Li v Tao

[2023] NSWCA 310

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Li v Tao [2023] NSWCA 310

Hearing dates:

16 May 2023

Date of orders:

15 December 2023

Decision date:

15 December 2023

Before:

Ward P at [1]
Mitchelmore JA at [2]
Kirk JA at [3]

Decision:

1. The appeal is dismissed.

2. The appellant is to pay the respondent’s costs.

Catchwords:

EQUITY — General principles and maxims — Conveyancing — Statute of Frauds — Part performance — High threshold for part performance — Equivocal factors for part performance — Many equivocal acts do not add up to an unequivocal act

EQUITY — Equitable interests in property — Property disputes — Assertion of legal ownership by trustee — Trusts and trustees — Evidence of trust — Where evidence of oral declaration of trust inadmissible under s 23C of the Conveyancing Act 1919 (NSW) — Doctrine in Rochefoucauld v Boustead — Doctrine not limited to where was a conditional assignment or written evidence prevented by fraud — Doctrine not limited to where property was assigned by claimant — Doctrine does not involve weighing up merits of conduct of parties

APPEALS — From finding of fact — Credibility of witnesses — Challenge to credibility finding not made out

Legislation Cited:

Conveyancing Act 1919 (NSW), ss 23B, 23C, 23D, 23E

Property, Stock and Business Agents Act 1941 (NSW)

Cases Cited:

Bahr v Nicholay [No 2] (1988) 164 CLR 604; [1988] HCA 16

Bloch v Bloch (1981) 180 CLR 390; [1981] HCA 56

Cadd v Cadd (1909) 9 CLR 171; [1909] HCA 59

Ciaglia v Ciaglia (2010) 269 ALR 175; [2010] NSWSC 341

Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470

Dunphy v Russell [2018] NSWSC 721

Last v Rosenfeld [1972] 2 NSWLR 923

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Maddison v Alderson (1883) 8 App Cas 467

Nelson v Nelson (1995) 184 CLR 538; [1995] HCA 25

Organ v Sandwell [1921] VLR 622

Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd (2003) ATPR (Digest) 46-242; (2004) Aust Contract R 90-181; [2003] NSWCA 305

Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39

Rochefoucauld v Boustead [1897] 1 Ch 196

Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57

Wratten v Hunter [1978] 2 NSWLR 367

Young v Young (2014) 23 Tas R 76

Texts Cited:

D Heydon, MJ Leeming and PG Turner, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (5th edn, 2015, Butterworths)

PW Young, C Croft and ML Smith, On Equity (2009, Lawbook)

I Spry, The Principles of Equitable Remedies (9th edn, 2014, Lawbook)

James Williams, The Statute of Frauds Section 4 (1932, Cambridge University Press)

William Swadling, “The Nature of the Trust in Rochefoucauld v Boustead”, in C Mitchell, Constructive and Resulting Trusts (2010, Hart Publishing)

YK Liew, “Rochefoucauld v Boustead (1897)” in C Mitchell and P Mitchell, Landmark Cases in Equity (2012, Hart Publishing)

Category:

Principal judgment

Parties:

Cheryl Shu Yan Li (Appellant)
Zhiyong Tao (Respondent)

Representation:

Counsel:

CD Wood SC with T Clear (Plaintiff)
C Truong KC with H Atkin (Respondent)

Solicitors:

Prime Lawyers (Appellant)
Herald Legal (Respondent)

File Number(s):

2022/318631

Publication restriction:

None

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity

Citation:

[2022] NSWSC 1335

Date of Decision:

30 September 2022

Before:

Peden J

File Number(s):

2020/182140

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellant, Ms Cheryl Li, and the respondent, Mr Zhiyong (Tommy) Tao, were in a relationship. In 2015 a house in St Ives in Sydney was purchased and was registered solely in Ms Li’s name. The pair separated in 2018. Mr Tao contended that Ms Li held the house on trust for him, pursuant to an express trust. The primary judge found that there was an oral agreement creating such a trust. Her Honour held that Ms Li could not rely on the writing requirements in s 23C of the Conveyancing Act 1919 (NSW) to resist Mr Tao’s claim, based upon the doctrine of part performance.

There were four issues on appeal. First, whether the primary judge erred in making findings in respect of Mr Tao’s credit. Second, whether Ms Li did in fact declare a trust in the terms contended for by Mr Tao. Third, whether the doctrine of part-performance applied in this case. Fourth, pursuant to a notice of contention filed by the respondent, whether Mr Tao’s beneficial interest could be recognised notwithstanding s 23C under the doctrine in Rochefoucauld v Boustead [1897] 1 Ch 196.

The Court dismissed the appeal (per Kirk JA, Ward P and Mitchelmore JA agreeing), and held as follows:

In respect of the first and second issues:

1. The trust finding was factual and likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge. It is therefore necessary to show that the findings were “glaringly improbable” or “contrary to compelling inferences”, unless the credit findings could themselves be overturned. The appellant’s challenge to the credit findings was not made out: at [50].

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28, applied.

2. The challenge to the existence of the trust turns on the first issue and fails with it: at [34]. The finding of the trust agreement between Ms Li and Mr Tao was not glaringly improbable or contrary to compelling inferences: at [51].

In respect of the third issue:

3. A court of equity will only recognise the interest of party alleging an oral agreement if they can show that they performed acts which are unequivocally, and in their own nature, referable to some such agreement as that alleged. Here, none of the four factors identified by the primary judge was on its own unequivocally referrable to an agreement of the kind alleged: at [58]. Adding together a series of equivocal acts does not an unequivocal act make. The doctrine of part performance does not, therefore, allow Mr Tao to escape the provisions of s 23C of the Conveyancing Act. The primary judge erred in concluding to the contrary: at [61]-[62].

Maddison v Alderson (1883) 8 App Cas 467; Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39, applied.

In respect of the fourth issue:

4. The doctrine in Rochefoucauld v Boustead has four requirements: the defendant has had land conveyed to them on trust; when they received it they knew it was to be held on trust; they now seek to deny the trust by relying on the Statute of Frauds provisions; and they do so in order to claim the land for themselves: at [68].

Rochefoucauld v Boustead [1897] 1 Ch 196, applied.

Cadd v Cadd (1909) 9 CLR 171, [1909] HCA 59; Bloch v Bloch (1981) 180 CLR 390, [1981] HCA 56; Bahr v Nicholay [No 2] (1988) 164 CLR 604, [1988] HCA 16; Nelson v Nelson (1995) 184 CLR 538, [1995] HCA 25, referred to.

5. The requirements were satisfied. Mr Tao and Ms Li agreed that the St Ives property would be conveyed to her, but as trustee holding it in trust for him (a fact, thus, that she knew). Ms Li denies the trust, seeking to rely on Statute of Frauds provisions, and claims the land for herself. That being so, it is competent for Mr Tao to seek to prove by parol evidence that it was so conveyed upon trust for him: at [69].

6. The appellant argued that the doctrine in Rochefoucauld v Boustead should be applied in a narrow fashion, limited to two species: where a settlor assigns the land conditionally, as in an old fashioned mortgage, and in cases where the trustee prevents the writing to come into effect by fraud. There was no good authority for this point, and no principled basis for so limiting the doctrine: at [73]-[77].

Ciaglia v Ciaglia (2010) 269 ALR 175; [2010] NSWSC 341, considered.

Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd (2003) ATPR (Digest) 46-242; (2004) Aust Contract R 90-181; [2003] NSWCA 305, distinguished.

7. The appellant further suggested that the doctrine does not extend to cases where the respondent never had a legal interest in the land: at [78]. Again there was no compelling argument or relevant authority which supported this position, and it was contrary to Victorian authority and, probably, Rochefoucauld v Boustead itself: at [77]-[95].

Organ v Sandwell [1921] VLR 622, applied.

Cadd v Cadd (1909) 9 CLR 171; Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470; Young v Young (2014) 23 Tas R 76; Dunphy v Russell [2018] NSWSC 721, considered.

Wratten v Hunter [1978] 2 NSWLR 367, distinguished.

8. The appellant also suggested that Mr Tao’s claim should not be enforceable because at some stage during the breakdown of the relationship he stopped making the loan payments on the property, contrary to his promise to do so. This argument appeared to be suggesting that this affected an assessment of unconscionability. The doctrine in Rochefoucauld v Boustead does not depend upon some weighing up of the merits of the conduct of the parties. It is sufficient that the requirements of the doctrine are made out. No defence of unclean hands was pleaded. This case falls squarely within the doctrine articulated in Rochefoucauld v Boustead. No extension of legal doctrine is required: at [94]-[95].

JUDGMENT

1. WARD P: I agree with Kirk JA.

2. MITCHELMORE JA: I agree with Kirk JA.

3. KIRK JA: In these proceedings equity is called on to intervene in a dispute over some realty after a relationship breakdown, in circumstances where the property was in one party’s name but claimed beneficially by the other. The claimed arrangement had not been reduced to writing.

4. The appellant, Ms Cheryl Li, and the respondent, Mr Zhiyong (Tommy) Tao, commenced a relationship in late 2014. In 2015 a house in St Ives in Sydney was purchased and was registered solely in Ms Li’s name. The pair separated in 2018. Mr Tao contended that Ms Li held the house on trust for him, pursuant to an express trust. The primary judge, Peden J, accepted evidence given by Mr Tao that there was an oral agreement creating such a trust.

5. Her Honour further held that Ms Li could not rely on the writing requirements in s 23C of the Conveyancing Act 1919 (NSW) to resist Mr Tao’s claim, based upon the doctrine of part performance (no particular reliance was placed on s 54 of that Act). There was some doubt raised in this Court as to whether, in addition to that doctrine, her Honour had relied on some other basis rooted, in particular, on the doctrine for which the case of Rochefoucauldv Boustead [1897] 1 Ch 196 is said to stand. In any event, the respondent filed a notice of contention in Court, without objection, which raised the issue.

6. On appeal there were four principal issues. The first concerned the primary judge’s findings in respect of Mr Tao’s credit, which the appellant challenged on appeal. The second was whether Ms Li did in fact declare a trust in the terms contended for by Mr Tao and found by the primary judge. The latter issue turns on the former, and I shall deal with them together. In my view the challenge to the credit finding fails, which also answers the challenge to the finding of a trust.

7. The third issue was whether the doctrine of part-performance applied in this case. In my view the appellant has made good its challenge on this ground.

8. The fourth issue concerned the alternative means of recognising Mr Tao’s beneficial interest notwithstanding s 23C, being the doctrine in Rochefoucauld v Boustead. I consider that this doctrine does support Mr Tao’s claim. On that basis the appeal should be dismissed with costs.

9. I will address these issues in turn. Before doing so it is appropriate to provide some background.

Background

Commencement of relationship and acquisition of North Ryde property

10. Ms Li and Mr Tao met in July 2014 on what Mr Tao referred to as a “marriage-seeking website”. Mr Tao’s evidence was that he was living in Melbourne at the time. He was not, however, a permanent resident of Australia. The evidence revealed that Mr Tao spent considerable time in China, where he had a young son who lived with his sister. Ms Li was an Australian citizen. She was living in Sydney when she met Mr Tao.

11. The pair met in person in late 2014 and commenced a relationship. From early 2015 Ms Li lived with her sister, Ms Jenny Lee, at a house in North Ryde. Mr Tao was frequently in China and in Melbourne, but lived with Ms Li and her sister in the house when he was in Sydney. Mr Tao began to search for property in Sydney, with a view to sending his son to school in that city.

12. On 20 June 2015 Ms Li attended an auction for a property in North Ryde. She placed the successful bid and paid a 10% deposit using a blank cheque belonging to Mr Tao. Much of the dispute below concerned this property and the circumstances of its acquisition. Ms Li contended that Mr Tao had asked her to purchase a house for the both of them, and that he had left her the cheque for this purpose. Mr Tao contended that Ms Li had used the cheque without authorisation, but that rather than cancelling the cheque and causing her to bear the heavy liability, he had decided to fund the development of the property. He contended that she held the property on trust for him. There was also an issue about an agreement entered into with an acquaintance of Mr Tao’s, concerning investment in the development of the property. The primary judge determined that Ms Li did hold the North Ryde property on trust for Mr Tao. There is no appeal from that determination.

Purchase of the St Ives property

13. Mr Tao’s evidence as to the making of an offer for the St Ives property was that, having identified a suitable school for his son in St Ives, he then noted that the property was for sale by auction. Having inspected it, he directed Ms Lee to negotiate with the agent of the property. He said that Ms Li suggested that her lawyers, Chess Legal, be engaged to assist with the conveyance, and that he “made no objection”. He explained that after noting “that a proposed purchasing price $3,100,000.00 may be accepted”, he went to China urgently for a business trip. His evidence was that Ms Lee then made an offer of $3,120,000 on his behalf, which offer was accepted. Ms Lee, who was called in Mr Tao’s case, gave similar evidence.

14. Ms Li’s evidence differed considerably. She explained that it was she who identified the St Ives Property, and that she sent an email enquiry to the listing agent about this property on 20 July 2015. That email was in evidence. She explained that she attended an inspection by herself on 22 July 2015, an inspection with her sister on 25 July, and an inspection with her sister and Mr Tao on 29 July. Her evidence was that she made an offer for the property, although she says the offer was for “$3.10 million”, as opposed to the $3,120,000 which Mr Tao and Ms Lee both say Ms Lee offered, and which was the ultimate purchase price. There is no documentary evidence indicating by whom the offer was made.

15. Mr Tao’s evidence was that he always understood “[d]uring the whole negotiation process” that he alone was the purchaser, and that he “never considered purchasing the St Ives property with Cheryl together”. In contrast, Ms Li said that she “understood that Mr Tao intended to purchase with me jointly”.

16. On 12 August 2015 copies of contracts for the sale of the St Ives Property were executed. There are two copies of the contract in evidence, one from each side of the transaction. Both copies of the contract list both Mr Tao and Ms Li as the purchasers. One copy is signed by both Mr Tao and Ms Li, the other signed by the vendor. However, Mr Tao’s evidence was that he remembered that only his name was on the contract when he signed it on 12 August 2015. No argument was put on appeal that Mr Tao’s name was there initially, and that Ms Li’s was added later. The evidence in this regard was somewhat inconsistent, but the primary judge did not resolve the issue, and nor was she expressly asked to do so.

FIRB, finance issues and the claimed agreement to hold on trust

17. Before the signing of the contract to purchase the St Ives property, it became apparent to the parties that Mr Tao’s status as a non-resident caused difficulties for acquisition of the property. His evidence was that on 11 August 2015 he directed Ms Li to submit an application to the Foreign Investment Review Board (FIRB) on his behalf, seeking approval for purchase of the St Ives Property. Ms Li’s evidence was that Mr Tao asked her to apply on his behalf for FIRB approval, but denied filing an application. She annexed to her affidavit a copy of a FIRB application which she says Mr Tao filed. The application is not dated. It records the contemplated purchase as being by Mr Tao and Ms Li jointly.

18. Mr Tao deposed that about a week after the FIRB application was submitted he and Ms Li had a conversation to the following effect (as written):

Me: Cheryl, why my FIRB application has not been approved?

Cheryl: I don't know, maybe they are busy at the moment.

Me: If my FIRB application is not approved, I will not able to continue the purchase

Cheryl: You can put my name on it. I can hold the property on trust for you, also I can apply for home loan for the property.

Tommy: You have been bookkeeping for me since we met in July 2014. You know I paid for everything for you. If either my FIRB application or my home loan application is unsuccessful, I would consider adding your name to the contract. I will keep paying for all expenses for this property and you will only hold this property on trust for me for about 2-3 years. We will live here temporarily. When my son is admitted into a private school, I will sell this property using my name. I know Jenny will demolish her property one day. If you hold this property on trust for me, I agree that Jenny and your parents can temporally [sic] live in the St Ives property.

Cheryl: Yes of course, you have spent lots of money for me and forgave my mistake by using your cheque without your consent for biding [sic] the North Ryde Property and indeed you saved me from bankruptcy by settling the purchase of the North Ryde Property. Sure, I just hold the St Ives property for you and will exit from the property once you are able to transfer the property to your sole name. I will also apply for finance for you without making any money from you if you are not able to get a loan.

Tommy: If you can apply for finance, that would be good and I will pay the balance of purchasing price not covered by the loan, and the mortgage interest after the settlement. However, I will also contact my home loan broker to explore my opportunity to apply for a mortgage for the settlement. If finally, I am not able to get a loan, I still can settle the purchase as I have sufficient fund at my Hong Kong stock. Please check with the FIRB application and know the reason why it has not been approved. Please wait for my final decision as to whether I put your name on the contract.

Cheryl: Ok. I will also read FIRB policy and contact them again.

19. The primary judge noted that Mr Tao was not tested on this evidence; that Ms Li simply denied that the conversation took place; but that she did not deny he had paid for all her living expenses, nor that Mr Tao did in fact meet all the costs and expenses of the purchase (at [24]).

20. Various emails were in evidence relating to the FIRB issue, involving Mr Tao, Ms Li, Ms Lau (the solicitor from Chess Legal acting on the purchase) and a mortgage broker. Mr Tao denied sending some of those which had been sent in his name, in circumstances where it was not in dispute that Ms Li had access to his Hotmail account. In any event, the net effect of the emails was that it was suggested that FIRB approval was not forthcoming, but that Ms Li did not need FIRB approval as she was an Australian citizen. Mr Tao claimed that it turned out some years later that approval had been given but he had not been informed of this by Ms Li.

21. These emails provide some context for why in the end the purchase went ahead in Ms Li’s name only, even though Mr Tao’s name had been on the contract.

19. An issue also arose in relation to the financing of the purchase. Mr Tao gave evidence that he had a conversation with his mortgage broker on 24 August 2015 in which his broker advised him that it was unlikely he could obtain a loan of 80% of the purchasing price given his existing debts. Mr Tao’s evidence was that the broker suggested that the loan be only in Ms Li’s name. Mr Tao then said the following conversation took place with Ms Li (as written):

Me: My broker advised me that my loan application was not successful. I will either transfer my fund from Hong Kong for settling the purchaser of St. Ives Property or put you as the only purchaser of St Ives Property. What do you think?

Cheryl: As I said to you before, if you put my name on it, I will hold the St Ives Property on trust for you, also I can apply for home loan for the property, but you shall pay everything for the St Ives Property including maintenance, furniture, renovation, mortgage principal and interest, council and water rate, and any other expenses.

Me: Ok, I agreed to put your name only on the contract.

Cheryl: I really appreciate that you helped me overcome the difficulties in North Ryde property. Without your help, I would have borne a huge liability. I am willing to help you now.

Me: Thanks. Your guarantee reassures me. Let’s continue the purchase then. We have been dating for a while. I cannot predict what will happen in the future for us. However, after about 2-3 years until my son gets admitted into a private school, I will sell this property using my name. I must let you know that I am not sharing this property with you.

Cheryl: I know. Don’t worry. I just hold the property on trust for you. …

Me: Please advise the conveyancing solicitor of the name change and proceed.

23. Ms Li again denied that this conversation occurred as alleged.

24. On 26 August 2015 Ms Li sent an email to Ms Lau which read:

This is to inform you that Zhiyong Tao and I have already decided not to have his name on the contract of 7 Douglas St, St Ives when the property is settled.

Please let me know if you need to negotiate with the vendor’s solicitor now or we just wait till the settlement comes but still be able to avoid paying stamp duty twice.

25. On 1 September 2015 Ms Lau wrote to Ms Li requesting that she “confirm that the property is to be purchased in Cheryl Shu Yan Li's name ONLY for finance purposes. As we need to prepare a statutory declaration on your behalf to reflect this”. In a reply later that day Ms Li said “I hereby confirm that the property is to be purchased in Cheryl Shu Yan Li’s name ONLY for finance purposes”.

26. On 4 September 2015 Ms Lee sent an email to Ms Lau, relaying a communication received from Ms Li and Mr Tao which the couple were unable to send to the solicitor because they were in China. It relevantly read:

As we have decided to put only Cheryl's name on, the loan application is under her name now. So we need a contract page with Cheryl's name and signature on for the banker to assess her loan application.

27. On 17 September Ms Li sent the following email to Ms Lau (as written):

Thank you for your update on my purchase of the property. Noted that purchasers on the cover page of the Contract are Zhiyong Tao and Cheryl Shu Yan Li. However the name shown on Transfer of Land is only Cheryl Shu Yan Li.

Now I have issues pertaining home loan application approval due to the name differences on Contract and Loan assessment document. My broker has tried his best to explained the situation to CBA Victoria (Tommy based in Vic.) and get the documents accepted by its assessment team. However, as the application moved to its document preparation, they did not agree to approve the mortgage because the application is just under my name while the contract involves two names.

Could you please contact CBA as the applicant’s solicitor to help clarify the issues for me with CBA document preparation team …

28. Ms Lau sent an email on the same day, attaching a statutory declaration in which she declared that “[i]t is proposed to transfer the property pursuant to the contract to Cheryl Shu Yan Li only which is not in conformity with the contract” and that “[t]he relationship between the purchaser and the transferee is that of de facto partner”. Mr Tao gave evidence that the declaration was made on 17 September, and it was emailed around that day, although it bears the date of 2 September.

29. Settlement occurred on 23 September 2015, with the property registered in Ms Li’s name only. There was no evidence of what explanation was given to the vendor for omitting Mr Tao from the transfer. Mr Tao, Ms Li and Mr Tao’s son then moved into the St Ives property.

The trust finding and the challenge to Mr Tao’s credibility

30. The primary judge noted, as regards both the St Ives and North Ryde properties, that Ms Li accepted that “other than the loan amounts, almost all the funds for the purchase and construction costs came from Mr Tao and Mr Bao” (at [54(3)]). Mr Bao was the fellow investor in the North Ryde property. Ms Li’s case was that the properties and the payments were made as gifts to her by Mr Tao.

31. Her Honour concluded that Mr Tao and Ms Li agreed to the creation of an express trust in relation to both properties (at [53]). In relation to the St Ives property she said:

[57] I also accept that the conversation prior to the completion of the purchase of the St Ives Property between Mr Tao and Ms Li occurred as Mr Tao deposed and that, together with Mr Tao practically funding the purchase and the other evidence, an express trust arrangement has been demonstrated so that it is appropriate to declare that trust relationship.

32. It seems implicit in her Honour’s judgment that the express trust was created pursuant to an agreement between Mr Tao and Ms Li. Part of that agreement was Mr Tao’s promise that “I will keep paying for all expenses for this property” (see the conversation quoted above at [17]). As noted, Ms Li did not deny that Mr Tao did in fact meet all the costs and expenses of the purchase (at [24]).

33. The primary judge’s finding of a trust was based on a range of evidence, summarised at [54]. That being said, her Honour had earlier noted that “Mr Tao’s case and Ms Li’s defence depend to a great extent on whose evidence is accepted, in light of the objective evidence and the evidence of Ms Lee” (at [9]). Her Honour found Mr Tao to be “a generally honest witness” (at [38]). She said that she considered Ms Li “an unimpressive witness” (at [44]). Reasons were given for these findings. She rejected attacks made on Ms Lee’s credibility (at [49]-[52]).

34. Grounds 4-5 of the notice of appeal challenged the finding that the St Ives property was held on an express trust for Mr Tao. The appellant accepted that the trust finding was a factual one likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence, and that accordingly it was necessary for her to show that the finding was “glaringly improbable” or “contrary to compelling inferences”, unless the credit findings could themselves be overturned: note Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. Thus grounds 1-3 of the notice to appeal challenged credit findings. In substance, the challenge to the trust finding depended on making out errors with respect to the credit findings.

35. In ground 1 of the notice of appeal the appellant said the finding in relation to Mr Tao’s credibility was made in error, and her Honour ought to have found that Mr Tao was an unreliable witness whose evidence should be accepted only if corroborated.

36. Ground 3 of the notice of appeal alleged that her Honour erred in failing to find that Ms Li was a witness of truth. Senior counsel for the appellant indicated near the start of his oral address that ground 3 was not pressed, so no attempt was made to resuscitate the appellant’s own evidence. Ground 2 of the notice of appeal asserted that the primary judge erred in failing to find that Ms Lee was an unreliable witness. When addressing ground 2, senior counsel for Ms Li indicated candidly to the Court that the appellant needed to undermine Ms Lee’s credit, as well as that of Mr Tao, in order to succeed on the fact appeal.

37. The significance of Ms Lee’s evidence was that she had sent a message to her sister on 18 October 2017 which said (as translated): “It is Tommy who owns the house not you. He wants to sell it and you should not have an objection. You are not capable of taking this! Wake up!” That message was sent at a time when a dispute had arisen between Mr Tao and Ms Li as to whether the St Ives property should be sold. The message supports the respondent’s claim that the property was held on trust, as the primary judge noted at [54(4)]. Senior counsel for Ms Li sought to undermine the force of this evidence by pointing to a text exchange between the sisters in which Ms Li asked for Ms Lee to “stand with me”, and Ms Lee responded “If you want me to help you, give me back My No 23” – referring to another property which was the subject of a dispute between the sisters – then adding “If you don’t want to return, I will go and help Tao!”. In the course of oral address, however, it emerged that that text exchange had occurred well after the email of 18 October 2017, although it was not clear precisely when it was sent. Senior counsel accepted that meant that ground 2 fell away, and it was withdrawn.

38. However, ground 1 was not withdrawn, despite the earlier concession that the appellant needed to succeed on both grounds 1 and 2 in order to win on the fact appeal. There is thus some oddity in the appellant’s position.

39. In any event, ground 1 is not made out. Ms Li identified two alleged instances of dishonesty on the part of Mr Tao. The first was evidence given in the course of questioning about the trust agreement with Ms Li:

Q: Was it the case that you felt you didn’t need to document a trust arrangement because you were dealing with family?

A. INTERPRETER: Not necessarily. With a trusted friend it can be done as well.

…

Q. If it was a trust arrangement, you would have documented it, wouldn't you?

A. INTERPRETER: So the thing was between me and my family members and other friends, we don't have the documents, including up to now.

40. The appellant submitted that the evidence revealed two occasions on which Mr Tao had entered into documented trust arrangements with family, and that, therefore, Mr Tao’s assertion was a “lie” made “to advance his case”. Yet Mr Tao’s evidence was not that he never reduced trust arrangements with family members and other friends to writing. The somewhat imprecise statement that “we don’t have documents” does not rise to the level of a definitive assertion that such agreements were never reduced to writing.

41. The first of the arrangements to which the appellant pointed was one between Mr Tao and his sister in which his sister held some shares on trust for him. Mr Tao was shown the document and the following exchange ensued:

Q. And, this is a trust agreement you reached with her?

A. INTERPRETER: Yes.

Q. And, you made sure to document this in writing, didn't you?

A. INTERPRETER: So, at first there wasn't such a document but then the husband of my sister had a different opinion so, actually, we just supplied with this later.

Q. You're just making that up; aren't you? You would always document a trust agreement; wouldn't you?

A. INTERPRETER: No.

42. The existence of this document itself is not inconsistent with Mr Tao’s evidence that “between me and my family members and other friends, we don't have the documents”. He gave a plausible explanation for why the trust arrangement with his sister was reduced to writing relating to the view of his brother-in-law. As the primary judge observed “there was no reason advanced by Ms Li to doubt Mr Tao’s explanation” (at [41]).

43. Ms Li pointed to another documented trust arrangement which involved Ms Lee, amongst others, holding property on trust for Mr Tao. The following exchange occurred in the cross-examination of Ms Lee:

Q. But you, perhaps amongst other people, held property on trust for Mr Tao, didn't you?

A. Yes.

Q. That trust arrangement was documented, wasn't it?

A. I believe so.

Q. Why were you placed in a trustee of that property in Melbourne?

A. Why. Just they ask me to help them to hold a property at that time.

Q. You didn't contribute any funds to the purchase of that property, did you?

A. No.

Q. You were purely holding it on trust for a time?

A. Correct.

Q. Ultimately you transferred it where Mr Tao told you to transfer it?

A. Yes.

44. Again, this does not suggest that Mr Tao lied to advance his case. Ms Lee was the sister of Mr Tao’s girlfriend – it is by no means clear that he would have regarded her as family or a friend in the sense he spoke of when saying that with such people he did not have documents. As the primary judge observed, “Ms Lee performed some work for Mr Tao as an accountant and Mr Tao may have considered any trust relationship with Ms Lee as ‘business’” (at [42]). Mr Tao himself was not asked about this arrangement.

45. The second alleged instance of dishonesty concerns what Ms Li referred to as “conflicting evidence as to a transfer of funds between the Respondent and one of his witnesses”. The funds in question were funds transferred in preparation for settlement of the North Ryde property. Mr Tao deposed (as written):

For preparing the fund for the North Ryde Property and other property purchases, I transferred my money total around $1,023,621.00 in multiple transactions from my Hong Kong personal account to Suqun He’s bank account … as directed and requested by Jenny and Cheryl. As Jenny is an accountant so she suggested a taxation planning that I transferred money into Suqun He’s back account. Suqun He is the sister-in-law of Jenny and Cheryl.

46. In his cross-examination, the following exchange occurred:

Q. You said your sister-in-law gave you some advice about where to transfer that money; is that correct?

A. INTERPRETER: No, Cheryl advised me.

Q. Cheryl advised you. So, Cheryl told you to put it into Suqun He’s account; is that right?

A. INTERPRETER: Yes.

Q. So, it wasn’t Jenny that told you to do that?

A. INTERPRETER: At first she told me so and then I asked Jenny and Jenny said it’s okay.

47. Ms Li says that there was an inconsistency between this evidence, and what Mr Tao said in his affidavit. But in his affidavit, he explained that the money was transferred “as directed and requested by Jenny and Cheryl”. His answers in cross-examination were not inconsistent with this, but merely provided further chronological detail: Ms Li advised him first, and after she was asked, Ms Lee agreed.

48. When Ms Lee was cross-examined, the following exchange occurred:

Q. Okay, so you hadn’t discussed it with Mr Tao before that?

A. There – there were discussion of what account to transfer Mr Tao’s money to purchase properties..(not transcribable)..

Q. So, when you say before that it was the first time you’d–

A. Before the money arrives.

Q. –heard about the money.

A. Before the money arrives, there were discussion on what account to use to transfer Mr Tao’s money.

Q. I see and did [you] give advice to Mr Tao about which account to transfer to?

A. No.

Q. You didn’t? Okay. You certainly wouldn’t have given him taxation advice on that; would you?

A. No.

49. There is some inconsistency between Mr Tao’s evidence in his affidavit that Ms Lee suggested the money be paid into the relevant account for “taxation planning” reasons and Ms Lee’s evidence that she did not do so. The inconsistency appears to be of limited consequence, and relates to the North Ryde property which is not the subject of the appeal. No error is apparent in the statement of the primary judge that she did not “place much weight on those inconsistencies in circumstances where they concerned matters irrelevant to the question of intention about the ownership of the properties” (at [43]).

50. There is no persuasive reason, thus, to disturb the primary judge’s finding that Mr Tao was “a generally honest witness” (at [38]).

51. The finding of the trust agreement between Ms Li and Mr Tao was not “glaringly improbable” or “contrary to compelling inferences”. Mr Tao’s account of the conversation was not inherently implausible, nor was it contradicted by any documentary evidence. Indeed, in the context outlined above there was good reason to accept his evidence.

52. Accordingly, there is no basis to overturn the finding of the primary judge that Ms Li agreed to hold the St Ives property on trust for Mr Tao. Grounds 1, 4 and 5 of the notice of appeal are rejected.

The doctrine of part performance

53. There was no dispute that Ms Li’s agreeing to hold the St Ives property on trust for Mr Tao in August 2015 would, but for s 23C of the Conveyancing Act, have created some interest in land in his favour. What was in issue was whether any such interest was defeated by reason of that section, which is a descendant of the Statute of Frauds. Section 23C relevantly provides as follows:

(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol—

(a)  no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,

(b)  a declaration of trust respecting any land or any interest therein 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 …

(2)  This section does not affect the creation or operation of resulting, implied, or constructive trusts.

54. Section 23E(d) of the Act provides that nothing in ss 23B-23D shall affect the operation of the law relating to part performance.

55. Here, the primary judge accepted that the respondent was able to sidestep s 23C by relying on the doctrine of part-performance. Pursuant to the doctrine, if a party alleging an oral agreement for the creation of an interest in land can show that they performed acts which are “unequivocally, and in their own nature, referable to some such agreement as that alleged”, then a court of equity will recognise the interest: Maddison v Alderson (1883) 8 App Cas 467 at 479; Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39.

56. Where the doctrine is invoked, “the logical order … is first to determine whether the acts performed establish the equity and then, and only then, to refer to the terms of the parol agreement in order to ascertain the terms in which the equity is to be enforced”: Pipikos at [55], see also [99]. Thus one does not begin with the contract and then identify acts which are referable to it. Rather, one focuses on the acts to consider if they are “consistent only with partial performance of a transaction of the same nature as that which the plaintiff seeks to have completed”: at [54]. Further, “payment of money alone is not a sufficient act of part performance because it is an equivocal act not in itself indicative of a contract concerning land”: Pipikos at [89] per Nettle and Gordon JJ.

57. The primary judge identified four acts of part performance which she found unequivocally referable to the agreement in relation to the St Ives property (at [68]):

(1) Mr Tao’s funds were used as a deposit for the purchase of the property;

(2) A contract of sale was signed in both Mr Tao’s and Ms Li’s names, but the property was transferred to Ms Li only for finance purposes;

(3) Mr Tao caused his company to pay Ms Li money so she could obtain a bank loan;

(4) Mr Tao’s funds were used to pay for expenses and interest associated with the St Ives property and Ms Li’s living expenses.

58. In the course of argument on the appeal, senior counsel for the respondent conceded that none of these acts, on its own, is unequivocally referrable to an agreement of the kind alleged. He was right to do so. The first act identified by the trial judge, being payment, cannot of itself constitute an act of part performance. The same is true of the fourth act. Each is consistent with Ms Li’s claim that the house was a gift to her from Mr Tao.

58. As to the second act, putting the property in Ms Tao’s name is obviously not unequivocally referrable to it being held on trust. As for the evidence that this was done for finance purposes, that does little to establish that the property was then to be held on trust. People in a relationship may agree to put property in one partner’s name without necessarily seeking thereby to create a trust.

59. As to the third act, senior counsel for the respondent initially sought to contend that the act was unequivocally referrable to an agreement of the kind alleged on the basis that, because the relationship between the pair was only brief, there could be no other reason for the payment. Unsurprisingly, he abandoned this argument in the course of questioning. Many a payment is made, or property transaction occurs, in a spirit of optimism about a relationship which turns out to be misplaced.

60. The ultimate argument of senior counsel for the respondent was that when all these things are considered together part performance can be made out. In Pipikos the High Court emphasised the high threshold set by the doctrine, rejecting attempts to water down the requirement of unequivocal referability. Mr Tao could not point to any one unequivocally referable act. Adding together a series of equivocal acts does not an unequivocal act make.

61. The doctrine of part performance does not, therefore, allow Mr Tao to escape the provisions of s 23C of the Conveyancing Act. The primary judge erred in concluding that it did. I would uphold grounds 6 and 7 of the notice of appeal on that basis.

The doctrine in Rochefoucauld v Boustead

63. There remains for consideration the alternative way in which the respondent sought to sidestep s 23C, as raised by the notice of contention. This issue was not addressed by the primary judge in light of her Honour’s conclusion on part performance, apart perhaps from a faint allusion at [63].

64. In Maddison v Alderson, at 474, Lord Selborne LC said the following with respect to the doctrine of part performance:

That equity has been stated by high authority to rest upon the principle of fraud: “Courts of Equity will not permit the statute to be made an instrument of fraud.” By this it cannot be meant that equity will relieve against a public statute of general policy in cases admitted to fall within it; and I agree with an observation made by Lord Justice Cotton, in Britain v. Rossiter [11 QBD 130], that this summary way of stating the principle (however true it may be when properly understood) is not an adequate explanation, either of the precise grounds, or of the established limits, of the equitable doctrine of part performance.

65. There are many authorities suggesting that the doctrine of part performance is a manifestation of a broader principle that courts will not permit Statute of Frauds provisions to be used as an instrument of fraud. The term “fraud” here is used in a broad sense that encompasses unconscionable conduct: see eg James Williams, The Statute of Frauds Section 4 (1932, Cambridge University Press) at 222–3 (Williams). In Pipikos, Kiefel CJ, Bell, Gageler and Keane JJ referred to the prevention of unconscionable conduct being the root of the doctrine of part performance: at [58] and [73], note also Nettle and Gordon JJ at [94]; see further Bahr v Nicholay [No 2] (1988) 164 CLR 604 at 656; [1988] HCA 16 per Brennan J.

66. Consistently with the observation of Lord Selborne in Maddison, and taking account of the High Court’s concern in Pipikos not unduly to extend the notion of part performance, it is necessary to look carefully to the grounds and limits of developed doctrines which sidestep Statute of Frauds provisions. As Kiefel CJ, Bell, Gageler and Keane JJ put it in Pipikos at [73], referring to Lord Selborne’s reconciliation of tensions in older case law relating to part performance, that approach “provided an acceptable balance between parliamentary insistence on certainty in dealings in land and curial insistence on the prevention of unconscionable conduct in relation to such dealings”. There is a need for a similar balance in all of equity’s doctrines in this area.

67. There is room for argument as to how to delimit relevant principles here. In Last v Rosenfeld [1972] 2 NSWLR 923, at 927-934, Hope J discussed a number of potentially overlapping doctrines. Here, the respondent appropriately sought to focus on the doctrine articulated in Rochefoucauld v Boustead, decided by the English Court of Appeal in 1897. In that case, Lindley LJ gave the following statement of principle (at 206):

It is further established by a series of cases, the propriety of which cannot now be questioned, that the Statute of Frauds does not prevent the proof of a fraud; and that it is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself. Consequently, notwithstanding the statute, it is competent for a person claiming land conveyed to another to prove by parol evidence that it was so conveyed upon trust for the claimant, and that the grantee, knowing the facts, is denying the trust and relying upon the form of conveyance and the statute, in order to keep the land himself.

68. This statement sets out four requirements: the defendant has had land conveyed to them on trust; when they received it they knew it was to be held on trust; they now seek to deny the trust by relying on the Statute of Frauds provisions; and they do so in order to claim the land for themselves.

69. Those requirements are satisfied here. Mr Tao and Ms Li agreed that the St Ives property would be conveyed to her, but as trustee holding it in trust for him (a fact, thus, that she knew). Ms Li denies the trust, seeking to rely on Statute of Frauds provisions, and claims the land for herself. That being so, applying Lord Lindley’s statement, it is competent for Mr Tao to seek to prove by parol evidence that it was so conveyed upon trust for him.

70. Rochefoucauld v Boustead has been referred to approvingly by single justices of the High Court: Cadd v Cadd (1909) 9 CLR 171 at 187, [1909] HCA 59 per Isaacs J; Bloch v Bloch (1981) 180 CLR 390 at 403, [1981] HCA 56 per Brennan J; Bahr v Nicholay at 656 per Brennan J; see also Nelson v Nelson (1995) 184 CLR 538 at 553 per Deane and Gummow JJ, [1995] HCA 25 at 553, referring approvingly to cases discussing the doctrine. In none of these cases was the doctrine applied or considered in any detail.

71. The appellant did not dispute the availability of some such doctrine, going beyond part performance, as part of the general law of Australia. Nor did she argue that it was excluded in this State by the terms of the Conveyancing Act. Rather, the appellant contends that the doctrine should be applied in a narrow fashion. The core arguments in this respect were as follows:

1. Senior counsel for the appellant suggested that there “are two species of this doctrine of cloak for fraud” insofar as it goes beyond the doctrine of part performance:

The first is the case where you assign an interest in land that you own, but you do so conditionally, and the mortgage cases were an example of that [referring to instances where the loan is secured in an old-fashioned way by conveyance of the property to the lender]. The second is where by some fraudulent means such as misrepresentation, you prevent the bit of writing coming into effect. We say that that accurately marks the limits of the doctrine of cloak for fraud …

2. In any event, and consistently with the way in which the first category is identified, the doctrine does not extend to a case such as this where the respondent never had a legal interest in the land, but at most had only an equitable right to seek specific performance based upon his name being on the contract to purchase the land. Giving up that right was not enough for equity to override the statutory provisions requiring writing.

72. The appellant is correct to submit that simply relying upon the Statute of Frauds provisions by itself is not a species of fraud: note Pipikos at [148] per Edelman J. However, the principle in Rochefoucauld v Boustead provides conditions under which reliance on that statute will not be countenanced. It is not necessary here to consider whether some theoretical basis can be identified uniting all of the ways in which equity allows sidestepping of the Statute of Frauds provisions: cf Bahr v Nicholay at 656 per Brennan J. A reason why equity is prepared to intervene in trust cases of the kind at issue was given by ICF Spry: “fraud in the relevant sense arises if a person, such as a trustee, who has accepted property in a fiduciary capacity attempts to set up an inconsistent personal claim” – The Principles of Equitable Remedies (9^th edn, 2014, Lawbook) at 259. A trustee has a fiduciary duty to the beneficiaries of the trust. That is not to say that equity is granting a remedy for breach of fiduciary duty. Rather, the particular nature of the office of trustee, and the fact that the land was only ever obtained and held in that capacity, is sufficient to move equity to prevent a defendant from using the absence of writing to facilitate misappropriation of the beneficial interest. This understanding is sufficient to recognise the justice in the doctrine in Rochefoucauld v Boustead, where that doctrine is sufficient to resolve this case.

73. The appellant’s argument that the “cloak for fraud” notion was limited to two species was founded to a significant extent upon the following statement by Williams in his 1932 text (at 223), which was quoted by White J in Ciaglia v Ciaglia (2010) 269 ALR 175; [2010] NSWSC 341 at [82]:

The Courts of Equity have, however, restricted the operation of this principle to two classes of case, viz:

(i) Cases where one party has partly or wholly performed his side of the contract, and the other thereupon, designing to secure the benefit of such performance without performing in return the obligations which the contract imposes on him, sets up a plea of non-compliance with the Statute; and

(ii) Cases where such a plea is set up by one who has by fraud prevented the execution of a sufficient writing.

74. White J did not indicate in Ciaglia that this delineation adequately captured relevant principles. Review of the chapter in Williams from which the quotation is taken indicates that it did not do so. Notably, the author makes no reference to Rochefoucauld v Boustead.

75. The appellant also sought to rely on Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd (2003) ATPR (Digest) 46-242; (2004) Aust Contract R 90-181; [2003] NSWCA 305. Young CJ in Eq there said the following (with the agreement of Meagher and Beazley JJA):

[68] Under the Statute of Fraud cases, relief can only be given if, in the words of Pomeroy (iii para 921):

The plaintiff must be induced through the deceit, false statements, or concealments of the other party to waive a written instrument, and to rely upon the parol undertaking.

or where the doctrine of part performance applies so that the contract has been partly executed and it would be fraudulent not to enforce the whole contract. There have been judicial warnings that courts should not increase the scope of this principle, for instance Lord Redesdale said in Lindsay v Lynch (1804) 2 Sch & Lef 1, that relaxation of the Statute of Frauds has been a ground of much perjury and much fraud.

[69] In ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697 at [336], Barrett J took the view that “the Statute of Frauds cannot be used as an instrument of fraud is limited to cases in which the legal owner of property has only obtained its legal title by acceding to the existence of a trust.” This point was not argued before us, but it is probably correct. This shows that it is unwise to think of the maxim “Equity will not allow a Statute to be used as a cloak for fraud” as having a wide operation.

76. The appellant relied upon what was said at [68]. The significance of that paragraph was overstated. The case did not concern Statute of Frauds type provisions but rather consumer protection type provisions in the Property, Stock and Business Agents Act 1941 (NSW). The paragraphs quoted were part of a brief discussion of the ways in which equity “will not allow a statute to be used as a cloak of fraud” (quoting [65]). The case did not concern the doctrine in Rochefoucauld v Boustead. And in any event, what was said at [69] indicates that [68] was not attempting an exhaustive description of relevant principle, as [69] appears to go beyond [68].

77. There is no need to attempt to shoehorn the doctrine in Rochefoucauld v Boustead into the two limited categories articulated by the appellant, nor any justification for so doing.

78. The appellant’s broader point was that the doctrine does not extend to a case such as this where the respondent never had a legal interest in the land. The appellant argued that the person claiming a beneficial interest must also have been the previous legal owner, who transferred the property to defendant. On this view, the difficulty with the present case is that the property was transferred by the third party vendor to Ms Li. Moreover, the transfer was not made conditional by the third party upon Ms Li’s holding the property on trust for Mr Tao.

79. In Rochefoucauld v Boustead itself the lands in question had been owned by the plaintiff but were mortgaged to two successive mortgagees, who sold the lands to the defendant. The plaintiff claimed, and the Court of Appeal found, that the lands were conveyed on the understanding between the plaintiff and the defendant that the latter would hold them on trust for the former. The Court held that Statute of Frauds provisions did not prevent reliance on the plaintiff’s (unwritten) evidence of the trust. Although the plaintiff there had been the legal owner (at least at some stage), nothing in the case suggests that it must be the transferor who imposes a condition on the transferee’s acquisition of the property. The core statement of principle by Lindley LJ, quoted above at [67], does not include such a requirement. And the property was actually sold by the action of the mortgagees.

80. Indeed, it is not clear from the report of that case whether or not the plaintiff had retained legal ownership of the estates prior to the sale to the defendant, or it was held by the mortgagees. It has been suggested that it was likely to be the latter: YK Liew, “Rochefoucauld v Boustead (1897)” in C Mitchell and P Mitchell, Landmark Cases in Equity (2012, Hart Publishing) at 424-425. If so, the plaintiff held only an equitable interest – the equity of redemption – at the time she agreed with the defendant that he would acquire the estates on trust.

81. Consistently with that understanding of the doctrine, in Cadd v Cadd Isaacs J said that “repudiation by any person of the terms upon which he has been entrusted with the legal title to property is a fraudulent use of another's confidence, and the Statute is not intended to cover fraud” (at 187). More recently, in Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470, Jenkinson J said that “equity regards as a fraud denial of the trust by a person taking an interest in land as trustee and permits the beneficiary of the trust to prove it by parol evidence and enforces the trust against the trustee and those claiming through the trustee” (at 479). Similarly, Sackville J said in the same case that “where land is transferred to a person absolutely, but the transferee undertakes to hold it on trust for another person, the beneficiary may prove the existence of the trust by parol evidence and obtain remedies requiring the trustee to give effect to the trust” (at 481-482). None of these statements requires that the beneficiary of the trust was the transferor.

82. An important case for current purposes is the decision of the Full Court of the Victorian Supreme Court in Organ v Sandwell [1921] VLR 622. A married couple paid their income and savings into a bank account in the wife’s name. Some land was purchased in the name of the wife using funds from the account, and a house was erected on the land using those funds. It was established that the couple had verbally agreed that “the land and house should be held by the wife in trust for herself and the plaintiff, substantially on a joint tenancy” (at 629). After the wife’s death her executor sought to deny the trust. The husband prevailed.

83. Senior counsel for the appellant in the present case sought to distinguish Organ v Sandwell on the basis that, there, “the husband provided all of the funds, and there was an agreement, and the judge at first instance was very critical of the brother-in-law who he said knew a lot more about what was going on than he let on, and perhaps procured the will”. As to the point about the provision of funds, there was some dispute about that, which the Full Court did not consider it necessary to determine (at 629). As to the point about the defendant executor, the trial judge’s scepticism about him (see at 626-627) formed no part of the reasoning of the Full Court.

84. The Full Court’s statement of principle was as follows (at 630):

What may be the precise limits to be assigned to the operation of this doctrine, and how much actual operation it may leave to the Statute in cases of verbal agreements to create trusts, may be difficult to define. But it is clear that the doctrine takes out of the Statute cases in which any person has become possessed of the property of another upon an agreement to hold that property on certain trusts, and where he or his representatives insist upon claiming to possess the property free from such trusts. To make use of the Statute to smother the proof of such an agreement is itself a fraud.

85. That statement encompasses cases, like the one before that court and like the present case, where property is transferred by a third party to a transferee, who has already agreed with the claimant to hold that property on trust for the claimant upon acquisition of the property, and where there is no suggestion that the transferor was party to or aware of the agreement. The case stands squarely against the arguments of the appellant, and offers direct support for the claim of Mr Tao.

86. Senior counsel for the appellant argued that Organ v Sandwell “would fall to a resulting trust analysis in modern thinking because it was simply a case of the husband had provided the whole of the proceeds”. Yet that was not how the issue was approached by the Full Court, and, as noted, that fact was not found by the Full Court. Moreover, the case has been referred to with approval by Brennan J in Bahr v Nicolay at 656 and by Deane and Gummow JJ in Nelson v Nelson at 553. It is also referred to approvingly in leading texts in the context of discussing Statute of Frauds cases: JD Heydon, MJ Leeming and PG Turner, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (5^th edn, 2015, Butterworths) at [12-115]-[12-120]; PW Young, C Croft and ML Smith, On Equity (2009, Lawbook) at [3.520]. The appellant’s attempt to limit the significance of the case should not be accepted.

87. Organ v Sandwell was applied by Blow CJ in Young v Young (2014) 23 Tas R 76. In that case a mother bought a house for her daughter, and paid for it, but on the basis that the beneficial interest belonged to the daughter. The house was bought in the mother’s name because of a concern about the daughter’s estranged husband locating her. It was held that the mother could not later deny the oral promise that the property, when acquired, was to be held on trust. Similarly, in Dunphy v Russell [2018] NSWSC 721 a father and daughter were found to have reached an oral agreement relating to the purchase of some realty, the effect of which was that the father would make a contribution to the purchase price and would have a one-third beneficial interest, with the property to be registered in the daughter’s name. Sackville AJA held that the daughter could not rely on s 23C(1) of the Conveyancing Act to defeat the father’s claim (at [129]-[130]), although Organ v Sandwell was not cited. These two cases are contrary to the appellant’s arguments.

85. The appellant in the present case cited Wratten v Hunter [1978] 2 NSWLR 367 in support of her argument. Needham J there held that the doctrine in Rochefoucauld v Boustead did not apply where an owner of land made an oral declaration of trust, rather than having acquired the land subject to the trust. His Honour quoted (at 370) an extract from the first edition of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, which remains materially unchanged in the present edition (see at [12-125]):

On the other hand the cases on s 7 (which is the predecessor or antecedent of s 23C(1)(b)) directly counter its provisions and appear authority for the proposition that the Statute may not be pleaded by the party holding the land against a claim that he only acquired the land upon trust for the claimant. These decisions turn upon the fact that but for the conveyee's acceptance of the trust the conveyor would never have transferred the land to him; they do not go so far as to waive the statute where A, having acquired land independently, later ineffectively declares himself trustee for a volunteer.

89. The phrase “the conveyor would never have transferred the land to him” might be read as suggesting that it is necessary that the conveyor transferred the land on the conveyor’s understanding that the conveyee would hold the land on trust. But this is not made explicit and is not a limitation which is express in the cases. Organ v Sandwell is to the contrary and, as noted, the learned authors discuss that case with approval. The substance of the point being made is a causal one, namely that the conveyee only obtained the property on the basis that it would be held in trust.

90. In Wratten v Hunter itself it was not the identity of the transferor but the voluntary nature of the declaration which Needham J relied on in reaching his decision, with his Honour saying (at 371):

It seems to me that, unless there is some decision binding on me that in the case of a voluntary oral declaration of trust by a person who is the owner of the whole beneficial interest in land the declaration is unaffected by the statute, it is my duty to apply the statute in accordance with its terms.

91. In the present case there was no mere voluntary declaration of trust. Before the property was transferred to Ms Li and registered in her name, Ms Li and Mr Tao entered into the agreement that the property would be conveyed to her only but held on trust, in whole, for him. It is true that both Ms Li’s and Mr Tao’s names were on the contract to purchase the property, albeit there was some unresolved dispute as to when and how Ms Li’s name came to be so (see above at [16]). Yet it was only Ms Li who became the registered proprietor, and this occurred after the agreement that she would hold the whole of the property on trust. She never held any legal interest in the property prior to the agreement that she would hold that interest on trust; the land was only conveyed to her, alone, on the basis of her acceptance of the trust.

92. Further, even if the doctrine did require that the claimant had given up an interest in the property (contrary to the decision in Organ v Sandwell) that would have been satisfied here in any event. At the time the oral agreement between Mr Tao and Ms Li was entered into – and assuming that both names were already on the contract of purchase at that point – both parties had an equitable interest in the property in the form of a possible right to specific performance of the contract: note Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [45]-[53]. Mr Tao gave up that right by agreeing that the property be transferred only to Ms Li. Senior counsel for the appellant contended that where the interest was only equitable the principle did not apply. No reasons for this argument were clearly articulated, except “because the authorities have applied the doctrine in a narrow sense”. The argument appears inconsistent with Rochefoucauld v Boustead itself, taking account of what is said above about the plaintiff there seemingly only having had an equitable interest at the time the defendant bought the estates.

93. Senior counsel for the appellant also seemed to argue that, even if the doctrine applies, Mr Tao’s having only an equitable interest should alter the application of the doctrine, contending that “then the outcome would be that it's only as to a half interest that the transfer is made”. But this ignores the fact that the agreement was that Ms Li would hold the whole of the property on trust for Mr Tao, and she acquired sole legal title on the basis of that agreement.

94. The appellant made some faint suggestion that Mr Tao’s claim should not be enforceable because at some stage during the breakdown of the relationship he stopped making the loan payments on the property, contrary to his promise to do so. This argument appeared to be suggesting that this affected an assessment of unconscionability. In Pipikos it was explained that the doctrine of part performance is distinct from equitable estoppel, despite a common root of a concern to prevent unconscientious conduct (at [58]). Similarly here, the doctrine in Rochefoucauld v Boustead does not depend upon some weighing up of the merits of the conduct of the parties. It is sufficient that the requirements of the doctrine are made out. No defence of unclean hands was pleaded.

95. It can be accepted that courts should not readily extend categories where Statute of Frauds provisions are sidestepped. However, this case falls squarely within the doctrine articulated in Rochefoucauld v Boustead as applied in Organ v Sandwell. No extension of legal doctrine is required. Ms Li only obtained her full and sole legal title to the St Ives property on the basis of her acceptance of a trust. Consistently with longstanding authority, she cannot invoke s 23C of the Conveyancing Act so as to seek to defeat the legitimate claim of the beneficiary to his trust property.

96. The ground raised in the notice of contention should be upheld.

97. Some submissions were made on the question of whether the Court is then giving effect to the express trust or to a constructive trust. That issue has been the subject of some (strongly expressed) academic debate: cf YK Liew’s chapter, referred to above, with William Swadling, “The Nature of the Trust in Rochefoucauld v Boustead”, in C Mitchell, Constructive and Resulting Trusts (2010, Hart Publishing). It was not suggested by either party that the issue affects the orders that were made by the primary judge. It is thus unnecessary to weigh into the quarrel.

Conclusion

98. In light of the above analysis the primary judge reached the correct conclusion, albeit for reasons which differ somewhat from those given by her Honour.

99. Ms Li made some brief written submissions directed to appeal ground 11 to the effect that the primary judge erred in making orders for the Registrar to execute necessary documents for the transfer of the St Ives property without first ordering that she was entitled to an indemnity as trustee. Yet the orders made by her Honour also allow for distribution of the net proceeds of any sale of the property “in accordance with the entitlements determined by agreement, or failing such agreement, by directions to be made by the Court”. That order protects any claim Ms Li may have as trustee.

100. The orders of the Court should be as follows:

1. The appeal is dismissed.

2. The appellant is to pay the respondent’s costs.

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Decision last updated: 15 December 2023