Soukoulis v Soukoulis

[2014] SASC 7

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

SOUKOULIS v SOUKOULIS

[2014] SASC 7

Judgment of The Honourable Justice Gray

21 January 2014

EQUITY - TRUSTS AND TRUSTEES - EXPRESS TRUSTS CONSTITUTED INTER VIVOS - TRANSFER TO TRUSTEES

EQUITY - TRUSTS AND TRUSTEES - VESTING ORDERS, CONVEYANCES AND TRANSFERS - VESTING ORDERS - JURISDICTION AND GENERALLY

In early 1999, the plaintiff entered a contract to purchase real property.  The plaintiff intended for the property to be held on trust.  A trust was created for this purpose and the plaintiff’s then wife, the defendant, was appointed as trustee.  The plaintiff assigned his interest in the contract to the defendant in her capacity as trustee.  Following the settlement of the contract, the title of the property was in the defendant’s name.  In February 2007, the plaintiff was appointed as an additional trustee and the defendant retired as trustee.  The title of the property remained in the name of the defendant.  In 2009, the defendant, without notice to the plaintiff, paid out the remaining mortgage debt relating to the trust property of $43,500.00.  The plaintiff acknowledged that the defendant was entitled to an equitable charge in respect of this payment.  The plaintiff sought declarations concerning the trust, orders for the vesting of the title of the trust property in his name and other consequential orders.  The defendant claimed that she had not signed a number of relevant documents and asserted that the plaintiff had acted fraudulently. 

Held: 

(1)  As of February 2007, the plaintiff became the sole appointed trustee of the trust and the defendant was no longer entitled to hold the legal title to the real property or to deal with the real property (at [24]).

(2) Order made under section 37(1) of the Trustee Act 1936 (SA) vesting the real property to the plaintiff to be held on trust (at [31]).

(3)  Plaintiff ordered to pay the defendant $37,500.00 in respect of her equitable charge over the trust property (at [31]).

(4)  Consequential orders and declarations made (at [31]).

Trustee Act 1936 (SA) s 37(1); Real Property Act 1886 (SA) s 64, referred to.
Re Purkiss [1999] 3 VR 223; Andrew Garrett Wine Resorts v National Australia Bank Ltd (No 6) (2005) 92 SASR 419, considered.

SOUKOULIS v SOUKOULIS
[2014] SASC 7

Civil

GRAY J.

1. In this proceeding, the plaintiff, Dimitrakis Soukoulis, seeks declarations concerning the 32 Hereford Avenue Trust - a trust created by the execution of a deed on 19 April 1999.  The plaintiff seeks orders for the vesting of the title of the property of the trust in his name as trustee and other consequential orders. 

2. The defendant, Donna Charmaine Soukoulis, the former spouse of the plaintiff, resisted the making of declarations, the vesting of the property and the consequential orders.  The defendant was unrepresented for most of the proceeding. 

3. In the months leading to trial, the defendant failed to attend several interlocutory hearings.  However, the defendant attended the first day of trial when the parties briefly outlined their respective cases.  The matter was then adjourned to enable without prejudice discussions to take place.  Those discussions were unsuccessful and the trial proceeded the following morning.  Apart from the first day, the defendant did not appear at the trial. 

4. The defendant, when outlining her case, said that she had not signed a number of relevant documents and, in substance, asserted that the plaintiff had acted fraudulently.

5. The plaintiff gave evidence and called several witnesses in support of his case.  Those witnesses included his accountant, his father, his brother, his solicitor and a legal adviser of the defendant.  Books of documents were tendered.  I was left with no reason to doubt the credibility and general reliability of the witnesses.  The plaintiff’s father was elderly and his memory appeared to be uncertain on matters of detail.  The legal adviser of the defendant claimed not to have acted for her as her solicitor but rather simply as an adviser.  The defendant’s adviser did not produce any contemporaneous records of his attendances and when considering the weight of his evidence, I have had regard to that matter.  However, as discussed below, the defendant’s adviser did attend Court on one occasion, informing the Court that the matter had been resolved, leading to an adjournment of the then trial date. 

6. Having regard to the evidence, I am satisfied to the requisite civil standard of the plaintiff’s entitlement to relief.  The following are my findings of fact.

7. The plaintiff and defendant were married on 10 December 1989.  They divorced in the year 2003.  There was one child of the marriage, a son born in 1993.  The plaintiff subsequently remarried and has a child aged two years by that partner.

8. In early 1999, the plaintiff faced charges of drug trafficking in Western Australia.  If convicted, the defendant believed that he would receive an immediate term of imprisonment.  At that time, the plaintiff was concerned to rearrange his affairs.  Ultimately, the charges were the subject of a nolle prosequi. 

9. On 11 March 1999, the plaintiff entered into a contract to purchase a house property at 32 Hereford Avenue, Trinity Gardens.  The purchaser was identified as the plaintiff and/or his nominee. 

10. It was the intention of the plaintiff that the property to be purchased would be held on trust.  The beneficiaries of the trust were to be the defendant and family members.  It was the intention of the plaintiff that his father would live in the property for the balance of his life and that the property would then pass to the son of the plaintiff and the defendant. 

11. In April 1999, the plaintiff instructed his accountant to prepare a trust deed for the purchase of the land and on 19 April 1999, the 32 Hereford Avenue Trust settled.  The plaintiff was the appointor and the defendant was the sole trustee. 

12. The consideration for the property was $81,000.00.  A little more than $50,000.00 was raised on mortgage and the balance, including the deposit, was provided by or through the plaintiff.  The contract settled in early May 1999.  Shortly prior to settlement, the plaintiff and the defendant executed a deed of assignment, whereby the plaintiff assigned all of his interest in the contract to the defendant in her capacity as trustee of the 32 Hereford Avenue Trust.  Following settlement, the plaintiff’s father occupied the property.  The plaintiff’s father agreed to pay the loan repayments and the expenses, outgoings and upkeep.

13. In about the year 2001, the plaintiff was charged in New South Wales with the offence of being knowingly concerned in the importation of a trafficable quantity of cocaine.  He was convicted on 26 September 2001 and on 8 February 2002, he was sentenced to a term of imprisonment of 12 years.  A non-parole period of eight years was fixed.  The plaintiff served this sentence and was released on parole on 8 August 2009.  His parole expired on 8 August 2013. 

14. In late 2006, the defendant wished to retire as trustee of the trust.  The title to the property was in her name and this was causing a problem with Centrelink.  She wished to resolve these problems by retiring and appointing a new trustee.  The plaintiff was prepared to act as the trustee and agreed to the defendant’s retirement. 

15. In about February 2007, the defendant executed a deed of appointment whereby the defendant appointed the plaintiff as an additional trustee of the trust.  The document, having been signed by the defendant, was brought to the New South Wales prison and signed by the plaintiff.  This appears to have occurred on about 3 February 2007.  On 4 February 2007, the defendant attended the plaintiff’s accountant and a written notice advising that she was retiring as trustee was prepared.  This notice was then signed by the defendant.  As a consequence, the defendant retired as trustee and the plaintiff became the trustee of the 32 Hereford Avenue Trust. 

16. My researches and those of counsel do not suggest that any prohibition exists on a prisoner taking on the role of trustee.  It is an entirely different question as to whether such a trustee would be removed by a court in such circumstances.

17. On his release from prison, the plaintiff took steps to seek a transfer of the property from the defendant as trustee to himself as trustee.  As earlier mentioned, the title of the property was in the name of the defendant.  The title did not disclose that the property was held on trust.  The deed of trust had not been lodged at the Lands Titles Office. 

18. Following the appointment of the plaintiff as trustee, he was under a duty to protect the trust property and it was appropriate for him to seek a transfer of the property to himself as trustee.  In 2010, the within proceeding commenced. 

19. In 2009, the defendant, without notice to the plaintiff, paid out the mortgage debt, being an amount at that time of $43,500.00.  As noted above, the defendant by this time had ceased to be a trustee.  The plaintiff accepted, however, that the defendant was entitled to an equitable charge in respect of this payment.  From the bar table, when briefly outlining her case, the defendant informed me that she was unaware of the trust and only became aware of the title of the property being in her name following a Freedom of Information application.  None of these assertions were the subject of evidence.  They are in conflict with the documentary evidence and the evidence of the witnesses called, in particular, that of the plaintiff’s accountant. 

20. In late 2011, settlement discussions were entered into between the parties.  The documents establish that a resolution was reached.  The defendant agreed to transfer the property to the plaintiff and the plaintiff agreed to pay $37,500.00 to the defendant in respect of her equitable charge subject to a modest adjustment on account of costs incurred by the plaintiff. 

21. The defendant refused to perform her covenants under this agreement.  As earlier noted, the defendant did have her legal adviser assist her at this time.  The plaintiff’s solicitors and the defendant’s adviser attended before Court and informed the Court that the proceeding had settled.  In evidence in this trial, the legal adviser confirmed that the matter had been settled and acknowledged that he had attended before the Court in 2011 with the instructions of the defendant to inform the Court that the matter had been resolved.  These events caused the plaintiff to amend his statement of claim to plead the agreement and to seek specific performance.

22. Against the background of these matters, I make the following particular findings.  An express inter vivos trust named the 32 Hereford Avenue Trust was created by the execution of a deed dated 19 April 1999.  Pursuant to the trust deed, the trust was settled by the defendant’s accountant.  The plaintiff was the appointor.  The defendant was appointed as trustee.  The plaintiff, the defendant, their son and the plaintiff’s father were included as beneficiaries under the trust. 

23. The reason that the trust was created was to provide a home for the plaintiff’s father in which to live for the term of his life and, upon his death, for the son of the plaintiff and the defendant to own the land.

24. On or about 3 May 1999, the defendant executed a deed of assignment of land contract as transferee of real property at 32 Hereford Avenue, Trinity Gardens.  Upon execution of the transfer, the land became trust property.  By deed dated 3 February 2007, the defendant appointed the plaintiff as an additional trustee in accordance with the terms of the trust deed.  On or about 4 February 2007, the defendant gave written notice to the plaintiff that she was retiring as trustee of the trust as of 4 February 2007.  This letter was a notice to resign from the office of trustee and accorded with the requirements of the trust deed.  By reason of this letter and the deed dated 3 February 2007, the plaintiff became the sole appointed trustee of the trust.  The defendant was no longer entitled to hold the legal title to the real property or to deal with the real property. 

25. Section 37(1) of the Trustee Act 1936 (SA) provides this Court with power to make orders vesting land. That section relevantly provides:

    In any of the following cases, namely:

    (a)     where the Supreme Court appoints or has appointed a trustee or where a trustee has been appointed out of court under any statutory or express power; …

    …

    the Supreme Court may make an order (in this Act called a vesting order) vesting the land in any such person in any such manner and for any such estate as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct.

26. The plaintiff’s appointment pursuant to the express power in the trust deed enlivens the Court’s powers under section 37(1) of the Trustee Act.

27. The underlying purpose of the vesting provisions is to ensure that a trust can achieve the purpose for which it was created and that those persons entitled to an interest pursuant to or as a result of a trust can achieve the benefit or interest to which they are so entitled.[1] 

    [1]    Re Purkiss [1999] 3 VR 223, 228.

28. It is clear in the present proceeding that the land was intended to be, and is, trust property. The defendant, a former trustee of the trust, has refused to convey the land to the plaintiff, the current trustee.  In these circumstances, it is appropriate that a vesting order be made.

29. The plaintiff agreed, notwithstanding the incurring of further costs, to honour the earlier referred to agreement to pay $37,500.00 to the defendant in respect of her equitable charge over the property.  The plaintiff’s counsel suggested that this was generous having regard to the further costs incurred by the plaintiff.  In the circumstances, I consider this to be an appropriate amount to be paid to the defendant.

30. Thus far, the defendant has refused to produce the duplicate certificate of title.  Recent dealings with the Lands Titles Office by the defendant to effect a change of name disclosed that the title was returned to her conveyancer.  The plaintiff has sought an order for the cancellation of the title and the issue of a new title.  In my view, this order should only be made when all reasonable efforts to obtain the duplicate title have been exhausted.[2] 

    [2]    See Andrew Garrett Wine Resorts v National Australia Bank Ltd (No 6) (2005) 92 SASR 419, 440.

31. Accordingly, I make the following declarations and orders:

    -I declare that by Deed dated 19 April 1999, a trust named the 32 Hereford Avenue Trust was settled by Con Caracoussis and Donna Charmaine Soukoulis (also now known as Donna Jade Lovelle) agreed to act as trustee of the Trust. 

    -I declare that on 3 May 1999, upon the execution of a Memorandum of Transfer by Donna Charmaine Soukoulis (also now known as Donna Jade Lovelle), as trustee of the trust, the whole of the land comprised in Certificate of Title Volume 5051 Folio 739 and more particularly described as the improved land situate at Unit 4/32 Hereford Avenue, Trinity Gardens, in the State of South Australia became property of the 32 Hereford Avenue Trust.

    -I declare that by Deed dated 3 February 2007, Dimitrakis Soukoulis became an additional trustee of the 32 Hereford Avenue Trust.

    -I declare that on 4 February 2007, Donna Charmaine Soukoulis (also now known as Donna Jade Lovelle) retired as trustee of the 32 Hereford Avenue Trust.

    -I order pursuant to section 37(1)(a) of the Trustee Act that the whole of the land described in Certificate of Title Volume 5051 Folio 739 and more particularly described as the improved land situate at Unit 4/32 Hereford Avenue, Trinity Gardens, in the State of South Australia vest in Dimitrakis Soukoulis of 302 Edgecliff Road, Woollahra, NSW, 2025 for an estate in fee simple to be held by him upon trust on the terms of the Deed of Trust dated 19 April 1999.

    -I order that Dimitrakis Soukoulis deposit with the Registrar-General a duplicate of the Deed dated 19 April 1999 for safe custody and reference pursuant to the Registration of Deeds Act 1935 (SA).

    -I order that by close of business on 4 December 2013, Dimitrakis Soukoulis pay into the Suitors Fund the sum of $37,500.00. 

    -I order that Donna Charmaine Soukoulis (also now known as Donna Jade Lovelle) deliver forthwith the duplicate certificate of title to the Registrar of the Supreme Court.

    -I order that upon Donna Charmaine Soukoulis (also now known as Donna Jade Lovelle) delivering the duplicate Certificate of Title Volume 5051 Folio 739 to the Registrar of the Supreme Court, that the funds held in the Suitors Fund be disbursed to her.

    -I order that in the event that the order above that Donna Charmaine Soukoulis (also now known as Donna Jade Lovelle) deliver forthwith the duplicate certificate of title to the Registrar of the Supreme Court is not complied with within two months, further consideration be given by the Court, on the application of Dimitrakis Soukoulis, to the making of an order pursuant to section 64 of the Real Property Act 1886 (SA) that the Registrar-General be directed to cancel the Certificate of Title Volume 5051 Folio 739 and issue a new original and duplicate Certificate of Title in the name of Dimitrakis Soukoulis of 302 Edgecliff Road, Woollahra, NSW, 2025 as the registered proprietor of the whole of the land described in Certificate of Title Volume 5051 Folio 739 and more particularly described as the improved land situate at Unit 4/32 Hereford Avenue, Trinity Gardens, in the State of South Australia.

    -No order as to costs.

    -The parties are at liberty to apply.