Public Trustee -v-

[2007] NSWSC 1066

CITATION:	Public Trustee -v- [2007] NSWSC 1066
HEARING DATE(S):	18 September 2007
JUDGMENT OF:	Gzell J
EX TEMPORE JUDGMENT DATE:	18 September 2007
DECISION:	Order that plaintiff would be justified in defending claims in the District Court proceedings
CATCHWORDS:	PROCEDURE - Court's opinion sought under the Trustee Act 1925, s 63 - Letters of administration issued to plaintiff on death of deceased intestate - Father of deceased commenced District Court proceedings on 11 April 2007 alleging an oral loan payable on demand made on 9 April 1997 and a further oral loan made in February 2002 - In each case the moneys were paid to purchase property of the first of which the deceased was the sole registered proprietor in the second of which the deceased held a two tenth interest the other purchasers being the father and the brother of the deceased - Whether cause of action for first loan accrued on 9 April 1997 and action statute barred - Whether the presumption of advancement applied to the second loan
LEGISLATION CITED:	Trustee Act 1925 Wills Probate and Administration Act 1898 Family Provision Act 1982 Limitation of Actions Act 1958 (Vic) Limitation Act 1969
CASES CITED:	Young v Queensland Trustees Ltd (1956) 99 CLR 560 Ogilvie v Adams [1981] VR 1041 Nelson v Nelson (1995) 184 CLR 538 Calverley v Green (1984) 155 CLR 242 Norton v Ellam (1837) 2 M & W 463 (150 ER 839) Jacobs’ Law of Trusts in Australia, 7th ed, LexisNexis Butterworths, Australia, 2000
PARTIES:	Public Trustee of New South Wales - Applicant
FILE NUMBER(S):	SC 3884/07
COUNSEL:	Mr D M Flaherty - Applicant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

TUESDAY 18 SEPTEMBER 2007

3884/07 PUBLIC TRUSTEE –v-

EX TEMPORE JUDGMENT

1 There is before the Court an application under the Trustee Act 1925, s 63 for an opinion, advice or direction of the Court.

2 The Public Trustee is in the process of administering the estate of the late Ronald Danial Fenech. The total value of the deceased's estate is estimated to be approximately $400,000. One of the assets in the estate is a property known as 49 Cuthill Road, Cobbitty, in New South Wales in which the deceased's held a two-tenth share.

3 The deceased died intestate on 19 February 2005 and letters of administration were granted to the Public Trustee by the Supreme Court of New South Wales on 7 June 2006.

4 The deceased formed a relationship with Lola Anne Oliver from which two children were born, Tristam on 27 August 1999 and Magenta on 27 April 2003.

5 By force of the Wills Probate and Administration Act 1898, s 61(B)(4) the whole of the deceased's estate passes to Tristam and Magenta in equal shares.

6 Ms Oliver has, in separate proceedings, sought an order for provision to be made for her out of the deceased's estate pursuant to the Family Provision Act 1982, s 7.

7 On or about 11 April 2007 the father of the deceased, Charles Joseph Fenech, commenced proceedings in the District Court at Penrith claiming that at the time of his death the deceased was indebted to him in the sum of $92,244.92 together with interest calculated at approximately $74,000 and continuing at a specified daily rate. The total claim by Charles Fenech against the Public Trustee appears to be of the order of $160,000-$170,000 plus the costs of prosecuting the claim.

8 The statement of claim in the District Court proceedings alleges that Charles Fenech lent the deceased $65,000 on 9 April 1997, the loan being repayable on demand together with interest if also demanded. Particulars were sought and given of the pleading. The particulars allege that the $65,000 was paid to a third party on behalf of the deceased when he purchased a property known as 33 Kent Road, Narellan. The loan agreement is alleged to have been purely oral and no demand was made on it until 7 June 2005, some three months after the death of the deceased. The deceased was the sole registered proprietor of the Narellan property.

9 In February 2002, the deceased sold the Narellan property and used the entire proceeds of sale to purchase the two-tenth share in the Cobbitty property. The co-owners were Charles Fenech and a brother of the deceased, David Fenech. The purchase price was approximately $960,000.

10 The statement of claim alleges that the loan was $19,180, being the deceased's share of monies paid at the time of the purchase. In addition to that, it is claimed that the deceased's share of stamp duty was $7,738.80 and the deceased's share of legal costs and disbursements was $326.12, giving a total for the second alleged loan of $27,244.92.

11 Particulars of the second loan were sought and given. It is alleged that monies as particularised in the statement of claim comprised portion of payments totalling $259,319.53 and that the monies were advanced to both the deceased and David Fenech to enable the purchase of the property to be completed. The particulars allege that the deceased's share of the monies expended by Charles Fenech was the amount of $19,180 specified in the statement of claim. The particulars allege that this loan was also purely oral and the first time any demand for repayment was made was on 7 June 2005.

12 It is settled law that a loan payable on request, that is, one where no time for repayment is specified or where the loan is payable on demand, creates an immediate debt. This means that the lender's cause of action accrues when the borrower receives the money. The lender can then commence action for its recovery at any time. Because the cause of action accrues at the first moment the lender commence action, the loan is subject to a six year limitation period from when the borrower receives the money.

13 In Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566 it was said:

"A loan of money payable on request creates an immediate debt. Speaking of a promissory note payable on demand Parke B in Norton v Ellam (1837) 2 M & W 463 (150 ER 839) said: “It is the same as the case of money lent payable upon request, with interest, where no demand is necessary before bringing the action. There is no obligation in law to give any notice at all; if you choose to make it part of the contract that notice shall be given, you may do so. The debt which constitutes the cause of action arises instantly on the loan. Where money is lent, simply, it is not denied that the statute begins to run from the time of lending”.”

14 Likewise in Ogilvie v Adams [1981] VR 1041 at 1043 Fullagher J said, in relation to a defence under the Limitation of Actions Act 1958 (Vic):

"In my opinion there can be no doubt as to how the aforesaid question of construction should be answered, and indeed I consider that, from the late seventeenth century at the latest, there could be only one answer to it, namely, that the case discloses a loan the only terms of which were those acknowledged in writing by the borrower to the lender, and no demand is necessary to found the cause of action for repayment, and the cause of action commenced instanter upon the making of the loan. Where there is a loan of money simpliciter (i.e. with nothing at all said as to repayment), the money is repayable instanter. Where there is a loan of money and the borrower contracts to repay on demand, again the money is repayable instanter . Where there is a loan of money which is recorded or acknowledged by the parties to be a loan repayable on demand, again the money is repayable instanter ."

15 The Limitation Act 1969 s 14(1)(a) provides that an action on a cause of action founded on contract not being a cause of action founded on a deed is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

16 In my opinion, clearly, the first loan is not maintainable by Charles Fenech since the relevant limitation period ran from the moment the cause of action fell due. If the claim for the alleged debt is not maintainable, then Charles Fenech is not entitled to interest on the debt.

17 That defence is not available with respect to the second alleged loan but there is an argument that the presumption of advancement applies. In Nelson v Nelson (1995) 184 CLR 538 at 547 Deane and Gummow JJ said this:

"The presumptions operate to place the burden of proof, if there be a paucity of evidence bearing upon such a relevant matter as the intention of the party who provided the funds for the purchase. The first presumption is that where a person in the position of Mrs Nelson paid the purchase price for the Bent Street property and caused it to be transferred to other persons, they hold the property upon trust for the person who provided the purchase money. The other presumption, that of advancement, is perhaps not strictly a presumption at all. Rather, the position is that there are certain relationships from which equity infers that any benefit provided for one party at the cost of the other has been provided by way of “advancement”. The consequence is that the equitable estate follows the legal estate and is at home with the legal title; there is an absence of any reason for assuming a trust arose. ( Calverley v Green (1984) 155 CLR 242 at 255-256, 265, 267)."

18 The matter is discussed in Jacobs’ Law of Trusts in Australia, 7th ed, LexisNexis Butterworths, Australia, 2000 at [1212]:

“A resulting trust is raised in the foregoing circumstances because the court presumes, in the absence of evidence to the contrary, that the person paying the purchase money intended to obtain the beneficial interest in the property. But where the legal title is, on a purchase, vested in someone whom the person providing the purchase money is under an obligation to support, namely, a wife, child or someone to whom the person stands in loco parentis, there is no presumption of a resulting trust in favour of the purchaser; there is, on the contrary, a presumption that the property was vested as an absolute gift or as an advancement."

19 The onus will be upon Charles Fenech in the proceedings in the District Court to exclude the presumption of advancement.

20 While the Public Trustee's prospects of success in resisting the second alleged loan are more problematic than his prospects of success with respect to the first loan because of the limitation point, there is a sufficient basis for the operation of the presumption of advancement together with some confusion with respect to the alleged share of the deceased of the second loan, as distinct from any amount said by Charles Fenech to be due by the deceased's brother, to warrant the Public Trustee in defending the proceedings.

21 I, therefore, make the following order: in answer to the question raised for the Court's opinion, advice or direction under the Trustee Act 1925 s 63 the Court orders that the Public Trustee would be justified in defending the claim or claims by Charles Fenech against the estate of the late Ronald Danial Fenech, deceased, as pleaded in the District Court at Penrith in proceedings 30/07. The Court orders that the costs of and incidental to the summons, including the costs of and incidental to obtaining the advice of counsel on the question the subject of the application be paid out of the estate of the late Ronald Danial Fenech, deceased.

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