Loone v Tasmanian Trustees Ltd
[1987] TASSC 56
•27 October 1987
TASSC A52/1987
CITATION: Loone v Tasmanian Trustees Ltd [1987] TASSC 56; (1987) Tas R 146; A52/1987
PARTIES:LOONE, NANCY MARGARET
v
TASMANIAN TRUSTEES LTD
TITLE OF COURT:
JURISDICTION: SUPREME COURT OF TASMANIA
FILE NO/S: 113/1985
DELIVERED ON: 27 October 1987
JUDGMENT OF: Cosgrove J
Judgment Number: A52/1987
Number of paragraphs: 21
Serial No 52/1987
List “A”
File No. 113/1985
NANCY MARGARET LOONE v. TASMANIAN TRUSTEES LTD.
REASONS FOR JUDGMENT COSGROVE J
27 October 1987
The defendant company is the administrator of the Estate of Robert Cyril Jackson who died intestate on the 24 September 1983. The plaintiff seeks a declaration that two bank accounts, a car and certain lands are held by the defendant on trust for her absolutely. So far as the land is concerned she claims in the alternative that it is held for her on trust as to one half share or such share as the court may determine. Further in the alternative, she claims a declaration that the defendant holds the said lands on trust to permit her to occupy it rent free for as long as she may desire.
The obligations which the plaintiff seeks to have declared as a burden on the estate are said to arise from the fact that the deceased held the said properties on trust for the plaintiff at the time of his death. There is no claim for breach of contract. It may be said straight away that there is nothing in the evidence which could even remotely justify a declaration in respect of the two bank accounts and the car. I do not think that this was conceded during the trial but the contrary was not argued.
So far as the land is concerned, the plaintiff claims that the deceased held the subject property upon trust for her and for himself for some time prior to his death. The time at which the trust is said to have arisen is not specified and is probably immaterial. The nature of the trust is said to be “implied” or “constructive”. This description of the trust means no more than that the plaintiff disclaims any reliance upon an express trust or declaration of trust. While this disclaimer circumvents the obstacle of the absence of writing, it takes the submission of counsel for the plaintiff into controversial and perhaps uncertain territory. In an endeavour to find a guide for myself through this territory I have gone back to first principles.
A “A trust is an equitable obligation binding a person to deal with property, over which he has control, for the benefit of persons of whom he may himself be one, and any one of whom may enforce the obligation” (Underhill quoted in Jacob‘s Law of Trusts in Australia 5th edn in para 101).
B. “There are four essential elements in every form of trust: the trustee, the trust property, the beneficiary, and the personal obligation annexed to [the] property” (the insertion in brackets is mine).
There is no difficulty for the plaintiff in the first three elements, the trustee and the beneficiary being putative and the property merely nominated. Her problem is to demonstrate the fourth, that is the personal obligation annexed to the property.
C Where a party seeking the assistance of Equity disclaims any express trust, he or she must invoke “the jurisdiction by which a Court of Equity, proceeding on the ground of fraud, converts the party who has committed it into a trustee for the party who is injured by that fraud”. (Lord Westbury in McCormick v Grogan (1869) LR 4 HL, at p97 quoted by Dixon J in Birmingham and Others v. Renfrew and Others (1937) 57 CLR 666 at 688).
The claimant may of course anticipate the commission of the fraud and apply for a declaration of his or her interest and for injunctive relief. The interest exists wherever the circumstances are such that a Court of Equity would invoke and exert the jurisdiction referred to. The interest does not wait upon the Court’s pronouncement. It arises from the circumstances.
D. In order to establish that a retention for himself alone or disposition for his purposes alone of property by a person holding the legal title would amount to a fraud, it is necessary to prove a transaction between the alleged trustee and cestui que trust of such a nature that it would be inequitable to allow the alleged trustee to deny to the cestui que trust a beneficial interest in the property. That transaction must itself be concerned with the property. It need not be an enforceable agreement. It is sufficient if it is a “compact” (Birmingham v Renfrew (supra)), a “common intention” (Gissing v Gissing [1971] AC 886 particularly at 908), an “agreement” (Allen v Snyder [1977] 2 NSWLR 685 particularly at 694), or “an expectation created or encouraged by the landlord” (Plimmer & Anor v The Mayor, Councillors and Citizens of the City of Wellington [1884] 9 AC 699). The transaction must be mutual and must involve the cestui que trust in the performance of some act onerous or detrimental in itself and in some way beneficial to the trustee’s interests. A unilateral promise would be a voluntary declaration of trust and therefore unenforceable in relation to real estate (see Allen v Snyder (supra) at 691A). Further, the act must be performed, for the equity arises from the action (or forebearance from action) of the cestui que trust in reliance on, or belief in the common intention, agreement, compact or encouraged expectation that the action (or inaction) would give rise to a beneficial interest in the property.
The trustee, having encouraged the performance (or non–performance) of the act on the common understanding that the beneficial interest would then arise, will not be allowed to deny that it has arisen. The doctrine is in some ways akin to estoppel but whereas estoppel is essentially defensive, a constructive trust is a positive right, which although it may be based on imprecise and unstated obligations, will be developed in equity into precise rights and obligations. Facts which will support an estoppel will not necessarily support a constructive trust.
E. The act to be done or foreborne must be an act or forebearance to which equity will lend its support. That support will not be forthcoming if the act or forebearance is illegal or contrary to public policy as tending to promote immorality.
The propositions which I have now set forth comprise in my opinion, the relevant law applicable to this case. I turn to the facts. This is a difficult area because the only witnesses of any importance were the plaintiff and her children, all of whom were speaking of events long ago, which were not of a kind that they were concerned to record or to remember with any precision. All of the witnesses were concerned to assist the plaintiff in this litigation though, with the exception of the plaintiff, not to the point of outright dishonesty. The plaintiff’s credit was seriously impugned in that she admitted having given false instructions to her solicitor to the effect that she and the deceased had lived together as man and wife when they had not, and that she made significant false statements in support of her application for a Social Welfare benefit. Moreover, on more than one occasion in the witness box I formed the distinct impression that she was not telling the truth. Nevertheless, it is possible to get some picture of the main events which occurred during the life time of the deceased and which bear on this action.
In May 1943 the plaintiff married Charles Edward Loone. She bore him three children. In 1949 she and her husband agreed with the deceased to rent from him a house at Stanley Street, Latrobe. The lessee was her husband. It was a poor standard house consisting only of a kitchen and two bedrooms and without a toilet other than an outside toilet, without hot water and without electricity. There was one tap but it was outside the house. The rental was two pounds per week which continued to be paid for some undetermined time. The plaintiff claims that the deceased returned the rent to her sub rosa, but I have serious doubts about this. Almost immediately upon moving to Stanley Street the plaintiff commenced a liaison with the deceased involving regular sexual intercourse, but, except on perhaps one or two occasions, that intercourse always took place outside the house. The deceased himself lived in a house some distance away in Farmers Road off the Moriarty Road, which was of a similar standard to the house which he was renting to Mr Loone. Between 1952 and 1963 the plaintiff bore 9 children to the deceased. All of those children bore the surname Loone and were described in birth certificates as the children of her husband. None of the children was ever made aware that their father was the deceased. It appears that after the liaison with the deceased commenced, sexual intercourse between the plaintiff and her husband ceased. He occupied one bedroom with some male children and she occupied the other bedroom with up to eight of the children. At some time which I am not able to fix, the deceased began to pay ten pounds per week or $20 per week to the plaintiff and began to provide the family with some meat, vegetables and groceries. He also took the family on outings, no distinction being drawn between the Loone children and the Jackson children. One of the reasons why I am not able to fix the date from which the deceased became a provider for the families is that Mr Loone also provided basic food supplies, but it is not clear when he ceased doing so.
The deceased and his wife had nine children, but in 1957 his wife and family left him permanently. The plaintiff said that in 1957 or thereabouts, the deceased said to her that “what was his was mine and what was mine was his whatever way ... who ever went first. If I went first he’d make sure the kiddies was looked after”. She went on to say “we felt very attracted to one another and we made that quite clear and Cyril suggested building a new home for myself and him and the children and that is the reason we had so many children.” That second conversation took place she said in about 1959. At some time the deceased did arrange for an extra room to be put on the house in which the Loone family was living, and some time after that an abortive attempt was made to erect the remains of a school house on the property but that came to nothing. In 1968 an application was made to the council for permission to build a house on the property. The deceased and the plaintiff joined in giving instructions to a Mr Oakley as to the design of the house. Some footings were dug and foundations poured and some framework put up but that remained the condition of the house until 1972. Some of the male children helped in the foundation work. In 1972 the plaintiff became dissatisfied with the progress on the new house, and left Stanley Street with what remained of her family without notifying the deceased that she intended to move. She said “that if Cyril wanted me he would find me”. She went to live in Devonport but shortly thereafter the house at Latrobe in which she had formerly been living burned down. She went to look at the site out of curiosity, and there met the deceased. He asked her to resume their relationship and she said she would come back to him if he would finish the new house properly. The deceased did complete the construction of the new house which comprised four bedrooms, a lounge room, a kitchen, a bathroom and a toilet. The plaintiff and her family moved back in 1973. The deceased however continued to live at his Farmers Road house with his step sister and he remained there until he died. The plaintiff did some interior painting and wall papering at the new house and her sons constructed a concrete porch at the back, some front steps and a driveway of gravel. She provided some furniture and some carpet. She and the deceased started a garden. The deceased continued to visit her every day or nearly every day, and their sexual relationship continued.
Although the plaintiff insisted that she provided the paint and wall paper and carpets herself, it is difficult to see what source of income she had that would enable her to do so. It may be she was getting some money from the deceased, it may be that she was getting some Social Welfare benefits, certainly she would be getting child endowment. Loone had moved out in 1972 and it is possible that she was then getting a deserted wife’s pension but that is not entirely clear. In 1980 Mr Loone died and thereafter she obtained a widow’s pension and got extra benefits on the basis of her statement (which she was constrained to say was false) that she was paying $30 or $35 a week rent to the deceased. It does not appear that the relationship between the deceased and the plaintiff altered until his death in 1983.
The relationship between the deceased and the plaintiff was clearly that of man and mistress, and Mr. Temple–Smith conceded that was so. Although the deceased was kind to the children and took the family on outings and provided some subsistence for them, he never recognised the plaintiff as his wife or wife de facto; he never lived with her as man and wife; he never acknowledged the children as his own; and he never did anything which would have made him liable for support of the plaintiff. The relationship was nevertheless a close one and no doubt the plaintiff had some sentimental claim on his bounty. However, the relationship was not one which would give rise to legal rights.
Mrs Donald who was the eldest of the Loone children, said that she had heard the deceased telling the plaintiff that he would leave the house to her and that the plaintiff often said to the deceased that she was worried as to what would happen if anything happened (to him) and the deceased said “you’ve got no worries because it is yours anyway”.
Mrs. Ivory, another child, said that when the deceased and the plaintiff were discussing her return from East Devonport in 1972, the deceased promised to build the new house and the plaintiff said “well you build it first and then I’ll come back. Probably if I do, if anything ever happens to you your family will get it”. She said that the deceased replied “No I wont do that I’ll make sure you’re well provided for”.
Mrs. Trudy Loone who was one of the plaintiff’s children, recalled that her mother and the deceased had a conversation at Devonport when the deceased asked the plaintiff would she move back to Latrobe and the plaintiff said yes she would as long as the house was finished and up to her standard. She did not recall any other conversations.
Another child, Mrs. Mandy Sheehan gave evidence that on one occasion there were some guests at the house whom the deceased did not favour, and he asked the plaintiff to get them to leave. She protested and said words to the effect that “if this is our house we’ll have who we want here or otherwise I’ll move out”. It is apparent that by our house she meant the Loone family house. The deceased replied that it was her house and there was no need for her to move out and he added “it’s all yours if anything ever happens it’s your house”.
Mr. Garry Loone claimed that he overheard a conversation between the plaintiff and the deceased to the effect that the plaintiff would “wind up with the property and be looked after” and that “we would all (meaning the children) wind up with a share thereof”. He claimed that he had heard conversations of this nature on up to two hundred occasions.
It would not be right to receive this evidence of statements made by the deceased as if it were evidence of actual words spoken by him. It is, at best, evidence of the kind of comment which he made from time to time, particularly when challenged about the shockingly poor accommodation which he provided for his mistress, and his and her children, (although it must be remembered that he lived quite happily in almost identical accommodation). Moreover, the evidence must be viewed through the screen of time, fading memory, and re–construction. However I accept that the deceased was wont to use standard expressions like “what’s yours is mine and what’s mine is yours”. That, however, is the sort of thing commonly said by people who have not the slightest intention of sharing their possessions. Often spoken as an anodyne, all that the speaker usually means, and is understood to mean, is that if the auditor ever needs help, he will provide it. Sayings such as “I’ll see that you are looked after if I go first” are no more than affectionate promises. Neither of these sayings evidence a common intention that property should be shared. Indeed the second is based on the premise that the property of the speaker remains his. I do not find any evidence of a common intention or agreement that any property to which the deceased had title was subject to a trust for the plaintiff, or was to be shared with her. Nothing in the evidence persuades me that the plaintiff was encouraged to believe that she had an existing interest in any property of the deceased.
Nor do I find any evidence that the plaintiff did anything in an encouraged expectation that she was to have a share in the property. The work of the sons on the second house is consistent with help given to the deceased in the expectation that the family would reside there. The work done by the plaintiff was no more than one would expect of a mistress who had been provided with basic accommodation which needed some decorating. Mr. Temple–Smith urged upon me the submission that the plaintiff, by bearing and caring for the deceased’s children, acted to her detriment. But those children were all born by 1963. The plaintiff‘s action in leaving the first house in 1972 and refusing to return until the second house was completed was a clear indication that she had no belief then, and relied then on no promise, that she should have a share in the land. In any event, I should regard the bearing of children by a mistress, in the circumstances of this case, in reliance on a promise or shared intention of property gain as not the sort of bargain to which equity would lend assistance. The bearing of the children, their care for them as Loones, may well have given rise to a moral duty to provide for them, and this the deceased seems to have done in a way which was satisfactory to all parties. But it will not alone create a trust in respect of property.
Nothing in this case satisfies me that it would have been a fraud on the plaintiff for the deceased, during his lifetime, to deal or not deal with his property as he saw fit, without sharing it or the proceeds of it with the plaintiff. If that is the case, the administrator holds the property unaffected by any trust. The plaintiff’s claim in this respect fails.
For the same reasons, the claim to a life tenancy, in so far as it is based on estoppel, also fails. The relationship between the parties, in all its aspects, sexual, emotional, and proprietorial was determinable at will by the deceased or for that matter, so far as she was able by the plaintiff.
There will be judgment for the defendant.
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