Simonson Properties Pty Ltd v Hardy
[2014] NSWSC 229
•14 March 2014
Supreme Court
New South Wales
Medium Neutral Citation: Simonson Properties Pty Limited v Bruce Lachlan Hardy and Anor [2014] NSWSC 229 Hearing dates: 24, 25, 26 February 2014 Decision date: 14 March 2014 Jurisdiction: Equity Division Before: Sackar J Decision: See paragraphs 152 and 153
Catchwords: EQUITY - trusts and trustees - express trust - resulting trust - whether trust arises on basis of custom and practice within family business - whether clear expression of intention
EQUITY - assignment - where insufficient evidence relating to purported assignment - whether statutory provision prevents assignment of equitable interest - whether writing requirements satisfied - whether clear intention to make an immediate disposition
PERSONAL PROPERTY - ownership and possession - nature and meaning of ownership of and property in personalty - acquisition of ownership of chose in action - evidence of ownership - where lack of records - where physical property remains property of the StateLegislation Cited: Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Limitation Act 1969 (NSW)
Road Transport Act 2013 (NSW)
Road Transport (Vehicle Registration) Act 1997 (NSW)
Road Transport (Vehicle Registration) Regulation 1998 (NSW)Cases Cited: Adamson v Hayes (1973) 130 CLR 276
Alexander v Webber [1922] 1 KB 642
Ali v Nationwide News Pty Ltd [2008] NSWCA 183
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Barnes v Addy (1874) LR 9 Ch App 244
Byrnes v Kendle (2011) 243 CLR 253
Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
Commissioner of Taxation v Linter Textiles Australia (in liquidation) (2005) 220 CLR 592
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Cubillo v Commonwealth of Australia [2000] FCA 1084; (2000) 174 ALR 97
Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510
Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643
Dyer v Dyer (1788) 30 ER 42
FAI Traders Insurance Co Ltd v ANZ McCaughan Securities Ltd (1990) 3 ACSR 279
Federal Commissioner of Taxation v Everett (1980) 143 CLR 440
Flack ν Chairperson, National Crime Authority (1997) 150 ALR 153
Fowkes v Pascoe (1875) 10 Ch App 343
Gatward v Alley (1940) 40 SR (NSW) 174
Hung v Warner, in the matter of Bellpac Pty Ltd (receivers and managers appointed) (in liquidation) [2013] FCAFC 48
Jones v Canavan (1972) 2 NSWLR 236
Jones v Dunkel (1959) 101 CLR 298
Kauter v Hilton (1953) 90 CLR 86
Kent v The Vessel 'Maria Luisa' (No 2) (2003) 130 FCR 12
King v Victoria Insurance Co Ltd [1896] AC 250
Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85; [1993] 3 All ER 417
Napier v Public Trustee (1980) 32 ALR 153
Neilson v Letch (No 2) [2006] NSWCA 254
Norman v Federal Commissioner of Taxation (1963) 109 CLR 9
PT Ltd v Maradona Pty Ltd (1992) 27 NSWLR 241
Re Transphere Pty Ltd (1986) 5 NSWLR 309
Russell v Wilson (1923) 33 CLR 538
Torkington v Magee [1902] 2 KB 427
Turner v Noyes (1903) 20 WN (NSW) 266
Vandervell v Inland Revenue Commissioners [1967] 2 AC 291
Warner v Hung, in the matter of Bellpac Pty Limited (receivers and managers appointed) (in liquidation) (No 2) (2011) 297 ALR 56
Xu v Council of the Law Society of New South Wales (2009) 236 FLR 480; [2009] NSWCA 430Texts Cited: Cross on Evidence, JD Heydon, 9th edition Category: Principal judgment Parties: Simonson Properties Pty Limited - plaintiff
Bruce Lachlan Hardy - first defendant
Patricia Zoe Hardy - second defendantRepresentation: Counsel:
G Drew - plaintiff
M Condon SC - defendants
Solicitors:
Meridian Lawyers - plaintiff
Vaughan Zarb & Co - defendants
File Number(s): 2013/30209
Judgment
Proceedings
By its amended statement of claim filed 14 May 2013, Simonson Properties Pty Ltd (the plaintiff) seeks a declaration that Mrs Patricia Hardy (the second defendant) holds the right to display a NSW licence plate on trust for it. The plate in question bears the number 116 (plate 116) and the dispute is concerned with the right to display it as recognised by the relevant authority (the right to display).
The plaintiff also claims an order that Mrs Hardy do all things necessary to authorise the Roads and Traffic Authority to transfer the right to display plate 116 to it.
Abandonment against the first defendant
On the afternoon of the first day of hearing, and through the course of the morning of the second day, it became clear that counsel for the plaintiff was unable to articulate with precision or perhaps at all the case against the first defendant.
It had also become clear that the transfer to the second defendant of legal title to the right to display in 2004 was not challenged as a breach of the fiduciary obligations, if any, of the first defendant. The plaintiff therefore abandoned its case against the first defendant. It was hence unnecessary for me to determine the issue of whether the first defendant owed fiduciary obligations, the nature and scope of any such obligations and whether they had been breached. This also led to an abandonment of any claim for equitable compensation against the first defendant.
As a further consequence of the abandonment of the case that Mr Hardy breached his fiduciary obligations, any liability of the second defendant as to her knowing receipt as a third party (under the first limb of Barnes v Addy (1874) LR 9 Ch App 244) was no longer part of the plaintiff's case.
The plaintiff was given leave to amend its statement of claim in order to reflect its narrowed case. The result was that the plaintiff only sought a declaration that the second defendant held plate 116 on trust for the plaintiff and that, as trustee, she do all things necessary to ensure the transfer of the right to display to the plaintiff.
I therefore made orders that there be judgment in favour of the first defendant and that the plaintiff pay the first defendant's costs of the proceedings.
Background facts
The plaintiff is a private company whose shares are wholly owned by Simonson Property Holdings Pty Ltd (Holdings). The shares in Holdings are owned by a number of different branches of the extended Simonson family.
The Simonson family has owned and operated a number of companies stretching back to 1879, including a trading company incorporated in Victoria at about that time.
In about the 1920s, a Mr Leopold John Simonson (Mr Leopold Simonson) extended the operations of the trading company to New South Wales, initially through a company called M Simonson (Sydney) Pty Ltd.
The trading activities of the Simonson family in Sydney however were effectively run by Mr John Arthur Simonson (Mr John Simonson) from about 1960. The second defendant is his daughter.
In about 1980, the Simonson family restructured its trading operations so as to merge its various state businesses. This occurred through the incorporation of a company called Elmica Pty Ltd on 19 May 1980. Elmica later changed its name to M Simonson Australia Pty Ltd in 1996 and to Belgundie Pty Ltd in 2004. For the purposes of this judgment, I will refer to this company as MSA despite it having a different name at various times.
From about 19 May 1980 until his retirement on 21 December 1986, Mr John Simonson was the managing director of MSA.
After his retirement from MSA in 1986, Mr Bruce Simonson took over as the managing director of MSA. Mr Bruce Simonson was a director of MSA from 4 August 1980 to 2 April 2004.
The first defendant, Mr Bruce Hardy, was involved in the activities of both MSA and the plaintiff from at least 1980. He was appointed as a director of MSA from 4 August 1980, and remained a director until 2 April 2004.
Mr Hardy was involved with the plaintiff in various roles, including as a director and as Chief Executive Officer. Specifically, Mr Hardy was a director of the plaintiff from 26 June 1981 to 2 April 2004, as an alternate director from 16 April 2007 to 4 September 2007 and as a director from 4 September 2007 to 26 March 2012.
The precise nature of Mr Hardy's role was initially contested at the trial, particularly in relation to the issue of whether he owed fiduciary obligations, but as a consequence of the abandonment of that part of the plaintiff's claim it is unnecessary to come to a concluded view on that issue.
The first defendant and the second defendant were married on 9 December 1974.
The history of plate 116
It is important to note several aspects of the history of plate 116, which is interwoven somewhat with the corporate history described above.
First, it should be observed that it is a requirement of the relevant government authority that the registration of a vehicle, and the right to display certain numberplates, must be in the same name. This requirement appears as part of the terms and conditions for their issue.
Secondly, the physical number plate always remains the property of the relevant statutory authority. The Road Transport (Vehicle Registration) Act 1997 (NSW) (repealed in 2013) provided in section 13(1) that any plates issued by Roads and Maritime Services for the purpose of authorising the use of a registrable vehicle remained the property of the authority. This provision was replaced by section 67 of the Road Transport Act 2013 (NSW) to the same effect.
Thirdly, it was the practice of the family businesses that certain senior directors were entitled to the use of vehicles owned by the company. It was the general practice that both a senior director and their spouse were each entitled to a separate vehicle.
The plaintiff contends that it was the usual custom and practice of MSA that it would permit plate 116 to be displayed on the vehicle used by a senior employee or director (or their spouse) until their resignation or retirement, at which point plate 116 would be returned to MSA for use by another employee or director (the custom). The custom assumes critical importance, as will become clearer shortly, for both the claim of ownership by MSA and hence the imposition of a trust.
Mr Bruce Simonson gave evidence that plate 116 was obtained when the first, or one of the first, company vehicles was purchased in NSW. The plate was initially attached to the car driven by Mr Leopold Simonson in the 1920's and subsequently attached to the company car driven by John Simonson from at least 1983.
Upon the retirement of John Simonson as managing director in 1986, he retained possession of plate 116. It remained on a bronze Holden Commodore which had belonged to the company. The bronze Commodore was then driven by Marjorey Simonson, the wife of John Simonson.
The second defendant gave unchallenged evidence which I accept that it was her understanding that at the time of his retirement, Mr John Simonson had purchased two cars from MSA. The plate was affixed to one of these cars.
Mr Bruce Simonson gave evidence that, although he was the incoming managing director of MSA in 1986, he did not raise with Mr John Simonson the issue of transferring plate 116 to his own vehicle.
In or about 1994, Mrs Hardy contends that her father "gave" her the plate and that she transferred the plate from her mother's car to the car she was then currently driving (a Holden) which was registered in the name of MSA. Critically, the conversation set out in her affidavit as to what was said was not challenged in cross-examination. Indeed, counsel for the plaintiff did not cross examine her at all, although she attended court and was sworn.
Mr Hardy also gave evidence that he had a conversation with Mr John Simonson around this time to the effect that plate 116 should be put in the name of his eldest child, namely the second defendant.
On 15 December 1999, MSA acquired a 1997 Land Rover that was used by Mrs Hardy (the Land Rover). In her affidavit at paragraph [8], Mrs Hardy gave evidence that she exchanged that vehicle for another car of that model in 2004 and plate 116 was transferred to the new car. On the basis of the documents produced by the RTA, it is more likely that such a transfer instead occurred in 2005 but nothing turns on this slight discrepancy.
The restructure
During 2003, the unsatisfactory financial performance of the trading business operated through MSA led to increasing concern amongst its shareholders and directors. An Executive Committee was formed that made various decisions regarding the future prospects of the Simonson group of companies, and MSA in particular.
During the first half of 2004, a comprehensive restructure of the group of companies including MSA and the plaintiff was planned and in part implemented.
Mr Alan Russell, a director of the plaintiff and a grandson of Mr Leopold Simonson, gave evidence that a meeting of the Executive Committee was held in or about January 2004 at which Mr John Simonson and Mr Bruce Hardy attended. In his affidavit he said:
[17] I do not now recall precisely what was said by any particular person at the meeting, but do recall that the committee made unanimous decisions to the effect that:
a) the trading business would be sold and any other assets that were no longer needed (such as furniture, equipment, racking) would be sold or written off;
b) any remaining assets would go into the property business which would continue to be carried on as Simonson Properties;
c) Prentice Parbury Barilla (PPB) was to advise on the sale of the trading business and the restructure and consolidation of the remaining assets and entities in the Simonson group of companies;
d) redundant companies, including M Simonson Australia, would eventually be deregistered; and
e) Bruce Hardy would generally manage and control that process.
Under cross-examination, Mr Russell agreed that he had taken but had since destroyed his handwritten notes of this meeting.
Both Mr Hardy and Mr Bruce Simonson resigned as directors of MSA and the plaintiff on or about 2 April 2004. The incoming directors of MSA were Mr Alan Russell and Mr John Simonson.
Mr John Simonson had returned as a director after 17 years in retirement.
On or about 13 May 2004, it is asserted by the plaintiff that certain resolutions were passed at a meeting of the board of directors of MSA, adopting the earlier recommendations of the Executive Committee. It was submitted that Mr John Simonson and Mr Alan Russell attended this meeting, as did Mr Hardy (although he was not at this point a director of MSA).
Mr Hardy contested whether at such a meeting resolutions as alleged were passed. No copy of any board minute is in existence but Mr Russell did attach a copy of his handwritten contemporaneous notes of the 13 May 2004 meeting to his affidavit. The notes contain no reference to any unanimous resolutions having been taken or an acknowledgement that plate 116 (or more relevantly, the right to display) was discussed at the meeting. Indeed it is common ground it was not.
Mr Hardy gave evidence that he did not recall at any point in time that plate 116 was recorded as an asset of any company within the group. He accepted there was never any discussion about the transfer of plate 116 at any point in time. Again it is also common ground that plate 116 has never been recorded as an asset of MSA or of any company within the group.
The restructure in 2004 involved the sale of most of the assets of MSA to a third party, AAA Trading Pty Ltd. Mr Hardy gave evidence that the only assets remaining after the sale were the board room table and chairs.
In addition to the sale of assets to AAA Trading Pty Ltd, certain individuals were entitled to purchase vehicles at their written down value. The first and second defendant exercised this entitlement in relation to the cars they were driving at the time.
It is not disputed that MSA intended to, and did sell, the Land Rover to Mrs Hardy in return for a payment of $8,500.
On or about 14 July 2004, a document was signed regarding the registration of the Land Rover, at that time bearing plate 116 and registered to MSA. The transfer of registration to Mrs Hardy was signed by Mrs Hardy and a Mr Rafael Lazo, who at that time was employed as an accountant by MSA.
On or about 15 July 2004, a document was signed regarding the transfer of the right to display to Mrs Hardy. Mrs Hardy and Mr Lazo signed the transfer. It is not disputed that the legal title in the right to display was transferred from MSA to Mrs Hardy for no consideration.
At this time, another vehicle with number plate (namely MSA116) was it seems also transferred to Mr or Mrs Hardy for no consideration. The plaintiff does not seek to impugn this transfer.
After he resigned as a director in 2004, Mr Hardy became a consultant and later an employee who was requested to assume responsibility for the sale of the assets of MSA and thereafter to assist in the ongoing management of the plaintiff.
On or about 16 April 2007 Mr Hardy was re-appointed as a director of the plaintiff.
On or about 18 May 2007 an application to voluntarily deregister MSA under section 601AA of the Corporations Act was lodged with ASIC. MSA was therefore deregistered on 5 August 2007.
In January 2010 Mr John Simonson died. In August 2011 the mother of the second defendant, Mrs Marjorey Simonson, also died.
On 6 March 2012, Mr Hardy gave notice via email that he would be retiring as CEO of the plaintiff on 11 April 2012. He ceased to be a director on 26 March 2012.
Upon his retirement as CEO of the plaintiff in April 2012, the plaintiff requested the return of the plate and the right to display. Both defendants have refused to comply with this request and deny that the plaintiff is entitled to make such a request.
Issues arising in these proceedings
There are a number of issues arising in these proceedings, even though the case was considerably narrowed from the second day.
The plaintiff contends that Mrs Hardy received the right to display in July 2004 on trust for MSA, and that it is the proper assignee of MSA's equitable interest.
The plaintiff contends that as a result of the restructure in 2004 and in particular the resolution of the board meeting of MSA on 13 May 2004 all of the residual or remaining assets of MSA, including its purported equitable interest in the right to display, were validly transferred or assigned to the plaintiff.
The effectiveness of the assignment in relation to any assets, but plate 116 in particular, is under challenge by the second defendant on the basis that it is contrary to the relevant statute, the terms of the resolution itself, or that the clear expression of intent by MSA has not been properly evidenced, or that writing requirements have not been satisfied. In her defence, the second defendant also denies the custom and contends that she simply purchased a motor vehicle in July 2004, which bore plate 116, and denies the existence of any trust.
Legal Principles
Given the number of legal issues that arise it is in my view desirable if I briefly deal with some of these prior to addressing the factual issues.
The statutory framework for the registration of vehicles and plates
Although I already briefly referred to it, it is desirable if I set out the applicable legislation that governs the registration of vehicles and the display of certain number plates in New South Wales.
The provisions of the Road Transport (Vehicle Registration) Act 1997 (NSW) were in force until their repeal in 2013. The relevant provisions were:
8A Special number-plates
(1) The regulations may make provision for or with respect to the issue by the Authority of number-plates (special number-plates) that have a special design, format or content approved by the Authority, and for or with respect to the use, transfer, replacement and surrender of special number-plates.
(2) The Authority is authorised to enter into contractual and other commercial arrangements (special number-plate arrangements) for the provision of marketing and other services to the Authority in
connection with the issue of special number-plates.
...
13 Ownership of devices, plates or documents
(1) Any devices, plates or documents issued by the Authority for the purpose of authorising the use of a registrable vehicle remain the property of the Authority.
(2) Any special number-plate issued by the Authority (whether or not for the purpose of authorising the use of a registrable vehicle) remains the property of the Authority.
18 Prohibition on using unregistered registrable vehicles
(1) A person must not use an unregistered registrable vehicle on a road or on a road related area.
Maximum penalty: 20 penalty units
...
The provisions of the Road Transport (Vehicle Registration) Regulation 1998 (NSW) were in force until their repeal in 2007. The relevant provisions were:
18 Definitions
In this Part:
number includes a letter of the alphabet.
plate holder, in relation to a number-plate, means:
(a) in the case of a trader's plate-the trader to whom the trader's plate has been issued, or
(a1) in the case of a special number-plate-a special plate holder within the meaning of clause 21, or
(b) in the case of any other number-plate-each registered operator of the registrable vehicle in respect of which the number-plate has been issued.
vehicle number-plate means a number-plate other than a bicycle-rack number-plate.
20 Number-plates generally
(1) If the Authority registers a registrable vehicle it must assign a distinguishing registration number to the vehicle.
(2) The Authority must, on payment of the applicable scheduled fee for the issue of a vehicle number-plate or number-plates, issue:
(a) for each motor vehicle registered by the Authority (other than a motor vehicle referred to in paragraph (b) or (c))-2 vehicle number-plates bearing the registration number assigned to that motor vehicle, and
(b) for each motor bike or trailer registered by the Authority-at least one vehicle number-plate bearing the registration number assigned to that motor bike or trailer, and
(c) for each other registrable vehicle registered by the Authority-such number of vehicle number-plates as the Authority considers appropriate.
(3) A vehicle number-plate is to conform to such specifications as the Authority may require and must display:
(a) the matter "NSW" and such words (if any) as the Authority may determine with the approval of the Minister, or
(b) the words "New South Wales" and such other words (if any) as the Authority may determine with the approval of the Minister.
21 Special number-plates
(1) The Authority may enter into an agreement with any person under which that person (referred to as a special plate holder) has an exclusive right to use, subject to the payment of any applicable gazetted fee, a specified combination of numbers on a special number-plate.
Note: A special number-plate is defined in the Dictionary to mean a number-plate with a number that is comprised of:
(a) one to 6 letters only, or
(b) one to 6 numbers only, or
(c) a combination of one or more letters with one or more numbers, being a combination that does not exceed 6 letters and numbers, and:
(i) that is not routinely issued by the Authority, or
(ii) that the Authority has determined should be treated as a special number.
(2) Such an agreement may be expressed to have effect indefinitely or for a definite period.
(3) The rights exercisable by a special plate holder under such an agreement may not be assigned to any other person except with the approval of the Authority.
(4) Clause 23 applies to a special number-plate in the same way as it applies to any other number-plate, despite the provisions of any agreement under this clause.
24 Display of number-plates
(1) Unless otherwise approved by the Authority, a registered operator of a registered registrable vehicle must ensure that a vehicle number-plate issued by the Authority for the vehicle is permanently affixed to the vehicle so that (assuming the vehicle to be on level ground)...
[various visibility requirements are then set out]
26 Transfer of number-plate to another vehicle
The Authority may transfer a vehicle number-plate of a registrable vehicle to another registrable vehicle if:
(a) the registration of the registrable vehicle from which the number-plate is to be transferred was cancelled following an application under clause 41 for the surrender of
the registration, and
(b) where the vehicle has one registered operator-the same person is (or is to be) the registered operator of the registrable vehicle to which the number-plate is to be transferred, and
(c) where the vehicle has more than one registered operator-the Authority is satisfied that each operator who is living consents to the transfer, and
(d) where the vehicle from which the number-plate is to be transferred has more than one registered operator-the Authority is satisfied that all the registered operators have consented to the transfer, and
(e) the Authority is paid any applicable gazetted fee for the transfer.
27 Exchange of number-plates
If a registered operator of a registered vehicle surrenders a vehicle number-plate to the Authority, the Authority may issue another set of vehicle number-plates with a different number from the number of the surrendered number-plate subject to the payment of any applicable scheduled fee for that issue.
In the present case, particular reliance is placed by the second defendant on regulation 21 of the Road Transport (Vehicle Registration) Regulation 1998 (NSW) (regulation 21) in relation to her challenge to the assignment of the purported interest in the right to display by MSA to the plaintiff.
Proof of ownership
In Halsbury's Laws of Australia, it is noted at [195-2315] that:
Ownership refers to the fact of proprietorship of property and the collection of rights that may be exercised by the proprietor. In proving ownership, it is usually necessary to characterise the property in issue, distinguish between legal and equitable interests, identify the purpose for which any equitable interest is to be recognised, the capacity of the proprietor and the type of ownership. The proof of ownership will in part depend upon the method of acquisition and transfer.
In Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592 at 606, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ approved the statement of McLelland J in Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311 regarding "the imprecision of the notion that absolute ownership of property can properly be divided up into a legal estate and an equitable estate". Their Honours also noted the statement of Hope JA in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 519 that "an absolute owner in fee simple does not hold two estates, a legal estate and an equitable estate. He holds only the legal estate, with all the rights and incidents that attach to that estate."
In Gatward v Alley (1940) 40 SR (NSW) 174, Jordan CJ said at 178-180:
A good title to property, in the sense of such ownership as the law allows, consists in having the legal right to exercise with respect to it all such rights, as against all such persons as by law are capable of being exercised with respect to property of the class in question. A person who has possession of property but not ownership has, as a general rule, the same legal rights as the owner, save to the extent to which those rights are qualified as against the owner
...
De facto possession of a chose in possession is prima facie evidence of ownership, and also of itself creates a legal right to possess which is enforceable against anyone who cannot prove that he has a superior right to possess: any person who interferes with this legal right, without being able to prove a superior right, is therefore a wrongdoer.
In Kent v The Vessel 'Maria Luisa' (No 2) (2003) 130 FCR 12, Tamberlin and Hely JJ noted at 33 that "the notion of "ownership" carries a connotation of dominance, ultimate control and of ultimate title against the whole world".
In Cross on Evidence 9th Australian Edition at [41125] the author, J D Heydon, notes that:
There are also four main ways in which the ownership of real or personal property may be proved. The first consists of production of the documents of title which must, of course, be duly authenticated in the sense that their due execution must be proved unless they are produced from proper custody in circumstances giving rise to the presumption in favour of due execution, in the case of documents more than 20 years old. Possession is prima facie evidence of ownership, and a second way in which ownership may be proved is by proof of possession of the property in question. Thirdly, in the case of real estate, proof of possession of connected property in circumstances rendering it probable that the owner of such connected property would, in addition, be the owner of the property in question may rank as the third means of proving ownership. Finally, ownership may be proved under exceptions to the rule against hearsay, such as declarations by deceased persons against interest or in the course of duty. In certain circumstances, reliance might also be placed on statements in public documents.
Many of the authorities relating to assertions of ownership and for example questions of possession such as Russell v Wilson (1923) 33 CLR 538 and more recently Flack ν Chairperson, National Crime Authority (1997) 150 ALR 153 are directed towards chattels in the sense of physical items and not choses in action.
In this case, it was accepted by both parties that the right to display should be regarded as a chose in action. In Torkington v Magee [1902] 2 KB 427 at 430, Channell J defined choses in action as "personal rights of property which can only be claimed or enforced by action, and not by taking physical possession". In light of the circumstances that the physical plates remain the property of the relevant authority and it is the right to display that is a personal right of property incapable of physical possession as such that acceptance by the parties in my view is correct.
Proof of ownership will of course depend on the nature of the property and as I have already said the circumstances of its acquisition. A Dobbs certificate, for example, is provided by an authorised bank officer pursuant to a contract with a customer, and "the certificate of the officer of the bank is conclusive evidence of the amount and existence of the customer's indebtedness": Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643 at 654 (per Rich, Dixon, Evatt and McTiernan JJ).
The question of property rights associated with an item, which remains the physical property of a third party, is of course the subject of many authorities and one recent example involving the State will perhaps suffice. The NSW Court of Appeal considered the property subsisting in a passport over which a solicitor asserted a lien to secure the payment of fees in Xu v Council of the Law Society of New South Wales (2009) 236 FLR 480; [2009] NSWCA 430. Handley AJA noted at 490:
[52] The fact that the general property in an Australian passport always remained with the Commonwealth did not prevent the grantee of the passport having a special property in it. Possession of a chattel is a good title against anyone who does not have a better title: Gatward v Alley (1940) 40 SR (NSW) 174 at 179. The grantee of an Australian passport in possession of it is a bailee at will of the Commonwealth with a good title against everyone except the Commonwealth.
In Warner v Hung, in the matter of Bellpac Pty Limited (receivers and managers appointed) (in liquidation) (No 2) (2011) 297 ALR 56 at 70, Emmett J observed the differences between the possession of a chattel and an entitlement to a chose in action.
[53] Possession of goods gives rise to a presumption of ownership: see Russell v Wilson (1923) 33 CLR 538 at 546-7. Thus, actual possession may be sufficient to found an immediate right to possession that, in turn, could be the basis for an action in detinue. Ken Hung and Austcorp say that, since Ken Hung is in possession of the transfers and certificates in respect of the convertible bonds, he is presumed to be the owner of the convertible bonds, unless Bellpac can prove a better title.
[54] However, the possession of goods is clearly distinguishable from the circumstances of the present case. Ken Hung may be in possession of transfers and certificates, which are chattels, but he cannot have possession of incorporeal property such as convertible bonds. Possession of a chattel is very much different from entitlement to a chose in action, such as the convertible bonds. For as long as Ken Hung is in possession of the transfers and certificates in relation to the convertible bonds, there may be a presumption that he is entitled to possession of the transfers and certificates. However, that does not necessarily say anything about his entitlement to the beneficial ownership of the underlying convertible bonds. His position is comparable to that of a financier holding a mortgage over shares to secure a loan. That financier would ordinarily have possession of the mortgagor's share certificates, but such possession would not give rise to any presumption of title. Accordingly, no presumption arising from possession operates in favour of Ken Hung and Austcorp in the present case.
An appeal to the Full Federal Court was dismissed: Hung v Warner, in the matter of Bellpac Pty Ltd (receivers and managers appointed) (in liquidation) [2013] FCAFC 48.
Nevertheless, it is clear that the current situation is not comparable to a financier holding a mortgage, for example, over the right to display. On the one hand, the possession by Mrs Hardy of the physical plate does not necessarily say anything about her entitlement to the right to display. However, although the actual property in the plate was owned at all times by the RTA, the exercise of the right to display by Mrs Hardy from 1994 and earlier her father from 1986 is at least somewhat analogous to an exercise of actual possession, especially in these circumstances where it occurred without complaint or comment from MSA, the plaintiff or any other party from 1986 to 2012, a period of some twenty six years.
Custom or usage
The plaintiff asserts that the custom should form the basis for a finding that there was a clear intention, at least in July 2004, that Mrs Hardy would hold the right to display on trust for MSA. Counsel did not direct my attention to any authorities in which custom or practice played a role or otherwise in proving a clear expression of intention to create a trust. However I consider it would be theoretically open to do so, depending on the circumstances.
Custom or usage may be the basis for the implication of a term in a contract: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226.
In particular, in Con-Stan the High Court determined that the existence of a custom is a question of fact. There must be evidence that the matters relied on are so well known and acquiesced in that everyone making a contract in the situation can reasonably be presumed to have imported a term embodying them into the contract. A person may be bound by a custom notwithstanding the fact that he had no knowledge of it. But a term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement.
Such a custom, for the purposes of implication into the terms of a contract, is constituted by repetition of a particular set of acts. The custom must be notorious, uniform, reasonable and certain: FAI Traders Insurance Co Ltd v ANZ McCaughan Securities Ltd (1990) 3 ACSR 279 at 304-306.
On the other hand for example courts have not been receptive to the proposition that fiduciary duties can be excluded or diluted by custom in a particular business or profession: Alexander v Webber [1922] 1 KB 642 at 644 per Bray J. However, the scope of fiduciary duties may be modified in specific respects in the course of a particular trade, business or profession: Jones v Canavan (1972) 2 NSWLR 236 at 245.
It is not here asserted that custom and usage arises in a contractual context, nor as to modify fiduciary obligations. Rather, the custom and its notoriety within the extended Simonson family (in contrast to a particular and identified trade, industry or profession) is relied upon by the plaintiff as a factor pointing towards the factual finding of an intention on the part of MSA in 2004 or perhaps earlier that in effect the right to display would be held by Mrs Hardy on the basis of an express trust.
The creation of an express trust
The essential elements of an express trust are often referred to as the three certainties of intention, subject matter and object. In Kauter v Hilton (1953) 90 CLR 86 at 97, Dixon CJ, Williams and Fullagher JJ noted "the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries".
In Bahr v Nicolay (No 2) (1988) 164 CLR 604, Mason CJ and Dawson J at 618 noted that "in the absence of the manifestation of a clear intention to create a trust, the courts have been reluctant to hold that a trust exists".
In Byrnes v Kendle (2011) 243 CLR 253, the High Court considered whether oral evidence was admissible to demonstrate an absence of intention to create a trust. Gummow and Hayne JJ held, at 273-274, that where "an express inter vivos trust of personalty is said to have been created by informal writing or orally, then a dispute as to the presence of the necessary intention, despite inexplicit language, is resolved by evidence of what the Court in Kauter v Hilton identified as "all the relevant circumstances" (citation omitted).
Heydon and Crennan JJ, at 290, noted that intention in that context is:
...to be extracted from the words used, not a subjective intention which may have existed but which cannot be extracted from those words... in relation to alleged trusts which are not wholly in writing, the need to draw inferences from circumstances in construing the terms of conversations may in practice widen the extent of the inquiry, but it does not alter its nature.
In passing, it should be observed that where the beneficiary is sui generis and absolutely entitled, the beneficiary is entitled to possession of the trust property and to the indicia of title to the trust property: Turner v Noyes (1903) 20 WN (NSW) 266.
The presumption of a resulting trust
In the absence of a finding that the right to display was held by Mrs Hardy on express trust for MSA, the plaintiff contends in the alternative that the property was held on the basis of a resulting trust.
A resulting trust is presumed to arise by operation of law in certain cases in which the legal estate is transferred otherwise than for valuable consideration: Dyer v Dyer (1788) 30 ER 42. The presumption, of course, may be rebutted.
In Napier v Public Trustee (1980) 32 ALR 153, the High Court noted at 158 (per Aicken J, with the concurrence of Wilson, Mason and Murphy JJ):
The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be [subject to the presumption of advancement]... Each of the presumptions may be rebutted by evidence.
In Fowkes v Pascoe (1875) 10 Ch App 343 at 352, Lord Justice Mellish observed that "the presumption must, beyond all question, be of very different weight in different cases". His Honour contrasted the position of a man who invested a sum of stock in the name of himself and his solicitor, in which case strong evidence would be required that it was a gift and not held by the solicitor on a resulting trust, with the position of a man who makes an investment in his name and some person, "although not a child or wife, yet in such a position as to make it extremely probable that the investment was intended as a gift".
In Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 at 312, Lord Upjohn noted that the presumption of a resulting trust "is only a presumption and is easily rebutted. All of the relevant facts and circumstances can be considered in order to ascertain [a party's] intentions with a view to rebutting this presumption".
In Neilson v Letch (No 2) [2006] NSWCA 254, Mason P observed (McColl and Basten JJA agreeing) that:
[26] The resulting trust that is presumed in the circumstances referred to in the previous paragraph is itself capable of being displaced by evidence showing that the parties had a common intention to share an equal interest in the property and/or that the party making the disproportionate contribution intended that the parties would have an equal interest in the property notwithstanding. As an American judge (Lamm J) stated in Mackowik v Kansas City St J & C B R Co 94 SW 256, 262 (1906):
Presumptions ... may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts.
[27] Lord Upjohn said in Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 at 313:
In reality the so-called presumption of a resulting trust is no more than a long stop to provide the answer when the relevant facts and circumstances fail to yield a solution.
[28] Evidence of the intention of the relevant party or parties may be drawn from contemporaneous statements of intention, subsequent admissions or inferred from the "facts as to subsequent dealings and of surrounding circumstances of the transaction" (Cummins at [65]). In Calverley, Mason and Brennan JJ (at 261) cited with approval Lord Diplock's statement in Gissing v Gissing [1971] AC 886 at 906:
As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct.
The assignment of equitable interests
The transfer of equitable property is, by its very nature, only recognised in equity.
Certain proprietary interests cannot be assigned at all - for example, there may be a contractual prohibition of an assignment as occurred in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85; [1993] 3 All ER 417. There may also be a statutory prohibition on the assignment of certain proprietary interests.
In Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 233 the Full Court (Northrop, Gummow and Hill JJ) said:
Where intangible rights and interests, the subject of a purported licence or assignment, are created by statute, the statute itself may so constitute them as to be inalienable, whether by consensual dealing or by what would otherwise.
In the present case, reliance is placed by the second defendant on regulation 21 of the Road Transport (Vehicle Registration) Regulation 1998 (NSW), which is set out above.
More generally, the principles involved in the voluntary assignment of equitable property were discussed by Windeyer J in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 30-31:
If the interest to be assigned is a creature of equity, such as the beneficial interest of a cestui que trust, then, apart from any statutory provisions, an assignment of it can, of course, only be effected in equity; for the common law does not know it. Any present assignment of such an interest, that is to say of a chose in equity, is therefore necessarily an equitable assignment. Such an assignment can be by way of gift; and, except that writing is required by s. 9 of the Statute of Frauds, no formality is necessary beyond a clear expression of an intention to make an immediate disposition. In short, there is no reason at all why a person should not give away any beneficial interest that is his: the classic statement is that of Knight Bruce L.J. in Kekewich v Manning; see too In re McArdle (dec'd). It is, of course, necessary that the transaction should take the form of, and be intended as, an immediate transfer of the beneficial interest of the assignor, as distinct from an agreement to assign it. The distinction is critical, for consideration is always necessary to attract the support of equity to a transaction that is a contract rather than a conveyance. The judgment of Stuart V.C. in Voyle v Hughes, puts all this clearly.
[citations omitted, my emphasis]
For equitable interests in personal property, the writing requirements of section 23C(1)(c) of the Conveyancing Act 1919 (NSW) must be met. Although the heading in the legislation refers to assurances of interests in land, the High Court in Adamson v Hayes (1973) 130 CLR 276 held that a statutory equivalent to s 23C(1)(c) applied to personal property as well as real property. This position has also been confirmed in PT Ltd v Maradona Pty Ltd (1992) 27 NSWLR 241 at 251.
For equitable interests in choses in action, an assignment may be effected either by following the requirements set out above, or through the use of section 12 of the Conveyancing Act. 'Legal' choses in action includes both legal and equitable interests in choses in action: see King v Victoria Insurance Co Ltd [1896] AC 250; Federal Commissioner of Taxation v Everett (1980) 143 CLR 440, 447 per Barwick CJ and Stephen, Mason and Wilson JJ.
It is therefore necessary to consider two provisions of the Conveyancing Act 1919 (NSW):
12 Assignments of debts and choses in action
Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal chose in action, of which express notice in writing has been given to the debtor, trustee, or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be, and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same without the concurrence of the assignor: Provided always that if the debtor, trustee, or other person liable in respect of such debt or chose in action has had notice that such assignment is disputed by the assignor or anyone claiming under the assignor, or of any other opposing or conflicting claims to such debt or chose in action, the debtor, trustee or other person liable shall be entitled, if he or she thinks fit, to call upon the several persons making claim thereto to interplead concerning the same, or he or she may, if he or she thinks fit, pay the same into court under and in conformity with the provisions of the Acts for the relief of trustees.
23C Instruments required to be in writing
(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person's agent thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will,
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition, must be in writing signed by the person disposing of the same or by the person's will, or by the person's agent thereunto lawfully authorised in writing.
(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.
Miscellaneous
It is noted that the second defendant was not cross-examined at all. Generally speaking, as I have previously noted in Camellia Properties Pty Ltd v Wesfarmers General Insurance Ltd [2013] NSWSC 1975 at [163], a trial judge is in no way restricted in his or her assessment of a witness; he or she is not bound to accept any of that which the witness attests to or indeed may only accept part thereof: Cubillo v Commonwealth of Australia [2000] FCA 1084; (2000) 174 ALR 97 at [188]-[123].
However the court is not obliged to accept her evidence, even in the absence of cross-examination. In Ali v Nationwide News Pty Ltd [2008] NSWCA 183 Tobias and McColl JJA observed at [112]:
There can be no doubt that where factual evidence is not cross-examined upon, prima facie it should be accepted. However, it ought not necessarily be accepted where, as Tobias JA said in Multiplex, there is a credible body of evidence of a substantial character in direct contradiction of the non cross-examined evidence. In the present case there is no such body of evidence.
However, in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-9, Handley JA held that inferences favourable to a party on certain matters should not be drawn "when no attempt was made to prove them by direct evidence and in particular when no relevant questions were asked" and that it was appropriate to apply the principles in Jones v Dunkel (1959) 101 CLR 298.
Discussion
Before dealing with the way in which the plaintiff puts its case against the second defendant, it is important that I make some observations and findings about the history of ownership of plate 116, or more accurately the right to display. I should also add that there is a paucity of official records dealing with precisely who owned the right to display and/or for that matter who had possession of the plate 116, such as to provide any real certainty prior to 1986. The evidence seems to suggest that prior to that date both individuals and corporate entities had exercised the right to display. Immediately prior to 1986 and perhaps for some time it seems MSA exercised such a right.
Plate 116 was it seems initially attached to a vehicle purchased by a Mr Leopold Simonson. At this point probably and for a period thereafter the plate was on a car personally owned by him rather than any corporate entity. The position is not entirely clear but perhaps of no moment ultimately.
Mr Leopold Simonson died in 1960. At that point Mr John Simonson (the father of the second defendant) took over the running of the family business.
From about 1960 until it seems his retirement in 1986, plate 116 was affixed to a car or cars used by Mr John Simonson and perhaps others but was it seems probably affixed from time to time to cars owned by a corporate entity within the Simonson family group of companies including MSA.
It will be recalled that an important factor put forward by the plaintiff as to why a trust of an express kind was created in relation to plate 116 is the contention that there was a custom of MSA to permit plate 116 to be displayed on a vehicle used by one of its senior employees or directors or a spouse thereof, and that on resignation or retirement of the employee or director it would be returned to that company for the use of another senior employee or director or spouse thereof. Mr Bruce Simonson gave evidence to that effect, which was to some extent corroborated by Mr Alan Russell.
However, I am by no means satisfied that the custom existed or at least was at all times adhered to, and indeed on one view of the evidence it was simply discontinued in 1986. It would appear probable that up to 1960 it was in the name of Mr Leopold Simonson, or a corporate entity, or perhaps both. It may well have been thereafter and until 1986 registered in the name of a corporate entity in particular MSA, however in 1986 all that changed when Mr John Simonson retired.
Upon his retirement in 1986 and in line with company policy Mr Simonson was permitted to purchase the two vehicles which had been allotted to him as part of his employment package. He did so, and it seems it is uncontroversial that plate 116 and hence the right of display was transferred with one of those vehicles that he had purchased at the time of his retirement. That vehicle was either initially registered in his name but on the evidence could have equally have been registered in the name of his wife. Until 1994, Mr Simonson and or his wife had it seems possession and control of plate 116 and the right to display.
It is common ground that upon retirement he ceased to be a director or an employee of MSA or of any other corporate entity in the family business. There may be little doubt that, as he was described as the patriarch of the Simonson family, he unsurprisingly thereafter maintained an interest in the affairs of the family business. But importantly his taking both the possession and control of the plate and affixing it to whichever car or cars he or his wife drove in the period 1986 through to 1994 Mr Simonson in effect discontinued or ignored the so called custom if it ever existed. There is also no doubt that the incoming managing director, Mr Bruce Simonson, was well aware that Mr John Simonson took the plates and was using them as if his own, and yet took no step to recover them on behalf of MSA or any corporate entity. It follows he was well aware that the custom, if it ever existed, had been discontinued or ignored by Mr John Simonson.
Relevantly during the period 1986 to 1994 no one from MSA ever approached Mrs Marjorey Simonson about the return of the plate.
Therefore during the period 1986 to 1994 Mr Simonson and/or his wife not only had physical possession of plate 116 but behaved as if they owned it, along with the right to display. There is little doubt that Mr Simonson had been instrumental in the success and prosperity of the family business. There is no evidence as to the actual level of his retirement benefits but as the patriarch and an important driver perhaps in the prosperity of the family business it clearly would have come as no surprise to other members of the family that he took plate 116 with him perhaps as a memento. I find it entirely probable given his status within the family business in NSW and in particular MSA that in effect he was given plate 116 by MSA, but more accurately the right to display. There is no evidence of whether Mr Simonson paid any consideration for the plate as opposed to payment for the motor vehicles. But even assuming no consideration was paid by him, as I have said, I find it entirely unsurprising given his status within the group and his long association with the family business that he would be given in absolute terms title and ownership of the right to display upon his retirement.
The break or discontinuance of the so called custom to the knowledge of relevant family members and/or MSA militates against any notion of any express trust.
I should also observe that MSA never attributed any value to plate 116 in 1986 or at any time. In so far as it may be suggested in some way that there should be presumed a resulting trust in MSA's right to display after his retirement, such a presumption would easily be rebutted given Mr Simonson's status and the circumstances of his taking possession and his exclusive use of the plates and hence the right to display for what should properly be seen in 1986 as an indefinite period going forward.
It was put by the plaintiff that the custom continued in some way even after 1986 because Mr Simonson kept an active interest in the family business, including MSA, but the facts are entirely against such a proposition and I reject it as a plausible argument. What happened after 1986 is entirely at odds in the way the matter is pleaded. To keep an active interest is a far cry from what is pleaded as the custom.
Mr John Simonson, it seems, had both a close and trusting relationship with his son in law Mr Bruce Hardy. They had a conversation in 1994, the terms of which are not challenged, in which Mr Simonson asked Mr Hardy what he should do with plate 116. Mr Hardy suggested that he was perhaps the last person that should be asked about the issue, but that his view was that it should be put into the name of the eldest child in the family. That of course was the second defendant.
The second defendant alleges that at or about this time she too had a conversation with her father. Her father asked her would she "like" the number plate on "mum's car". The second defendant says that shortly after she had a conversation with her mother in which she asked whether it was acceptable for her to "have" the number plates, to which her mother answered that if it was alright with her father then she was content for that to occur.
It was not put to either Mr Hardy, or the second defendant that these particular conversations with Mr Simonson did not in fact take place. Rather it was put that they should or could not be characterised as Mr Simonson intending to make a gift of the plate, and hence the right to display. I am satisfied that neither conversation was inherently improbable and indeed I accept that both of these conversations in fact occurred. It appears to be common ground that in or about 1994 after these conversations took place the second defendant transferred plate 116 from her mother's car to a car that she was then driving and which was owned by MSA. There is nothing to suggest that the second defendant made any payment to either of her parents in respect of plate 116.
In my view, in 1994 Mrs Hardy's father Mr John Simonson, along perhaps with her mother, intended to give the second defendant the right to display plate 116 absolutely. In other words they were relinquishing any further claims or control over it. They obviously considered the matter and wanted their daughter to have that right. It was entirely a matter for the second defendant in turn, it seems to me, as to which vehicle she chose for the purposes of displaying the plate.
During the period 1994 to 2004, the second defendant drove a number of motor vehicles provided by MSA and from time to time transferred plate 116 to whatever vehicle was then supplied to her.
In summary then, when one considers such materials as are available as to the ownership of the right to display plate 116 it seems to me that what occurred in 1986 with the consent and knowledge of MSA, including individuals such as Mr Bruce Simonson, is that Mr John Simonson took physical possession and control of the plate and with it the right to display. His conduct in not only treating the plates as his own to the knowledge of all concerned having purchased both vehicles but thereafter paying registration and other fees associated with the exercise of the right to display are consistent with his clearly asserting and enjoying absolute ownership of the right to display.
After 1986 no person, director or otherwise in the family business sought to challenge Mr Simonson's possession of and/or control over the plate. It would have been obvious that he had the plate, continued to use it and did so to the knowledge of MSA. As I have also observed, those concerned therefore must have been acutely aware that even in the event that some custom had previously existed it had been brought to an end in 1986.
The gift to the second defendant again could hardly have escaped the attention of relevant persons and that she thereafter had effective possession and control over the plate.
There is no evidence that in 1994 a choice was made by the second defendant to make a gift of the right to display to MSA, nor was she asked to do so. There is no evidence that either Mr Simonson or his wife requested their daughter to transfer the right to display the plate to MSA, nor is there any evidence that MSA urged the second defendant to return it to the family business. The only evidence available is that she merely chose to have it affixed to a vehicle which then happened to be provided for her exclusive use at that time by MSA.
It was not put to the second defendant in cross examination that in choosing to have the plate registered in the name of MSA she was intending to give absolute title to MSA either in recognition of some custom or otherwise.
In transferring or facilitating the transfer of the plate I am satisfied she was not intending to give absolutely any property in the right to display in the plate to MSA. Following discussion with her father she gratefully accepted his gift, as it were, which she undoubtedly thought was of some significance to him and her mother. Given the circumstances in which she obtained physical possession and control of the plate, I would regard it as inconceivable she would immediately give it and the right to display absolutely to MSA.
On that basis and on my view of the facts, a resulting trust would be presumed in her favour, whereby MSA whilst it acquired the legal title to the right to display thereafter held her equitable or beneficial interest in the right to display on trust for her. Given the circumstances in which she received the plate and maintained exclusive use and control of it through the decade 1994 to 2004 would in my mind not rebut the existence of that resulting trust but rather fortify its continued existence in her favour.
At no time during the period 1994 to 2004 did any person in the family raise the matter of the plate with her or complain about her exclusive use of the right to display the plate. The plaintiff says that what occurred during that period was consistent with the custom as alleged as her husband was a director and/or senior manager of at least MSA. However I regard that as a rather glib response and indeed mere coincidence that in that decade the cars that she drove and upon which the plate was displayed from time to time were conveniently supplied by MSA.
By 2003, according to Mr Bruce Simonson, the shareholders and directors became increasingly concerned about the unsatisfactory financial performance of the trading business operated through MSA. It was simply not operating profitably. A decision was taken some time during 2003 by an Executive Committee seemingly made up mainly of shareholders and directors of the two main Simonson family companies, MSA and the plaintiff, that the trading business should be sold.
The trading business which included the stock and goodwill was in fact sold in or about April 2004. At that time the trading business had more than 100 employees and substantial assets including stock, racking, forklifts and computer systems.
In or about April 2004 Mr Hardy and Mr Bruce Simonson resigned as directors of MSA. The other directors also resigned either in April or earlier in that year. All persons were paid out their respective entitlements including retrenchment entitlements.
Mr John Simonson, understandably very concerned about the fate of the business which he had assisted to prosperity, came out of retirement to take an active role as a director of various companies including MSA. As at 2004 he had been in retirement for some 17 years and was 82 years old. He became involved in discussions concerning the sale of the assets of the trading company and thereafter remained actively involved in the business until at least August 2007, when MSA was deregistered. During this time he was at least on the boards of MSA and the plaintiff.
On the other hand, Mr Hardy clearly played a significant role in the sale of the assets of MSA. He remained after 2007 when MSA was deregistered and was involved in other aspects of the business of the plaintiff and other family companies until 2012. However after his resignation in April 2004 he became a consultant for a period and later that year it seems became an employee although it is not entirely clear which corporate entity in fact employed him.
As part of the sale process directors it seems were offered the opportunity to purchase cars that had been allotted to them during their period of service. Mr Hardy purchased two vehicles, as did indeed Mr Bruce Simonson. The vehicles were purchased at a written down value. Mr Hardy gave evidence that he recalled being present at a meeting in 2004 with Mr John Simonson and Mr Alan Russell. Either Mr John Simonson or Mr Russell asked why there were two vehicles left to be sold to which Mr Hardy indicated that they were the two which he was entitled to purchase. Again either Mr Simonson or Mr Russell asked Mr Hardy could in effect expedite the transfer of them out of MSA. I accept such a conversation took place.
At this meeting it is uncontroversial that plate 116 was simply not discussed.
MSA had retained a Mr Molloy, an independent auditor who assisted the company in the sale process and indeed had been MSA's auditor from 1994 to 2007. There is no evidence he considered the plate of any value or more to the point no evidence anyone ever drew his attention to it to be included in any list of assets.
Indeed the plate seems to have been considered by the family, but perhaps more accurately only some members of it, as having some heirloom or memento status. In particular, it seems that Mr Bruce Simonson and Mr Alan Russell held this view. No other relevant members of the board of MSA were called before me and I am by no means satisfied that even its heirloom status was or is shared by all members of the Simonson family. This also tends to detract from there ever being a custom as alleged, but rather that there were a small number of family members who had a particular interest in plate 116.
On 14 and 15 July 2004 both ownership in the motor vehicle and the right to display plate 116 were transferred into the second defendant's name, however it was only in 2012 when Mr Hardy retired that the second defendant was asked to return the plate.
Undoubtedly during the early part of 2004 there were a number of meetings between Mr John Simonson and others in the context of discussing the disposal of assets of the trading company. Mr Russell gave evidence that in or about January 2004 the Executive Committee held the meeting at the offices of Deacons in Sydney which he attended. Present at the meeting were also Mr John Simonson and Mr Bruce Hardy.
Mr Russell has no recollection of what was said by any particular person at the meeting but gave evidence that he recalled what he described as "unanimous decisions to the effect" that the trading business would be sold and any other assets that were no longer needed (such as furniture, equipment, racking) would be sold otherwise relevantly any "remaining assets" would be transferred to the plaintiff.
On 13 May a board meeting of MSA was held and attended by Mr John Simonson, Mr Hardy and Mr Russell. In substance it is alleged that the meeting adopted according to Mr Russell what the Executive Committee had in fact resolved and/or recommended earlier in the year. Therefore I am asked to find MSA resolved to transfer for no consideration any remaining assets not sold, which it is submitted necessarily included plate 116.
There are no contemporaneous minutes or notes of Mr Simonson or Mr Hardy or otherwise of either the meeting in January or the meeting of 13 May save for two and a half pages of handwritten notes taken by Mr Russell during the meeting in May. However it is accepted that neither at the meeting in January nor that of May was plate 116 referred to or discussed. It seems however reasonably clear from Mr Russell's notes of the meeting of 13 May that there was some discussion about motor vehicles but none which are relevant in my view to these proceedings.
In the circumstances I am not satisfied on the available evidence that MSA resolved as suggested by Mr Russell. However in any event I regard it as fanciful that even if such a resolution were passed it could have been intended that plate 116 was to be regarded as a "remaining asset", to be transferred to the plaintiff only if not sold. First it was never considered an asset nor according to the so called custom was it ever to be sold.
Importantly however Mr John Simonson must have become aware that not only were the two cars sold to his daughter and son-in-law but that the right to display plate 116 was transferred into his daughter's name. There is no evidence that he or anyone else raised any complaint or comment whatsoever. This is again entirely consistent with him having given the plates and hence the right to display to his daughter a decade earlier an event of which I am satisfied other persons in the MSA were well aware. But of all of the people associated with the company Mr Simonson must have been privy to the transfer of the plate from MSA to the second defendant. Mr Simonson clearly had a special interest in plate 116. Its existence could not have escaped his attention. He was back and involved in running the companies at a time of crisis but nobody sought to raise plate 116 including himself.
Notwithstanding the fact that the transfer to her in 2004 was without consideration in my view she was entitled to have that occur. She was on my analysis the beneficial owner of the right to display in any event from 1994 and she had in effect permitted MSA to enjoy the legal right to display since then.
For the reasons I have already given I do not consider that the right to display was the subject of a trust in favour of MSA at any point and certainly not after 1986 could it be regarded as having had a resulting trust in its favour either. The only relevant resulting trust in my view was one in favour of the second defendant from 1994 to 2004.
My conclusion that there was no express trust is based upon my rejection of the alleged custom as objective fact. Rather than any custom existing in any factual or legal sense I am of the view that in reality what existed was no more than a belief or hopeful expectation of a few male members of the Simonson family. Otherwise as I have said the history of dealings with the plate also simply rebuts any presumption of a resulting trust in favour of MSA.
Other arguments
It was put by the plaintiff that by reason of either the meeting in January 2004 of the Executive Committee of MSA and/or its board in May 2004 which it is alleged adopted the earlier Executive Committee's recommendations or resolutions there was an assignment of the equitable interest in the right to display to the plaintiff notwithstanding the transfer of the legal title to the second defendant.
A number of reasons were advanced by the plaintiff in support of a valid assignment, namely the existence of an express trust and/or a resulting trust in favour of MSA. What is said is that the resolution evinced a clear intention on the part of MSA to assign the equitable interest in the right to display to the plaintiff. Given my findings, this issue does not arise. However independently of those reasons there are a number of additional factors which run contrary to any form of valid assignment having taken place.
Consistent with authorities such as Norman v Federal Commissioner of Taxation, the so called resolution could not operate in my opinion as a matter of law as an equitable assignment of the plate, or the right to display in any event. The terms of the decision or resolution, even had I been satisfied of its existence, simply could not be characterised as purporting to effect an immediate disposition of any assets, plate or otherwise, but perhaps only an intention to do something in the future. In the absence of a contract for valuable consideration no assignment in my view could be effected consistent with Norman's case.
Perhaps an even more fundamental flaw in the plaintiff's argument as to the alleged assignment is that it depends upon the right to display being included in that part of the resolution which purports to deal with "remaining assets". First, the plate or right to display was never so characterised and hence I can infer never intended to be regarded as an asset. It is therefore difficult to see how the resolution was ever intended to deal with the plate.
Secondly, the whole thrust of the plaintiff's case was that the plate and the right to display was never to be sold but rather handed down in accordance with the custom and yet the resolution relied upon presupposes that all assets are up for sale with only those remaining being transferred to the plaintiff. This is additional reason why the resolution could not have been intended to apply to the plate.
Furthermore, the writing requirements of section 23C(1)(c) of the Conveyancing Act 1919 (NSW) have not been satisfied. Even if the assignment of MSA's equitable interest took the form of a clear expression of an intention to make an immediate disposition (which I do not accept for the reasons stated above), the lack of writing is fatal to any purported assignment in the absence of consideration.
The defendants had contended that in any event the purported assignment of the equitable interest, if it did exist, was contrary to regulation 21(3) referred to earlier. By reason of my findings above again, this argument does not arise, but my view is that regulation 21(3) refers to the rights exercisable by a special plates holder under their agreement with the authority. It is clearly directed towards ensuring the authority is aware of the holder of the legal title to the right to display and controls the transfer of that right. In my view, it would not prevent an equitable assignment of the equitable interest (assuming it arises) from MSA to the plaintiff.
Conclusion
In the light of the above, the plaintiff's case fails.
The parties should prepare short minutes to reflect my reasons, and re-list the matter so that the question of costs can be determined.
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Decision last updated: 14 March 2014
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