Stallan v Kent
[2025] QDC 177
•17 November 2025
DISTRICT COURT OF QUEENSLAND
CITATION:
Stallan & Anor v Kent [2025] QDC 177
PARTIES:
GREGORY BRETT STALLAN ON BEHALF OF THE ESTATE OF AVIS LORRAINE STALLAN (DECEASED)
(first plaintiff)
AND
GREGORY BRETT STALLAN
(second plaintiff)v
SUSAN AVIS KENT
(defendant)
FILE NO:
DC No. 113 of 2021
DIVISION:
Civil
PROCEEDING:
Trial
ORIGINATING COURT: District Court of Queensland
DELIVERED ON:
17 November 2025
DELIVERED AT:
Cairns
HEARING DATE:
26, 27, 28 May 2025
JUDGE:
Treviño KC DCJ
ORDER:
1. It is declared that Susan Avis Kent holds 85% of the property situated at 2/44-46 Turner Street, Whitfield in the State of Queensland and described as lot 2 on survey plan 198017, Title Reference 50726370 on constructive trust for Gregory Brett Stallan on behalf of the estate of Lorraine Avis Stallan (deceased).
2. The parties have liberty to apply within 14 days for any further or consequential orders necessary to give effect to the declaration made.
3. The second plaintiff’s claim is dismissed.
4. I will hear the parties as to costs.
CATCHWORDS:
EQUITY – TRUSTS – RESULTING TRUSTS – CONSTRUCTIVE TRUSTS – TRANSFER OF TITLE – whether the deceased has an equitable interest in the property - where a resulting trust created in the deceased’s favour upon the deceased’s financial contribution to the purchase price – where there is a transfer of title – whether the defendant acknowledged and accepted the deceased’s interest in the property prior to its transfer – whether there was any alteration of the deceased’s equitable interest in the property – whether a constructive trust is an available remedy – where equity will impose a constructive trust as remedy to preclude an unconscionable assertion of legal rights
CASES:
Bosanac v Commissioner of Taxation [2022] 275 CLR 37
Calverly v Green (1984) 155 CLR 242
Camden v McKenzie [2008] 1 Qd R 39
Dable v Peisley [2009] NSWSC 772
Fox v Percy (2003) 214 CLR 118
Konann Pty Ltd v Commissioner of State Revenue & Anor (2015) 100 ATR 772
Muschinski v Dodds (1985) 160 CLR 538
Peffer v Rigg & Anor [1977] WLR 285
Swettenham v Wild [2005] QCA 264
Watson v Foxman (1995) 49 NSWLR 315
COUNSEL: C Ryall for the plaintiffs
P Sommers for the defendant
SOLICITORS: Absolute Law for the plaintiffs
O’Connor Law for the defendant
Introduction
Mrs Avis Lorraine Stallan died on 3 August 2019 at the age of 87. She was survived by her two children, Mr Gregory Brett Stallan and Ms Susan Avis Kent. For the last 11 years of her life, she lived alone at a duplex unit situated at 2/44-46 Turner St, Whitfield, Cairns. The legal title for the property was never held by her. Presently, Ms Kent is the sole title holder. At the time Mrs Stallan assumed occupancy of the property, the title was held by Ms Kent and a company owned by Ms Kent’s then husband. Prior to moving in, Mrs Stallan had paid that company $323,000.00 towards the purchase of the property. At issue in this claim is whether either Mrs Stallan’s estate or Mr Stallan has an equitable interest in the property as a result of her initial payment and events that transpired thereafter.
As executor of his mother’s estate, Mr Stallan is the first plaintiff to the claim. In that capacity, he seeks a declaration that his sister, the defendant, holds most of her interest in the property on constructive trust in favour of their mother’s estate and seeks orders for the transfer of that interest to the estate. In the alternative to that relief favouring the estate, as second plaintiff, he also seeks a declaration that Ms Kent holds the property subject to an equitable charge in his favour personally.
Ms Kent defends the claim brought on behalf of the estate on the basis her mother did not have a beneficial interest in the property at the time of her death. In respect of her brother’s claim as second plaintiff, Ms Kent denies any dealings between them or concerning the property has given rise to any beneficial interest in his favour.
Background
The following matters are not in dispute. The deceased was a widow. Her husband died on 29 September 2006. Shortly after his death she sold her former matrimonial home in Townsville and moved to Cairns to live with Ms Kent and her then husband, Michael Connell, in their home in Edge Hill. From the proceeds of sale of her Townsville house, Mrs Stallan had retained a total sum of $323,000.00. She resided in a granny flat at Ms Kent’s home, rent and expense free.
Mr Connell was the director of MJ Connell Constructions Pty Ltd, a company through which he operated a business as a builder. Through the company, and together with Ms Kent, he was engaged in the business of “flipping houses”; that is, buying, renovating, and then selling residential houses for profit. Both units of the duplex at 44-46 Turner St were purchased by the company in 2006 for that purpose. The duplex was purchased for $169,000.00. The title was held by the company and Ms Kent as tenants in common in shares of 99% and 1% respectively.
In July of 2007, it was agreed between Ms Kent, Mr Connell and Mrs Stallan that Mrs Stallan would purchase one of the units at Turner St (unit 2) from the company when renovations then being carried out on them were completed. In furtherance of that agreement, Mrs Stallan paid the entirety of the proceeds of sale of her Townsville house, $323,000.00, to the company on 23 July 2007.
The company completed renovations on unit 1 in late June/early July 2008 and it was subsequently sold to a third party for $400,000.00. Renovations on unit 2 were completed in late September/early October 2008. At that time, Mrs Stallan disagreed with Ms Kent and Mr Connell about further monies to be paid to the company before title to unit 2 could be transferred to her. Ms Kent and Mr Connell requested Mrs Stallan pay a further sum of $57,000.00 to the company in addition to the $323,000.00 she had already paid (amounting to a total of $380,000.00), asserting that the arrangement made in July 2007 was that she would purchase the unit for a price determined by the sale amount achieved for unit 1 less $20,000.00 for agent’s commission ($380,000.00). Mrs Stallan refused to pay any further monies over and above the $323,000.00 she had paid to the company in July 2007.
Notwithstanding their disagreement about this further payment, Mrs Stallan moved into unit 2 soon after the renovations to it were completed. According to Ms Kent, she told her mother that she could move into unit 2, but that the $57,000.00 would need to be paid before title to the unit could be transferred to her.[1] Thereafter, Mrs Stallan lived in unit 2 on her own, without paying any rent or outgoings on the property (except for water rates or charges) until shortly before her death.[2] It is uncontroversial that she did not make any further financial contributions in respect of the property over and above her initial payment of $323,000.00.
[1] T 2-28, ln 10.
[2] Evidence of Mr Stallan: T 1-77, ln 26 – T 1-78, ln 5; Evidence of Ms Kent: T 2-28, ln 25; T 2-39, ln 40 -50.
In February 2013, Ms Kent and Mr Connell separated and property settlement negotiations commenced between them. An issue arising in their property settlement concerned Mrs Stallan’s interest in the Turner Street property and whether the company was entitled to any further payment from Mrs Stallan by reason of the July 2007 agreement for the sale of the unit by the company to her.
On 30 January 2015, consent orders were made by the Family Court of Australia effecting a final property settlement between Ms Kent and Mr Connell.[3] In so far as the Turner St property was concerned, paragraphs 3(c) and (d) of the consent orders provided as follows:
(c)The Husband shall transfer, or cause to be transferred to the Wife, upon the payment of $39,000.00 at the expense of the Wife, all of the right, title and interest of MJ Connell Constructions Pty Ltd in the property situate at 2/44-46 Turner St, Whitfield described as Lot 2 on SP 198017, County Nares, Parish Cairns, in the State of Queensland and unencumbered (“Turner Street”).
(d)Contemporaneously with the transfer of Turner Street, the Wife pay, indemnify and keep indemnified the Husband and/or MJ Connell Constructions Pty Ltd in relation to all liability of whatsoever nature and kind and whensoever arising relating to Turner Street including but not limited to any liability for taxation and any claim by Avis Stallan.
[3] See Exhibit 1, pages 12-17.
Those orders were performed, and the company transferred its title to the property to Ms Kent on 3 September 2015. The $39,000.00 Ms Kent paid to Mr Connell in accordance with 3(c) of the consent orders was a sum reflecting a compromise of the company’s claim to the $57,000.00 to be paid by Mrs Stallan in accordance with the terms of the July 2007 agreement as contended for by Ms Kent and Mr Connell.
The consent orders made on 30 January 2015 also contained the following notation:
“The Wife’s mother, Mrs Avis Stallan has been notified of the terms of the Orders and has been advised to obtain legal advice in relation to Order3(c) herein specifically. A letter of consent has been received from Mrs Avis Stallan in relation to the proposed transfer of the property set out in paragraph 3(c) herein.”
Exhibit 15 is a copy of the letter of consent referred to in the notation and prepared by solicitor Lee Williams of Real T Law, Williams & Associates Lawyers. It is dated 5 December 2014. The letter relevantly provides:
“We act for Avis Lorraine Stallan (the mother of Susan Avis Connell) who resides at 2/44-46 Turner Street, Whitfield, Cairns.
Our client has perused the minutes of proposed orders signed by both the husband and wife.
Our client has made suitable arrangements regarding the occupancy of the above residence mentioned in the orders sought and in the circumstances consents to those orders (so far as they relate to her).”
The key issue in dispute
The key factual issue in dispute concerns what those “suitable arrangements” about Mrs Stallan’s continued occupancy of the Turner St duplex involved. Ascertaining the true nature of those arrangements will determine whether the plaintiffs are entitled to relief and the nature of that relief.
Mr Stallan contends those arrangements involved the making of two interrelated agreements. First, an agreement where Mrs Stallan consented to the transfer of the property on condition she would enjoy continued occupancy of it, and as well, that on her death, her initial $323,000.00 investment in it would be shared equally between Mr Stallan and Ms Kent in accordance with her will made on 4 December 2006 (by clause 6 of the will Mrs Stallan gifted the entirety of her estate to her children in equal shares).[4] And second, an agreement between Mr Stallan and Ms Kent in furtherance of the first agreement requiring a cash payment from one sibling to the other to ensure they shared equally in Mrs Stallan’s assets whilst she was still living, including the $323,000.00 paid towards the property’s purchase.
[4] See Exhibit 1, page 3.
The Statement of Claim rehearses these allegations in the following way:
“15. Prior to the defendant’s property settlement being finalised the deceased orally agreed with the second plaintiff and the defendant that she would consent to the company transferring the title of the duplex to the defendant on terms that:
(a) the deceased continued to have a right to occupy the duplex; and
(b) that upon her death her $323,000 investment in the duplex be shared equally between the second plaintiff and the defendant, in accordance with her wishes as recorded in her will made 4 December 2006 (“the transfer agreement”)
Particulars
The transfer agreement was made in conversations between the second plaintiff, the defendant and the deceased over the period from July – November 2014.
16. In addition to the transfer agreement by an agreement made partly orally and partly in writing, or made orally and partly evidence in writing it was agreed between the second plaintiff and the defendant that to give effect to the transfer agreement the second plaintiff and defendant would between themselves by payments by one party to the other in cash ensure that they each shared equally in the property of the deceased (“the live will agreement”)”
Particulars
The relevant conversations took place in the same period as the conversations in which the transfer agreement was made.
…”
At paragraphs 17 to 22 of the Statement of Claim, it is pleaded both Mrs Stallan and Mr Stallan acted to their detriment by agreeing to, and co-operating in, the transfer of the title to the property to Ms Kent in circumstances where there was a failure to perform the live will agreement. And that in these premises, it would be unconscionable for Ms Kent to deny that:
(a) Mrs Stallan’s estate has a beneficial interest in the property arising from and in proportion to her contribution of $323,000.00 to the consideration provided to the company resulting in the transfer of the duplex to Ms Kent, or in the alternative that Mrs Stallan’s estate has an equitable charge over the property securing $323,000.00; and
(b) Mr Stallan has a beneficial interest representing one half of Mrs Stallan’s beneficial interest at the date of her death (said to be a 42.5% interest), or in the alternative an interest to the value of one half of Mrs Stallan’s contribution to the purchase price of the property at the time of transfer to Ms Kent (said to be $161,500).
At paragraphs 13 and 14 of the Amended Defence, Ms Kent denies any such interrelated agreements were made prior to her property settlement with Mr Connell. She contends an arrangement was made solely between herself and her mother which did not involve any agreement or understanding that Mrs Stallan’s investment in the duplex would be shared equally between Ms Kent and Mr Stallan on her death.
At paragraph 9 of the Amended Defence, she pleads she entered into a “right of residence agreement” with her mother whereby her mother agreed she would not make a claim to having an interest in the property after its transfer to Ms Kent in exchange for Ms Kent making the payment of $39,000.00 to Mr Connell and agreeing that her mother could continue to reside in the property until her death free of charge, with Ms Kent paying all outgoings in respect of the property. Paragraph 9 of the Amended Defence provides:
“9. In or around November 2014, the Deceased, the Defendant, and Michael Connell (in his personal capacity and on behalf of the Company) entered into an agreement, partly written and partly oral, with the following terms (“Right of Residence Agreement”):
a.the Defendant would pay the sum of $39,000.00 to Michael Connell;
b.upon making of that payment, Michael Connell would cause the Company to transfer all of its right, title and interest in the property to the Defendant;
c.the Deceased would be entitled to reside in the property until her death free of charge and the Defendant would meet all of the outgoings required to maintain ownership of the property; and
d. all right, title, and interest in the property would vest in the Defendant and the Deceased would not make any claim as to any right, title, or interest that she may have had in the property or as against the Company.”
In accordance with paragraph 12(c) of the Amended Defence, Ms Kent contends any interest her mother had in the property prior to the “right of residence agreement” as pleaded in paragraph 9 of the Amended Defence, merged into the terms of that agreement such that Mrs Stallan had no legal or equitable interest in the property at the time of her death.
As to the allegation she entered into a “live will agreement” with Mr Stallan before her property settlement with Mr Connell, Ms Kent denies there was ever a concluded agreement with her brother about the division of her mother’s assets. Instead, in accordance with paragraph 14 (b)(iii) of the Amended Defence she pleads there were conversations and email exchanges in or around July 2014 where her brother advanced some proposals about the property which she did not agree to. In the absence of any concluded agreement between them, she contends her brother has no basis on which to claim an equitable interest in, or equitable charge upon, the property.
The parties’ contentions concerning the making of agreements referred to by such labels as the “transfer agreement”, “live will agreement” or “right of residence agreement” must be approached with caution. They are obviously labels applied retrospectively to describe and characterise the various interactions and dealings of relevance. Significantly, those labels, and the material facts pleaded by reference to them, do not accurately reflect the evidence actually given by Mr Stallan or Ms Kent. To ascertain the true nature of the arrangements made about their mother’s interests in the property, it is necessary to engage in a close analysis of that evidence, considered against the other objective and documentary evidence elicited during the trial, rather than engaging with the retrospective labels the parties now contend for.
Approach to the evidence of the parties
Mr Stallan and Ms Kent are obviously self-interested parties. In approaching their testimony, and in particular their testimony about dealings with their mother, I keep firmly in mind the need to closely scrutinise their claims in circumstances where Mrs Stallan is not available to give evidence in contradiction to what they say.[5]
[5]Dable v Peisley [2009] NSWSC 772 at [130] – [131].
The observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319 are also apposite:
“…human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”
In the circumstances, in resolving the factual disputes arising, it is necessary to have regard to the objectively established facts and the apparent logic of events rather than an assessment of the demeanour or presentation of either party.[6]
[6]Fox v Percy (2003) 214 CLR 118; Camden v McKenzie [2008] 1 Qd R 39 at [34].
Mr Stallan’s evidence
To give context to Mr Stallan’s evidence concerning agreements about Mrs Stallan’s interest in the property at the time of Ms Kent’s property settlement with Mr Connell, it is necessary to set out some further background circumstances.
Mr Stallan is a finance broker. At the time of Ms Kent’s separation from Mr Connell, he had already received some financial benefits from his parents. In February 2006, he negotiated a loan from his parents whereby a company he controlled borrowed the sum of $100,000 from them pursuant to an agreement that he would pay interest on that amount at the rate of 6% per annum. It was a term of the agreement that the loan would be repaid within two years, with monthly interest only payments of $500.00 to be made during that period. Mr Stallan says he made those monthly payments up until November 2015. Upon the expiration of the two years, the outstanding balance became repayable on demand.[7] He was never asked to repay the principal of that loan.
[7] See Exhibit 2C.
Mr Stallan accepts Ms Kent requested he repay the loan when Mrs Stallan first moved to the property (in 2007) so that Mrs Stallan could pay the $57,000.00 Ms Kent and Mr Connell asserted was owed to the company to complete the purchase of the property. He says he refused Ms Kent’s request and told her Mrs Stallan did not owe any money for the property.[8]
[8] T 1-76, ln 45 – T 1-77, ln 15.
In the same year as the loan was made, Mr Stallan’s father died, and in accordance with his father’s will, he was bequeathed his father’s part interest in a fishing hut jointly owned by his father and his father’s siblings. The balance of his father’s estate was left to Mrs Stallan. The will made no provision for Ms Kent. When that fishing hut was subsequently sold, Mr Stallan received the sum of $73,000.00 from the proceeds of sale.[9]
[9] T 1-74, ln 15-36.
Against those background circumstances, Mr Stallan’s evidence was that in July 2014 Ms Kent called and informed him she was getting divorced from Mr Connell. Referring to the duplex unit, she told him “mum’s property” was in Mr Connell’s company’s name, that she did not want Mr Connell to get 50% of it and that she wanted Mr Stallan to do something about it.[10] In the same call, he said he suggested the property could be transferred into Mrs Stallan’s name without any payment by her on the basis nothing more was owed but that Ms Kent was insistent that “we owed money, and I needed to fix it”.[11]
[10] T 1-43, ln 30.
[11] T 1-43, ln 50.
He said he then raised two options for Ms Kent to consider. The first option was that title to the property be transferred to Mrs Stallan upon payment of the $57,000.00 said to be owed to the company for its purchase. The second option involved a transfer of the property to Ms Kent as part of an even split of their parent’s assets between them, including: the amount paid towards the purchase of the property by Mrs Stallan; the loan made to Mr Stallan’s company in 2006, and; Mr Stallan’s part interest in the fishing hut he inherited from his father.[12]
[12] T 1-44, ln 1-6.
He said Ms Kent wanted to see the second option in writing. He sent her an email at 8:51am on 9 July 2014 setting out his proposed “second option” but said in his evidence the “numbers” within it were “very rough” at that stage.[13] His evidence was that after: (a) obtaining a bank statement confirming the amount Mrs Stallan paid to Mr Connell’s company for the Turner St property and emailing it to Ms Kent[14], and; (b) verbal discussion with Ms Kent about the legal costs involved in the property transfer to Ms Kent and the date of “settlement” for his proposal (involving a cash payment by Ms Kent to Mr Stallan), he sent a final version of this second option proposal to Ms Kent which incorporated some minor changes.[15] That email was sent at 2:05pm on 9 July 2014 and provides:
[13] Exhibit 2(a).
[14] T 1-45, ln 45.
[15] T 1-46, ln 44 – T 1-47, ln 11.
“From: Greg Stallan (email address not included)
Sent: Wednesday, 9 July 2014 2:05 PM
To: Susan Connell (email address not included)
Subject: Avis
Hi Susan
Mum is happy to do that change
But in general terms
Mum paid $323,000, Mum gave our business $100,000.00 we pay her 6% per annum which is $500pm Dad gave me $73,000 in his inheritance.
Interests on $325,000 @ 6% same commercial terms as the $100,000 is $373pw which is equivalent to fair rent over the unit The company also had use of the 2 bay garage over this period.
Dispute is over the original cost.
Proposal
Split the funds $323,000 + 173,000 = $496,000 $248,500 Susan $248,500 - $173,000 = $75,500 less 50% of Solicitors fees max total fees $4,000
Mum stays in the house as long as she likes rent free she will pay water rates. If anything happens to you, you can pass it on to your family but Mum still has full rights live there.
You put the property in your name and work out the difference with Michael but you have the equity in the property and any future profit and ownership in the property.
I will continue to pay $500pm.
If anything happens to mum all of this has already been split 50/50 You retain the property the loan is extinguished and cash has already been paid.
Settlement can be prior to, at property settlement or within 30days after.
If you can send me current rates notice I can get any previous valuations.
Kind Regards,
Greg Stallan”[16]
[16] Exhibit 2(d) (errors in the original).
Clearly, this proposal was quite advantageous to Mr Stallan. If accepted, it meant he would avoid the need for his company to repay the principal owing on the loan from his parents and obtain instead the benefit of a cash payment of $73,500.00 from his sister – his “half” of parental assets ($248,500.00) minus the value of the hut and the loan ($173,000.00) and a share of the solicitors fees ($2,000.00). Absent from Mr Stallan’s account, however, was any cogent evidence that either his mother or Ms Kent gave their agreement or consent to the arrangement he proposed.
Mr Stallan did not produce any document or writing to evidence his mother’s consent to the proposal. Instead, he relied on a conversation he had with her prior to the making of the proposal, and then, discussions he had in her presence at the time she consulted with the solicitor who advised her about the terms of Ms Kent’s property settlement with Mr Connell, as the basis for an inference that she gave her consent to the arrangement. In my view, there is no reasonable basis for such an inference. The evidence relied on merely demonstrates steps Mr Stallan took to make arrangements about his mother’s interests in the Turner Street property with his sister, not that he had made any agreement with his mother about her interest in it.
As to his conversation prior to sending the proposal, the extent of his evidence was that after the initial call with Ms Kent where he raised the two options for her consideration, he spoke with Mrs Stallan in person on a single occasion. He said he asked his mother if she was happy to get the title in her name and she said yes, and that he then asked her if she was happy to pay the extra money and she said no “because she didn’t believe she owed it.” He said he then asked his mother “if we split all the assets up evenly between Susan and I, would you be happy to do that” to which she responded “yes, as long as it was even for everybody.”[17] He gave no evidence about any other discussion with his mother concerning the terms of his proposal at the time it was prepared and sent, or afterwards. He gave no evidence that the proposal was sent to his sister with his mother’s knowledge or authorisation. He gave no evidence that the proposal he sent to his sister was ever read or provided to his mother.
[17] T 1-44, ln 8-15.
Considering the limited discussion Mr Stallan said was engaged in with his mother before the proposal was sent, the opening line of the email that “mum is happy to do that change” cannot be understood as an indication that she had already agreed to the detail of the proposal set out within it. It merely indicated that (Mr Stallan thought) she was generally amenable to a change from what had been proposed to that point - that the title of the property be transferred to her – to a situation where the title was transferred to Ms Kent and there be some splitting of assets that was “even for everybody”.
Significantly, Mr Stallan’s evidence about this conversation with his mother prior to sending the proposal to Ms Kent bears no resemblance to the case pleaded at paragraph 15 of the Statement of Claim. As set out above, paragraph 15 alleges that a “transfer agreement” was made orally between Mr Stallan, Mrs Stallan and Ms Kent by which Mrs Stallan agreed to the transfer of title to Ms Kent on condition that Mrs Stallan would continue to have a right to occupy the property and that upon her death, her $323,000 investment in it would be shared equally between her children in accordance with her will. However, by reference to his evidence, Ms Kent was not a party to the only oral discussion he had with Mrs Stallan about the matter and that discussion made no reference at all to the key aspects of the agreement alleged – Mrs Stallan’s continued right to occupy the property, her $323,000.00 investment in it, or the terms of her will.
As to his discussions in Mrs Stallan’s presence when she consulted a solicitor, his evidence was that he arranged for his mother to consult with Leigh Williams of Real T Law on 1 December 2014. Ms Kent had telephoned him on 28 November 2014 and requested his assistance in making the appointment, and facilitating Mrs Stallan’s attendance at it, so that she could receive advice about the terms of Ms Kent’s consent orders with Mr Connell.[18]
[18] T 1-60, ln 11.
He said he drove his mother to the appointment and attended with her. At Mr William’s office, and before Mrs Stallan conferred with Mr Williams privately, he explained to Mr Williams that “Susan and I had come to an agreement on Mum’s property...that we needed protection for Avi...and that Susan required her to sign a consent order…”[19] He told Mr Williams that the nature of his agreement with Ms Kent was that “we’d agreed to break up the assets as a…live will...as long as Mum could live in the property for...as long as she lived.”[20] Notably, his evidence was silent about whether Mrs Stallan heard the remarks he made about his agreement with his sister or whether she indicated any agreement with them.
[19] T 1-61, ln 15.
[20] T 1-61, ln 20.
His evidence was that after he told Mr Williams these things, Mr Williams took Mrs Stallan into another room for a few minutes before coming back out to summarise what had been spoken about. He said Mr Williams informed him Mrs Stallan would need a perpetual lease which Mr Williams could arrange.[21]
[21] T 1-61, ln 15-30.
Mr Williams was not called as witness by either party and his records of this consultation were not otherwise in evidence, so it is not known what advice Mrs Stallan was given by Mr Williams, what her instructions were to him, or what documentation Mr Williams was supplied with in order to advise Mrs Stallan about her position. However, after the meeting, Mr Williams sent Ms Kent’s solicitors a letter which suggests Mrs Stallan’s primary concern at this time was to ensure her right of continued occupation of the property was not jeopardised by the transfer of title to Ms Kent, rather than any agreement about the splitting of her assets. The letter provides:
“Dear Colleagues
Re AVIS LORRAINE STALLAN AND SUSAN CONNELL & MICHAEL CONNEL – FAMILY COURT MLC5801 of 2014
We act for Avis Lorraine Stallan. You act for her daughter, Susan Avis Connell.
Newman Family Law act for Michael John Connell.
Our client has been asked to consent to the transfer of Unit 2, 44-46 Turner Street, Whitfield Cairns to Susan.
We are told that our client can reside in the residence for life and not be liable for any rates, body corporate fees, insurance and other outgoings when this residence is transferred to Susan.
We ask how this right of residence is to be formalised. We suggest a 5 x5 lease terminating on death or expiration whichever is the sooner. Lease and we as we are Queensland Lawyers that we prepare it for Susan’s signature. (sic)
Our client’s consent is subject to this Lease or a suitable alternative being in place or signed before formal consent is given.
We can prepare this Lease quickly.
We await your comments….”[22]
[22] Exhibit 14.
Clearly absent from this letter is any reference to an agreement or arrangement consistent with Mr Stallan’s email proposal made on 9 July 2014. Nor is there reference to an agreement or arrangement about the distribution of Mrs Stallan’s $323,000.00 contribution to the Turner St property upon her death in accordance with the terms of her will (i.e. consistent with the “transfer agreement” alleged in paragraph 15 of the Statement of Claim).
In all of these circumstances, Mr Stallan’s claim to have spoken about his proposal for the splitting of assets between himself and Ms Kent in his mother’s presence, before she consulted privately with her solicitor, says nothing about Mrs Stallan’s agreement or consent to such an arrangement. In my view, Mr Stallan’s evidence fails to establish that his mother entered into an agreement with him and his sister about the property consistent with what is pleaded at paragraph 15 of the Statement of Claim, or with his 9 July 2014 proposal.
Mr Stallan’s evidence concerning Ms Kent’s consent to or agreement with his 9 July 2014 proposal was similarly vague and unconvincing. He did not receive an email from Ms Kent responding to the proposal he made. Instead, on 10 July 2014 he sent her a further email clarifying the terms of the proposal. That email informed her that he would pay the outstanding water rates on the property and clarified that the solicitors fees he was happy to share in were those related to the costs of “doing what documents we need for our agreement and Avis not for negotiating with Michael I see that as a separate issue.”[23]
[23] Exhibit 2(g).
Mr Stallan tendered Ms Kent’s response to his later email into evidence, an email she sent in the afternoon of 10 July 2014.[24] It does not indicate her consent to the 9 July 2014 proposal. She informed him she had no intention of using a solicitor to deal with Mr Connell “on Mum’s property” and forwarded a message she had sent to Mr Connell earlier that day, noting she had not yet received a response to it.
[24] Exhibit 2(h) (errors in the original).
The contents of that forwarded message do not particularly assist Mr Stallan’s case. That is because the forwarded message (sent to Mr Connell at 8:47am on 10 July 2014) shows Ms Kent was negotiating with Mr Connell on a premise fundamentally inconsistent with Mr Stallan’s 9 July 2014 proposal, namely, that Mr Stallan pay Mr Connell’s company the $57,000.00 allegedly owning to it in exchange for a transfer of title to Mrs Stallan.
The forwarded email also purported to include details of a proposal made by Mr Stallan to Ms Kent that was inconsistent with the 9 July 2014 proposal. It provides:
“From: susanconnell (email address withheld)
Date: 10 July 2014 8:47:51 am AEST
To: Michael John Connell (email address withheld)
Subject: Avis Stallan
Hi Michael,
Mum’s property is not part of our property settlement. However we have had her money for the past seven years in the company’s name. ($323,000).
I have contacted Greg to sort this problem and he is willing to pay the $57,000 owing to have the property transferred. Fair and Reasonable. This is not apart of our settlement and needs to be addressed urgently. I am sure you do not want Mum’s house valued as part of MJ Connell constructions as legally this is not our asset.Susan
Email from Greg:
Hi Susan
Avis transferred $323,000 on the 23 July, 2007 (document attached) [25]
Interest on $323,000 @ 6% commercial terms is $373pw which is equivalent to fair rent over the unit. The company also had use of the 2 bay garage over most of this period.
Dispute is over the original cost.Proposal to pay the $57,000 and transfer the property.”[26]
[25] A bank statement provided to Ms Kent by Mr Stallan the previous day (Exhibit 2(I)).
[26] Exhibit 2(h).
On 22 July 2014, Ms Kent emailed Mr Stallan attaching an offer from Mr Connell concerning the Turner St property and noting Mr Connell wanted to speak with him about it. Mr Connell’s offer contemplated that upon payment of $39,000 to him personally, he would transfer the property to Mrs Stallan.
Mr Stallan said he met with Mr Connell to discuss the offer sometime between 23 and 25 July 2014. In that discussion he said Mr Connell identified that $10,500 of the $39,000.00 payment he sought in exchange for the transfer of title was made up of body corporate fees and rates and the balance $28,500 represented his share of the monies owning for the purchase of the property. Mr Stallan said he then spoke with Ms Kent who told him she would not agree to payment of the $10,500.00 to Mr Connell. He said his response was to send her an email on 27 July 2014 in which he resent his 9 July 2014 email proposal to her, along with the following message set out above the text of that earlier email:
“Hi Susan
I want to stay out of the negotiations for the house. But to make things easier and to avoid the hassle of extra solicitors bills I am willing to split the difference on the additional bill $5,250 each and as below splitting the bill for the solicitor.
Hope that helps I will ring tomorrow.”[27]
[27] Exhibit 2(k).
He said his intention in sending the email was to point out to Ms Kent that he would share the costs of the $10,500 comprising body corporate fees and rates on the property as part of their agreement, on the basis that a further $5,250 would be subtracted from the cash payment Ms Kent would be required to make to him.
Mr Stallan did not a receive a written response from Ms Kent to his email of 27 July 2014. However, he gave evidence that he rang and spoke with Ms Kent the next day, on 28 July 2014. His evidence about that phone call was as follows:
“I organised to talk with Susan in the 28th of – to confirm that that would be the agreement we would follow. Um the only thing that would – had to be completed was that we get a perpetual lease from my mum, as she couldn’t be never thrown out of the house. And that was on the 28th of July. We just confirmed what was in the agr – agreement on the 9th plus adding that extra 5,250 off my share, and that was the final, uh, dollar arrangement, I suppose, um. Other than organising of the lease.”[28]
[28] T 1-59, ln 26-33.
Mr Stallan was not asked to relay the actual words he alleged were used in the conversation. Without that information, his assertion that “we just confirmed the agreement” could indicate that Ms Kent actually expressed her consent to, or agreement with, Mr Stallan’s proposal as amended by his 10 July and 27 July emails, but equally, could also indicate that Ms Kent merely confirmed her understanding of the terms of the agreement as were then proposed by him. However, in the wider context of his evidence it is clear he meant to convey that Ms Kent agreed to his proposal at this time.
In cross-examination about his 27 July 2014 email, it was put to Mr Stallan that Ms Kent never agreed to an amount that she would have to pay him, and specifically, did not agree with him about the amount of $10,500. He denied this and claimed her agreement was evidenced “a few times in the documents”.[29] However, when challenged about the failure to produce documentary proof of her agreement, he then flatly contradicted himself stating “Oh, she never says she agrees, just like she never agrees to mum’s contract”[30] before accepting the proposition there was no evidence Ms Kent had ever agreed in writing to an amount she would have to pay to him.[31]
[29] T 1-97, ln 39.
[30] T 1-97, ln 40-45.
[31] T 1-97, ln 46-47.
It was also put to him in cross-examination that email exchanges he had with Ms Kent in October 2015 demonstrated no agreement had been reached by them at that stage. His answer was problematic. He denied the proposition that agreement had not been reached by that time but asserted, contrary to his evidence in chief, that the agreement was confirmed on 21 or 22 July 2015, rather than in the telephone call on 28 July 2014, a year earlier.
His evidence about Ms Kent’s confirmation of the agreement in July of 2015 rather than July of 2014 was difficult to follow and internally inconsistent. His evidence made reference to a telephone call he had with Ms Kent in July 2015. He said in the call Ms Kent asked him to get Mrs Stallan to sign a letter terminating the services of Real T Law Lee Williams & Associates. He said that he told Ms Kent he would not help her unless their agreement was in place and that in response to this ultimatum she confirmed there was an agreement.[32] Confusingly, he claimed initially that Ms Kent had actually confirmed the agreement in writing in an email she had sent to him, before then conceding no such evidence had been produced and instead asserting there was a conversation over the phone where Ms Kent’s confirmation was given.[33] When pressed for the actual words spoken by Ms Kent in this conversation, he said he did not recall.[34]
[32] T 2-3, ln 10.
[33] T 1-93, ln 1-25.
[34] T 2-3, ln 26.
His claim in cross-examination that agreement was reached with Ms Kent in July of 2015 was clearly inconsistent with his evidence in chief that agreement was reached on 28 July 2014. It was also inconsistent with his pleaded case. In accordance with paragraph 4 of the Further and Better Particulars of Statement of Claim filed 23 September 2021, Mr Stallan claimed the “live will” agreement was made in conversations that took place between July and November 2014. No reference was made, or reliance was placed on any conversation or interaction with Ms Kent in July 2015 in the particulars. The particulars allege Mr Stallan spoke with Ms Kent “on a number of occasions in July 2014” were the “substance of the conversations” was that agreement was reached and that Ms Kent subsequently confirmed her agreement in a phone call with Mr Stallan on 28 November 2014. Mr Stallan’s evidence made no reference to this call on 28 November 2014 where the agreement was allegedly confirmed.
These inconsistencies in his account lead me to conclude that his evidence concerning when agreement was reached cannot be relied upon. I reject Mr Stallan’s evidence that Ms Kent “confirmed what was in the agreement” on 28 July 2014 and that she “confirmed” they had an agreement in July 2015. Mr Stallan’s evidence fails to establish that any agreement was reached between himself and Ms Kent about the matters in question.
Ms Kent’s evidence
Ms Kent is a primary school teacher. She currently lives and works in Victoria. She has been a teacher for 45 years. She moved to Victoria after her separation from Mr Connell. Upon her separation from Mr Connell, she agreed that she spoke with Mr Stallan in July 2014 and that he raised two possible ways to approach Mr Connell about their mother’s property. The first was that Mr Stallan would pay the $57,000 owing to Mr Connell’s company by arranging for a loan of those monies secured over the property and the second involved a balancing out of their parent’s assets between them.[35]
[35] T 2-29, ln 29.
Ms Kent accepted she received Mr Stallan’s email proposal of 9 July 2014 which was consistent with the second possibility discussed. She said they were discussing a “ledger” like arrangement in which they wanted to “look at what Greg had received, what I had received, what we had paid and…at the end I would pay Greg a sum of money- or balance out the two sides of the ledger.”[36] It was her evidence that she never reached a concluded agreement with Mr Stallan about how much she would pay him in accordance with this ledger exercise.
[36] T 2-29, ln 33-38.
She understood that his 9 July 2014 email was “a proposal to finalise the moneys received from both estates, from dad’s and mum’s”[37], but said she did not accept that proposal. She said she told Mr Stallan in a telephone conversation with him at the time the email was sent, that the proposal wasn’t fair, it wasn’t reasonable, and it didn’t include the moneys to be paid to Mr Connell. She also said she told him she wanted accounting advice before she made any decision on what she should pay to him. In cross-examination she denied that after she received Mr Stallan’s email of 27 July 2014 that she agreed with Mr Stallan that they should proceed with the 9 July 2014 proposal. She also denied that she had a telephone discussion with Mr Stallan in July 2015 where she confirmed that she had an agreement with him.[38]
[37] T 2-29, ln 45-48.
[38] T 2-56, ln 30.
Her evidence that no concluded agreement was reached is consistent with later email exchanges she had with Mr Stallan in October 2015, after the title to the property had already been transferred to her. Mr Stallan relies on comments she made in an email on 29 October 2014[39] that Mrs Stallan’s will needed to be changed to reflect Ms Kent’s status as the legal owner of the property “especially as we have all decided to complete a ‘live will’ with transfer of funds” as proof that agreement was reached between the parties. However, those comments, viewed in context demonstrate that Mr Stallan and Ms Kent were still discussing an arrangement where their parent’s assets would be split between them, but that agreement about those matters was not finalised. During that email exchange in October 2015:
[39] Exhibit 12.
(a)Ms Kent advised Mr Stallan that the property had been transferred to her[40];
[40] Exhibit 7.
(b)Mr Stallan asked what was happening with Turner Street and to let him know if he had to do anything[41];
(c)Ms Kent advised that she needed to find a copy of Mrs Stallan’s will “before we finalise Turner Street”[42];
(d)Ms Kent told Mr Stallan that she thought Mrs Stallan’s will needed to be amended to exclude the property[43] and Mr Stallan disagreed[44];
(e)Ms Kent asserted the will should be changed to reflect that the property was hers “especially as we all have decided to complete a live will with transfer of funds”, referred to the state of their dealings as amounting to “an understanding” and stated that “My recent experience with the law has shown me one thing very clearly and this is if there is any doubt in distribution of assets at any level only the lawyers win. So I respectfully suggest that we draft and complete a new will that accurately and clearly reflects the current state of affairs.”[45];
(f)In response, Mr Stallan stated that “The word property in the will means possessions which can be converted to cash not necessarily a house. I would think that we just need an agreement made up between us that the cash and property has already been distributed in equal shares and neither of us can dispute it. Having said that whatever documents you need to get them organised and we can finalise it. I am also happy to do it either way1) if you want your half in cash and I take over the house or 2) as we agreed at the beginning of the year.”[46]
[41] Ibid.
[42] Exhibit 7.
[43] Exhibit 8.
[44] Exhibit 9.
[45] Exhibit 10.
[46] Exhibit 11.
The final exchanges demonstrate any understanding they had about the division of assets had not yet been formalised or finally agreed to. Even at this late stage, Mr Stallan was proposing another way in which the property could be divided between them inconsistent with the 9 July 2014 proposal, i.e. that he make a cash payment to Ms Kent and assume ownership of the property on their mother’s death.
Ms Kent’s evidence was that at the time of these email exchanges she wanted legal and accounting advice on paying Mr Stallan money. She said she was concerned to obtain a copy of the will for that purpose. She said there was never a final amount that was agreed between her and Mr Stallan about what she should pay him. I accept her evidence about these matters.
Ms Kent’s evidence that she was concerned to obtain accounting advice about the arrangement before making a final decision is consistent with an email she sent her brother on 16 November 2015 after he had inquired about what needed to be done to “finalise this for mum”. She responded:
“To keep you in the loop the earliest appointment for my accountant is the 4th February (I tried to get an appointment prior to Christmas without success) however, this will give me a chance to go through all paperwork and the legal bills etc when I am on holidays.”[47]
[47] Exhibit 13 (errors in the original).
I accept Ms Kent’s evidence that no final or concluded agreement was reached between her and Mr Stallan about the division of their parent’s assets before her mother’s death. Her evidence about these matters was clear, and consistent with the objective evidence. Her correspondence with her brother in late 2015, more than a year after his initial proposal was made, shows that she wanted to hold off finalising any agreement until after she had obtained advice about whether the arrangement proposed by him was in her interests.
I also accept her evidence about the arrangements she made with her mother about the transfer of title from Mr Connell’s company. On her evidence, those arrangements were not made by reference to any discussions with Mr Stallan about division of their parent’s assets. She said that she spoke to her mother by telephone from Melbourne soon after she had agreed to settlement terms with Mr Connell. This call occurred after she had called Mr Stallan and told him that Mrs Stallan required advice from an independent solicitor about transferring the property into Ms Kent’s name.
She said she told Mrs Stallan “mum we’re looking at through the consent orders transferring the property into my name, but you will be allowed to live here for the rest of your life. You won’t have to pay any major rates, or body corporate, and the property will be maintained, and I give you my word that will happen.” She said her mother indicated her consent to that arrangement.[48]
[48] T 2-31, ln 35.
After Mrs Stallan consultation with Mr Williams on 1 December 2014, Ms Kent received the following email from Mr Stallan:
“Hi Susan
Mum has been to see Lee Williams. He is going to let the solicitors know that Mum agrees in principal but requires what protection is available to her.
He suggested a perpetual lease where all outgoings were being covered and you could not sell while the lease was in place. He is happy to do up the paper work for her.”[49]
[49] Exhibit 4.
Upon receipt of this email, Ms Kent said she had a further phone call with her mother in which the following occurred:
I said to mum the – “you’ve been to the solicitor” and mum said, “Yes”. “The solicitor is looking at a perpetual lease that you would have to pay for” and she said, “I don’t want that, Susan. I don’t want to spend any more money on legal fees.[50]
[50] T 2-33, ln 20-24.
….
She said to me, “I don’t want to spend any more money on legal fees. I don’t need the lease. I trust Susan that you will allow me to stay here for the rest of my life”, and I said, “Yes, mum. I will.”[51]
[51] T 2-33, ln 26-29.
She said after these discussions with her mother, her lawyers received the letter of consent from Mr Williams. As set out above, that letter indicated Mrs Stallan’s consent to the orders proposed between Mr Connell and Ms Kent in so far as they related to her and that she had made suitable arrangements concerning the occupancy of the property with Ms Kent.[52]
[52] Exhibit 15.
On 16 July 2015, Lee Williams wrote to Mrs Stallan enclosing the consent order made between Mr Connell and Mrs Kent and seeking her instructions about the need for a lease over the property[53]. Ms Kent’s evidence was that she had further discussion with Mrs Stallan about this issue. She said Mrs Stallan instructed her to ring Mr Williams and inform him that she did not need a five by five perpetual lease and that she no longer required his services. In cross-examination she accepted she sent Mr Stallan an email attaching a letter for Mrs Stallan to sign terminating Mr William’s services, acknowledging his account for costs and referring them to her for payment.[54]
[53] Exhibit 6.
[54] T 2-56, ln 38-47.
No right of residence agreement
Whilst I accept Ms Kent’s evidence about the arrangements she made with her mother, it does not follow that I accept Ms Kent and Mrs Stallan therefore entered into the “right of residence agreement” pleaded at paragraph 9 of the Amended Defence. That is because the evidence falls short of proving the agreement pleaded at paragraph 9 of the Amended Defence in an important particular.
In accordance paragraph 9(d) of the Amended Defence, it is pleaded it was a material term of the agreement that Mrs Stallan and Ms Kent agreed that all right, title and interest in the property would vest in Ms Kent and that Mrs Stallan would not make any claim as to any right, title or interests that she may have had in the property. But no support for the inclusion of the term alleged in paragraph 9(d) of the Amended Defence is found in either:
(a) Ms Kent’s evidence about what was discussed between her and her mother regarding the transfer of title and her mother’s continued right of occupancy, or
(b) any of the documentary evidence before the court, including the terms of the consent orders made between Mr Connell and Ms Kent, and the correspondence authored by Mr Williams on Mrs Stallan’s behalf regarding those orders.
Accepting Ms Kent’s evidence, it shows only that Mrs Stallan agreed to the transfer of title in exchange for Ms Kent’s promise that she could remain in occupation of the property expense free. The topic of Mrs Stallan’s interest in the property was not something they discussed. There is no evidence they discussed, let alone agreed, that Mrs Kent would retain all right, title and interest in the property upon transfer of title and that Mrs Stallan would not make any claim to any interest in it. There was no gift of Mrs Stallan’s beneficial interest in the property to her daughter, only acquiescence in a transfer of the company’s right, title and interest to Ms Kent on the proviso that Mrs Stallan remain living in the property she had mostly paid for.
The documentary evidence does not support the contention made at paragraph 9(d) of the Amended Defence either. Dealing first with the consent orders themselves, in so far as they relate to Mrs Stallan, they are of limited scope and operation. They merely facilitate a transfer of the company’s interests in the property (whatever those interests are) to Ms Kent. They do not in terms deal with any interest held by Mrs Stallan, except to the extent they provide that Ms Kent agreed to indemnify Mr Connell and his company in relation to any claim made by Mrs Stallan about the property. The orders say nothing at all about Mrs Stallan’s right to make a claim in respect of any interest asserted by her. Similarly, the notation to the consent orders, and the letter of consent that was attached to them say anything about Mrs Stallan’s beneficial ownership of the property. They provide only that Mrs Stallan had received legal advice and consented to the transfer of title in accordance with paragraph 3 of the consent order on the basis she could remain in continued occupancy of the property (as had been orally agreed between her and Ms Kent). They do not indicate that Mrs Stallan wished to assign or gift her beneficial interest in the property to her daughter or that she agreed not to make any claim to having an interest in it.
As to the balance of the evidence, no correspondence or document was produced at trial that supported the contention made at 9(d) of the Amended Defence. The only other document with any bearing on the nature of the arrangement between Ms Kent and her mother is Exhibit 14, a letter produced by Mr Williams and addressed to Ms Kent’s solicitors. It is extracted above at paragraph 41. As is plain from its terms, Mr Williams was seeking assurances from Ms Kent’s solicitors about Mrs Stallan’s continued right of occupancy as the sole condition to her consent to the consent orders. His letter does not deal at all with Mrs Stallan’s underlying interest in the property.
Findings about the arrangements made on transfer of title
In summary, the contentions made by both Mr Stallan and Ms Kent about their respective dealings with their mother’s interests in the property at the time of transfer of title from the company to Ms Kent are not made out or established by the evidence. There was no “transfer agreement”, “live will agreement” or “right of residence agreement”.
On the balance of probabilities, and having regard to the evidence actually given by the parties and supported by the objective evidence, I make the following findings of fact relevant to the arrangements made on transfer of title:
(a)Prior to the transfer, Ms Kent acknowledged and accepted her mother’s interest in the property arising from her payment of $323,000.00 towards its purchase. She referred to and considered the property as her mother’s property.[55]
[55] For example, see para 47 above.
(b)There was never a concluded agreement between Mr Stallan and Ms Kent concerning the division of their parent’s assets before their mother’s death.
(c)Mrs Stallan gave her consent to the transfer of the title to the property from the company to her daughter in the terms contemplated by the consent orders on condition that she retain the right to reside in the property rent and expense free.
(d)This was an arrangement made solely between herself and her daughter.
(e)It did not involve any agreement or understanding that her investment in the property would be shared equally between Ms Kent and Mr Stallan on her death, in accordance with the terms of her will, or otherwise.
(f)Nor did it involve any agreement, understanding or representation that her beneficial interest in the property would vest in Ms Kent, or a representation by Mrs Stallan that she would not make any claim to holding a beneficial interest in the property after the company’s title was transferred.
The second plaintiff’s claim
In light of the findings that I have made, Mr Stallan’s claim as second plaintiff can be easily dispensed with. There was no concluded agreement between him and Ms Kent, whether it be described as a “live will agreement’ or by some other label. In the absence of any concluded agreement between them, Mr Stallan has no basis at all on which to claim an equitable interest in, or equitable charge upon, the property. The second plaintiff’s claim must be dismissed.
The first plaintiff’s claim
Similarly, to the extent the claim for relief on behalf of the first plaintiff relies on a failure to perform, either the “transfer agreement” or “live will agreement”, it must be disregarded. I have found that no such agreements were made between the parties and thus reliance upon them provides no avenue for the relief sought. Those findings, however, do not mean the first plaintiff’s claim for declaratory relief must fail.
It is not disputed Mrs Stallan had an equitable interest in the property prior to the transfer of title to Ms Kent. In closing submissions, counsel for Ms Kent conceded that a true appreciation of the circumstances in which Mrs Stallan made her $323,000.00 contribution towards the purchase of the unit meant the conclusion she thereby obtained a beneficial interest at the time of her payment could not be sensibly resisted.[56] That was an appropriate concession. By reference to the undisputed facts set out above at [4] – [13], I find the circumstances in which Mrs Stallan made her payment to Mr Connell’s company gave rise to a resulting trust in her favour, with the extent of her beneficial interest in the property being commensurate to the proportion of her contribution towards the purchase price (here 85% beneficial ownership [$323,000.00 of a total purchase price of $380,000].[57]
[56] T 3-5, ln 5 – T 3-5, ln 15.
[57] Calverly v Green (1984) 155 CLR 242 at 246; 258; Bosanac v Commissioner of Taxation [2022] 275 CLR 37 at [12]; [32] – [34]; [64] – [67];[104] – [113]; Swettenham v Wild [2005] QCA 264 at [32]; [45].
Having regard to that resulting trust, the real question in relation to the first plaintiff’s claim is whether the events after Mrs Stallan’s payment to the company served to alter the equitable interest she acquired in the property at that time. In my view, and for the reasons set out below, nothing that occurred after the making of that payment altered her interest.
Counsel for Ms Kent advanced two arguments relevant to whether Mrs Stallan’s interest in the property was altered, changed or forfeited after the making of the consent orders and the transfer of title. However, as a result of the factual findings that I have made, neither of them succeeds. First, it was argued Mrs Stallan’s interest was altered by the “right of residence agreement” pleaded at paragraph 9 of the Amended Defence because Mrs Stallan’s interest in the property merged into the terms of the agreement such that she had no equitable interest in the property after the agreement was made. I reject this argument. As I have found, no such agreement was ever entered into by Ms Kent and Mrs Stallan. There is no evidence to support the conclusion that Mrs Stallan agreed to give away or give up her interest in the property in exchange for a right to occupy the property. Second, it was argued the first plaintiff is estopped from asserting an interest in the property because, in entering into the “right of residence agreement” with Ms Kent, Mrs Stallan made a range of representations which Ms Kent relied upon to her detriment, including, most crucially, that she would not make any claim to the property or the money she paid towards its purchase. I reject this argument also. As I have found, Mrs Stallan made no such representations to her daughter. There was no assurance given by Mrs Stallan concerning her interest in the property on which Ms Kent could have reasonably relied to act in any way to her detriment. And Ms Kent gave no evidence that she actually relied on any assurances or representations by her mother when entering into the consent orders with Mr Connell.
It is significant that Ms Kent did not obtain the company’s interest in the property as a bona fide purchaser for value. The company’s title was transferred to her as part of the resolution of her property settlement with Mr Connell, and in circumstances where both Ms Kent and Mr Connell were acutely aware of Mrs Stallan’s equitable interest in the property arising from her contribution of $323,000.00 towards the purchase of it.[58] The money Ms Kent paid to Mr Connell in exchange for the transfer of title pursuant to paragraph 3 of the consent orders, served only to effect part of a broader division of property interests as between them. In those circumstances, Mrs Stallan’s acquiescence to the transfer said nothing about her interest in the property. Ms Kent’s agreement with Mr Connell about how to deal with the company’s interest in the property (whatever they might be), which formed only part of the division of their matrimonial assets, did not alter, and was not intended to alter, Mrs Stallan’s equitable interest. The transfer of legal title to Ms Kent had the effect that she alone, as opposed to both the company and her, held the property subject to the equitable interest of her mother, an interest of which she was well aware and had acknowledged at the time of transfer.
[58] T 2-4, ln 14 – T 2-11; T 2-13, ln 42 – T 2-14, ln 14; 25; Exhibit 18.
In these circumstances, Ms Kent took the property on a constructive trust in favour of Mrs Stallan.[59] In arriving at that conclusion, I rely on Croft J’s statement of relevant principle in Konann Pty Ltd v Commissioner of State Revenue & Anor (2015) 100 ATR 772; 2015 ATC 20-490; [2015] VSC 23 at [50] – [52] (footnotes from original included):
[50] A constructive trust is properly described as “a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle”.[60] While it is “remedial” in character, a constructive trust can arise by operation of law from the time at which the relevant circumstances occurred, and its existence does not depend on a prior declaration or order by a court.[61] It follows that “the decree recognises and enforces the trust, but does not create it; the trust arises immediately the circumstances exist in respect of which equity would construe a trust”.[62]
[51] The proper analysis of the circumstances in which a constructive trust may arise in relation to the receipt of trust property raises some debate as to whether a constructive trust arises or whether equity intervenes simply to protect an existing beneficial interest. Thus, in these circumstances, reference has been made to a “borderline” category of constructive trust, in that it is as much a consequence of the continued enforcement of the pre-existing trust against the recipient of the trust property rather, perhaps, than a fresh trust arising. Thus the statement is made in Jacobs’ Law of Trusts:[63]
‘The second borderline category [of constructive trust] concerns third parties who have received trust property in such circumstances that equity will hold them bound by the trust. While the third parties are often called constructive trustees,[64] they are more properly treated as persons against whom the beneficial interest under the primary trust persists because they cannot set up a title as a bona fide purchaser of the legal title without notice.[65] The third party will be subjected to the prior beneficial interest not so much by dint of the imposition of a fresh trust as by the operation against them of the rules as to priority between legal and equitable titles.’
A similar point was made in a previous edition of Lewin on Trusts,[66] describing situations in which the trust estate passes into the hands of a volunteer or a purchaser for value with notice as “cases rather of an existing trust continued and kept on foot than of a new trust created”. In Scott and Ascher on Trusts,[67]the authors state that “[t]he principle that a transferee of trust property who has notice of the trust at the time of transfer takes subject to the trust is so well established that it is unnecessary to cite the numerous cases that so hold”. Similarly, in relation to volunteers or “donees”, the authors state that “it is well-settled law that, when a trustee in breach of trust transfers trust property to one who pays no value, the transferee takes subject to the trust, even if the transferee is without notice of the breach of trust or the existence of the trust”.[68] In any event, whichever perspective is adopted in the analysis, equity will protect the interest of the beneficiary in trust property against the world, rather than against the bona fide purchaser without notice.
[52] Moreover, the application of these principles applies with equal force to the transfer of trust property by the trustee of a resulting trust. Thus, Scott and Ascher state:
The interest of the beneficiary of a resulting trust is an equitable interest, and as such it is cut off if the trustee transfers the property to a bona fide purchaser. But if the transfer is to one who does not give value or who has notice of the resulting trust, the transferee takes subject to the trust.[69]
[59]Peffer v Rigg & Anor [1977] WLR 285 at 294.
[60] Muschinski v Dodds (1985) 160 CLR 583 at 614 (Deane J); see also Paragon Finance plc v D B Thakerar & Co (a firm) [1999] 1 All ER 400 at 408-409 (Millett LJ); and see Wright, The Remedial Constructive Trust (Butterworths, 1998), [1.1].
[61]Muschinski v Dodds (1985) 160 CLR 583 at 614 (Deane J).
[62]Jacobs’ Law of Trusts in Australia (7th ed) at [1311].
[63] Jacobs’ Law of Trusts in Australia (7th ed) at 259 [1304] (emphasis added by plaintiff). See also Australian Stamp Duties Law, [27.0010]: “A constructive trust can arise where a person has received trust property in circumstances where the court will hold that he is bound by the trust. This is really just an instance of an existing trust being continued and kept on foot rather than the creation of a new trust: Lewin on Trusts, 15th ed, p 168. The person holding the trust property is nonetheless usually referred to as a ‘constructive trustee’.”
[64] Karak Rubber Co Ltd v Burden (No 2) [1972] 1 All ER 210 at 1234-1235; Peffer v Rigg [1977] 1 WLR 285 at 294; [1978] 3 All ER 745 at 752.
[65] Rolfe v Gregory (1864) 4 De G J and S 576; 46 ER 1042; United States Surgical Corp v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 247 (reversed on other grounds (1984) 156 CLR 41.
[66] Lewin on Trusts (16th ed 1964), p 151; see also at pp 655, 661 in relation to tracing trust property into the hands of a purchaser with notice or a volunteer.
[67]Scott and Ascher on Trusts (5th ed), p 1969.
[68]Scott and Ascher on Trusts (5th ed), p 1972.
[69]Scott and Ascher on Trusts (5th ed), p 2833.
Equity will impose a constructive trust as a remedy to preclude an unconscionable assertion of legal rights.[70] In the absence of any event, arrangement, agreement or conduct on the part of Mrs Stallan that altered the interest she acquired in the property at the time of making her initial payment for its purchase, I find it is unconscionable for Ms Kent to now deny the first plaintiff’s beneficial interest in the property, in circumstances where, at the time the company’s title was transferred to her, she was aware of and had acknowledged her mother’s interest in the property arising from the payment and the circumstances in which it was made.
[70]Muschinski v Dodds (1985) 160 CLR 583 at 608; 620; Paragon Finance PLC v DB Thakerar & Co
(a firm) [1999] 1 All ER 400 at 408-9
In all of the circumstances, I am satisfied Ms Kent’s conduct in seeking to assert and retain the benefit of her legal interest amounts to an unconscionable assertion of a beneficial interest in the property to the detriment of the first plaintiff which warrants the declaration of a constructive trust in terms that Ms Kent holds 85% of the property on constructive trust for the first plaintiff.
Disposition
In addition to a declaration of a constructive trust, the first plaintiff sought an order “for the performance of the constructive trust” requiring a transfer of title to the first plaintiff. However, in the absence of any submissions concerning whether and how any contributions to the property that may have been made by Ms Kent should be accounted for, I am not persuaded about the need for, or desirability of, such an order. In those circumstances I will hear the parties on the need for any further consequential orders necessary to give effect to the declaration of a constructive trust.
I make the following orders:
1. It is declared that Susan Avis Kent holds 85% of the property situated at 2/44-46 Turner Street, Whitfield in the State of Queensland and described as lot 2 on survey plan 198017, Title Reference 50726370 on constructive trust for Gregory Brett Stallan on behalf of the estate of Lorraine Avis Stallan (deceased).
2. The parties have liberty to apply within 14 days for any further or consequential orders necessary to give effect to the declaration made.
3. The second plaintiff’s claim is dismissed.
4. I will hear the parties as to costs.
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