Powell v Oorschot
[2024] WASC 401
•29 OCTOBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: POWELL -v- OORSCHOT [2024] WASC 401
CORAM: HILL J
HEARD: 24 OCTOBER 2024
DELIVERED : 29 OCTOBER 2024
PUBLISHED : 29 OCTOBER 2024
FILE NO/S: CIV 2156 of 2024
BETWEEN: DAVID ANTHONY POWELL
Plaintiff
AND
DEBRA JOY OORSCHOT
First Defendant
CHAD JOSEPH WIESE
Second Defendant
Catchwords:
Practice and procedure - Application by beneficiary and one of executors for payment of money into court - No grant of probate - Choses in action form part of estates - Whether serious question to be tried that plaintiff has standing to pursue claim - Whether serious question to be tried - Whether title indefeasible on application for survivorship - Whether plaintiff has delayed in bringing application - Balance of convenience
Legislation:
Administration Act 1903 (WA) s 35
Rules of the Supreme Court 1971 (WA) O 18 r 15
Supreme Court Rules 1970 (NSW) Pt 8 r 16
Transfer of Land Act 1893 (WA) s 68, s 227
Uniform Civil Procedures Rules 2005 (NSW) r 7.10
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | B W Ashdown |
| First Defendant | : | T O Coyle |
| Second Defendant | : | P G Donovan |
Solicitors:
| Plaintiff | : | Hall & Wilcox |
| First Defendant | : | Solomon Hollett Lawyers |
| Second Defendant | : | MDS Legal |
Cases referred to in decision:
Avsar v Wesland Healthcare Ltd [2005] WADC 74
Barnes v Addy (1874) LR 9 Ch App 244
Baumgartner v Baumgartner (1987) 164 CLR 137
Calverley v Green [1984] HCA 81; (1984) 155 CLR 242
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Fried v National Australia Bank Ltd [2001] FCA 907
Hewitt v Gardner; Hewitt v Gardner [2009] NSWSC 705
Horsman v MG Kailis Pty Ltd [2009] WASC 166
Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432
Lloyd v Tedesco [2002] WASCA 63
Miller v Sutherland (1990) 14 Fam LR 416 (NSWSC)
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Pekel v Humich (Unreported, WASC, 3 December 1998)
Petar v The Macedonian Orthodox Community Church St Petka Inc [2006] NSWCA 277
Ramage v Waclaw (1988) 12 NSWLR 84
Scallan v Scallan [2001] NSWSC 1129
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36
Vallelonga v Sorgiovanni [2017] WASC 323
Watkins v Combes (1921) 29 CLR 317
Willis v Western Australia [No 3] [2010] WASCA 56
Zekry v Zekry [2020] VSCA 336
HILL J:
On 30 September 2024, the plaintiff commenced these proceedings by writ of summons endorsed with a statement of claim. On 16 October 2024, the plaintiff filed a chamber summons for an injunction, together with a certificate of urgency and an undertaking as to damages.
The plaintiff and first defendant are brother and sister. The second defendant is the son of the first defendant. Pamela Powell, the mother of the plaintiff and first defendant, died on 21 October 2022 and Roland Powell, their father, died on 27 August 2023. At this stage, probate has not been granted in respect of either Mr or Mrs Powell's wills.
The plaintiff's claim in these proceedings arises out of a series of transactions said to have been undertaken by the first defendant pursuant to an enduring power of attorney of Roland Powell prior to his death. The application for an injunction arises from one of these transactions; namely, the purchase of 3 Godwit Court, Djugun, Broome (Broome Property) on 17 January 2023, which was sold on 23 February 2024. The plaintiff says these proceeds are held on resulting or constructive trust for the estates of Mr Powell and/or Mrs Powell.
Since the sale of the Broome Property, the proceeds have been held in a bank account in the name of the second defendant's now former solicitors pursuant to an irrevocable undertaking given by the second defendant. This undertaking expired on 19 October 2024. On 18 October 2024, orders were made by consent to program the matter through to hearing on 24 October 2024 on the undertaking of the second defendant not to transfer or otherwise deal with these funds. At the hearing, orders were made on the basis of the second defendant's extension of the undertaking until delivery of these reasons for decision.
By chamber summons dated 16 October 2024, the plaintiff seeks orders for the payment of the sale proceeds of the Broome Property into court pending further order. In support of the application, the plaintiff relied on two affidavits filed by him, one on 16 October 2024 and the other on 22 October 2024.
The defendants deny the plaintiff is entitled to the relief sought on three primary grounds. First, they say that, as joint executor and a beneficiary of the estates of both Mr and Mrs Powell, the plaintiff did not have standing to commence these proceedings in his own right. Any claim can only be made by an executor where probate has been granted, or an administrator appointed under s 35 of the Administration Act 1903 (WA) (Administration Act). Second, the second defendant says that he had indefeasible title in the Broome Property as a consequence of survivorship and that the plaintiff has no claim to the proceeds of this sale. Third, the second defendant says there has been a significant delay by the plaintiff in seeking orders from the court which weighs against granting the relief sought.
The first defendant filed two affidavits in opposition to the application, being an affidavit of the first defendant filed 21 October 2024, and an affidavit of Andrew Ronald William Bower, a solicitor employed at Solomon Hollett Lawyers, the solicitors for the first defendant, filed 22 October 2024. The second defendant also filed two affidavits in opposition to the application: an affidavit of the second defendant filed 21 October 2024, and an affidavit of Camilla D'Angelo Radenti, a solicitor employed at MDS Legal, the solicitors for the second defendant, filed 24 October 2024.
Factual background
On 17 January 2023, Roland Powell and the second defendant purchased the Broome Property as joint tenants for $741,000.[1] On 26 November 2022, the offer and acceptance was signed by the second defendant, and on 28 November 2022, by the first defendant in her capacity as attorney for Roland Powell.[2] The offer was signed by the first defendant shortly after the plaintiff asked that she not act on behalf of their father without consulting him (the plaintiff).[3]
[1] Affidavit of David Anthony Powell filed 16 October 2024 [60].
[2] Affidavit of David Anthony Powell filed 22 October 2024 [6(a)].
[3] Affidavit of David Anthony Powell filed 22 October 2024, 'DP-52'.
The second defendant's evidence is that he contributed $1,000 to the purchase price of the Broome Property as well as $17,365.34 for payment of stamp duty.[4] The remainder of the purchase price was paid from an account in the name of the first defendant. On 1 December 2022, prior to payment of the remainder of the purchase price, an amount of almost $975,000 was paid into the first defendant's account from a bridging home loan account in the name of the first defendant and Mr and Mrs Powell. The funds in the bridging home loan account included $600,000 which was transferred from Mrs Powell's account on 21 October 2022 (the date of Mrs Powell's death),[5] as well $1.3 million which was transferred (in two separate transactions) on 21 October 2022 from Mr Powell's account.[6]
[4] Affidavit of Chad Joseph Wiese filed 21 October 2024 [7].
[5] Affidavit of David Anthony Powell filed 22 October 2024 [36] - [37], 'DP-59'.
[6] Affidavit of David Anthony Powell filed 16 October 2024 [38(b)(ii)] - [38(b)(iii)], 'DP-10' page 97; 'DP‑11' pages 121 - 122.
The first defendant's evidence is that she signed the offer and acceptance at the request of her father.[7] She says that prior to her mother's death, an offer was made in relation to a separate property in Broome on 12 September 2022. Prior to the offer being made on this property, she had conversations with her parents during which they said they wanted to purchase a property with the second defendant for him to inherit by survivorship.[8]
[7] Affidavit of Debra Joy Oorschot filed 21 October 2024 [17].
[8] Affidavit of Debra Joy Oorschot filed 21 October 2024 [7] - [8].
At the time the Broome Property was purchased, Mr Powell had been assessed by a medical practitioner as having cognitive deterioration with an underlying pathology most likely to be Alzheimer's.[9] There is a significant dispute between the parties as to the extent of Mr Powell's deterioration and whether, and if so, to what extent, it impacted him and his decision making. The first defendant's evidence is that Mr Powell retained his capacity until 3 - 4 days prior to his death. This is disputed by the plaintiff.
[9] Affidavit of David Anthony Powell filed 16 October 2024 [28(b)], [30(a)].
After the purchase of the Broome Property, the second defendant paid a number of expenses as well as costs associated with its renovation. These payments total approximately $21,500[10] and are consistent with a handwritten agreement between Mr Powell and the second defendant dated 3 January 2023, under which the parties agree that Mr Powell would receive all rental income for the property, and the second defendant would pay all expenses and modifications, and manage the property. This agreement was to be in place until their contributions became equal.[11]
[10] Affidavit of Chad Joseph Wiese filed 21 October 2024 [11].
[11] Affidavit of Chad Joseph Wiese filed 21 October 2024, 'CJW-2'.
On 27 August 2023, Mr Powell died. Under his will, the plaintiff and first defendant were appointed executors with all of his property to be divided between two testamentary trusts: one for the primary benefit of the plaintiff and the other for the first defendant.[12] Probate has not been granted at this stage because of proceedings that have been commenced by the plaintiff against the first defendant (CIV 2403 of 2023).
[12] Affidavit of David Anthony Powell filed 16 October 2024, 'DP-3'.
Mrs Powell's will also appointed the plaintiff and first defendant as executors with the property divided between two testamentary trusts: one for the primary benefit of the plaintiff and the other for the benefit of the first defendant.[13] Probate has not been granted at this stage because of proceedings that have been commenced by the plaintiff against the first defendant (CIV 2151 of 2024).
[13] Affidavit of David Anthony Powell filed 16 October 2024, 'DP-1'.
On 16 October 2023, following the death of Mr Powell, the second defendant applied to be registered as sole proprietor of the Broome Property.
On 2 January 2024, pursuant to a contract for sale of land on that date, the second defendant sold the Broome Property, with settlement occurring on 23 February 2024. The proceeds of this sale were paid by agreement into the trust account of Macdonald Rudder Lawyers and subsequently, into an interest bearing trust account.[14] Both of these occurred under an irrevocable undertaking given by the second defendant.
[14] Affidavit of David Anthony Powell filed 16 October 2024, 'DP-26', 'DP-31'.
It is clear from the correspondence between the parties' solicitors, which is annexed to the plaintiff's first affidavit, that the defendants deny any wrong-doing and that prior to the deaths of Mr and Mrs Powell, there were strains in the family relationship between the plaintiff and the remainder of the family.[15]
[15] See, for example, affidavit of David Anthony Powell filed 16 October 2024, 'DP-8', 'DP-40'.
Legal principles governing the grant of an interlocutory injunction
The principles to be applied on an application for an interlocutory injunction are well-known and are not in dispute. The court must consider whether:[16]
(a)there is a serious question to be tried;
(b)unless an injunction is granted, the plaintiff will suffer irreparable damage for which damages will not be adequate compensation; and
(c)the balance of convenience favours granting the injunction.
[16] Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, 153 (Mason ACJ).
The first inquiry does not mean that the plaintiff must show that it is more probable than not that at trial they will succeed. It is sufficient that the plaintiff show there is a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights asserted and the practical consequences likely to flow from the orders sought. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case, and whether the balance of convenience favours granting such relief, are related, but not independent, questions.[17]
[17] Castlemaine Tooheys Ltd v South Australia (155) (Mason ACJ).
Delay by the plaintiff in seeking relief may be a discretionary factor in favour of refusing an interlocutory injunction.[18]
[18] Horsman v MG Kailis Pty Ltd [2009] WASC 166 [91] (Beech J).
The court's power to grant an interlocutory injunction must be exercised by reference to the rights claimed in the proceedings; it is not to be exercised by 'unconstrained notions of what appears to be just'.[19]
[19] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36 [130] (Buss P, Murphy JA, Beech J).
Is there a serious question to be tried in relation to the sale proceeds of the Broome Property?
The plaintiff advanced three separate claims in relation to the proceeds of the Broome Property. First, these funds are traceable proceeds of the property of Mrs Powell and/or Mr Powell. Second, the second defendant obtained his interest in the Broome Property and the proceeds of its sale in 2024 with notice of alleged breaches of duty by the first defendant of the enduring power of attorney (ie a Barnes v Addy claim).[20] Third, these proceeds are held on either resulting or constructive trust for the estate of the late Roland Powell and/or Mrs Powell.
[20] Barnes v Addy (1874) LR 9 Ch App 244.
A significant issue at the hearing was whether the plaintiff had standing to bring the application for an interlocutory injunction. Counsel for both defendants submitted that this question was relevant in assessing whether there was a serious question to be tried.
Standing to bring claims
At the hearing, counsel for the plaintiff submitted he has standing to bring claims 'for the benefit of the estate'.[21] This submission differed from the written submissions filed on the morning of the hearing, which contended that the plaintiff had standing to bring the claims 'on behalf of both deceased estates'.[22] The basis for both submissions was that the plaintiff was a named executor (with the first defendant) in respect of both estates; a beneficiary of a testamentary trust established pursuant to the wills of both Mr and Mrs Powell; and a beneficiary of both estates.
[21] ts 15.
[22] Plaintiff's submissions filed 24 October 2024 [2].
In their written and oral submissions, all parties referred to the decisions of Powell J in Ramage v Waclaw;[23] Windeyer J in Scallan v Scallan;[24] and Ward J in Hewitt v Gardner; Hewitt v Gardner.[25]
[23] Ramage v Waclaw (1988) 12 NSWLR 84.
[24] Scallan v Scallan [2001] NSWSC 1129.
[25] Hewitt v Gardner; Hewitt v Gardner [2009] NSWSC 705.
The following principles flow from these decisions.
(a)Where an executor of an estate has refused to bring proceedings against a debtor or to recover trust property, a beneficiary may bring proceedings in their own name if relief is sought in the equitable jurisdiction of the court and where there are exceptional or special circumstances. In these circumstances, the trustee and other beneficiaries need to be joined as defendants.[26]
(b)Initially, the courts limited 'exceptional circumstances' to collusion between the trustee and the debtor, or the insolvency of the trustee. This is no longer the case.[27]
(c)In appropriate cases, a party can obtain a grant of administration ad litem.[28]
(d)While a beneficiary might have standing to challenge a will, they do not have standing to bring proceedings in respect of choses of action held by the estate.[29]
[26] Ramage v Waclaw (91).
[27] Ramage v Waclaw (91).
[28] Scallan v Scallan [10].
[29] Hewitt v Gardner; Hewitt v Gardner [25].
Counsel for the plaintiff also referred to the decisions of Lamru Pty Ltd v Kation Pty Ltd[30] and Fried v National Australia Bank Ltd.[31] In each of these cases, a beneficiary of a former trust was held to be entitled to bring proceedings to enforce a claim of the trust. The plaintiff contended that, on the basis of these authorities, it was not necessary for the trust to come into existence (by the granting of probate) before the plaintiff could pursue the claims of Mr and Mrs Powell's estates.
[30] Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432.
[31] Fried v National Australia Bank Ltd [2001] FCA 907.
In Lamru Pty Ltd v Kation Pty Ltd, Cohen J held that the fact that the trustees were no longer trustees did not prevent them from bringing the claim. However, without funds or an existing status, they could not be expected to do so. This, in his Honour's view, added to the 'exceptional or special' circumstances enabling the plaintiff to bring the claim.[32]
[32] Lamru Pty Ltd v Kation Pty Ltd (438).
In Fried v National Australia Bank Ltd, Gray J considered that where the obligation owed to the trustee is a debt, a contractual obligation, or a covenant under a deed, it was sufficient that the trustee be unwilling to bring the proceeding for the beneficiary to have the right to sue to enforce the obligation, and that 'exceptional or special' circumstances were not required. Nevertheless, on the facts of that case, his Honour considered that the plaintiff had established exceptional or special circumstances.
I do not accept the plaintiff's submission that these cases provide support for the contention that he is entitled to bring these proceedings in his own name prior to grant of probate. In my view, these cases are consistent with the principles set out in Ramage v Waclaw that exceptional or special circumstances are required where a claim in equity is pursued, as is the case here.
Each of Scallan v Scallan and Hewitt v Gardner; Hewitt v Gardner, which were matters before the Supreme Court of New South Wales, referred to and considered r 7.10 of the Uniform Civil Procedure Rules 2005 (NSW) (or its predecessor, Pt 8 r 16 of the Supreme Court Rules 1970 (NSW)). This rule (and its predecessor) enables the court to appoint a representative of a deceased person's estate where the estate has an interest in the proceedings but is not currently being represented. The equivalent provision in Western Australia is O 18 r 15(1) of the Rules of the Supreme Court 1971 (WA) (Rules).
In Scallan v Scallan, the plaintiff was a beneficiary under a will of which her brother was the executor. She submitted that 'clearly enough' the executor would not be willing to bring an action against himself, and that her position was analogous to the position of a beneficiary seeking to bring proceedings for the enforcement of a right of action which the trustee refused to bring. Windeyer J rejected this submission and held that the plaintiff's alleged difficulty could be resolved by obtaining a grant of administration ad litem. In relation to Pt 8 r 16 of the Supreme Court Rules 1970 (NSW), his Honour considered this rule did not assist the plaintiff 'if the proceedings could not be commenced without such an order'.[33] On this basis, his Honour concluded that the proceedings were a nullity.
[33] Scallan v Scallan [10].
In Hewitt v Gardner; Hewitt v Gardner, two proceedings were ordered to be heard together. The first were proceedings under the Family Provision Act 1982 (NSW). The second raised two matters: first, a claim of undue influence in relation to the transfer of the family home; and second, an order for the grant of probate in relation to an earlier will. In that case, it was not disputed that the plaintiffs had standing to challenge the will, although Ward J considered they did not have standing to bring the undue influence claim, which was a cause of action of the estate. In circumstances where the entire proceedings could not be considered a nullity, her Honour considered there was power under r 7.10 of the Uniform Civil Procedure Rules 2005 (NSW) to appoint a representative to maintain the proceedings in relation to the undue influence claim.[34]
[34] Hewitt v Gardner; Hewitt v Gardner [30] - [32], [87].
In Pekel v Humich,[35] Master Sanderson considered whether proceedings commenced on behalf of an estate by a plaintiff, who had not yet obtained a grant of letters of administration at the time the writ was issued, but did so subsequently, were a nullity. Master Sanderson concluded that, by reason of s 8 of the Administration Act, the grant of probate after the issue of the writ had the effect of validating the proceedings. That is, this section operated as a 'relation back from the time of the grant of letters of administration'.[36] However, in his view, neither O 18 r 15 nor O 2 r 1 of the Rules[37] could cure any defect in the proceedings.[38] Similarly, in Avsar v Wesland Healthcare Ltd, Chaney DCJ considered the irregularity in the proceedings, caused by the issue of a writ by the plaintiff, was capable of being cured.[39] In that case, the plaintiff was entitled as of right to bring some, but not all, of the claims in the proceedings the subject of the writ. Given this, his Honour concluded the writ was validly issued and was not a nullity.
[35] Pekel v Humich (Unreported, WASC, 3 December 1998).
[36] Pekel v Humich (9).
[37] As they were at the time the case was decided. The current form of these provisions are substantially similar to those which were considered by Master Sanderson.
[38] Pekel v Humich (11).
[39] Avsar v Wesland Healthcare Ltd [2005] WADC 74 [43].
The facts of these cases can be distinguished from this case. At present, there has been no grant of probate in respect of the estates of either Mr or Mrs Powell. As a consequence, there is no legal personal representative of either estate. The plaintiff has commenced probate proceedings in respect of each of the wills, seeking an order that the first defendant be passed over as an executor. The proceedings in relation to the will of Mr Powell is significantly more advanced than the proceedings in relation to Mrs Powell or these proceedings.
The claim made by the plaintiff in relation to the Broome Property is a chose of action of the estates of Mr and Mrs Powell. As such, it is a claim that is properly made by their estates. Because there is no legal personal representative of these estates, it cannot be said that there is a trustee who has refused or is unwilling to take action in respect of the claim.
Counsel for the plaintiff submitted that the effect of the defendants' position was that there was no ability for a beneficiary or one of the named executors to protect the assets of a deceased estate while contested probate proceedings were on foot. I do not agree.
As the plaintiff is aware, he is able to seek orders under s 35 of the Administration Act to enable him to pursue the claims in these proceedings. An application under s 35 of the Administration Act was brought in CIV 2403 of 2023 by the plaintiff in February 2024 (although, I accept it was not limited to the prosecution of these claims). On 27 March 2024, by consent, this application was adjourned sine die. Since that date, there has been no attempt by the plaintiff to amend this application or relist it for hearing.
The plaintiff says that the lack of assets in the estate of Mr Powell means an independent interim administrator is unlikely to accept an appointment or pursue these claims. While there may be some merit in this argument, this does not mean that an application under s 35 of the Administration Act cannot be pursued. As was noted by Master Sanderson in Vallelonga v Sorgiovanni, in considering whether an interim or limited administrator should be appointed (and, if so, who), the court will consider whether the appointment is in the interests of justice and the best interests of all parties connected with the estate.[40] That is, in my view, it is possible that the plaintiff could be appointed as an interim or limited administrator to pursue the present claims. In any event, if an interim or limited administrator were appointed and refused to pursue the claims, this may be evidence of the 'exceptional or special' circumstances required for the plaintiff to pursue these claims in his own name.
[40] Vallelonga v Sorgiovanni [2017] WASC 323 [9].
To adopt the succinct judgment of Knox CJ considering a similar situation in Watkins v Combes,[41] I accept that in respect of the claim made by the plaintiff in relation to the Broome Property, there is a 'fatal defect as to parties'.
[41] Watkins v Combes (1921) 29 CLR 317.
On this basis, I consider that there is no serious question to be tried as to whether the plaintiff can pursue a claim in his own name in respect of the Broome Property, and the application for an injunction should be dismissed.
Given this conclusion, it is strictly unnecessary for me to consider the remaining issues raised on the application. However, for completeness, I will address them briefly.
Claim in respect of the Broome Property
As summarised above, the claim in respect of the Broome Property is advanced on a number of alternative grounds: resulting trust, constructive trust, and tracing in reliance on Barnes v Addy.
The evidence is that almost the entirety of the purchase price for the Broome Property came from an account in the name of the first defendant, into which a significant sum from the sale of a property of Mr Powell as well as funds transferred from Mrs Powell's account (on the date of her death) had recently been deposited.
While the evidence of the first defendant is that there were conversations between her and Mr and Mrs Powell before an offer was made on a previous property, there is no evidence as to whether similar discussions occurred prior to the purchase of the Broome Property. The only evidence is that the first defendant was told soon after Mrs Powell's death in October 2022 that Mr Powell still wanted to purchase a property in Broome with the second defendant. However, there is no detail as to what was said prior to the offer and acceptance of the Broome property being signed on 9 December 2022.
There is no evidence at all from the second defendant as to any conversation he had with Mr Powell about the purchase of the Broome Property. His evidence was that he entered into a handwritten agreement with Mr Powell in relation to the Broome Property. The handwritten agreement dated 3 January 2023 records the parties' intention that the second defendant would, in effect, equalise his financial contribution to the purchase price through forgoing any entitlement to rental income and by paying expenses and the costs of renovation. Ultimately, the second defendant's financial contribution (taking into account stamp duty and the renovations) to the Broome Property was approximately 6% of the purchase price.
A resulting trust is a trust that arises in favour of the settlor or parties claiming through the settlor. Generally, a resulting trust arises in two different circumstances. First, where a person transfers property to another but has not disposed of their beneficial interest in the property. Second, where the purchase price is provided by a person other than the person holding the legal interest without intending the third party to have beneficial ownership of the property.[42] In this case, it is the second circumstance which is relied upon by the plaintiff. In a resulting trust, the focus is on the events that led to the purchase of the property.
[42] Heydon J D and Leeming M J, Jacobs' Law of Trusts in Australia (8th ed, 2016) [12-01].
In Calverley v Green, Gibbs CJ summarised the relevant principles in the following terms:[43]
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, ie, 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, for example, as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money.
[43] Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, 246 (Gibbs CJ).
The extent of the beneficial interests of the respective parties is determined at the time the property was purchased and the trust created. Acts after the purchase of the property, such as the repayment of any mortgage in relation to the property, are not relevant to the determination of the parties' interests in the land or the extent of the interests. These matters may, however, be relevant on an equitable accounting between the parties.[44]
[44] Calverley v Green (252) (Gibbs CJ).
At the time the second defendant obtained an interest in the Broome Property, he knew that Mr Powell had contributed most of the purchase price of the property. The handwritten agreement between them dated 3 January 2023 supports the assumption that this contribution was not a gift. As a result, I accept there is a serious question to be tried as to whether the second defendant held his interest in the Broome Property on resulting trust for the estate of Mr Powell and/or Mrs Powell.
The second defendant and Mr Powell were registered as joint tenants of the Broome Property. As joint tenants, each had an entitlement in the whole of the Broome Property.[45] On the death of Mr Powell, the whole of the Broome Property remained with the second defendant. Under s 227 of the Transfer of Land Act 1893 (WA) (TLA), on Mr Powell's death, the second defendant was entitled to be registered as the sole proprietor of the Broome Property. This is to ensure that the register accurately reflects the legal reality.[46]
[45] B Edgeworth, Butt's Land Law (7th ed 2017), [6.90].
[46] B Edgeworth, Butt's Land Law (7th ed 2017), [6.90].
Counsel for the second defendant contended that, by reason of s 68 of the TLA, on the registration of the second defendant's interest in the whole of the Broome Property, the second defendant's title became indefeasible except in the case of fraud. It is not necessary for the purposes of this decision to express any concluded view on this. The question as to whether this section applies on an amendment of the register on an application under s 227 of the TLA does not appear to have been the subject of consideration by the court and should await considered argument. It is sufficient to express the view that I do not consider that it is unarguable that the second defendant continued to hold his interest in the Broome Property on resulting trust for the estate of Mr Powell after the register was amended, to accurately reflect the legal reality of the ownership of the Broome Property following Mr Powell's death.
In contrast to a resulting trust, a constructive trust arises by operation of law and independently of the parties' intentions. It is a remedy imposed by the court irrespective of the parties' actual or presumed agreement or intent because, in certain circumstances, the court considers it is appropriate to impose on a person the duties of a trustee in respect of particular property.[47]
[47] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, 613 - 614 (Deane J).
The basis for the imposition of a constructive trust is that an equity is owed by the registered proprietor to the party who is claiming an interest in the land. For this reason, the critical focus is on the knowledge and conduct of the registered proprietor. This includes the context in which the person became the registered proprietor, and whether they did so as a volunteer.[48]
[48] Zekry v Zekry [2020] VSCA 336 [71] (Tate, Kyrou & Niall JJA).
There is a range of matters the court will take into account in determining whether to impose a constructive trust. These include who made direct financial contributions to the purchase price and costs associated with the purchase; whether there has been pooling of financial resources or other financial contributions made; and whether contributions have been made through labour and other non-financial means. The court can also take into account events that occur after the purchase of the property.[49]
[49] See, for example, Baumgartner v Baumgartner (1987) 164 CLR 137; Lloyd v Tedesco [2002] WASCA 63; Miller v Sutherland (1990) 14 Fam LR 416 (NSWSC); Willis v Western Australia [No 3] [2010] WASCA 56.
I am satisfied that there is a sufficient likelihood of success of establishing that Mr Powell (and/or Mrs Powell) contributed almost the entirety of the purchase price of the Broome Property and that, as a consequence, a resulting or constructive trust should be imposed over the proceeds of the sale of this property. As a result, I consider that there is a serious question to be tried (at least on this issue) which would justify preserving the status quo pending the trial, if the application were brought by a party with standing.
Balance of convenience
The starting point is that, in general, the balance of convenience will favour the preservation of a trust fund until a final determination of the dispute can occur. In circumstances where the funds the subject of the application are said to be the subject of a resulting trust or over which a constructive trust should be imposed, an important factor in the balance of convenience is the recoverability of these funds.[50]
[50] Petar v The Macedonian Orthodox Community Church St Petka Inc [2006] NSWCA 277 [60].
The second defendant's evidence is that he wishes to have access to the funds from the sale of the Broome Property to pay legal fees associated with these proceedings, to repay certain loans, and to purchase another property in Broome. There is no evidence before me as to the second defendant's financial position, or whether the second defendant could repay these funds to the plaintiff if an order for repayment was made at trial. There is also no evidence that the second defendant will be unable to defend the claim against him if an injunction were granted.
Given these matters, it is my view that the balance of convenience would support preserving the status quo and granting an injunction, if the claim were advanced by a proper party.
Delay
In opposing the application, the second defendant also referred to the plaintiff's delay in bringing the application. Counsel for the second defendant drew attention to the terms of the undertakings given by him.[51] The first specifically noted that the plaintiff or the executors of Mr Powell's estate would obtain orders in relation to the proceeds from the sale of the Broome Property within 56 days.[52] This was agreed to be extended until 19 October 2024.[53]
[51] ts 41 - 42.
[52] Affidavit of David Anthony Powell filed 16 October 2024, 'DP-26'.
[53] Affidavit of David Anthony Powell filed 16 October 2024, 'DP-31'.
Since the date of the original undertaking, no orders have been sought or obtained in relation to the proceeds of sale.
Counsel for the plaintiff did not accept there had been any relevant delay which would disentitle the plaintiff to the relief sought. Reference was made to the mediation in CIV 2403 of 2023, which the second defendant attended. It was submitted that when these negotiations broke down, these proceedings were commenced.[54]
[54] ts 57.
While I accept that the fact that the mediation which occurred in CIV 2403 of 2023 provides an explanation as to some of the delay in pursuing this application, it is not a complete answer. The mediation occurred on 19 July 2024. Since that date, numerous subpoenas have been issued, discovery has been given by the parties, and there have been a number of case management conferences. However, there is no explanation as to why the plaintiff has not sought to relist his application under s 35 of the Administration Act.
While I accept that there has been delay by the plaintiff in bringing this application, for the following reasons, I do not consider that the delay is such that I would have declined to grant the injunction if the plaintiff had standing to bring a claim in respect of the Broome Property. First, there is no suggestion that the second defendant has been prejudiced by any delay in bringing this application. The proceeds of sale have been placed into an interest bearing trust account and he has not had access to them. Second, given the relative strength of the claim that could be advanced by Mr Powell's estate (and/or Mrs Powell's estate) in relation to these proceeds (given the inference that is open that the money for the purchase price originated from Mr and Mrs Powell), I do not consider this delay in itself would be a reason not to grant an injunction to a party who had standing.
Conclusion
Given my conclusion that the plaintiff does not, at present, have standing to bring a claim in respect of the Broome Property, the application for an interlocutory injunction must be dismissed.
My preliminary view is that these proceedings should be stayed pending the determination of the contested probate proceedings, or the outcome of any application for the appointment of an administrator ad litem. However, before making any orders, I will hear from the parties as to the appropriate orders, including as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
29 OCTOBER 2024
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