Di Pietro & Ors v Official Trustee in Bankruptcy as Trustee - Williams

[1996] HCATrans 118

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S128 of 1995

B e t w e e n -

ELIO DI PIETRO, KIM BONNIE DONALDSON and KEITH CONNOR DONALDSON

Applicants

and

OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE BANKRUPT ESTATE OF PATRICIA WILLIAMS

Respondent

Application for special leave to appeal

BRENNAN CJ
DAWSON J
TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 16 APRIL 1996, AT 11.27 AM

Copyright in the High Court of Australia

MR A.T. McINNES, QC:   If the Court pleases, I appear for the applicants.  (instructed by Ferrier & Associates)

MR D.L. RONZANI:   May it please the Court, I appear for the respondent.  (instructed by Abbott Tout)

MR McINNES:   Your Honours, the point in issue in this matter is the construction of an agreement made in a family law suit in ‑ ‑ ‑

BRENNAN CJ:   What if the agreement is as you contend for, what is the result of that?

MR McINNES:   It is that the second and third applicants have a one‑half interest.

BRENNAN CJ:   How did they acquire it?

MR McINNES:   The agreement was, in 1971, that any future residence that Mrs Di Pietro, the bankrupt, had, would be held in trust for the children.

BRENNAN CJ:   That is a promise by her to him.

MR McINNES:   Yes, she promised him that she - - -

BRENNAN CJ:   How do the children acquire any proprietary interest?

MR McINNES:   If she was obliged to do that, it is our submission that the children would have the right to claim that since she had the agreement with him.

BRENNAN CJ:   But your submission is wrong, is it not?  It does not give rise to an equitable interest, does it?  It is simply a promise.

MR McINNES:   Yes, she promised, and she took the benefit of the agreement on that promise that she would do it and then, of course, at a later stage she was obliged to honour that promise, in my submission.

BRENNAN CJ:   And if she did not?

MR McINNES:   The children would have the right to enforce the ‑ ‑ ‑

BRENNAN CJ:   How?

MR McINNES:   Your Honours, if she acquired a residence pursuant to that agreement, my submission is her former husband could have enforced it, so that if he could have enforced it there is a trust there, and if there is a trust there then the children could enforce it.  That is the way I would put it.

BRENNAN CJ:   Her husband was not a party.

MR McINNES:   To these proceedings?

BRENNAN CJ:   That is right.

MR McINNES:   No, I understand that.

BRENNAN CJ:   I can understand that if you had ever put this case on the basis that the husband was the trustee of the promise it might have been an interesting case, but there is no declaration of trust of the new property.

MR McINNES:   No, that is so, your Honour.

BRENNAN CJ:   There is no more than a promise made to a party who is not a party to the proceedings.

MR McINNES:   Yes.

BRENNAN CJ:   How do the children acquire any interest or a proprietary nature under that?

MR McINNES:   Your Honour, I can only repeat what I have said.  The submission is that even though he is not a party ‑ ‑ ‑

TOOHEY J:   Is there no statutory provision under Property Law Act legislation or like which would allow the children, as third parties, to enforce the ‑ ‑ ‑

MR McINNES:   Not so far as I am aware, your Honour.  It was the assumption that we proceeded in both cases that the children - if my construction was correct, or the construction that I am putting at the present time was correct - would be entitled to enforce it.  The question was not raised before as an issue and, as I understand it, until your Honours raised it, it was not raised in this matter either.  I suppose that is one of the things one has to face.  Your Honours, I take the point.  My submission is that notwithstanding what your Honours have said that there would be a trust that could have been enforced by somebody else.  If a trust exists, then it is for the benefit of the children and the children could enforce it, notwithstanding the former husband is not joined.

Your Honours, the other submissions are quite short, and having put that I would simply seek to put them, and that is that there is no basis for cutting down, as the Full Court did, the express words used in what was in the agreement of September 1971.  The suggestion that it should be construed as to mean only the residence that was first acquired or the residence which was acquired from the proceeds of that residence.  The parties could not have intended to limit the agreement in such a way because that would follow as a matter of course.  The children had an equitable interest in Kendall Street, the first property.  That property was sold and the proceeds used to purchase another property.  Their interest in it would be traceable to the next property.

BRENNAN CJ:   But it could not be traced in this case, is that right?

MR McINNES:   No, your Honour, the court was against me in that, so it was not traced.  So it would be unnecessary to add the words to the agreement, “as she may later acquire” because, if the Full Court was correct in the limitation they placed upon it, then it would be unnecessary words; it would follow as a matter of course, so the parties must have intended to refer to any residence as is said. 

Your Honours, the mere fact that it may lead to a strange result is not a basis for so construing an agreement in a matrimonial cause or a family law cause because it is a different background to the ordinary trust situation where one looks at - the circumstances:   family law people are moved by emotion, perhaps bitterness, perhaps undue concern for children, whatever it may be, so it would be normal to make strange agreements in what might be described as the heat of the moment.

Apart from the matters that your Honours have raised with me, we would say that this is a matter of special concern because of the number and volume of family law matters that are settled and agreements made daily in the family law courts, and unless those agreements are going to be enforced according to their terms, then it will lead to difficulty and lack of confidence in the parties at a time when they are emotional or where they are very determined to make arrangements which they feel correct in insisting on, although from a commercial point of view they may be considered strange.  I have nothing further to put to your Honours.

BRENNAN CJ:   Thank you, Mr McInnes.  We need not trouble you, Mr Ronzani. 

The question of construction of the agreement is not itself a question of public importance that warrants a grant of special leave.  In any event, no foundation appears for the relief for which the applicants contend.  Special leave must be refused.

MR RONZANI:   I seek costs, your Honour.

BRENNAN CJ:   What do you say about that, Mr McInnes?

MR McINNES:   Nothing to say on costs, your Honour.

BRENNAN CJ:   It will be refused with costs.

AT 11.35 AM THE MATTER WAS CONCLUDED