Francis v Francis - [2009] SASC 363

SUPREME COURT OF SOUTH AUSTRALIA
(Land and Valuation Division)
FRANCIS v FRANCIS
[2009] SASC 363
Judgment of The Honourable Justice Bleby
25 November 2009
REAL PROPERTY - PARTITION OF LAND - PARTITION OR SALE IN PARTITION ACTIONS
REAL PROPERTY - TORRENS TITLE - INDEFEASIBILITY OF TITLE - EXCEPTIONS TO INDEFEASIBILITY - IN PERSONAM EXCEPTION
EQUITY - TRUSTS AND TRUSTEES - CONSTITUTION AND CLASSIFICATION OF TRUSTS GENERALLY - CLASSIFICATION OF TRUSTS IN GENERAL - IMPLIED TRUSTS - RESULTING TRUSTS - WHERE INTENTION PRESUMED
Application under Part 8 Law of Property Act 1936 (SA) for order that land held by the plaintiff and her parents, the defendants, be sold and that the proceeds be divided equally between the three parties - defendants owned farm property - plaintiff wished to build and live in transportable home on defendants' property - defendants transferred one half of the legal title in the land to the plaintiff - in association with the transfer a Bank granted a loan to all three parties - parties entered into partnership for the running of the property and for the breeding of horses.
Whether parties intended transfer of land to be a transfer of half of the beneficial interest in the land or of some lesser part - whether bank loan applied for the benefit of the plaintiff - whether parties hold beneficial interest on resulting trust - whether presumption of advancement applies - how parties' intentions are to be ascertained.
Parties intended to confer on the plaintiff a beneficial interest in no more than approximately one hectare of the land - transfer of legal interest effected solely to enable bank loan to be made to plaintiff - not appropriate for whole property to be sold - parties to pursue application for subdivision of land.
Law of Property Act 1936 (SA) Part 8, s 69, s 70, 83; Development Act 1993 (SA) s 40; Development Regulations 2008 (SA) reg 48, referred to.
Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248; Critchley v Collins (2004) 232 LSJS 155, applied.
Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353; Calverley v Green (1984) 155 CLR 242; Gissing v Gissing [1971] AC 886, discussed.

WORDS AND PHRASES CONSIDERED/DEFINED
"partition and sale", "indefeasibility of title", "resulting trust", "presumption of advancement"

FRANCIS v FRANCIS
[2009] SASC 363
Land and Valuation Division
BLEBY J.
Introduction

The land presently comprised and described in Certificate of Title Register Book Volume 5346 Folio 305 is an irregularly shaped piece of land on the northern side of the junction of Marrabel Road and Patterson Road in the Hundred of Julia Creek in the area known as Hampden in the Regional Council of Goyder. It is approximately 10 kilometres west of the town of Eudunda. It comprises approximately 64.7 hectares.
In November 1989 the land was purchased by the defendants, Mr and Mrs Francis, who then lived at Two Wells. They moved into the house which had been erected on the land. It has been their matrimonial home since then. They have worked the land under a share farming arrangement for the growing of crops and, more recently, they have bred horses. They bought the land at a time when Mr Francis was unable to continue to work full time as a fitter and turner, due to a work-related injury. The property has never provided an income sufficient to support Mr and Mrs Francis. They are now pensioners.
On or about 31 May 1996, in circumstances described below, Mr and Mrs Francis transferred to themselves “as Joint Tenants in one undivided moiety and to Susanne Jane Francis [their daughter and the plaintiff] … as to the remaining one undivided moiety” of an estate of fee simple in the land. As registered on the Certificate of Title the interest of Mr and Mrs Francis is described as “Joint Tenants of 1 Undivided 2nd Part”, and the plaintiff’s interest is described as “1 Undivided 2nd Part” of the estate of fee simple in the land.
The proceedings
By her summons issued on 4 July 2008 the plaintiff seeks an order pursuant to Part 8 of the Law of Property Act 1936 (SA) that the whole of the land, including all improvements thereon, be sold and that the net proceeds, after payment of the expenses, any outstanding rates and taxes and the discharge of an existing mortgage, be divided as to 50% to the plaintiff and 50% to the defendants jointly. However, at the trial counsel for the plaintiff announced that in lieu of seeking a 50/50 division of the net proceeds of sale of the property, the plaintiff was now seeking a division as to one third for herself and two thirds for the defendants. As appeared from her counsel’s opening and from the oral evidence led from the plaintiff, this was based on the alleged intention of the parties at the time when the transfer of the one undivided second part of the land was made to the plaintiff.
For their part, the defendants seek an order of partition of the land into an area of one hectare, which I shall for convenience refer to as “Lot 1” and the transfer of Lot 1, together with the improvements thereon, to the plaintiff. They seek an order that the plaintiff should transfer her interest in the balance of the land, which I will refer to as “Lot 2”, to the defendants. They claim that this represents the intention of the parties at the time as to the respective equities intended to be created.
Accordingly, at the trial, neither the plaintiffs nor the defendants suggested that the actual transfer of the legal interest which took place in 1996 represented the true intention of the parties at the time. Both maintained that their respective equitable interests were something different.
The defendants also seek an order for dissolution of the partnership between the plaintiff and the defendants and certain other incidental orders. The parties are agreed that the partnership should be terminated, and I was informed by counsel that the terms of an appropriate order in that regard have been agreed.
Until shortly before the trial the defendants were self-represented. I had earlier directed the filing of affidavits in lieu of pleadings. In support of her claim the plaintiff filed two affidavits. One was sworn on 1 July 2008 (“the first affidavit”) and another was sworn on 3 September 2008 (“the second affidavit”). Mr and Mrs Francis filed an answering affidavit jointly sworn by them on 12 December 2008 (“the defendants’ affidavit”), and the plaintiff filed an answering affidavit which was sworn on 14 January 2009 (“the third affidavit”). The defendants’ affidavit was prepared without the benefit of legal advice and contained some irrelevant or otherwise inadmissible material.
All of the plaintiff’s affidavits and their respective exhibits were admitted at the trial. Subject to the exclusion of certain passages, the defendants’ affidavit and relevant exhibits were also admitted.
The plaintiff gave oral evidence and was cross-examined on her affidavits. She also called a valuer, Mr Ian Rothe, who was cross-examined as to one minor aspect of certain valuations of the property which he had provided both at the request of the plaintiff and the defendants, and which were not otherwise in dispute. Mr and Mrs Francis also gave evidence and were cross-examined on their affidavit.
Facts not in dispute
After her marriage in 1991 or 1992,[1] the plaintiff and her husband began living in a house erected on some land which she owned in Eudunda. She was a police officer working in metropolitan Adelaide. She gave birth to her daughter, Annabel, on 8 June 1994.
[1] The defendants allege that the plaintiff was married on 11 December 1992: Exhibit D8, para 24. The plaintiff alleges that she was married “in 1991”: Exhibit P4, para 8. The matter was not resolved.
In February 1995, after her marriage broke down, the plaintiff and her husband separated. The separation was not amicable and included episodes of violence. The plaintiff and her daughter remained in the Eudunda house. The plaintiff was under severe financial and emotional stress, as well as suffering from post-natal depression. She resumed her employment as a police officer, a neighbour undertaking the care of her child while she was at work. Mr and Mrs Francis also assisted from time to time with some child care, but there were obvious difficulties caused by distance.
Following a family discussion the plaintiff decided to sell the Eudunda house. She and her daughter moved in to live with her parents. It was only intended that she should live in the same house while arrangements were made to acquire a transportable house to be placed on the property in which the plaintiff and her daughter could live independently.
Mr Francis made some enquiries of the local council as to the possibility of subdividing off one hectare of the property on which to place the transportable home. He was informed that the Council would not consent to such a subdivision but would favourably consider a development application for the erection of a transportable home on the property.
Mr and Mrs Francis could not afford to provide financial assistance to the plaintiff to acquire the transportable home. If this was to happen, the plaintiff would have to borrow money.
An approach was made to Bank SA to provide a loan for the purchase of a transportable home and for works associated with its installation. The bank was not prepared to lend the amount required to the defendants because they were unable to repay the loan from their own resources. The bank would not lend to the plaintiff. Although she could apparently service the loan, she could provide no security. The bank would only lend for that purpose if the plaintiff had an interest in the land.
Mr Francis approached a conveyancer in Kapunda. It is not clear precisely what his instructions were, but he prepared the memorandum of transfer in the terms described above. The transfer was executed by all parties in the office of the conveyancer. Precisely when that occurred is a matter of some dispute, but the transfer was dated, it would appear by the witness, 29 May 1996. The memorandum of transfer was assessed for stamp duty on 31 May 1996 at a value of $63,000.
The preparation of the transfer was done in association with the granting of a loan by Bank SA to all three parties. The mortgage over the property to secure the loan was executed by all three parties in the office of Bank SA in Gawler. Again, there is some dispute about the date on which that occurred, but the mortgage was dated 28 May 1996, apparently by the witness to the signatures. The mortgage was stamped on 30 May 1996 for a security to the value of $71,000. Settlement occurred and the documents were produced for registration on 31 May 1996.
Mr and Mrs Francis had financed the original purchase of the property with a loan from the ANZ Bank secured by first mortgage on the property. At the time of the transfer to the plaintiff, that mortgage was discharged by payment to the ANZ Bank of $11,397.12. The repayment of that loan and the payment of the conveyancer’s fee of $423 was paid out of the proceeds of the Bank SA advance.
It was intended that the defendants should pay to the plaintiff the amount of the ANZ Bank loan repaid at settlement, and that was done, together with a modest interest payment. It was also intended that the plaintiff should be fully responsible for the repayment of the Bank SA loan.
On 7 June 1996 the plaintiff alone entered into a contract with Oasis Transportable Buildings and Homes Pty Ltd for the purchase of a transportable home in accordance with specifications contained in the contract. That company also applied, on behalf of the plaintiff, for development approval to what was then the District Council of Eudunda. Approval was subject to a number of conditions which included the following:
5.(1) This approval is not to be construed as allowing or signifying, demoting (sic) or leading to any future division of the subject land which creates an additional allotment for the purposes of containing the dwellings.
…
(4)The effect or benefit of the consent now granted to be limited to the applicants and their employees only and is not to be inhabited by or transferred to parties or new owners of the land and shall in any event cease upon the sale of the subject land at which time one or other of the dwellings shall be totally removed from the land within a reasonable period to Council’s satisfaction.
…
(6)If the use of the proposed dwelling ceases for a period in excess of 12 months it is to be removed from the subject land or be the subject of a further Development Application.
The transportable home was duly erected and connected with power, water and an approved waste control system by further contracts entered into by the plaintiff alone. The Bank SA loan was further drawn down to pay for the cost of the transportable home, site preparation, erection of a carport and garage, installation of the septic system and material for a driveway. In addition, the plaintiff drew further amounts for the purchase of a motor vehicle and personal requirements.
When installed, the plaintiff and her daughter moved into the house and lived there for approximately 10-12 months, the plaintiff continuing to work in Adelaide and the defendants undertaking most of the child care of the plaintiff’s daughter while the plaintiff was at work.
In September 1997 the plaintiff was transferred to Whyalla and she moved there with her daughter. Through the agency of a property management firm based in Kapunda, the transportable home was let, initially to a series of two short-term tenants but subsequently to a long-term tenant who still remains as a tenant.
At some stage the three parties entered into a partnership for the running of the property and for the breeding of horses. Tax returns (the only ones tendered) for the financial years ending 30 June 2004, 2005 and 2006 show rent as a partnership income and bank interest as an expense. I infer that the partnership began after the plaintiff moved to Whyalla and that rent from the transportable home was treated at all material times as partnership income. This is the subject of further observation below. The partnership never made a profit. However, it was a mutually convenient arrangement. All income producing activities from the property were combined, as were all relevant expenses, including interest on the Bank SA loan. The combined expenses substantially exceeded the combined income. It ensured that the horse breeding activity, which they all enjoyed, could be carried out without generating taxable income. From the defendants’ point of view, the income they had previously derived from share farming was offset by deductions and therefore did not adversely affect their pension. From the plaintiff’s point of view, she did not pay tax on the net rent she would otherwise have received after deducting the interest payments to the Bank.
At about the end of 1999 the plaintiff returned from Whyalla to work at Elizabeth. She did not return to live in the transportable home, but with her daughter, she lived in her parents’ house while commuting to work at Elizabeth. This enabled the mutually favourable partnership arrangements to continue. The defendants once again played a major role in child care and in delivering the plaintiff’s daughter to and collecting her from either the school in Eudunda or the nearest school bus stop. Those domestic arrangements continued until 20 April 2007 when the plaintiff and her daughter left the defendants’ home to live elsewhere.
Until she moved out in April 2007 the plaintiff, from her own resources, paid all instalments of the Bank SA loan. The initial amount borrowed was in the order of $71,000. By October 2005 the principal had been reduced to approximately $50,000. The loan was renegotiated and the amount owing rose to approximately $82,000. The initial advance had been applied entirely towards the acquisition and installation of the transportable home and personal expenses of the plaintiff. The additional monies were used to fund the construction of a horse arena on what had, in the meantime, been fenced and become Lot 1, the construction of a shed on Lot 2 and the purchase, by the plaintiff for her use and benefit, of a horse float. There is no evidence as to the value of the improvement of Lot 2 by the addition of the shed. Otherwise, it would seem that the further advance was for the benefit of the plaintiff.
When the plaintiff moved to Whyalla, the defendants received the rent from the tenants of the transportable home. That was applied by Mr and Mrs Francis towards repayment of expenditure incurred by them in making the house lettable and in expenses associated with the partnership. When the plaintiff returned to live with Mr and Mrs Francis in their house, the payments of rent were applied principally towards board and lodging of the plaintiff and her daughter, other personal expenses of the plaintiff and some partnership expenses. When the plaintiff left in April 2007 she stopped making payments to Bank SA, and the rent received by Mr and Mrs Francis was applied in repaying the bank loan. As at 17 August 2008 the amount outstanding on that loan was $79,361.49. There is no evidence as to the current balance of that loan, but the statement of accounts from Bank SA as at that date indicated that the contract term remaining was 18 years and 2 months.
The partnership that the parties entered into was never the subject of a written partnership agreement. The business is described in the tax returns tendered as “Sheep farming and cereal grains growing”. However, the principal source of partnership income seems to have been from the continued share farming arrangement, no details of which were led in evidence, the breeding and training of horses and the letting of the transportable home. In addition, the plaintiff engaged in the showing of horses on her own account.
As I said, the partnership never made a profit. It is difficult to determine from the tax returns what assets were regarded as partnership assets. However, in the years for which tax returns of the partnership were tendered, there is an item of income described as “rent” and an item of expenditure shown as “interest”. The evidence showed that the only source of rent was the transportable home and the only interest was that on the Bank SA loan. In the absence of any other explanation I infer that “rent” was the rent from the tenant of the transportable home and that “interest” was interest paid to Bank SA in respect of the loan secured by the mortgage on the property. The respective amounts stated are consistent with such designations.
The question of possible subdivision of Lot 1 was not abandoned after the initial advice from the Council in 1996. Mr Francis spoke to an officer of the then council in 2003 about possible subdivision but was advised that an application would probably not succeed. In 2007 Mr Francis engaged a firm of Mosel Browne, surveyors, to prepare a plan of subdivision for the formation of Lot 1 and Lot 2. It is not clear precisely when Mr Francis gave those instructions, but by 16 April 2007 Mosel Browne had prepared a proposal plan. In a letter of that date to Mr Francis they enclosed a copy of the proposal plan, an estimate of the costs involved and of the minimum time frame within which the application would be likely to be processed. In fact it appears from the Council’s form of development approval that the development application for the subdivision had been lodged with the Regional Council of Goyder on 10 April 2007. Provisional Development Plan consent was granted to the subdivision on 24 May 2007. However, it is possible that that consent has now lapsed, as it was not progressed further owing to the costs and uncertainty relating to these proceedings. At this time it is not clear whether, if an application were made, the time for taking the next step in the subdivision process would be extended or, if a fresh application were lodged in similar terms, it would be granted.

The final matter not in dispute is that the plaintiff and her daughter left her parents’ house on 20 April 2007. The relationship between the plaintiff and her parents had been deteriorating, particularly after the plaintiff began a relationship with Gareth Jones in 2006. The defendants had little affection for him. Following her departure the plaintiff engaged solicitors which ultimately resulted in these proceedings being commenced. The plaintiff ceased paying any mortgage repayments to the Bank. Since then the defendants have been applying all rental payments derived from the letting of the transportable home to the Bank.
The plaintiff’s solicitors wrote to the defendants on 14 May 2007 (“the 14 May letter”) in the following terms:
We act for your daughter, Susan. She has consulted us for advice in relation to the dissolution of the partnership with you.
Prior to considering in full detail the implications of dissolution, our client demands, on behalf of her daughter, the return of the 2 horses “Frankie” and “Monty” and her daughter’s saddle. You can speak with Gareth regarding arrangements for their return.
We note that in relation to the partnership property, all partners have an obligation to act in the best interests of the partnership, in particular with regard to selling partnership property.
Our client demands that no partnership property be sold without her prior approval as to price and condition of sale.
We note the proposal to subdivide the property, please provide us with up to date information regarding the progress of this application.
We look forward to hearing from you.
On 22 May 2007 Mr and Mrs Francis replied to the solicitors in the following terms:
The horses and saddlery are partnership property and just to consider as to what is to happen to that property shall await terms of settlement as to final accounting and distribution of partnership assets.
Meantime we shall preserve partnership assets, but equally we look to your client to make contributions towards same, including payment of the mortgage.
The subdivision is proceeding but it is no certainty and if successful is still some 12-14 months away.
We have taken advice on the respective shares by us on the one hand and your client on the other given that we fail to understand why we are thirds in the partnership but that your client on the one hand and ourselves each have half interest in the real estate.
It was always that we each have a third interest is your client prepared to regonize (sic) that.
We are desiriouse (sic) of having contact with Annabel, if an arrangement cannot be negotiated direc (sic) within seven days we intend making application to the family court.
Contact with us should only be through yourself and/or our daughter.
It will be necessary to return to a consideration of this correspondence in due course.
Facts in dispute
There are a number of issues on which the evidence of the plaintiff, on the one hand, and the defendants, on the other hand, was diametrically opposed or where the evidence of one party was the subject of challenge by the other. Resolution of some of these issues is critical to the proper resolution of the action. Before attempting to resolve these differences it is necessary to make some further observations about the attitude and conduct of the parties.
There is an obvious and deep-seated acrimony between Mr and Mrs Francis, on the one hand, and their daughter, on the other. Regrettably, both sides have adopted entrenched positions of bitterness and distrust in respect of the other. That has affected the evidence of all of them, requiring the application of a healthy cynicism in accepting the evidence of any of them on crucial issues where they are diametrically opposed. The three witnesses all gave their evidence confidently, convinced in their own mind of its accuracy. Neither side was prepared to concede that the other side’s version might contain an element of truth. Both the plaintiff and the defendants were blinded to the truth by the advocacy of their respective positions. The fact finding process must therefore be governed to a large extent by what is the most likely sequence of events or version of conversations when judged against other facts which are not in dispute or where inferences to be drawn from other evidence are compelling.
Resolution of some of the differences is not necessary for a final determination of the facts. On the other hand, resolution of those differences in favour of one party or the other instils confidence in the resolution of the issues which do matter.
The plaintiff made a number of assertions which I do not accept. In the first place, consistent with what she had regarded as her parents’ domination over her for much of her life, she claimed that she was under considerable pressure from her parents to sell her house in Eudunda and to move onto their property. She gave the impression that she was a reluctant participant in the whole transaction. I reject that assertion. The plaintiff, at that time, was under considerable financial and emotional stress. She was having great difficulty with adequate child care as a sole employed parent. It was of substantial benefit to her to be able to move into a house co-located with her parents – a house which would be a cheaper accommodation option. It would solve her child care problems and would result in little or no difference in her commuting time to work. It was the plaintiff who stood to benefit from the Bank SA loan, not the defendants. It was applied not only for the house but for other personal needs of the plaintiff including the payment of existing debts and the acquisition of a replacement motor vehicle. It was the plaintiff, not the defendants, who contracted to purchase the transportable home.
In the second place, the plaintiff insisted that the loan arrangements for the transportable home were negotiated by Mr Francis. I reject that assertion. The loan was negotiated with Bank SA. Mr and Mrs Francis had had nothing to do with that Bank and had their own banking arrangements. The plaintiff had banked with Bank SA. The sole purpose of the initial loan was to provide a house for the plaintiff and additional cash for her then financial needs. Subject only to paying out the balance of the defendants’ existing secured loan from the ANZ Bank, the loan was for the sole benefit of the plaintiff. I accept the defendants’ evidence that the only dealings they had with Bank SA was when they went to the Gawler branch of the Bank to execute the mortgage with the plaintiff.
Thirdly, the plaintiff asserted that she was a reluctant participant in the partnership arrangements which were subsequently made. For reasons mentioned above, there were benefits to all parties by the arrangement. Contrary to the impression that she sought to give, I find that all three were willing participants in the partnership arrangement and that there were substantial benefits to the plaintiff in her participation.
The plaintiff also sought to put a gloss on the truth. In one of the affidavits in support of her claim she asserted that, after she moved to Whyalla, the defendants received and “kept … for themselves” the rent from the transportable home from that point until May 2007 when she left the home. There was no acknowledgement, as was the fact, that while she was at Whyalla the defendants applied and carefully documented the rental income towards partnership obligations and the maintenance and improvement of the rental producing house, as well as providing cash to the plaintiff. There was no acknowledgement in the affidavits that when the plaintiff returned to live at the premises at the end of 1999, rental payments were largely absorbed by board and lodgings and other moneys expended for the benefit of the plaintiff and her daughter, as well as being disclosed in the tax returns as partnership income. Although that latter fact may appear to have been disadvantageous to the plaintiff, the partnership income also included income from the share-farming arrangement and other activities to which the plaintiff made limited, if any, contribution.
The plaintiff also asserted in her evidence-in-chief that, when discussing the transfer of the property to her, her parents told her that the remainder of the property would be left to her in their wills because they did not wish her brother to have the property. He had a drug and alcohol problem and had spent some time in jail. While the defendants acknowledged that their son had had a problem, they denied that part of the conversation. The evidence suggests that, with their son undergoing a rehabilitation program, he worked on the property and they enjoyed a good relationship with him. I accept the evidence of the defendants.
Finally, the plaintiff asserted in her evidence-in-chief that her parents had told her before the transaction was effected that she would be owner of one third of the property, and that they would give her that one third. I reject that evidence. There was no mention of any such proposal in either of the affidavits sworn by the plaintiff in support of her application. Those affidavits were sworn on 1 July 2008 and 3 September 2008. It was not borne out by what in fact happened by way of the transfer of the legal interest. In fact any suggestion of entitlement to a one third beneficial interest in the property did not arise until the beginning of the trial. Furthermore, later in her cross-examination she conceded that what she referred to as the conversation concerning a one third interest did not occur until well after the transaction and been effected, wherein it was suggested that in fact she held a one third beneficial interest. By then, however, the partnership was either in existence or in contemplation, and there was no dispute that each of the parties held a one third interest in that partnership. If there was a conversation about a one third interest I consider that in all probability it related to the partnership.
On these findings it will be apparent that I regard the plaintiff’s assertions, at times vigorously made, as unreliable.
Mr Francis on some occasions had difficulty in recalling precise details of what had occurred. Nevertheless, he was at least prepared to concede that difficulty and did not seek to assert facts that could be wrong. Mrs Francis left most of the financial and other dealings to her husband and was quite unaware of some relevant events. Where there is a difference between the plaintiff and the defendants, I prefer the evidence of the defendants, especially that of Mr Francis, as that evidence also gains more support from the objective facts.
Mr Francis also had a number of misunderstandings as to the true nature of the transaction. It is apparent that he did not fully understand the nature of a moiety in the land that was transferred. He believed that it would prevent an enforced sale by any one of the participants, and that the moiety, as I understood his evidence, was restricted to the one hectare allotment. It was Mr Francis who arranged for the conveyancer to prepare the transfer, and he accepted the assurance of the conveyancer that the transfer, as executed, was the best way of achieving his understanding of the parties’ desires.
The nature of the arrangement
Neither the plaintiff nor the defendants at the trial asserted that it was agreed that a one half beneficial interest in the property should be transferred to the plaintiff. The transfer of one half of the legal interest to the plaintiff did not, therefore, represent the intention of any party. There was no consideration for the transfer.
The purpose of the transaction was to enable the plaintiff to borrow money to purchase a transportable home to be placed on the property so that she could live in it and for other purposes personal to her. It was the clear intention of the defendants to make available to the plaintiff some portion of their land to enable the house to be placed on the land. At an early stage it was the intention of the defendants to make available one hectare of their land for that purpose. Mr Francis made enquiries of the District Council about the possibility of subdividing the land accordingly. When he received a negative indication from the Council, that gave rise to the ultimately successful application for development approval to erect the transportable house on the area he intended, but without a subdivision of the land. There was sufficient area set aside not only for the house but for horse breeding and training activities. At the time of the transfer that is all that was envisaged. The partnership discussions and other arrangements came later.
While it was clear from the defendants’ actions and from their versions of the discussions which took place that it was intended that the plaintiff’s beneficial interest in the land should be so limited, it was equally clear that the only way that money could be borrowed for the project was for all parties to be party to the loan and to grant security to the Bank over the whole of the land. That was achieved by the transfer of the legal interest in the manner in which it was effected, but it does not follow that that represented the intention of the parties as to the transfer of any beneficial interest. The plaintiff conceded in evidence that the only reason for the transfer of the legal interest to her was to facilitate the bank loan. The evidence of contemporary events points to an intention on the part of the defendants to grant a beneficial interest to the plaintiff in one hectare of the land to enable her to secure a place to live and to pursue her equine interests. The sole purpose of the transfer of the legal interest which took place was to enable the plaintiff to obtain a loan from Bank SA.
Although it is not evidence of his intention at the time of transfer, Mr Francis’ subsequent application for Development Approval in April 2007 by way of subdivision of the land into two allotments is entirely consistent with his intention in transferring the interest in the land to the plaintiff in 1996.
Reliance was placed by the plaintiff on what was submitted to be an admission by the defendants in their letter dated 22 May 2007 to the plaintiff’s solicitors to the effect that they intended to convey a one third beneficial interest in the land to the plaintiff. The content of that letter is set out in paragraph [34] above. I am unable to accept that as an unequivocal admission of the defendants’ intention.
The letter must be read in the context of the earlier letter dated 14 May 2007 from the plaintiff’s solicitors to the defendants. That letter concerned the dissolution of the partnership. Incidentally, in the final paragraph, it noted the proposal to subdivide the property, and sought up-to-date information regarding the progress of that application. Information about that proposed subdivision to the solicitors could only have come from the plaintiff. There was no protest or suggestion that such a proposal would not reflect the plaintiff’s beneficial interest in the land.
The expression in the defendants’ letter “It was always that we each have a third interest is your client prepared to recognise that” is just as likely to refer to her interest in the partnership as to her interest in the land. They were, after all, answering a query in relation to the partnership and its dissolution. The question they posed was just as likely to refer to the partnership given the recognition by them of the apparent anomaly between their understanding of the partnership, on the one hand, and their understanding of the legal ownership of the land, on the other hand. It is far from an unequivocal admission that the plaintiff was entitled to a one third interest in the land.
If I am wrong in that, and the observation that “we each have a third interest” was intended to relate to the land and not the partnership, then I consider it was an admission based on a misunderstanding of the law, and not an admission of fact which can be relied on.
A joint affidavit of the defendants sworn on 12 December 2008 was admitted subject to deletion of certain parts to which the plaintiff took objection. One of them was to exhibit EJ20 and the reference to that exhibit in paragraph 29 of the affidavit. The objection was allowed on the basis that the exhibit amounted solely to a submission and contained no relevant factual information. However, upon reconsideration I am prepared to admit that part of the affidavit as evidence of the defendants’ state of mind as to certain legal issues as at 12 December 2008, the date of the swearing of the affidavit.
Exhibit EJ20 is a two page document, the first of which contains what appears to be extracts of various dictionary definitions of the word “moiety” and its origin. The second page then continues:
Law of Property Act 1936 Sect 95A
Husband and Wife to be treated as separate persons for purpose of taking property
Husband and Wife, joint tenants
undivided moiety                  equals        2 persons
other person tenant in common
undivided moiety                  equals        1 person
EQUALS           3 people each with an undivided moiety
That indicates an understanding on the part of the defendants that the transfer of the land in 1996 had resulted in three people each having an undivided moiety in the land, at least as to their respective legal interests. That was obviously a mistaken belief and a mistaken application of the law. However, there is no reason to suggest that that was not also the belief of the defendants at the time they wrote the letter to the plaintiff’s solicitors on 22 May 2007. If that is so, the letter referred to the defendants’ perception of the respective legal interests in the land at the time of writing the letter. It said nothing about the intention of the parties in creating those interests in 1996. At the very least it indicates some confusion in the minds of the defendants as to the true nature of both the legal and equitable interests created by the transfer of the land in 1996, sufficient to persuade me that I should place no reliance on what was said to be an admission against interest contained in the letter of 22 May 2007.
The effect of the transfer of one half of the legal interest to the plaintiff
Neither party sought to justify the transfer of one half of the legal interest in the defendants’ land to the plaintiff as representing an absolute gift of one half of the defendants’ beneficial interest in the land. The plaintiff only claims a one third beneficial interest. The defendants allege that the plaintiff only has a beneficial interest in one hectare on which is erected the transportable home and other improvements.
It must follow that the parties now hold the land upon a resulting trust for whatever beneficial interest in the land each party is now entitled to.
The plaintiff accepts that although the Memorandum of Transfer may have acted to transfer to her the legal interest in one half of the property, an equity arising against her, as the registered proprietor, may be enforced notwithstanding the indefeasibility of the registered title,[2] and that a resulting trust arises where the transferor transfers title to another but retains a beneficial ownership of the property in whole or in part, the purpose of the resulting trust being to give effect to the parties’ presumed intention.[3] The presumption of a resulting trust may be rebutted by evidence of the donor’s intention to make an outright gift.[4]
[2] See Bank of South Australia Ltd v Ferguson [1998] HCA 12, [9], (1998) 192 CLR 248, 255.
[3] See Critchley v Collins [2004] SASC 10, [20], (2004) 232 LSJS 155, 160.
[4] Ibid [21], 160.
The presumption may also be rebutted, in the case of a transfer to a spouse or child, by the presumption of advancement.[5] However, that presumption too is rebuttable by evidence of actual intention or from which the relevant intention may be inferred.[6]
[5] See Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353.
[6] Ibid 364-365; Calverley v Green (1984) 155 CLR 242, 251 Gibbs CJ.

In the case of rebutting the presumption of advancement the members of the High Court[7] in Charles Marshall Pty Ltd v Grimsley[8] said:
The plaintiffs are the daughters of the donor and the initial presumption is that he intended to give the shares to them or, in other words, to make them the absolute beneficial as well as the legal owners of the shares. The plaintiffs start with this advantage. The presumption can be rebutted or qualified by evidence which manifests an intention to the contrary. Apart from admissions the only evidence that is relevant and admissible comprises the acts and declarations of the parties before or at the time of the purchase (in this case before or at the time of the acquisition of the shares by allotment) or so immediately thereafter as to constitute a part of the transaction. If that evidence is insufficient to rebut the presumption the beneficial gift, absolute or subject only to qualifications imposed upon it at the time, is complete and no subsequent changes of mind or dealings with the property inconsistent with the trust by the donor can as between himself and the donees alter the beneficial interest.
[7] Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ.
[8] (1956) 95 CLR 353 at 365.
The question then arises as to how that intention is to be ascertained when it may remain uncommunicated in the donor’s state of mind. The answer is to be seen in a speech of Lord Diplock in Gissing v Gissing,[9] adopted by Mason and Brennan JJ in Calverley v Green.[10] Lord Diplock said:
As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct. It is in this sense that in the branch of English law relating to constructive, implied or resulting trusts effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw from their words or conduct and not to any subjective intention or absence of intention which was not made manifest at the time of the transaction itself. It is for the court to determine what those inferences are.
[9] [1971] AC 886, 906.
[10] (1984) 155 CLR 242, 261.
In this case the plaintiff concedes that the presumption of advancement does not apply. She has not claimed a one half interest of the equitable estate in the land. In any event, I consider that the presumption is rebutted by the evidence of a contrary intention to be inferred from the conduct of the parties at the time.
There was an express desire on the part of all parties for the defendants to provide a space on their land for the plaintiff to erect a transportable home at her own ultimate expense, and to provide the means whereby the plaintiff could borrow the necessary money to acquire the home and to satisfy other pressing personal needs. That is borne out by the evidence of the defendants, which I accept, as to what was said at the time. It is also supported by the undisputed evidence of Mr Francis of his enquiries to subdivide an appropriate small portion of the land, and by the plaintiff negotiating a loan and using it for her own purposes, principally for the acquisition for the transportable home, and by her assuming responsibility for all repayments of the loan and later negotiating an addition to the loan for her own benefit.
There is no evidence to suggest that the defendants ever intended that they should make any contribution to the repayment of principal or interest of the Bank SA loan, and they did not do so until the plaintiff finally left the property in 2007. Neither did they contribute, other than by way of personal exertion, to any expenses of installing or maintaining the transportable home, at least until the house was let and became income producing, whereupon the rent from the house was agreed to be treated as partnership income. But that was a later transaction.
I therefore find that it was the intention of the parties at the time to confer on the plaintiff a beneficial interest in no more than approximately one hectare of the land for the purpose I have described. The plaintiff holds the remainder of a 50% interest in the land on resulting trust for the benefit of the defendants. The transfer of the legal interest was effected solely to enable the bank loan to be made to the plaintiff.
The Law of Property Act 1936
This application is brought pursuant to Part 8 of the Law of Property Act 1936 (SA). The plaintiff seeks an order that the whole of the land be sold and that the proceeds be appropriately divided between the parties. Section 83 of the Law of Property Act provides:
83—Application for partition to include application for sale and distribution of the proceeds
In an application for partition it shall be sufficient to claim a sale and distribution of the proceeds, and it shall not be necessary to claim a partition.
The power to order partition is contained in s 69(1) of the Act. Section 69(2) provides:
69—Power to order partition or sale instead of partition
(2)On any such application if it appears to the court that, by reason of the nature of the property, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the absence, dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions.
Section 70 of the Act provides:
70—Sale on application of certain proportion of parties interested
On any application for partition, if the party or parties interested individually or collectively, to the extent of one moiety or upwards in the property, request the court to direct a sale of the property and a distribution of the proceeds, instead of a division of the property between or among the parties interested, the court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and shall give all necessary or proper consequential directions.
I have found that the defendants are beneficially entitled to an extent greater than one moiety in the property. They do not seek a sale of the land. Accordingly, s 70 has no application. If it can be achieved, partition of the respective interests of the parties is by far the most satisfactory option.
Evidence of the value of the land in various forms was given by a valuer, Mr Rothe. His evidence was undisputed. In his valuation dated 26 August 2008, he valued proposed allotment 1 of one hectare, together with its present improvements including the transportable home, at $110,000. He valued Lot 2, being the balance of the land and improvements, including the defendants’ home, at $502,000, making a total of $612,000. In his valuation of 30 January 2009 he valued the whole of the land with its present improvements, unsubdivided, at $574,000. There is therefore a significant increase in value to the parties if the land can be subdivided and partitioned, rather than sold as a whole.
A further reason why sale as a whole is undesirable is that Condition 5(4) of the Development Approval of 27 August 1996 under which the transportable home was allowed to be installed provides that if the land is sold, the transportable home must be removed. Without a variation of that condition, even if there is an approved subdivision and partition, a sale of the land as a whole or of proposed Lot 1, if subdivided, would still require separate sale and removal of the transportable house. Nevertheless, it should be the Court’s aim to achieve partition with as few adverse side effects as possible.
The final compelling reason why the land as a whole should not be sold if it can be avoided is that it would probably mean the ejection of the defendants from their home for the past 20 years. If possible, they should be allowed to remain in their home and on the property which they have developed and nurtured until they are ready to leave.
On the other hand, the plaintiff is entitled to the benefit and enjoyment to the greatest extent possible of her equitable interest in the land. Her ability to do that without restriction can only be achieved if the land can lawfully be subdivided and without any sacrifice by Bank SA of the security which it holds in respect of the loan to the parties.
However, there is a complication in achieving that. The development approval sought by Mr Francis in 2007 has now expired.[11] There is no guarantee that the Council will again agree to an application for development approval in a similar form, although Mr Rothe expressed some confidence that a further application would be approved.
[11] Development Act 1993 (SA), s 40(2); Development Regulations 2008 (SA), reg 48.
I therefore propose to adjourn further consider without making any orders at this stage to enable the defendants to pursue two applications, the result of which will determine the nature of the final orders to be made.
The first application to be pursued by the defendants is an application to subdivide the land into two allotments in a manner and subject to such conditions, including the granting of any easements, as the parties may agree, or failing agreement, in accordance with the plan of subdivision approved by the Regional Council of Goyder on 24 May 2007 by Development No. 422/D002/07. I am prepared to allow some flexibility in the making of the application to include, for example, the provision of a right of way in favour of the owner of proposed Lot 1 over the narrow strip of land immediately north of proposed Lot 1, should that be agreed.
It would then be my intention, if such development application is granted, to make a declaration that the land is held by the parties as to proposed Lot 1 for the sole benefit of the plaintiff and as to proposed Lot 2 for the sole benefit of the defendants. The nature of any further orders would also depend on what follows.
Subdivision would not affect the mortgage in favour of Bank SA over the whole of the land. The original loan and its later extension were largely for the benefit of the plaintiff. As far as possible the defendants should be relieved of providing any further security for the plaintiff’s loan. It follows that if Development Approval is granted, it will also be necessary for the defendants to apply to Bank of SA Ltd for a partial discharge of Registered Mortgage No. 8122515 insofar as it affects proposed Lot 2 of the proposed subdivision. The Bank may or may not agree to such partial discharge and it may seek to impose some conditions upon the partial discharge. That may necessitate the sale of the transportable home or of the land on which it stands, or both. The plaintiff may also choose to apply to the Council for a variation of the condition that requires removal of the home upon sale of the allotment. Any further orders would need to be considered when the Bank’s attitude to the partial discharge is known. It is my intention, however, that, as the plaintiff would then become beneficially entitled to proposed Lot 1 and to have the legal estate vested in her, and as the loan was essentially for her benefit, if any sale is necessary in order for her to repay the loan and partially discharge the mortgage, it should be the improvements to and, if necessary, Lot 1 itself, that are sold in order to repay the loan. The plaintiff has so far shown no interest in retaining Lot 1 if subdivided. If any balance of the loan then remains outstanding, the Bank will be entitled to retain its security for that balance over proposed Lot 2. However, if the valuation of Mr Rothe is fulfilled, and if proposed Lot 1 and its improvements are sold, the whole of the loan should be able to be repaid without difficulty.
If either of the steps contemplated cannot be fulfilled, it will be necessary to hear further submissions as to what should then occur. That could include sale and removal of the transportable home and the application of the proceeds to the repayment of the Bank SA loan and/or the entering into some other arrangement to secure the plaintiff’s proper equitable interest in the land without unduly inconveniencing the defendants and interrupting their enjoyment of the land. There may be other courses which could also be considered at that time.
It would be my intention, and I would propose to order in due course, that the costs of any application for Development Approval and of implementing that approval be borne as to one half by the plaintiff and one half by the defendants.
I propose to adjourn the hearing into chambers at a date to be determined to review progress in respect of the applications which the defendants must now make. I will hear the parties further as to costs, although it may be appropriate to delay any order for costs until the making of final orders.