Lowe & Anor v Sze Tu & Ors

[2015] HCATrans 179

[2015] HCATrans 179

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S16 of 2015

B e t w e e n -

GEOFFREY ALAN LOWE

First Applicant

MARY LOWE

Second Applicant

and

HELEN SZE TU

First Respondent

SCOTT PASCOE (ADMINISTRATOR OF THE ESTATE OF THE LATE KUT SZE TU)

Second Respondent

MARGARET SZE TU

Third Respondent

SHIU SHING SZE TU

Fourth Respondent

SHIU HOW SZE TU

Fifth Respondent

JANET McNAMARA

Sixth Respondent

STELLA SZE TU (AS REPRESENTATIVE OF THE ESTATE OF THE LATE CHOW FUNG CHUN)

Seventh Respondent

Office of the Registry
  Sydney  No S17 of 2015

B e t w e e n -

GEOFFREY ALAN LOWE

First Applicant

MARY LOWE

Second Applicant

and

MARGARET SZE TU

First Respondent

SCOTT PASCOE AS TRUSTEE OF THE ESTATE OF THE LATE KUT SZE TU

Second Respondent

HELEN SZE TU

Third Respondent

SHIU SHING (SUNLY) SZE TU

Fourth Respondent

SHIU HOW (GORDON) SZE TU

Fifth Respondent

JANET McNAMARA

Sixth Respondent

STELLA SZE TU

Seventh Respondent

Office of the Registry
  Sydney  No S18 of 2015

B e t w e e n -

GEOFFREY ALAN LOWE

First Applicant

MARY LOWE

Second Applicant

and

SHIU SHING (SUNLY) SZE TU

First Respondent

SHIU HOW (GORDON) SZE TU

Second Respondent

SCOTT PASCOE AS TRUSTEE OF THE ESTATE OF THE LATE KUT SZE TU

Third Respondent

HELEN SZE TU

Fourth Respondent

MARGARET SZE TU

Fifth Respondent

JANET McNAMARA

Sixth Respondent

STELLA SZE TU AS TRUSTEE OF THE ESTATE OF THE LATE CHOW FUNG CHUN

Seventh Respondent

Applications for special leave to appeal

GAGELER J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 7 AUGUST 2015, AT 12.02 PM

Copyright in the High Court of Australia

____________________

MR N.C. HUTLEY, SC:   If your Honours please, I appear with my learned friend, MR C.H. WITHERS, in each of the applications for the applicant.  (instructed by Kemp Strang Lawyers)

MR T.G.R. PARKER, SC:   If it please the Court, I appear with my learned friend, MR R.A. YEZERSKI, for Margaret Sze Tu in each of the matters.  (instructed by Holman Webb Lawyers)

MR D.L. WILLIAMS, SC:   May it please the Court, I appear with my learned friend, MS J.D. LITTLE, for Sunly and Gordon Sze Tu in each of the matters.  (instructed by CLS Legal)

MR D.A. LLOYD:   If it please the Court, I appear for Helen Sze Tu in each of the matters.  (instructed by GSG Legal)

GAGELER J:   Mr Hutley.

MR HUTLEY:   Your Honour, the applicants and the respondents are all children of the late Kut Sze Tu, who is universally referred to as KST, and the applications deal with three pieces of property in respect of which the registered proprietors in different proportions are the various children other than my clients and now the estate of KST.

The case arose out of the partnership, the dispute and the question which we say arise in the case is the way in which the court dealt with it in dismissing the claim in respect of a resulting trust on the basis of a failure to rebut the presumption of advancement is a principle which is available, having regard to the findings which were made concerning the source of 90 per cent of the funds; that is, 90 per cent of it was money as was found by the trial judge which was absconded with by the father, and that finding was confirmed on appeal.  Our first point is, that being the case, the principle of advancement simply does not speak to that universe because ‑ ‑ ‑

GAGELER J:   Well, does a resulting trust speak to that universe?

MR HUTLEY:   That is a debate ‑ and I accept that, your Honour ‑ but it was so dealt with by the Court of Appeal and that then flows into the second issue as to the position of a volunteer and whether this Court would consider the question of the conflict which has existed and still existed in academic literature between the position of the Court of Appeal in Bogdanovic and the position which was expressed by Mr Justice Adam in King v Smail which has been applied or approved at least obiter a number of times since, and we have referred to the cases.

GAGELER J:   Yes.  Well, that is your second point.

MR HUTLEY:   That is our second point.

GAGELER J:   Going back to your first point ‑ ‑ ‑

MR HUTLEY:   Your Honour, we say it does because one is talking about, in effect, the supply of money for a purchase by A to B.

GAGELER J:   Who is A?

MR HUTLEY:   A in this is KST ‑ for the purchase for the benefit of KST and the various children.

GORDON J:   Is that not your problem?  It is the inconsistency in the source.  I thought your finding was it was taken from the partnership.

MR HUTLEY:   Yes, your Honour.

GORDON J:   Is that not your problem?

MR HUTLEY:   With respect, we say no, because if the money was held upon constructive trust by KST at the time the money was applied and the title was put in the name, the question which arises is, was there an intent to confer a gift upon the children by KST?  The presumption of a question of resulting trust, we would say, would arise in favour of those who were beneficially interested if KST supplies the money.  That may take the form in equity of creating a bare equity for the benefit of the payer – KST – but he in turn holding it upon constructive trust for those truly interested – the partners – but the equity would then be in effect executed to produce a holding on behalf of the partners.

GAGELER J:   It gets very complicated.

MR HUTLEY:   It is.

GAGELER J:   So you get a resulting trust of a beneficial interest held on constructive trust, is that right?

MR HUTLEY:   Yes, your Honour, because it is, in effect, a gift and the purchase has been effected with money which at law is the money, because he controls it, of KST, and the question then is – and he puts the title in the children’s name.  What is the intention of KST to be presumed with respect to that?  He may have had the actual intention to hold it for his own benefit and then there would be a resulting trust, but equity would say he is a bare trustee of the interest and equity would execute the trust and it would become for the beneficiaries.  So that is why we say the terms of resulting trust can arise and do arise and the way the ‑ ‑ ‑

GAGELER J:   The resulting trust.

MR HUTLEY:   Resulting trust.

GAGELER J:   Well, that takes you to your second point.

MR HUTLEY:   No, no, resulting trust, because the question is, once the money is passed over as a gift, is the money given by KST in effect for the benefit of his children by buying it?  That is the question, the first question.

GAGELER J:   Well, another problem – I mean, the real problem you have with your first question is that the way you now seem to put it was not the way it was put to the Court of Appeal.

MR HUTLEY:   Your Honour, if one goes to paragraph 207 in the Court of Appeal’s judgment, I accept fully that this was not run, but the Court of Appeal dealt with this from paragraph 178 onwards at 457 as an inquiry as to whether there was a resulting trust.  That was one of the ways in which the matter was dealt with.  Their Honours then turned to the issue of the presumption of advancement at paragraph 184 and they asked the question is it rebutted?

GAGELER J:   Well, dealt with the arguments that were put to it in respect of the presumption of advancement.

MR HUTLEY:   But, with respect, they then came to deal with it at 207.

GAGELER J:   Yes.

MR HUTLEY:   So it is in not in effect it was dealt with as a hypothetical argument.  They said:

The finding of Gzell J that KST had a practice of holding his investments in his children’s names does not take the matter very far.  What is critical is KST’s actual intention in relation to the acquisition . . . The matters to which Geoffrey and Mary referred the Court are insufficient to rebut the presumption of advancement.

So their Honours determined this question on the basis of an inadequacy to rebut the presumption of advancement, so that in effect the presumption of advancement was central to their determination on this basis.

GAGELER J:   They were dealing with the argument set out in paragraph 184, paragraph 9, as expected.  Now, your argument is different.

MR HUTLEY:   I accept that, your Honour.

GAGELER J:   Now, your argument is different.

MR HUTLEY:   No, our argument accepts that proposition because ‑ ‑ ‑

GAGELER J:   Yes, of course it does, but it goes further.

MR HUTLEY:   No, with respect, it does not, because when one turns to the difference between 9 and 10, 10 would be that it was held beneficially by KST.  What we say is, there is a resulting trust, but as a matter of technical equity title, equitable interest, there may be a bare interest that passes through KST but, because KST is a defaulting beneficiary, he would hold any interest on bare trust for the partnership, that is, the partners generally.  I understand – and we say that is what was dealt with in 184, paragraph (a), by saying:

If KST intended that the properties be owned by the partnership but held in the name of himself . . . for some period, then a resulting trust also arose whereby the properties were held ‑

Now, that was the argument.  The way that argument was defeated was to say that, because KST was passing the properties by way of to his children, there was a presumption of advancement in respect of that payment, and that defeated that argument.  We submit the presumption of advancement had nothing to do with the inquiry.  We say if one goes to the cases – and we have referred your Honours to in effect the first case where this – or the case where these principles were originally settled, Dyer v Dyer.  I do not know if your Honours have it, but we have copies for your Honours if your Honours do not.

GAGELER J:   We do not.  Do we need to look at it?

MR HUTLEY:   Well, your Honour, what we say is that settled the basis upon which there would be a presumption of advancement, and the cases were based upon the concept of generally as expressed in a case at that time, a parent, particularly a father in the case in point, making provision out of his estate for the benefit of his children.  The fundamental point is that the court would say – in equity they would say a presumption of intent to benefit would arise out of that fact.  That is the presumption of advancement, i.e. from the fact of a person taking out of his property money and using it to buy a property to vest in his children, the court would infer by law, by presumption, an intention to benefit them, and that is the presumption of advancement.  That is in history.

It has never been thought, in our respectful submission, that that would apply as a presumption if the money being used to pay for the asset is money which the person does not beneficially hold.  What we say is that the whole concept of a presumption of advancement is ‑ ‑ ‑

GAGELER J:   Does not beneficially hold.

MR HUTLEY:   Does not beneficially hold simply because if one goes back to the time before one had questions of indefeasible title, the issue would have appeared, in effect, bizarre to an equity lawyer.  The question would be, I have got a presumption of a gift by a defaulting trustee to give property, to use money to invest for the benefit of the children.  They would just say, well, how could that have arisen?  Why would you ever be in an issue of presumption of advancement?  If you are using trust money to buy an asset and put it in any person’s name, it is going to be held upon trust for the ultimate interested parties.

GAGELER J:   Constructive trust, clearly.

MR HUTLEY:   But, your Honour, whether constructive or actual, I accept that.  But what we say is that no one would have ever thought that you would ever have an inquiry of the variety of which a presumption of advancement addresses in those circumstances, and that is why we say the fact that we did not raise it in the Court of Appeal is neither here nor there.  This is a point of, is the universe of discourse a meaningful one of a presumption of advancement in the case of stolen money?  We say it simply is not.  That is why we say it is a point which is – it has not arisen.  In all our research, I do not think it has ever arisen anywhere in the world.  That may be some good example as to why it should not – could be taken not to be a good point to suggest ‑ ‑ ‑

GAGELER J:   Or perhaps a reason why it should not be raised for the first time in an ultimate appellate court.

MR HUTLEY:   I accept the point.  Your Honour, I cannot get away with it; I am not trying to.  But what we are saying, it is clean, no facts arise in relation to it because the facts are as found and their Honours disposed of the question on a failure to rebut the presumption of advancement, and we say there is not one.  I cannot put it any other way than that, your Honour.  I accept it was not raised, but we say that there could be no facts which would inform it and it is an important question.  It is important because it interrogates the very character of the presumption of advancement; what it is about.

GORDON J:   You say the presumption of advancement can be put to one side, but where is the evidence that supports the opening line of paragraph 9 in 184?  When you say there is no findings to be found in the findings, or the facts are there as found, the opening line of 9 is the very thing that is absent, is it not?

MR HUTLEY:   But, with respect, your Honour, our learned friend – we say the facts were these.  There was money and it was used, and the money was used and the property was invested in the children’s name.  The question of the intent to benefit the children and therefore is the intent dealt with by the presumption of advancement?

GORDON J:   No, that is a separate question.  It is the underlying facts.

MR HUTLEY:   Yes, but the full underlying facts about what KST’s views were and what he thought are those which were investigated throughout the rest of this part of the judgment.  In fact, the court is making findings about what transpired at 196 and 197 ‑ KST’s actual intentions – and in fact came to the conclusion that you could not determine it, which is reflected in 207.  But that is not altered – but, your Honour, that was fully addressed in the case.  What his intentions were, or trying to find it out, was everything which was absolutely investigated from time to time.  People were trying to find that out.  The simple fact is they could not.

That was the entirety of the material and that is why at 207 the court says this case is determined by a failure “to rebut the presumption of advancement”.  In other words, the usual principle as to resulting trust would apply but for the advancement, and you have failed to rebut it.  You in effect have been incapable of establishing that the presumption as to the intention of KST has been rebutted, and we say that was at law a wrong inquiry.  That is the point.

The second point, your Honours, is shortly put.  There has been for a considerable period of time a debate as to whether the view expressed by the Court of Appeal or the holding of the Court of Appeal in Bogdanovic v Koteff (1988) 12 NSWLR 472 is correct.

GAGELER J:   What do you say about Say‑Dee?

MR HUTLEY:   Your Honour, in Say‑Dee the relevant parties were held not to be volunteers, and that is at paragraph 188 at page 166, and so, with respect, it was obiter, and it was obiter and this debate simply was not addressed so it was not dealt with in Say‑Dee.  It similarly was not dealt with in Cassegrain.  It was assumed in Cassegrain.  The history of that is that it came from the New South Wales Court of Appeal and no one raised the issue.  There have been numerous statements obiter in Full Courts of the Federal Court ‑ we have referred to them – and the best, as it were, exposure of the debate is in the case of Rasmussen in the judgment of Justice Coldrey in the Victorian Supreme Court, and that is in the little bundle I handed up to your Honours.  It is not in the little bundle I handed up to your Honours.  I have not handed it up yet.

GAGELER J:   We did not get to the bundle.

MR HUTLEY:   Your Honours said you did not want it.

GORDON J:   We ignored the bundle.

MR HUTLEY:   Right, I offered.

GAGELER J:   You are speaking of Rasmussen?

MR HUTLEY:   Rasmussen, yes.

GAGELER J:   Yes, we are ahead of you, Mr Hutley.

MR HUTLEY:   Well, it probably would not help me to say something obsequious at that moment.

GORDON J:   It would not.

MR HUTLEY:   But, your Honours, his Honour there exposes between pages 631 and 634, as it were, the debate, the state of authority.  It is a view, for example, that – and we have given your Honours a reference to this ‑ Acting Justice Sackville in Arambasic (No 4) (2014) NSWSC 1109 at paragraph 164 says there are very respectable arguments in favour of. It has not been addressed by this Court. It is a fundamental issue in the field. The Court of Appeal obviously relied upon it. In our respectful submission, this is a perfect vehicle. It requires no facts to determine the question at all. It is either right or it is wrong. This issue – true it was, this point was not taken in the Court of Appeal, but to take it in the Court of Appeal one would have had to submit that Bogdanovic was clearly wrong and that would have been, with respect, a farce.

GAGELER J:   You say it is a pure question of law?

MR HUTLEY:   It is absolute pure question of law, it is a fundamental question of law in the field, and if your Honours were minded to take that, it would, in our respectful submission, support also taking the first point because that would clarify the interrelationship between resulting trusts and such constructive trusts in volunteer situations and, in our respectful submission, that is an important point.  So, in our respectful submission, the second point is just crisp, clear, it has not been resolved, it is an ongoing matter of debate amongst academics, and judges of the highest experience in this field have expressed support in favour of it.  Those are our submissions, if your Honours please.

GAGELER J:   Thank you very much, Mr Hutley.  We do not need to hear from the respondents.

Special leave to appeal is sought on two questions.  As to the first question, given the way in which the appeal was argued before the Court of Appeal, we do not consider it to be in the interests of justice that the question be explored in this Court.  As to the second, we do not consider that the prospects of success are sufficient to warrant the grant of special leave to appeal.  Special leave in each of the three matters will be refused with costs.

AT 12.22 PM THE MATTERS WERE CONCLUDED