Lottwo Pty Ltd (in Liquidation) v Tudo - [2012] SASC 172

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
LOTTWO PTY LTD (IN LIQUIDATION) v TUDO & ORS
[2012] SASC 172
Judgment of The Honourable Justice White
27 September 2012
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PARTIES - JOINDER OF PARTIES
EQUITY - TRUSTS AND TRUSTEES - IMPLIED TRUSTS - RESULTING TRUSTS - WHEN ARISING - JOINT PURCHASE OF LAND
Purchasers, including the appellant, defaulted on loans used to purchase several properties - bank exercised mortgagee's powers of sale - surplus remained after borrowers' liabilities discharged - surplus paid into Court in actions relating to the different properties - three persons applied to a Master to be joined as plaintiffs to the action relating to appellant's property - Master granted the application - appeal against that order for joinder.
Whether each of the persons has an arguable claim in a proprietary interest in the money in Court - whether an arguable case of a resulting trust - whether sufficient pleading or evidence that these three persons provided their monies as purchaser.
Held: appeal dismissed with respect to the respondent Tudo, appeal allowed with respect to the joinder of the other two persons - Tudo has an arguable case that he has a proprietary interest in the money, the other persons did not plead or establish such an arguable case.
Supreme Court Civil Rules 2006 (SA) r 74, r 98, r 99; Real Property Act 1886 (SA) s 223LB; Strata Titles Act 1988 (SA); Community Titles Act 1996 (SA), referred to.
Calverley v Green (1984) 155 CLR 242; Muschinski v Dodds (1985) 160 CLR 583; Nelson v Nelson (1995) 184 CLR 538, considered.

LOTTWO PTY LTD (IN LIQUIDATION) v TUDO & ORS
[2012] SASC 172
Appeal from a Master

WHITE J. This is an appeal against an order by a Master that three persons be joined as plaintiffs to this action. Those persons are Biay Ing Ong, Maxwell Tudo and Rose Ong. They have been referred to in the proceedings as Moses, Tudo and Rose and, without intending any disrespect, I will do likewise.
Background
The proceedings at first instance arise out of the purchase in 2006 of seven parcels of land in or near to Gouger Street, Adelaide. Two parcels (Properties 1 and 2) were purchased by Gouger Centre Pty Ltd (Gouger Centre); one parcel (Property 3) by Gouger Centre and Pua Hor Ong; one parcel (Property 4) by Gouger Centre and Shek Kwan Lee; one parcel (Property 5) by Magnificant Pty Ltd; one parcel (Property 6) by the present appellant Lottwo Pty Ltd (Lottwo); and one parcel (Property 7) by The Wine Kingdom Pty Ltd. Each of these companies is now in liquidation. The purchasers (collectively, the Gouger Central Companies) borrowed $7.5m from St George Bank, now part of the Westpac Banking Corporation (Westpac). The borrowings were secured by mortgages over the seven parcels of land (collectively, “the Land”) and by directors’ guarantees.
The Gouger Central…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] SASC 172
Decision Date: 27 September 2012

CaseChat Overview and Summary

In Lottwo Pty Ltd (in Liquidation) v Tudo, the Supreme Court of South Australia addressed the issue of joinder of parties in a legal action concerning the distribution of surplus funds from a property sale. The case involved the purchase of several properties by various entities, including the appellant, Lottwo Pty Ltd. Following defaults on loans, the bank exercised its power of sale, and surplus funds remained after settling the borrowers' liabilities. These surplus funds were deposited into court in separate actions concerning each property. Three individuals, Moses, Tudo, and Rose, sought to be joined as plaintiffs in the action relating to Lottwo Pty Ltd's property, asserting claims of resulting trust and purchaser's lien over the surplus funds. The Master granted their application, and Lottwo Pty Ltd appealed against this decision.

The central legal issues in the case were whether each of the applicants had an arguable claim to a proprietary interest in the surplus funds and if there was sufficient evidence to establish a resulting trust or purchaser's lien. The court needed to determine whether the applicants provided their monies as purchasers and if their claims were sufficiently pled or evidenced to warrant their inclusion as plaintiffs in the proceedings. The applicants argued that they had paid substantial sums towards the purchase price of the property, which should give rise to a resulting trust in their favour.

The court found that each applicant had established an arguable case for a resulting trust based on the evidence that they had contributed funds towards the purchase price. The Master's decision to join them as plaintiffs was upheld because there was at least prima facie evidence that their monies were used as part of the purchase price, and no evidence contradicted this claim. The Master concluded that the applicants had an arguable case of a resulting trust, and it was convenient for them to be joined as plaintiffs. The court did not require detailed pleadings at that stage, as the existence and extent of the trust would be matters for trial. The Master also found that Tudo's claim of a purchaser's lien was arguable, providing another reason for joining him as a plaintiff.

The Supreme Court of South Australia dismissed the appeal, affirming the Master's decision to allow Moses, Tudo, and Rose to be joined as plaintiffs in the proceedings. The court held that the applicants had made out an arguable case for a resulting trust and that there was sufficient evidence to support their claims. The final orders of the court were that the appeal against the Master's decision was dismissed, and the applicants were permitted to remain as plaintiffs in the proceedings.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

WHITE J

Rose alleges that on 4 July 2006 she had paid a total of $530,000 into the trust account of Bail and Robazza, and that those monies were used to complete the purchase of the Land. Accordingly, Rose too alleges a resulting trust in her favour equal to a pro rata share of the total purchase price.The Master’s Decision The Master considered that each of Moses, Tudo and Rose had established an arguable case of a resulting trust with the effect that their applications to be joined as plaintiffs to the proceedings should be granted. His reasons appear in the following passages:[30]… [T]here is at least prima facie evidence that Moses, Tudo and Rose paid substantial monies to the conveyancers involved in the property transaction and that those monies were used as part of the purchase price of those properties. There is no evidence before the Court to explain any arrangements between those three potential claimants and the companies and persons involved in actually purchasing the properties. The claimants rely on the presumption of a resulting trust, it being demonstrated that they have paid substantial monies towards the purchase price.[31]In my view those three claimants have an arguable case of a resulting trust. This is so notwithstanding that there may be considerable argument as to the extent of the trust and whether it exists at all. That will be a matter for pleading and trial. It is convenient that they should be joined as plaintiffs to this action. … The Master was not concerned by the absence of any plea or foreshadowed plea that Moses, Tudo or Rose had paid the money upon which they relied as purchasers of the Land. He considered the material indicating that their monies had been used to meet the purchase price was “sufficient to give them an arguable case of a resulting trust and therefore a proprietary interest in the funds held in the Suitors Fund” (at [40]). In relation to Tudo’s alternative claim of a purchaser’s lien, the Master held:[35]… [I]t is arguable that Tudo has a claim for a purchaser’s lien in respect of at least [Property 2]. As such that is another reason why permission should be given for Tudo to be joined as a plaintiff in these proceedings.A Resulting Trust: Relevant Principles The principles relating to resulting trusts in the present context are well settled. The authors of Jacobs’ Law of Trusts in Australia state the principle as follows:A resulting trust will be presumed where, on a purchase, the legal title to real or personal property is vested in someone other than the person who is proved (by parol or other evidence) to have provided the purchase money. Thus, where A purchases land from X and directs X to make the transfer to B, which X does, there is a presumption of a resulting trust in favour of A except … where A is the husband or parent of, or stands in loco parentis to B.[1](Citations omitted)[1] JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (7th ed, 2006) at 240. However, this principle does not apply if the party advancing the money has not done so as purchaser. This requirement appears in the following passage in the reasons of Gibbs CJ in Calverley v Green:[2]Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such – not e.g., as a loan. [3](Emphasis added)Similarly, the authors of Jacobs’ Law of Trusts in Australia say:These principles will not apply if A lends or gives money to B and B uses the money to buy property from X, or if A lends or gives money to B and at the direction of B pays it to X; B is not an implied trustee of the land for A because A has not acted as a purchaser. Unless A can show an express trust of the land by B in favour of A, the relationship between A and B will be limited to donor and donee or lender and borrower.[4](Citation omitted) (Emphasis added)[2] (1984) 155 CLR 242.[3] Ibid at 246.[4] JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (7th ed, 2006) at 241.

Ratio Decidendi

Legal Principle Established

Established by: WHITE J

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