He gave some thought to transferring the title to his properties to another person, no doubt to conceal his assets if there ever were large claims. Evidence of Mrs Wilson, his sister, makes it quite clear that he did in fact have this project under consideration, as he discussed with her the possibility of transferring properties to her daughter, then a young adult. He also considered transferring the properties to his son Roger, who then was very young, probably one year old or less, and discussed this possibility with Mr R.N. Day who told him that he could not put properties in the name of a minor and suggested “Why don’t you put them into my name and I will look after them for you.” The plaintiff said “What about the mortgage on Tadmore Road” to which his father replied, “I can pay that off out of the money that I am holding for you.” The plaintiff agreed. 34   Mr R.N. Day made arrangements for a solicitor to prepare documents relating to the transfers. The documents were prepared by Ms Caroline Bellantonio, a solicitor who was then practising in Springwood; she was not known to the plaintiff, and she did not act for him in any other business. The plaintiff’s evidence is that when his father told him that the solicitor had drawn up the documents he went with his father to see the solicitor, and signed the transfer documents. It is his evidence that he received no payment of money on the transfers but that Mr R.N. Day arranged for payment to discharge the mortgage on the Tadmore Road property. 35   Claims arising from damage to the electricity pole did not prove to be very large; the plaintiff paid three or four claims amounting to about $10,000 out of proceeds of his business, but nothing was subsequently done to change the titles of the properties back to his own name. 36   The plaintiff continued to occupy his house at Cranebrook with his family. He made no payments in relation to rent or any other payment which could be thought to recognise that he was not the owner of the property; on his case, there was no arrangement for him to do so. The rate notices issued in the name of Mr R.N. Day who had become the registered proprietor; it is the plaintiff’s evidence that he in fact paid the rates, at times letting rates get into arrears for several years; that he paid some of them to Penrith City Council in cash and on some occasions gave his father cash with which to pay the rates to the Council. His evidence about payment of rates was challenged, but there is no substantial reason for thinking that the rates were paid with the funds of anyone other than the plaintiff. Receipts for rates naming Mr R.N. Day as the payer do not establish that Mr R.N. Day in fact paid the rates, or that he paid them out of his own funds; it would be usual for a rate receipt to be issued showing the name of the rateable person. 37   Basic to the plaintiff’s claim that Mr R.N. Day was a trustee of properties for him is the plaintiff’s alleged belief that over many years Mr R.N. Day told him that he was holding and accumulating funds which would be used for Mr W.R. Day’s benefit ultimately in a way which was not clearly defined but was referred to as the purchase of a big farm. In a manner this continued the expectations which had been held out to the plaintiff since early in his life that he would eventually get a rural property of his own. This expectation is related to the plaintiff’s belief that he had an interest of some undefined kind in the Palm Beach property and in the Toukley property which Mr R.N. Day later acquired. It was the plaintiff’s evidence that, over many years, he from time to time gave his father money, in round sums usually of some thousands of dollars, and he believed that his father was accumulating this money. One of these payments was the considerable sum of $30,000 which he said he paid to his father out of damages of $80,000 which he recovered in respect of his severe injuries in a motor accident in 1976. He did not get or seek any accounting from his father about the fund or kitty which he believed was accumulating. He believed that when his father spent money on his behalf or in his interest, that was money which his father was holding for him. He attributed various payments which his father made for his benefit to money which he had earlier given to his father. 38   A great deal depends on whether the Court accepts that this course of conduct was followed and that the position or story was maintained as between the two, over a period of some decades, that Mr W.R. Day had expectations that a big farm would be bought for him, and that his contributions, including money, were in some way being accumulated to bring that about. 39   I accept that it is true that for many years Mr R.N. Day maintained the position that in some way assets and funds were accumulating for Mr W.R. Day’s benefit. The circumstances which lead me to accept this include the relative abilities and fields of activity of the two men; Mr R.N. Day managed family affairs, attended with his wife to all administration, made effectual decisions about properties and dealt with banks and other authorities about them, while on the other hand Mr W.R. Day left all significant decisions and management, including the management of rural assets, to Mr R.N. Day, attended to farming, mechanical and other manual work according to his ability, and did not attempt things such as making investments and managing and accumulating funds and assets which were beyond his ability. The kinds of business undertaken by Mr R.N. Day contrast strongly; he described himself in his will as “Retired Real Estate Agent, Farmer and Grazier” and the evidence speaks of him engaging in a significant number of property transactions. I accept that, in the way he described, the plaintiff put his economic affairs in the hands of his father to an extent which, in a person with different abilities, would be very imprudent and highly unlikely. 40   The plaintiff continues up to the present time to occupy the Cranebrook house as if he were the proprietor, and to use the surrounding five acres of land, and he was never challenged or disturbed in his possession by Mr R.N. Day. The plaintiff used the land in ways special to him; as well as the existing house, he brought onto it a large shed which had previously been workers’ accommodation on a construction site, and many vehicles, 70 or 80 old cars and implements; sometimes he works on them, sometime he buys and sells them. By 1983 he had remarried and lived at Cranebrook with his second wife, her two daughters and their son; but later she separated from him and she and her daughters went to live in Penrith. The plaintiff now occupies the property with his son Roger who is 17 years of age. 41   A great many circumstances in the evidence bear directly or indirectly on the probabilities of whether the remarkable transactions alleged by the plaintiff in fact happened, and whether he remained the beneficial owner of the properties. 42   One chain of circumstances relates to Mr R.N. Day’s dealing with the property. In 1986 a mortgage over the Cranebrook property to Westpac Savings Bank Limited was registered; this was later discharged. This mortgage must have been given by Mr R.N. Day. The plaintiff was unaware of the mortgage and was not consulted about it. 43   In 1989 Mr R.N. Day sold the Napoleon Reef property for $97,000. The plaintiff was not informed about the proposed sale; the fact that there had been a sale was not reported to him by Mr R.N. Day; there was no accounting to him for the proceeds. He did not learn of the sale until 1993 when he noticed some improvements on the property as he drove past it on the road; this led him to make some inquiries and to be told about the sale by Mr R.N. Day. He protested angrily and this was the point of a profound change in their relationship. 44   Although his evidence was challenged I accept that the plaintiff was not informed of the sale and did not learn of it until 1993; and that when he did learn of it he genuinely disputed Mr R.N. Day’s entitlement to sell it or to dispose of the proceeds. 45   The freehold of the property at Napoleon Reef had been acquired through various transactions up to 1976, including payment of $4,000 to the vendor of the Crown Lease and $428.24 to the Crown on conversion. Then in 1989 it was sold by Mr R.N. Day for $97,000. These circumstances make it on the whole improbable that it would have been sold for $2,000 by the plaintiff to Mr R.N. Day in 1983; it is more probable that the figure in the transfer was a nominal consideration and was, as the plaintiff asserts, not actually paid. 46   The Cranebrook house was acquired in 1978 for $45,000 and was extended or improved by the plaintiff; it was his evidence that he had building work done in accordance with the quotation Ex H which included building an additional lounge room and rumpus room and providing a back patio at quoted prices totalling $15,909. A price of $55,000 in 1983 is rather low, although not so low as to require to be rejected as improbable. It is not possible that Mr W.R. Day intentionally transferred the beneficial interest in the properties to his father for less than what he believed was their value. 47   It is improbable that the plaintiff would have agreed to part with his beneficial interest in both properties in return for no more than payment out of the mortgage on one of them. 48   If the true position was that the Cranebrook property was burdened or overburdened with a mortgage and the plaintiff sold the property to his father in consideration of repayment of the mortgage, that would not explain why he would at the same time also sell the Napoleon Reef property to his father, as it was not burdened with a mortgage. This observation has force whether $2000 was the actual value of the Napoleon Reef property (as is extremely unlikely) or whether it was an undervalue. 49   Mr R.N. Day’s conduct in disposing of the Napoleon Reef property without reference to the plaintiff is a rather striking act of ownership, behaviour inconsistent with any consciousness of a trust obligation. The force of this is qualified by a written statement of Mrs C.M. Day dated 14 July 1991 in which she says:

I have been requested by Ross Day to put on paper what I considered to be a fair distribution of the $100,000 … which he, Ross Day, received for a block of land at Bathurst which his son, William Ross Day, had owned until some time before its sale. I considered that R. Day should have given his son the amount of $50,000 and kept $50,000 himself as he had paid close to this amount to secure the property which W. Day was buying at 29 Tadmore Road, Cranebrook.

50 This statement was admitted under s.67 of the Evidence Act 1995. Mrs C.M. Day’s opinion is not significant, but the statement does show that Mr R.N. Day had paid close to $50,000 to secure the Cranebrook property; and I infer that Mrs C.M. Day knew this from a statement by Mr R.N. Day. The statement also shows that Mr R.N. Day was of the view that how he ought fairly to distribute the proceeds of selling the land at Napoleon Reef was a matter for consideration and consultation with his wife. 51 Exhibit B contains copies of two statements by Mrs C.M. Day which also state facts which I infer she knew because she had been told them by Mr R.N. Day. These statements include the following: “To begin with Bill owned one house at Cranebrook plus 120 acres at Bathurst. To safeguard his property Bill wanted them transferred out of his name, you said he could put it into your name. … You sold the block of land at Bathurst for approx $100 thousand & kept all the money (Bills) and now you are trying to sell his home at Cranebrook which would leave him totally destitute.” Mrs C.M. Day wrote some additional words on the second statement in Ex B including: “It is not to be forgotten that Bill worked for quite a number of years alone on the property.” 52 Exhibit 3 is a photocopy of a memorandum relating to the Bathurst property. This document is one of two which Mr R.N. Day gave to Mr P. Day in 1994. This occurred when he left hospital to visit the house at Warrimoo, owned by Mr P. Day, in which Mr R.N. Day had lived for many years before he suffered a stroke; at the house he recovered documents from a pouch hidden from under the mattress. So far as appears from evidence no-one other than Mr R.N. Day had earlier seen or dealt with the memorandum relating to the Bathurst property. It is in these terms:

Bathurst Property
Vol 13044 Fol 81
Price as agreed - Agents enquiry & other Considerations
All Cars Machinery & other articles on the land to become the property of the Purchaser
Transfer & completion of sale to final & no further negotiations will be considered.
The purchaser to pay all legal costs in respect of sale
In respect to any sale of said property the owner shall have any profit or withstand any loss.

53   The memorandum is not dated or stamped. The stamp on the transfer suggests that the transfer was stamped ad valorem without any other written agreement being shown to the Stamp Office. The memorandum Exhibit 3 would not be a sufficient memorandum on which to base a sale and transfer. It must be said that it does not make sense; it does not establish what the price was and it is difficult to see what could be meant by the words “Agent’s inquiry and other considerations” in relation to a sale from son to father. 54   The plaintiff acknowledged that the signature at the foot of the document is his, and said in evidence that when he signed the document it was blank. There is no other evidence about what form the document was in when it was signed. Mr Peter Day’s evidence was that the document is in Mr R.N. Day’s handwriting. The plaintiff says that he signed the document in blank when it was given to him with other documents at the solicitor’s office on the occasion when he signed the transfers. In my view it is extremely improbable that an event like that happened in the solicitor’s office at the time of signing the transfers. On the other hand it is also extremely improbable that a memorandum such as Ex 3 was signed on that occasion; if the solicitor saw a need to establish the terms of a transaction between close family members it is extremely unlikely that she would allow the record to take this form, and something more clear and comprehensible could be expected to emerge. Some things in the memorandum are superfluous and the last sentence seems to be a repetition of the earlier statement about finality. The last sentence has the air of being put together on the basis that something had to be found to say to complete the text down to the signature. 55   The original of Ex 3 has not been produced. In evidence it was last spoken of as having been given by Mr R.N. Day to Mr P. Day and sent on by him to the defendant. There has been no opportunity for expert examination of the original. 56   Another memorandum, Ex 1, sets out conditions of sale for Tadmore Road, Cranebrook. Like Ex 3 it is a photocopy and the original is not in evidence. Its terms are as follows:

Tademore Road Crainbrook
Condition of Sale 29 Tadmore Road Fol.91999 Fol 225
(1) Full Price = Pay out Bank Mortgage & legal cost of sale.
(2) A bank account in the name of purchaser Ron Nelson Day must be opened by the occupier, Bill Day and two hundred dollars per week paid into this account as rent.
(3) In four years this account & interest should be $50,000. Bill may wish to buy 29 Tadmore and may repurchase at $50,000 if purchase is within four years. If time exceeds four years then the price shall be market value either more or less than original sale to R N Day.
(4) The rent account may be used as credit if purchase is within four years, if in excess of four years then it will remain with RN Day as rent & have no bearing on repurchase and be as normal rental repairs & maintenance to be at cost of tenant (alternatively funds may come from account.)

57   Mr P. Day’s evidence is that the original of this document also was extracted from under the mattress and given to him by Mr R.N. Day in 1994, and that he sent it on to the defendant. Mrs Freeman had earlier seen a copy of this document; she said in evidence that it was left near the telephone which she used when visiting her parents’ house. Again the plaintiff acknowledges that the signature is his, and says that when he signed it there was no other writing on the page. Again the document was not dated or stamped. The document can be understood to be Mr R.N. Day’s version of the transaction without accepting that its contents were attested by the plaintiff’s signature. It does not state what the full price was, but states it was to equal paying out the bank mortgage and the legal costs. The layout of Ex 1 is consistent with the text having been written later than the signature. The arrangement of the handwritten text, the last two lines of which are crowded against and around the signature, is consistent with the text having been written after the signature. 58   It is clear that none of the matters for which arrangements are suggested in paras (2), (3) and (4) of Ex 1 in fact happened. No bank account in the name of Mr R.N. Day was opened by Mr W.R. Day; and it is difficult to see how he could have done that. There were never payments of $200 per week, or any payments, into any bank account for Mr R.N. Day, whether as rent or otherwise. It is remarkable that, if there really was an arrangement for payment of rent, there was no sign of any controversy relating to rent or any claims before 1994. The arrangements set out in paras (3) and (4) suggest that the amount in the account and the question whether the property was to be transferred back would have had attention around March 1987, after the four years expired, but there is no sign in the evidence that they received any attention then. As with Ex 3 I am of the view that it is extremely unlikely that the terms of the transaction would be recorded in this way if the business had been conducted by a solicitor. Of course it is not unknown for clients not to tell their solicitors the true basis or whole terms of their dealings. 59   It is difficult to understand either side of the question relating to Exs 1 and 3; I do not understand why the plaintiff would sign blank documents, without an explanation why they were required: this goes beyond the limits of what even the most trusting person would be likely to do. On the other hand I am not able to understand why such informal documents would be the vehicle for recording the substance of the transaction, when they do not make a record in any complete or clear way, and when the solicitor’s services were available to make a proper record if one was desired. Not telling the solicitor the whole nature of the transaction, and recording it in a separate and informal document, would be consistent with an objective of evading possible creditors. 60   It is a very strange tale that the Cranebrook house was owned by one person yet occupied by another for almost ten years during which nothing was paid for occupation and there were no claims, disputes or even, so far as appears, discussions about possession. The idea that Mr R.N. Day had some claim to the house did not come under discussion or contention with the plaintiff, and the original memoranda referred to above were not produced from under the mattress until after the plaintiff had lodged a caveat against the Cranebrook house. 61   There is no positive evidence establishing that there was writing on either Ex 1 or Ex 3 when the plaintiff signed them, and the view that he signed so as to acknowledge what is now written on them depends on inference from the form of the documents. This is a slight basis for a finding adverse to him when there is no evidence from the solicitor (who is shown by evidence to be unavailable to be called by either party) or from any other person about the event. There are other circumstances. The documents were not seen or acted on for some years, after which Mr R.N. Day appeared to promote one of them by leaving copies near the telephone for family members to see. The documents are highly irregular in their lack of dates and stamps, and they do not give a complete narration in their contents. Mr R.N. Day did not rely on their terms to assert rights against the plaintiff until after the plaintiff lodged his caveat, although his rights under them, particularly in respect of rent, would have been of considerable value; he produced them to Mr Peter Day from the strange provenance of a pouch sewn under the mattress, and the originals are not forthcoming to be examined for authenticity. 62   I have to approach with suspicion documents which give an incomplete account of transactions and which are susceptible to the view that they were squirreled away under a mattress to be used if expedient; they would probably not have been produced if, for example, they were inconvenient in the face of inquiries on behalf of creditors into the true nature of the transactions. If there truly was a wish to record the nature of the transactions for future enforcement it is very unlikely that it would have been done in this strange way; the solicitor’s talents were available and would have been used. 63   I turn to consider circumstances relating to the evolution of conflict. Mr W.R. Day lodged Caveat I496766 on the title to the Cranebrook property on 19 July 1993. The caveat is crudely expressed and was prepared with the assistance of a friend whom the plaintiff described as “a Philadelphia lawyer”. The claim in the caveat is to the effect that the property had never been owned by Mr R.N. Day “… whom I only asked to become caretaker in the event of the ression [reason] I had foreseen coming”. There was a repeated assertion that Mr R.N. Day had no interest other than caretaker and that Mr W.R. Day had the full interest in the property. 64   Later Mr W.R. Day consulted Mr Mark Mulock, solicitor of Penrith. Mr Mulock lodged a caveat on his behalf on 11 April 1994 claiming an interest in the Toukley property based on application of the plaintiff’s moneys for its purchase. By this time Mr R.N. Day was impeded in dealing with business because he had a stroke and was a hospital patient. However he consulted the defendant as his solicitor, and on 27 September 1994 he gave the defendant instructions recorded in a file note as: “Your son Bill’s solicitor called and wanted you to transfer the [Tadmore] Road property to him. You would not as you had actually paid for it years ago in order to prevent the property becoming part of bankrupt estate of Bill. You have offered to sell it to him if he can raise the money.” 65   On 27 February 1995 the defendant, on Mr R.N. Day’s instructions, sent the plaintiff a letter asserting that there was an arrangement for repurchase, in terms generally following the memorandum (Ex 1) although not referring to its existence. By this letter Mr R.N. Day offered the plaintiff the opportunity to purchase the property at the present market price, failing which the property would be placed on the open market. There was a call to withdraw the caveat. This led to inconclusive correspondence between the solicitors in which the plaintiff’s solicitor sought and was given some details of what Mr R.N. Day claimed was the position. The plaintiff’s solicitor advised him to discuss the matter with his father and seek resolution. This indefinite position continued until Mr R.N. Day’s death; he did not take the threatened action relating to the caveat and the plaintiff did not commence any litigation to establish his asserted rights. 66   It is clear from evidence that Mrs C.M. Day, Mrs Freeman and Mrs Wilson all supported in a general way the plaintiff’s position with respect to ownership of Cranebrook. However their support is not based on participation in or actual knowledge of the transaction, and their opinions and any reputed rights within the family have, in my view, no significance for resolution of the plaintiff’s claims. 67   In Ex C there is a statement written by Mrs Wilson and signed by Mrs C.M. Day; it bears date 1 February 1994, and was written on the day and prompted by the event of Mr R.N. Day’s stroke. It contains some very strong expressions adverse to Mr R.N. Day and supportive of the plaintiff. This includes some statements which are probably derived from information given to Mrs C.M. Day by Mr R.N. Day including the following: “Yes he did sell land owned by Mr William R. Day for $100,000 and yes he did keep ALL the money. It is also perfectly true that William only put this land and the home in Tadmore Road into his father’s name so he wouldn’t loose [sic] his property through bankruptcy courts. The propertys [sic] were only signed into Mr R. Day’s name for safekeeping. He the father has abused the trust he was given.” At a later point: “Yes he did pay out W.R. Day’s home when it was put into Ross’s name, this I think was about $40,000. I can’t be certain as to exact amount … Ross has no right to even consider not returning Bill’s home to him.” 68 The evidence of Mrs Wilson and Mrs Freeman seems to show that although there was much discussion with Mr R.N. Day about the plaintiff’s rights, he did not ever distinctly acknowledge them and avoided giving any distinct response. 69 The plaintiff’s counsel contended that Mrs C.M. Day’s statements have some standing as evidence of family history under s.73(1)(d) of the Evidence Act 1995. I do not regard the substance of the disputed transactions as falling within the reference to family history. In my view s.73(1)(d) widens the range of matters which may be proved by reputation to some extent beyond the common law relating to pedigree, but the family history referred to does not include the detailed terms of real estate transactions. 70 Exhibit E contains a number of entries by Mrs C.M. Day in her diary for 1966. These entries record Mr W.R. Day working in the family enterprises, not always to her satisfaction.

71   Exhibit 8 is an account book written by Mrs C.M. Day. The entries in it are not a complete accounting but relate to miscellaneous matters extending over many years, from as early as 1957 to 1966. There is no complete record of anything. There are records of wages paid, but no wages records for Mr W.R. Day. Folio 10 is a record of a number of payments on account of W.R. Day from 1 July 1965 to 31 January 1967. Payments from this period of 19 months do not include any payment of wages, and include some but not regular monthly payments to GMAC appropriate for hire purchase of a vehicle. The payments amounts in all to 398 10s 10d, a modest amount over the period of 19 months dealt with. This document has little force, but it tends to confirm the plaintiff’s account of having received no wages and limited funds.

72 I reiterate the need for careful scrutiny of the plaintiff’s case. It would be unrealistic to expect highly detailed evidence or exact recounting of the terms of oral arrangements made many years ago, in some cases decades ago. There are many loose ends and matters which were unexplained or were left unsatisfactorily explained. In a family whose members were equipped with much business experience, higher education, commercial training or facility with accounts, records and papers, behaviour such as the plaintiff attributes to himself and his father would not occur and the claim that it had would not be credible. I have endeavoured to understand the facts and the plaintiff’s evidence in its strangeness in the social context of the family, its ways and experiences, and particularly in the context of the contrast between the plaintiff with the abilities he has, and his father, as his abilities appear. There is a marked contrast between the plaintiff with his history of manual labour and mechanical work, not a fully literate person as is demonstrated by the terms of his Caveat, and his father whose life experiences included many enterprises and transactions and who described himself in his will as a retired real estate agent. 73 The plaintiff’s object of concealing assets from potential creditors is to some degree adverse to his credit; that was not an honest object, although there were no actual creditors at the time and as things turned out none were defeated. There is however no doubt that that was the object of the transaction; that this is so is shown not only by the plaintiff’s evidence but also by the evidence of Mrs Wilson, and it is confirmed by Mr R.N. Day’s instructions in Ex 7 to his solicitor that he paid for the property in order to prevent it becoming part of a bankrupt estate. 74 I have seen the plaintiff cross-examined at length in detail and with tenacity. Notwithstanding that there are anomalies and improbabilities at a number of points in his account, I accept that his central position is true: that the two properties were transferred to his father without payment of consideration, as caretaker only and on the basis that his father would pay the mortgage with money which in some sense belonged to or was held in order to be spent for the benefit of the plaintiff, that the Cranebrook house was held by Mr R.N. Day on trust for him, and that Mr R.N. Day was accountable to him for the proceed of the sale of the Napoleon Reef property. The moneys which Mr R.N. Day used to pay off the mortgage in 1982 were not drawn against any identifiable funds in which the plaintiff had an interest which can be ascertained or stated in a clear way. There is no evidence establishing in a reliable way how much was paid to discharge the Cranebrook mortgage. The plaintiff in claiming judgment for $67,000 in respect of the $97,000 consideration concedes $30,000, and in my view I should act on this concession. The basis of the concession appears to be that it is accepted that in fact there was no kitty or fund held by Mr R.N. Day for the plaintiff: or that, whatever was promised, it cannot be shown that there really was one, and credit is allowed for $30,000 of the mortgage moneys on Cranebrook. 75 My view of the facts is that when Mr R.N. Day paid out the Cranebrook mortgage, he did not do so on an understanding shared by him with the plaintiff that paying that money would bring him beneficial ownership of the property, but on the understanding that he was to be the caretaker of the property and that the money paid on the mortgage was to be adjusted in some way; in the context of earlier family dealings, when a great deal was left to undefined expectations, there was plenty of room for such an adjustment. I should accept that it was adjusted, wholly or in part, by payments by Mr W.R. Day to Mr R.N. Day, and if and insofar as it was not completely adjusted the concession of $30,000 is sufficient to make it probable that nothing further is outstanding. 76 In accepting the plaintiff’s evidence I am acting upon the standard of proof on the balance of probabilities, with recognition that the plaintiff has not carried proof to the degree of certainty, and with residual doubt. In my judgment the preponderance of probabilities favours the plaintiff’s case. 77 If the plaintiff’s claims had not succeeded he would in my opinion have had a strong basis for an order for provision in his alternative claim under the Family Provision Act, having regard to his contributions to Mr R.N. Day’s resources, his present circumstances and needs, particularly his needs for housing, and the fact that only Mrs C.M. Day is shown by evidence to be in need of provision; the other residuary beneficiaries are not. However it is not necessary to adjudicate the alternative claim. 78 There was no defence or submission attacking the plaintiff’s claim on the ground of the illegality of the plaintiff’s purpose in transferring the properties to the deceased. I have considered whether the plaintiff’s rights are affected by illegality. 79 The consequence of alienating property with intent to defraud creditors prescribed by s.37A of the (NSW) Conveyancing Act 1919, the successor to the statute 13 Elizabeth ch.5, is that the alienation is voidable at the instance of any person thereby prejudiced. (In the circumstances of a personal bankruptcy ss.120 and 121 of the (Cth) Bankruptcy Act 1966 deal in greater detail with setting aside transactions). 80 Section 37A does not, in terms, forbid making an alienation of property with intent to defraud creditors or impose a penalty on doing so; the consequence specified is voidability at the instance of any person prejudiced. The policy of the section is that creditors should not be prejudiced by alienations of property made with intent to defraud creditors. It is not the policy of the section to confer benefits or impose disadvantages by depriving transactions of effect in any other way. 81 In Martin v. Martin (1959) 110 CLR 297 the High Court dealt with rebuttal of the presumption of advancement where a husband placed property in his wife’s name, and in that case, “… the legal title was placed in the name of the wife or child as a nominee for no reason except to cloak the truth”. Their Honours said, “[w]hen that is the case there must, under Australian case law, be further inquiry and it must be ascertained whether the unlawful purpose was in any degree carried out or, on the other hand, the intending law breaker recanted before any necessity arose of using the cover he had thus provided or else virtuously refrained from using it” (at 305). In reference to English cases their Honours observed, “[p]erhaps different views obtain in England”. 82 Later developments in case law have affirmed the Australian position and entrenched the English position. Nelson v. Nelson (1995) 184 CLR 538 established that Australian law on illegality now differs markedly from the law in England as set out by the House of Lords in Tinsley v. Milligan [1994] 1 AC 340: see, for example, Lowson v. Coombes [1999] Ch 373. 83 McHugh J, who was in the majority in Nelson v. Nelson referred to four exceptions to withholding remedies where there is illegality. The exceptions were stated at 604-5, and included “… where the illegal purpose has not been carried into effect [Payne v. McDonald (1908) 6 CLR 208 at 211-212; Perpetual Executors & Trustees Association of Australia Ltd v. Wright (1917) 23 CLR 185 at 193-194; Martin (1959) 110 CLR 297 at 305]”: at 605. 84 The plaintiff’s case shows that he transferred the properties to the deceased with the purpose of making them unavailable to creditors if the plaintiff faced large claims for damages arising from his trucking business. As events turned out the claims were relatively small and he paid them, he did not become a bankrupt, and no creditor was defrauded. What he did was not unlawful in a sense that it was forbidden by law, but it was done with a purpose of being in a position to defraud creditors at a later time, and I regard that as an unlawful purpose. 85 Doing acts preparatory to committing a fraud in circumstances which have not yet happened is obviously undesirable behaviour, but it is difficult to identify any legal rule which it contravenes. The fact that the plaintiff and the deceased both participated in the suspect conduct directs attention to whether there was conspiracy to defraud, but in the absence of an existing identifiable creditor or class of creditors and of any loss by a creditor there is no actionable conspiracy. 86 The facts of the present case appear to me to fall within McHugh J’s fourth exception. If they do not, they fall within McHugh J’s conclusions (at 613):

Accordingly, in my opinion, even if a case does not come within one of the four exceptions of the Holman dictum to which I have referred, courts should not refuse to enforce legal or equitable rights simply because they arose out of or were associated with an unlawful purpose unless: (a) the statute discloses an intention that those rights should be unenforceable in all circumstances; or (b)(i) the sanction of refusing to enforce those rights is not disproportionate to the seriousness of the unlawful conduct; (ii) the imposition of the sanction is necessary, having regard to the terms of the statute, to protect its objects or policies; and (iii) the statute does not disclose an intention that the sanctions and remedies contained in the statute are to be the only legal consequences of a breach of the statute or the frustration of its policies.

87   The facts should also be seen to fall within the third class mentioned in the judgment of Deane and Gummow JJ in Nelson v. Nelson, that is, “… contracts and trusts not directly contrary to the provisions of the statute by reason of any express or implied prohibition in the statute but which are ‘associated with or in furtherance of illegal purposes’”: at 552. This exception is considered extensively. After a thorough review, particularly of case law dealing with resulting trusts and statutory illegality (at 564ff) their Honours dealt with the element of illegality in that case by saying, at 571:

“[i]n our view, as the price of obtaining the relief she seeks for the recognition and enforcement of a resulting trust in respect of the whole of the balance of the proceeds of sale of the Bent Street property, Mrs Nelson must be prepared to do equity according to the requirements of good conscience. That may involve consideration of more than the interests of the parties to the litigation. Here, good conscience calls for the taking by Mrs Nelson of steps sufficient to satisfy the demands of the underlying policy of the Act.”

88 A similar approach appears to me to be appropriate in the present case. There has been no breach of any legislative prohibition, and nothing which is punishable under statute has been done. The Conveyancing Act points out what the consequences are to be, and the circumstances in which there are consequences have not occurred. The statute states the class of person who are intended to be protected, and the estate of the deceased is not a member of that class. It would be altogether disproportionate to deny the plaintiff any relief when no creditor actually was prejudiced, and the deceased and the plaintiff were similarly unmeritorious in the matter. Nothing more needs to be done to satisfy the policy of s.37A. I am of the view that the illegality of the plaintiff’s purpose does not give rise to a limit on the remedy to be granted. 89 Orders:

(1) Declare that the plaintiff is the beneficial owner of the land in Folio Identifier 2/211189 being house and land known as 136-138 Tadmore Road Cranebrook.

(2) Declare that at his death Ross Nelson Day owed $67,000 to the plaintiff.

(3) Liberty to apply with respect to enforcement of the rights declared.

(4) Order that the defendant pay the plaintiff’s costs of the proceedings out of the assets of the testator.

(5) Order that the defendant pay or retain the defendant’s costs of the proceedings out of the assets of the testator.

Last Modified: 09/25/2000