George v Fletcher (Trustee)

Case [2010] FCAFC 53

FEDERAL COURT OF AUSTRALIA

George v Fletcher (Trustee) [2010] FCAFC 53

Citation: George v Fletcher (Trustee) [2010] FCAFC 53
Appeal from: Fletcher v George & Ors (No 6) [2009] FMCA 69
Parties: LAUREN KAY GEORGE (A BANKRUPT) v WILLIAM JOHN FLETCHER AS TRUSTEE OF THE BANKRUPT ESTATE OF LAUREN KAY GEORGE, DR PETER IRONSIDE PTY LTD ACN 008 126 387, DR PETER DOUGLAS IRONSIDE, NATIONAL AUSTRALIA BANK LIMITED and SUSAN WILSON
File number: QUD 47 of 2009
Judges: RYAN, MARSHALL & LOGAN JJ
Date of judgment: 28 MAY 2010
Catchwords:

PRACTICE AND PROCEDURE – Summary judgment in Federal Magistrates Court – Whether question was one apt for disposal – Where application for summary judgment was made orally during the course of the trial – Where substantial issues of credit required resolution – Where particular factual disputes required resolution.

Held: matter was not apt for summary judgment pursuant to the Federal Magistrates Act 1999 (Cth) s 17A.

TRUSTS AND TRUSTEES – Trust asserted to have been declared over Torrens system land – Where land already legally and beneficially owned by trustee – Whether declaration was sufficient to create a trust – Whether trust was evidenced in writing – Whether assignment of land needed to occur to effect the trust – Whether assignment should have been registered.

Held: trust was claimed to have been created by declaration so that assignment was not necessary:  Property Law Act 1974 (Qld) s 11 and s 200 – registration of registered proprietor’s status as trustee possible but not mandatory in order to perfect trust: Land Title Act 1994 (Qld) s 109 and s 110

Legislation: The Constitution (Cth)
Bankruptcy Act 1966 (Cth) ss 27, 31, 58, 116
Family Law Act 1975 (Cth) s 79, Part VIIIAA
Federal Court of Australia Act 1976 (Cth) s 31A
Federal Magistrates Act 1999 (Cth) s 17A
Duties Act 2001 (Qld) s 487
Land Title Act 1994 (Qld) ss 109, 110
Property Law Act 1974 (Qld) ss 11, 200
Trusts Act 1973 (Qld)
Conveyancing Act 1919 (NSW) s 23C
Federal Court Rules O 52 4
Uniform Civil Procedure Rules (Qld)
Cases cited:

Cope v Keene (1968) 118 CLR 1
Corin v Patton (1990) 169 CLR 540
Fletcher v George (No 5) [2008] FMCA 1628
Fletcher v George (No 6) [2009] FMCA 69
George v Fletcher (Trustee) [2008] FCA 1848
George v Fletcher (Trustee) [2009] FCA 264
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited (2008) 167 FCR 372
Johnson v Johnson (2000) 201 CLR 488
Klewer v Official Trustee in Bankruptcy (No 2) [2008] FCA 1788
Lauren Kay Cordes as Trustee for Alexander George v Dr Peter Ironside P/L [2009] QCA 302
Meriton Apartments Pty Ltd v Industrial Court of New South Wales (2008) 171 FCR 380
Scott v Bagshaw (2000) 99 FCR 573
White Industries Australia Ltd v Commissioner of Taxation (2007) 160 FCR 298

Ford & Lee, Principles of the Law of Trusts, Thompson Law Book Co, 2006
Heydon JD and Leeming MJ,

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George v Fletcher (Trustee) [2010] FCAFC 53
Case
[2010] FCAFC 53
Decision Date

CaseChat Overview and Summary

George v Fletcher (Trustee) involved a dispute over the validity of a trust over Torrens system land in Queensland, where the trustee claimed to own the land both legally and beneficially. The Federal Magistrates Court had to determine whether the declaration of the trust was sufficient to create it without the need for an assignment, and whether the assignment should have been registered.

The key legal issues were whether the Federal Magistrates Court could grant summary judgment, and if the declaration of the trust over the land was sufficient to create it without an assignment, and whether registration of the assignment was necessary to perfect the trust. The court had to examine the provisions of the Federal Magistrates Act 1999 (Cth), the Property Law Act 1974 (Qld), and the Land Title Act 1994 (Qld).

The Federal Magistrates Court ruled that the matter was not suitable for summary judgment as there were substantial issues of credit and factual disputes that required resolution. Regarding the trust, the court found that the trust was claimed to have been created by declaration, making an assignment unnecessary. The court referenced Property Law Act s 11 and s 200, and Land Title Act s 109 and s 110, to conclude that registration of the registered proprietor’s status as trustee was possible but not mandatory to perfect the trust. The declaration of trust was deemed to be in compliance with the statutory requirement for a written declaration if the trust property is land.

In conclusion, the appeal was partially allowed, and the orders of the Federal Magistrates Court were set aside in part. The matter was remitted to the Federal Magistrates Court for further hearing and determination according to law. The parties were directed to file and serve any written submissions on costs within seven days, and costs were reserved accordingly.

Orders

Orders of the court

1. The appeal is allowed in part.

2. Orders 1 and 2 of the orders made by the Federal Magistrates Court are set aside and the matter is remitted to that court for hearing and determination according to law.

3. Save as provided above, the appeal is dismissed.

4. The parties file and serve such written submission, if any, as to costs of the appeal within seven days from today.

5. Costs be reserved accordingly.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Section 17A is the cognate of s 31A of the Federal Court of Australia Act 1976 (Cth) (the Court Act), which provides as follows:31ASummary judgment(1)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:(a)the first party is prosecuting the proceeding or that part of the proceeding; and(b)the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.(2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:(a)the first party is defending the proceeding or that part of the proceeding; and(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:(a)hopeless; or(b)bound to fail;for it to have no reasonable prospect of success.(4)This section does not limit any powers that the Court has apart from this section. In an authority cited by the learned Magistrate, White Industries Australia Limited v Commissioner of Taxation (2007) 160 FCR 298, Lindgren J remarked, at [50], that “section 31A of the FCA Act, like O 20 of the Rules [of this Court], is concerned with the bringing and defending of proceedings, not just with pleadings; with substance, not just with form...”. His Honour went on to say, at [54], that:Under s 31A I must be satisfied that the applicants have no reasonable prospects of success, but as s 31A (3) makes clear, this does not mean that I must be satisfied that the proceeding is hopeless or bound to fail. I suggest that the legislature’s intention in enacting s 31A was to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners (1949) 78 CLR 62. In Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited (2008) 167 FCR 372, Rares J expanded upon the procedures to be followed and tests to be applied under s 31A in the following terms, at [45]:The character of a judgment under s 31A is identified by the test which the section prescribes. The judgment is a determination that the proceeding or part of the proceeding ... “has no reasonable prospect of success”. Thus, when the Court gives judgment for a party under s 31A (1) or (2) it is exercising a jurisdiction similar to the implied or inherent power of the Court to protect its own processes from proceedings which are an abuse of those processes. By enacting s 31A, the Parliament broadened the categories of case in which the power summarily to determine proceedings could be exercised. It is inherent in the power conferred by s 31A that the Court need not, and does not ordinarily determine the proceedings on their merits after a full trial. A decision under s 31A is that the claim or defence has "no reasonable prospect of success". It is not that the claim or defence has been proved so that the right or cause of action or defence merges into judgment and loses its independent existence: Blair v Curran[1939] HCA 23; (1939) 62 CLR 464 at 531-532 per Dixon J. Rather, the power conferred by the section authorises the Court to make a decision summarily that there is no reasonable prospect that if a trial were to take place the claim or defence would succeed. The section requires a prediction of the outcome of a trial on the merits but is not an actual adjudication of those merits.

Ratio Decidendi

Legal Principle Established

An express trust may be created either by declaration or by transfer. The reasons for judgment of the learned federal magistrate and the submissions of the parties to the appeal, save for Ms George, proceed upon the assumption that a transfer or assignment of the Pullenvale property or the Moggill property, as the case may be, was necessary in order that it be held on trust by Ms George. This is wrong. At the time of each of the alleged written declarations, Ms George was already the registered proprietor of the land in question. This being so, the position is as stated in Heydon JD and Leeming MJ, Jacobs’ Law of Trusts in Australia (7th ed, LexisNexis Butterworths, 2006) (Jacobs’) at [622] and [623]:Declaration of Trust[622]The second principal mode by which a trust may be constituted is by declaration. What is required is a statement, intended to be final and binding, that property owned by the settlor is thereafter held on trust for another. … No consideration is required. Because the trust property is already owned by the trustee, the principles in Milroy v Lord do not apply; indeed, that is the force of Milroy v Lord.[623]The declaration must be manifested in writing signed by the person making the declaration if the trust property is land or any interest in land. … [Footnote references omitted] In respect of the need, referred to in para 623 of Jacobs’, for a declaration to be in writing if the trust property is land or an interest in land, the learned authors cite s 23C(1)(b) of the Conveyancing Act 1919 (NSW) and its interstate equivalents. In Queensland, that equivalent is s11(1)(b) of the Property Law Act 1974 (Qld) (Property Law Act), which provides:11Instruments required to be in writing (1)Subject to this Act with respect to the creation of interests in land by parol—…(b)a declaration of trust respecting any land must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will If nothing else, the alleged indorsements on the respective copies of the Trusts Act 1973 (Qld) (Trusts Act) were a manifestation in writing and signed by the person able to declare a trust, Ms George. Ms George complied with this necessary formality in relation to the holding of land in Queensland on trust. Section 109(a) of the Land Title Act 1994 (Qld) (Land Title Act) provides, materially:109 How interest as trustee may be registeredA person may be registered as trustee of an interest in a lot only by the registration of—(a)an instrument transferring the interest to, or creating the interest in favour of, the person as trustee; or(b) a request to vest the interest in the person as trustee.As can be seen, s 109(a) of the Land Title Act draws upon the proposition of general trust law that a trust in respect of property may be created either by assignment or declaration; hence the reference in the alternative to an instrument “creating the interest in favour of” the person as trustee. As its heading indicates, the section is concerned with how an interest as trustee in respect of land or an interest in land may be registered, not with how such an interest may validly be created. Section 110(1)(b) of the Land Title Act permits a registered owner of land in Queensland to lodge an instrument of transfer “to declare that the registered owner holds the interest in a lot as trustee”. This provision is facultative. Such an instrument may be registered. If so, it alerts those who search the title to the existence of a trust in respect of the registered proprietorship of the land in question. It does not, however, have the effect that a declaration of trust in respect of freehold land which conforms with s 11(1)(b) of the Property Law Act is nonetheless ineffective to create a trust in respect of that land if an instrument declaring that the owner holds the land on trust is not registered.The prevailing position in Queensland is accurately summarised thus in MacDonald, McCrimmon, Wallace and Weir, Real Property Law in Queensland (3rd ed, Thomson Reuters, 2010) at [5.100]:No equitable interests in land can be registered under the Land Title Act. The Torrens system is concerned with the registration of, and dealings with, legal estates and interests in land. Generally, equitable interests are kept off the register. This is not to suggest that equitable interests in Torrens land have been abolished. Trusts may be created and a person may be registered as a trustee of an interest in a lot.