Kinton and Kinton and Anor

[2008] FamCA 767

FAMILY COURT OF AUSTRALIA

KINTON & KINTON AND ANOR [2008] FamCA 767

FAMILY LAW – PRACTICE AND PROCEDURE – Summary dismissal – Application of the Limitation Act 1969 (NSW) – Whether any breach of trust which occurred is time barred

Family Law Act 1975 (Cth)

Lindon v The Commonwealth (No 2) (1996) ALJR 541

Nuthall and Nuthall [2001] NSWSC 90.

APPLICANT: Ms Kinton

FIRST RESPONDENT: Mr Kinton

SECOND RESPONDENT: Mr J Kinton

FILE NUMBER: SYC 4054 of 2007

DATE DELIVERED: 4 September 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Fowler

HEARING DATE: 27 August 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Foster

COUNSEL FOR THE RESPONDENT: Mr Stewart

COUNSEL FOR THE INTERVENOR: Mr Jackson

Orders

1. That orders sought by the wife against the second respondent and numbered 1, 2, 3, 4, 5, 6, 7, 8, 10 and 13 be and are hereby summarily dismissed.

2. Should there be any application for an order for costs then any applicant party must file and serve within 28 days of the orders herein made any such application that they might wish to make.  Any application is to be accompanied by any affidavit material setting forth any evidence in chief on which they wish to rely, together with any written submission in support of that application.

3. Any respondent party must file within a further 14 days a response, together with a written submission in support of that response, and any affidavit material, setting forth any evidence in chief on which they wish to rely.

4. Any applicant will have a further 7 days in which to file any submission or evidence in reply.

5. In the event that no application is filed within the time limit there will be no order as to costs.

IT IS NOTED that publication of this judgment under the pseudonym Kinton and Kinton and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4054  of 2007

MS KINTON

Applicant

And

MR KINTON

First Respondent

MR J KINTON

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. The wife in these proceedings provided money to her son.  She asserts that she has as a result of that provision and the use of the monies interests in land and in the proceeds of the sale of land acquired by him.

2. She also claims to be a creditor of the son’s with respect to an amount advanced to the son of $5,000.

3. The issues for determination were whether these claims should be summarily dismissed, if they were justiciable at some time are they now barred by the Statute of Limitations, or is there a justiciable controversy to be tried.

4. The wife in her application filed in these proceedings seeks the following orders against the son:

   “1.Declaration that the second respondent holds 50% of his interest in the property situate at and known as [O property] as trustee for the applicant.

   2.Order that within 28 days of the date of these orders, the second respondent pay to the applicant a sum equal to 50% of the agreed nett equity of the property situate at and known as [O property].

   3.Declaration that the second respondent holds 1/3 of the sale proceeds of the property situate at and known as [B property] as trustee for the applicant.

   4.Order that within 28 days of the date of this order, the second respondent pay to the applicant a sum equal to one third of the sale proceeds of [B property] after deduction of legal and other costs of sale together with interest at the prescribed rate calculated and compounding monthly from the date of sale to the date of payment.

   5.Order that within 28 days of the date of this order, the second respondent pay to the applicant a sum equal to $5,000.00 together with interest thereon at the rate of 5% per annum as from 31 October 1997 to the date of payment to the applicant.

   6.Order that in the event that the second respondent fails, refuses or neglects to comply with these orders or any of them, then the second respondent shall forthwith do all acts and things and sign all documents necessary to cause the sale of the property at [O] by public auction at the best price reasonably obtainable.

   7.Pending the sale of the said property known as [O property], the Second Respondent shall pay and bear, as and when they fall due, all instalments of principal and interest (including arrears, if any) in relation to water rates, land rates and all other outgoings in respect of the said property and the Second Respondent shall indemnify the Applicant in relation thereto.

   8.Order that forthwith upon completion of the sale of the property referred to in order 6 herein, the second respondent cause the sale proceeds to be applied in the following manner and priority:

   aIn adjustment of municipal and water rates.

   bTo the agent in payment of his/her proper costs and disbursements.

   c.To the lawyer acting for the parties on the sale of the Property in payment of his/her proper costs and disbursements.

   d.In payment of the balance then remaining in the following proportions:

   i.the sum payable to the applicant by the second respondent pursuant to these orders together with interest at the prescribed rate calculated and compounding monthly from the date of these orders until payment in full.

   ii.the remainder to the second respondent

   …

   10.Order that the first and or the second respondent deliver up possession of the following items to the applicant in good working order:

   Timber table

   Black portable chair

   Plants from the [R] property

   Wooden step ladder

   Large rag doll

   2x wooden picture frames

   Remote control for TV

   Antique hand mincing machine

   Quantity of bed linen, blankets, pillows, doonas, and bath towels

   2x gold chain and rings

   Shoes, clothing, train and car sets and personal effects

   2 x new purses

   2x pink vases

   2 containers holding $1,000.00 in cash

   Box of toys

   Red picnic table and chairs

   Boxes of personal paper

   3 carpet rugs

   Lace curtain material

   6 books belonging to an Encyclopaedia collection

   Braun electric jug

   Sunbeam electric frypan

   Toaster

   Wooden square table with lace cloth covering

   Green vase

   Scissors

   Grocery items

   Crockery and glassware

   Marble top coffee table

   Various umbrellas

   Rugs

   Books

   18” German shepherd figurine

   Small crotched blanket

   Little table with lace cloth

   Large doll

   Quantity of Golden story books

   Bills file and receipts

   Hand made needle work cloth

   Contents of freezer

   A pair of ornamental door knobs

   Clay pot items

   Quantity of glassware

   Antique glass door knob

   Cooking utensils including cake tins, trays, microwave cooking plates and trays

   Green crochet flannel

   Toiletries including face creams, soaps, toothpaste and brushes

   Various ornaments

   Small stand covered with hand worked needlecraft

   Red glass ornament

   Venetian fluted dish

   Stuffed toys

   Small framed tapestry

   Gardening tools including long handed spade, long handed tree clippers and scythe

   Fertilisers

   Soap powder

   Watering cans, garden pots, potting mix, 6 foot aluminium ladder

   Garden ornaments

   Hanging and large ceramic pots

   4 x full length rubber backed gold curtains and attachments including rods

   2 cameo brooches, one hollow and one solid.

   13.That the first and the second respondent jointly and severally pay the applicant’s costs of and incidental to these proceedings.”

5. The son seeks that the orders numbered 1, 2, 3, 4, 5, 6, 7, 8, 10 and 13 be summarily dismissed and an order for costs.

6. In addition to filing an affidavit in relation to the current application the wife supplied a statement of her claim against the son in the following terms:

   “PLEADING FOR [THE WIFE]”

   1.On the 9 August 1985, the applicant and the second respondent purchased the property situate at and known as [O] in the State of New South Wales [“O Property”] in the sole name of the second respondent.

   2.In the alternative, on the 9 August 1985, the second respondent purchased the property situate at and known as [O property] in the State of New South Wales (“[O property]”) in his sole name.

   3.[O Property] was purchased for the sum of $74,000.00 of which sum, the applicant paid 50% thereof.

   4.At no time has the applicant transferred or intended to transfer or assign part or all of her interest in [O property] to any other person.

   5.The applicant seeks a sale of [O property] and the equal distribution of the sale proceeds after deduction of legal and other costs of sale.

   6.In the alternative, the applicant loaned the second respondent the sum of $37,000.00 on or about the 13 June 1985.

   7.Following that loan, the parties entered into a Deed of Loan Agreement (“The Deed”).

   8.Pursuant to the Deed, the loan made by the applicant is to be repaid upon a sale of [O property] and the quantum of amount owing and payable to the applicant is equal to 50% of the sale proceeds of [O property] after deduction of legal costs and other costs of sale.

   9.The applicant seeks a sale of [O property] and the equal distribution of the sale proceeds after deduction of legal and other costs of sale.”

Background Facts

In relation to the wife’s claims in relation to O property

1. In August 1985 the parties’ son, the second respondent (herein referred to by me as “the son”) acquired the legal title to the property situate at O for the purchase price of $75,000.

2. The property was subject to a mortgage securing advances from the Commonwealth Savings Bank in the sum of $30,000.

3. The applicant wife asserts either an equitable interest in the property by reason of contribution of half the purchase price, or in the alternative the wife asserts a loan of $37,000 on or about June, July or August 1985 on terms.

4. Subsequent to the purchase the parties enter into a deed.  A copy of the deed is tendered to the Court and although bearing no date of execution was stamped by the Office of State Revenue in March 2007.  It also was tendered with handwritten amendments.  It is agreed that the deed is executed by each of the wife and the second respondent and is in the following terms:

   “THIS DEED is made the              day of           19       .

   BETWEEN [THE WIFE] of            in the State of New South Wales (“the lender”) of the one part;

   and [THE SON] of              in the State of New South Wales (“the borrower”) of the other part.

   WHEREAS

   A.On 13 June 1985 [the son] purchased property known as [O property] being Lot […] deposited plan […] (illegible),000.00 (“the purchase”).

   B.To complete this purchase [the wife] at the request of [the son] advanced to [the son] 50% of the sale price being $37,000.00 upon having the repayment of this total sum secured in the manner outlined.

   C.Both acknowledge and agree that the terms of this loan advance were orally agreed at the time of the advance and purchase of the property in 1985 and now seek to record same in writing to avoid any dispute in relation thereto.

   D.NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED AND DECLARED AS FOLLOWS:

   1.In consideration of the loan advance sum of $37,000.00 advanced by [the wife] to [the son] on/or about 13 June 1985 for the purchase of the property (receipt of which borrower hereby acknowledges) the borrower agrees that the said sum and any further advances from the lender are to become due and payable and in the following manner:-

   a)upon a sale of the property;

   b)upon the death of the borrower [the son].

   2.The lender and the borrower both acknowledge and agree that the principal sum for the purchase and any later advances to assist in improvements to the property made by the lender shall be interest-free but re-payable as follows:

   3.(i)        Upon a sale of the property by the ^borrower _lender
   [the son] both parties agree that the
   re-payment of all loan advances made by the
   ^lender _borrower, is to be paid in full by receipt of 50% of the nett proceeds from the sale.

   (ii)upon the death of [the son] all loan amounts shall become due and payable and repayment is to be the amount of 50% of the nett sale proceeds upon a sale of the property being effected by the legal representatives of the lender within 12 months of the date of his death, OR alternatively, by payment of 50% of the value of the property as at the date of death as agreed by the parties or determined by a licensed registered valuer as agreed by the parties or railing agreement then appointment of a valuer by the President of the Institute of Valuers for the time being at the request of either party or their representatives.  Such sum to be paid within
   3 months of the date of the valuation – the costs of the valuation to come out of the sale proceeds.

   3.Upon the death of the lender [the wife], her interest in the property and as recorded in this Deed shall pass to _{her legal personal representative of her estate} ^{[the son]}.

   4.The parties acknowledge that the lender continued to make further loan advances for payment of 50% contribution to the rates on the property since the lenders purchase.

   5.a)        the _buyer ^borrower acknowledges and agrees that the lender may lodge a caveat over the said property [O property] to secure the loan advance as recorded under this agreement;

   b)The borrower agrees to sign all documents presented to him to record the caveat upon request by the lender.

   6.The parties acknowledge and agree that payment of stamp duty on this agreement shall be paid in full by the lender.

   7.[The son] also acknowledges that in the event of his death and in the absence of his Will expressing same that [the wife] has an equitable interest to 50% of the sale proceeds in the said property resulting from the loan agreement as recorded in this Deed.

   8.Service of any notices required pursuant to or under Deed may be served in the manner prescribed by Section 170 of the Conveyancing Act, 1919 (as amended) New South Wales.

   9.The parties acknowledge that the repayment of the loan advances as noted and recorded in this Deed may be secured by way of charge over the sale proceeds of the property.

   10.This Deed represents the entire agreement between the parties in relation to this property.

   IN WITNESS THEREOF the parties hereunto subscribed their hands and signed this document first herein before written.

   EXECUTED AS A DEED

   SIGNED SEALED AND DELIVERED BY    )
   [The wife]  )
   IN THE PRESCENCE OF:  )         [Signed]
   [Signed:  the wife]
   [Wife’s name]

   SIGNED SEALED AND DELIVERED BY    )
   [The son]  )
   IN THE PRESENCE OF:  )         [Signed]
   [Signed:  the son]
   [Son’s name]”

1. Each of the son’s and the wife’s counsel has said that I should, at this time, not be troubled by any dispute as to the handwritten amendments to the document.

2. The deed is stamped at rates applicable to a deed securing an advance rather than those applicable to a deed of trust.

3. The son is alive.

4. The mother is alive.

5. The property has not been sold.

6. In relation to this property the wife says relevantly in her affidavit filed:

   “7.In or about May- June 1985 the Second Respondent requested I advance to him an amount of $37,000.00 to meet fifty percent of the purchase costs of a property situate and known as [O property]).  To the best of my knowledge and belief contracts for the purchase of the said property were exchanged on 13 June 1985.

   8.I advanced the sum of $37,000.00 to the Second Respondent in or about late July 1985- early August 1985 and to the best of my knowledge and belief the said $37,000.00 was used to complete the purchase of [O property] on or about 9 August 1985.  The property was purchased in the sole name of the Second Respondent and he remains the sole registered proprietor of that property.  I say however that at the time I advanced to the Second Respondent the amount of $37,000.00 I did so on the basis that such advance would entitle me to fifty per cent of the sale proceeds of the property.  This agreement with the Second Respondent was oral.  I say that I agreed to this arrangement with the Second Respondent on the basis that we would be equal partners in the purchase of the property.  I understood the $37,000.00 advanced by me was 50% of the total purchase costs of the property.  I say that after settlement of the purchase was completed I met 50% of the mortgage repayments in relation to the property and also made payments in respect of council and water rates and taxes, maintenance and repair expenses concerning the said property.

   9.In 1997 I instructed my then solicitor Mr Parsons of WH Parsons and Associates to draft an Agreement between the Second Respondent and I evidencing the oral agreement referred to in paragraph 8 herein.  I annexe hereto and mark with the letter “A” copy undated Deed of Loan Agreement.  I do remember signing the Deed.  It was not signed at my Solicitor’s office.  I signed the Deed at the same time as the Second Respondent and our signatures were witnessed by my sister […].  My sister signed her name at the same time the Second Respondent and I signed the document.  To the best of my knowledge and recollection the Deed was signed in 1997, sometime after 5 November 1997.”

The Law as to Summary Dismissal

1. The requirement of a summary dismissal is that I must be satisfied that the party against whom the application for summary dismissal is brought has no arguable case.

2. The use of the power of summary dismissal must be one which is attendant with caution particularly if there are disputes of fact that will need to be determined in a Court hearing.

3. In determining the application I must accept the version of facts put forward by the wife unless it is inherently incredible.  I otherwise must proceed on the basis that the wife’s version will be accepted at trial.

4. Justice Kirby in Lindon v The Commonwealth (No 2) (1996) ALJR 541 at 544-5 said (footnote omitted):

   “To secure such relief, the party seeking it must show that it is clear on the face of the opponents’ documents, that the opponent lacks a reasonable cause of action…”

5. The power to grant summary dismissal is a discretionary one and I must be satisfied that the application is doomed to fail.

6. It is not in dispute that the wife provided the funds she asserts she provided to the purchase of the property at O.  It was asserted by those representing her that this created a resulting trust in her favour to the extent of the contribution.

7. The wife’s counsel asserted that the fact that the purchaser was her son gives rise to a rebuttable presumption of advancement and in this case it is clear that that presumption is by the deed subsequently executed by the parties and the subject of tender rebutted.

8. I agree that there could not be presumed to be a gift to the son by reason of the advance.

9. Nor however on the basis of that deed would a court declare that the son held the property upon a resulting trust, and the claim of the wife, having regard to the terms of the deed, is inherently not credible.

10. The provision of funds to assist a purchase is not inevitably an act which gives rise to a court declaring a resulting trust in favour of the provider of the fund affording them an interest in the property, especially where as in this case the nature of the relationship between the funder and the funded is specifically set forth in a document which belies the existence of circumstances which might give rise to such a declaration.

11. Were it otherwise, many banks and other lenders would own a lot of property over which they only presently hold security.  The nature of the relationship on the wife’s own evidence between her and the son is that of creditor and debtor, not trustee and beneficiary.

12. I accept that the terms of the loan require the borrower to repay the lender on a sale of the property or on his death, and that the amount required to discharge the loan is calculated by reference to either the sale proceeds or the value of the property.

1. The deed itself in clear and unambiguous terms describes the provision of the funds as an advance and permits the lodgement of a caveat to secure the loan advance recorded in the agreement.

2. The deed also provides an acknowledgement by the second respondent that the wife has an interest in the sale proceeds of the property in the event of his death.  He does not, however, acknowledge that she has any estate of interest in the property.  The deed also creates a charge over the sale proceeds to secure the obligation for repayment when it arises.

3. The deed is expressed to be the entire agreement between the parties in relation to the property.

4. The deed is relied upon by the wife in asserting her claim.

5. None of the conditions precedent to the repayment of the loan having presently arisen and no right of repayment having been thereby crystallised there is in my view no basis on which the wife can seek early repayment of the amount.

6. Accordingly, the claim contained in paragraphs 1 to 9 of her application are dismissed.

In relation to the wife’s claim with respect to the purchase of  B property

1. The wife in her amended application sought the following orders in relation to this property namely:

   “3.Declaration that the second respondent holds 1/3 of the sale proceeds of the property situate at and known as [B property] as trustee for the applicant.

   4.Order that within 28 days of the date of this order, the second respondent pay to the applicant a sum equal to one third of the sale proceeds of [B property] after deduction of legal and other costs of sale together with interest at the prescribed rate calculated and compounding monthly from the date of sale to the date of payment.”

2. The property in B was purchased in the name of Ms C on 29 September 1993.

3. It is common ground that Ms C was at the time a “life partner” of the son, the second respondent.

4. An Agreement was executed by Ms C, the son and the wife dated

   
   

   10 December 1993 which is unstamped but which is in the following terms:

   “AGREEMENT

   THIS AGREEMENT dated 10^th day of December 1993

   BETWEEN[MS C] of […] in the State of New South Wales, [profession].  (“[Ms C]”).

   AND[THE SON] of [O property] in the State of New South Wales, [profession].

   AND[THE WIFE] of […] in the State of New South Wales, Retired.

   WHEREAS:

   We agree that:

   [MS C] appears on Certificate of Title Folio Identifier […] as the registered proprietor of the property known as [B property] in the Shire of […], Parish of […] and County of […].

   Even though [Ms C’s] name is the only name that appears on Certificate of Title Folio Identifier […] [Ms C] is not the sole proprietor of the above property.

   [Ms C] holds an equal one-third share thereof with [THE SON] and [THE WIFE] as joint tenants.

   [THE SON] and [THE WIFE] each hold a equal one-third share in the above property as joint tenants.

   SIGNED by me

   [MS C]

   in the presence of:  [signed]

   [signed]

   AGREEMENT BETWEEN [MS C], [THE SON] & [THE WIFE]

   __________________________________________________________

   SIGNED by me

   [THE SON]

   in the presence of:  [signed the son]

   [signed]

   SIGNED by me

   [THE WIFE]

   in the presence of:  [signed the wife]

   [signed]”

1. The document is not expressed to be a deed nor is it expressed to be signed sealed and delivered nor is it stamped as a deed.

2. In her pleading the wife particularised the following claim:

   “10.On the 29 September 1993, [Ms C], the applicant and second respondent purchased the property situate at and known as [B property] in the State of New South Wales (“[B property]”) in the sole name of [Ms C].

   11.At the time of its acquisition, [Ms C], the applicant and second respondent each acquired a one third share in [B property] as joint tenants.

   12.On the 3 October 1997, the second respondent sold [B property] for the sum of $235,000.00

   13.At no time has the applicant transferred or intended to sever the joint tenancy or transfer or assign part or all of her interest in [B property] to the second respondent or any other person.

   14.The second respondent has failed to account to the applicant for one third of the sale proceeds of [B property].

   15.The applicant seeks payment from the second respondent of the sum equal to one third of the sale proceeds of [B property] after deduction of legal and other costs of sale together with interest at the prescribed rate calculated and compounding monthly from the date of sale to the date of payment.”

3. The wife applied the sum of $60,000 to the costs of purchase of the property.

4. A written agreement was prepared as set out above.

5. It appears that Ms C transferred the registered ownership of the property to the son in December 1994 and the son with the consent of the wife sold the property in October 1997.

6. Counsel for the son submitted that there is no evidence of any fund held by the son representing the proceeds of sale of the property which could be identified as a fund to which the wife could maintain a claim in any event. There is, therefore, no evidence that the trust fund (formerly the property, and now the proceeds of its sale), still exists.

7. The wife does not assert that any of the transactions were subject to fraud.

8. Any breach of trust which occurred by reason of the transfer by Ms C to the son is barred by reason of the operation of the Limitation Act 1969(NSW) Section 48 which provides:

   “An action on a cause of action in respect of a breach of trust is not maintainable if brought after the expiration of the only or later to expire of such of the following periods of limitation as are applicable:

   a)a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims, and

   b)the limitation period for the cause of action fixed by or under any provision of this Act other than this section.”

9. The period of six years has expired since both the transfer of the property to the son and the failure to account to the wife.  The sale was with the knowledge of the wife who witnessed the transfer by the son of the property when he sold it.

10. Accordingly the action is not maintainable by reason of the operation of the Limitation Act 1969 Section 48. See Nuthall and Nuthall [2001] NSWSC 90.

11. It was put by Counsel for the wife that a combination of s27(2) and s36 gave rise to a longer limitation period. But in respect of this property, s27(2) does not apply since it is not an action to recover land. Equally, s36 does not apply because there is no land in which an equitable interest in land is held and could be claimed.

12. It was asserted that a longer period of limitation was applicable to the cause of action by reason of the containment of the trust in a Deed.  I reject that submission since the document does not meet the requirements of a Deed.  It is an agreement.  It does not identify itself as a Deed nor is it expressed to be signed sealed and delivered nor is it stamped as a Deed.

13. Accordingly the wife’s claim under this heading will also be dismissed.

14. There is no evidence of any application before the Court to seek to extend the limitation period and no evidence of any application before the Court to seek to rectify any document.

In relation to the wife’s claim for the repayment of the sum of $5,000

1. In relation to this order the wife pleads:

   “16.In or about 1995, the applicant lent the second respondent the sum of $5,000.00 to enable the acquisition of a property in the State of Tasmania.

   17.The applicant has requested the second respondent to repay the $5,000.00 but the second respondent has failed to do so.

   18.The applicant seeks payment from the second respondent of a sum of $5,000.00 together with interest at the prescribed rate calculated and compounding monthly from the date of the loan to the date of payment.”

2. This claim arose out of a loan repayable on demand made by the wife to the second respondent.  The wife sought an order:

   “5.That within 28 days of the date of this order the second respondent pay to the applicant a sum equal to $5000.00 together with interest thereon at the rate of 5% per annum as from the
   31 October 1997 to the date of payment to the applicant.”

1. Before me on hearing it was conceded that being such a loan the Limitation period was calculated from the date of its making and that limitation period had expired.  Accordingly, that claim is also dismissed.

I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.

Associate: 

Date:  4 September 2008