Strang v Strang - [2009] NSWSC 760

No judgment structure available for this case.

CITATION: Strang v Strang [2009] NSWSC 760

HEARING DATE(S): 12.02.09, 13.02.09, 16.04.09, 17.04.09

JUDGMENT DATE :
5 August 2009

JUDGMENT OF: Nicholas J

DECISION: Par 156 - 159

CATCHWORDS: EQUITY – trusts and trustees – vesting orders – written declaration of trust – whether requisite intention existed at time of declaration – equitable defences – laches and delay – general principles considered REAL PROPERTY – Crown land – week-end leases – whether declaration of trust an illegal dealing under Crown Lands Consolidation Act 1913 LIMITATION OF ACTIONS – trusts and trustees – trustee’s executrix refuses to transfer trust property to beneficiary’s executrix – whether plaintiff statute barred – when claim for a vesting order arises – rule in Saunders v Vautier considered STATUTORY INTERPRETATION –Trustee Act 1925 – whether laches available as a defence to a claim for a vesting order under s 71 Trustee Act 1925 – principles considered CROSS-CLAIM – equity – powers and duties of trustee – trustee seeks indemnity out of trust estate for payment of expenses – whether expenses related to conduct of the trust or trust affairs – question turns on its on facts – no general principles considered

LEGISLATION CITED: Crown Lands Consolidation Act 1913
Limitation Act 1969
Supreme Court Act 1970
Trustee Act 1925

CATEGORY: Principal judgment

CASES CITED: CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53; (2005) 224 CLR 98
Davies v Littlejohn [1923] HCA 64; (1923) 34 CLR 174
DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510
DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431
Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072
Gatsios Holdings Pty Ltd v Kritharas Holdings (in liq) [2002] NSWCA 29
Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271
Hourigan v Trustees Executors and Agency Co Ltd [1934] HCA 25; (1934) 51 CLR 619
Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624
Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72
McWilliam v McWilliam Wines Pty Ltd [1964] HCA 6; (1964) 114 CLR 656
Minister for Lands v Cassin (1966) 45 LVR 26
Minister for Lands & Forests v McPherson (1991) 22 NSWLR 687
Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2004] HCA 14; (2004) 218 CLR 273
NSW v Scharer [2003] NSWCA 328
Orr v Ford [1989] HCA 4; (1989) 167 CLR 316
Re Lamshed [1970] SASR 224
Re McCready [2004] NSWSC 887
Re Purkiss [1999] VSC 386; (1999) 3 VR 223
Saunders v Vautier (1841) 4 Beav 115; 49 ER 282
Sichel v O’Shanassy (1877) 3 VLR (E) 208
Stafford v Kekatos (No. 4) [2008] NSWSC 1338
Walsh v Minister for Lands for NSW [1960] HCA 52; (1960) 103 CLR 240

TEXTS CITED: J D Heydon and M J Lemming, Jacobs' Law of Trusts in Australia, 5th Ed (2006) Lexis Nexis Butterworths

PARTIES: Stephanie Kay Strang - plaintiff
Rosalind Prudence Strang - defendant

FILE NUMBER(S): SC 1346/08

COUNSEL: G A Sirtes SC - plaintiff
P Hallen SC/E T Finnane - defendant

SOLICITORS: Graeme J McKimm - plaintiff
Watkins Tapsell - defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Nicholas J

5 August 2009

1346/08 Strang v Strang

JUDGMENT

1 His Honour: In these proceedings the plaintiff seeks an order pursuant to s 71 Trustee Act 1925 (the Act) vesting the property in folio identifier 3/111964 in her, and ancillary relief.

2 The plaintiff is the widow of the late Stephen John Strang (Stephen) who died on 26 January 2000 aged 55 years. She is his executrix and trustee and the sole beneficiary under his last will made 14 January 2000 of which probate was granted on 26 October 2000. She was the daughter-in-law of the late Stanley Russell Strang (Stanley) who died on 14 November 2007 aged 90 years.

3 The defendant is Stanley’s niece. She was appointed executrix and trustee of his last will made 29 May 2006 of which probate was granted on 19 March 2008. She is the sole beneficiary of his estate.

4 Stephen was born on 8 April 1944. He became Stanley’s stepson when his mother, Jean Phyllis Edwards (Jean) married Stanley on 26 December 1948 when he was four years old. Jean died on 26 May 1990.

5 At the date of his death Stanley was the sole registered proprietor of the property which consists of a house and land at Arrawarra, New South Wales.

6 In summary, the plaintiff claims that on 21 February 1967 Stanley executed a declaration of trust (the declaration) that he held the property on trust for Stephen. Although the amended statement of claim included further and alternative claims that the property was held under a resulting trust, or an equitable charge, or a constructive trust for Stephen, the plaintiff proceeded only with the claim for an order based on the declaration. The other claims were not formally abandoned, but as they were neither pressed nor referred to in submissions I treated them as such. Accordingly, I have not considered them in these reasons.

7 The defendant denies the claim to an order on several grounds:

(i) there was no intention to create any trust;

(ii) the trust was conditional upon the provision by Stephen of monies for the erection of the weekend residence, which condition was not fulfilled;

(iii) the declaration was illegal and unenforceable under various provisions of the Crown Lands Consolidation Act 1913 (the CLC Act);

(iv) the claim was barred under various provisions of the Limitation Act 1969; and

(v) laches.

Background

8 The following matters are common ground and, in any event, are established on the evidence.

9 On 16 October 1963 Stanley was granted a week-end lease of the property by the New South Wales Department of Lands conditional upon the erection of a dwelling within 12 months. He then resided at Dobie Street, Grafton.

10 On 13 November 1964 the period for erection of the dwelling was extended to 15 October 1965.

11 On 9 June 1965 the Coffs Harbour Shire Council approved the building application for the proposed dwelling.

12 By letter of about 27 October 1965 to the Land Board, Stanley advised:

“Building has been commenced concrete foundations have been poured – brickwork has almost been completed to floor level.”

13 By letter of about 24 October 1966 to the Land Board, Stanley advised that the building was not complete. He said:

“The brickwork of the ground floor – consisting of carport, boatshed, bathroom, toilet, sunroom and foyer have been completed, floor joists and frame of upper story [sic] have been erected, rafters and roof will be completed shortly.”

14 On 21 February 1967 Stanley declared by a deed that he held the property on trust for Stephen. It included the following:

WHEREAS

AND WHEREAS

STEPHEN JOHN STRANG

NOW THESE PRESENTS WITNESS

IT IS HEREBY

DECLARED AND AGREED

UPON TRUST

15 By deed poll of 5 May 1967 Stephen changed his surname from Edwards to Strang.

16 By letter of about 10 November 1967 to the Land Board, Stanley advised:

“The improvements to date are a two storey dwelling, ground floor in brick to height of eight feet, upper storey timber frame with roof and flooring. Lock up stage should be reached before the end of the year.”

17 On 24 November 1967 the plaintiff and Stephen were married.

18 In about January 1968 Stanley advised the Land Board that the dwelling was erected to lock up stage with a value of $3,000. He requested an extension of time to December 1968 to complete construction.

19 On about 12 February 1969 Stanley advised the Land Board that water and sewerage were being installed, and the improvements had a value of $4,000. He requested an extension of time to 10 February 1970 to complete construction.

20 On 18 March 1970 the Land Board certified compliance with conditions of the grant, and that a dwelling had been erected to lock up stage.

21 On 2 April 1971 Stanley made a will under which he left all his estate to Jean provided that should she predecease him or die within one month of his death it was left to Stephen.

22 On 31 March 1977 the trust deed was registered as book 3269 no. 673. The instrument was released by the solicitors, Pollack, Greening & Hampshire, for this purpose.

23 On about 15 June 1977 Stanley applied for the grant of a perpetual lease of the property. On 5 October 1977 the perpetual lease was granted to him and comprised in Crown Grant Volume 13450 Folio 105.

24 In late 1977 Stanley and Jean moved to the dwelling on the property and continued to live there for the rest of their lives.

25 On 26 May 1990 Jean died. By her will made on 24 February 1967 she left her estate to Stephen.

26 On 26 January 2000 Stephen died. By his will made on 14 January 2000 he left his estate to the plaintiff.

27 By letter of 6 June 2000 to Stanley, the plaintiff’s solicitors requested information concerning Jean’s estate including details of a trust in favour of the plaintiff or her children, and of the location of the title deed to the property.

28 On 11 September 2000 Stanley made a will under which he left all his estate to the defendant provided that should she predecease him it was left to her children.

29 By letter of 17 October 2000 to Pollack, Greening & Hampshire, the plaintiff’s solicitors enquired as to the title to the property.

30 With their letter of 19 October 2000 to the plaintiff’s solicitors, Pollack, Greening & Hampshire sent documents which included the original of Jean’s will, and the original of the trust deed, and provided advice on the transfer of the title to the property to Stephen’s estate.

31 On 4 September 2004 the plaintiff caused the lodgement of a Registrar General’s caveat on the title to the property to prohibit dealings not in accordance with the trust deed.

32 On 29 May 2006 Stanley applied to the Department of Lands to convert the lease to freehold. On the same day he made a will by which he left his estate to the defendant.

33 By letter of 25 July 2006 to Pollack, Greening & Hampshire, Stanley’s solicitor, Mr Gordon Abbott (Mr Abbott) of G L Abbott & Co, solicitors, of Woolgoolga sent Stanley’s authority to forward documents to them, described as follows:

“… all and any papers held by you on my behalf and in particular the original and any copies of a Declaration of Trust between myself as Trustee and Stephen John Strang as Beneficiary and dated 1st day of February 1977 Registered Number 673 Book 3269 together with any papers relating to or surrounding the preparation of an existence of this deed.”

34 By letter of 28 July 2006 Pollack, Greening & Hampshire informed G L Abbott & Co that they were unable to locate the documents requested.

35 With his letter of 30 August 2006 to the defendant, Mr Abbott enclosed copies of documents including the trust deed, crown grant, and a handwritten statement of Stanley. It also said:

“As discussed with you, we have written to the widow of Stan’s step son to ask for a copy of the original deed of trust. As soon as we receive it, the writer will see Stan again and seek an explanation of how the document came into existence and whether there could be any fraud involved.”

36 With his letter of 13 September 2006 to the defendant, Mr Abbott enclosed copies of documents including the caveat and the trust deed. He advised that he proposed to see Stanley as soon as possible regarding the trust deed and his signature on it. It appears there was no reply from the defendant.

37 On 19 July 2007 certificate of title 3/111964 was issued to Stanley as the registered proprietor of the property.

38 On 14 November 2007 Stanley died.

39 By letter of 24 December 2007 to the defendant, the plaintiff’s solicitors claimed entitlement to the property under Stephen’s estate. A number of documents were enclosed, including a copy of the registered deed of trust. There was no reply to this letter.

40 By letter of 16 January 2008 to the defendant, the plaintiff’s solicitors advised that absent a response within 14 days, proceedings would be taken for orders for the transfer of the property to her, pursuant to the trust.

41 By letters of 21 January 2008 and 31 January 2008 the defendant’s solicitors replied to the effect that the defendant intended to apply for probate of Stanley’s will, and were awaiting advice in respect of the plaintiff’s claim.

42 On 4 February 2008 the plaintiff filed the statement of claim.

The evidence

43 I set out below a summary of what I found to be the relevant evidence of the several witnesses. In my assessment, each of the witnesses who gave evidence endeavoured to give it truthfully, and to the extent that recollection allowed.

44 The plaintiff said she married Stephen, an electrician, on 24 November 1967 when she was about 19 years old. They spent the week after their marriage clearing the property of overgrowth in preparation for the building of the house on it. Thereafter, it was their practice about every second weekend to drive from their home in Sydney on Friday night to work on the property, returning home on Sunday night. This they continued to do until the building reached lock up stage several years later. She said that from time to time they were assisted by various friends. Stephen purchased materials and supplies for the building, and sometimes paid the assistants for their work. Stephen did the electrical work, built the frame, laid the floor, and dug trenches for the septic tank. During this time she and Stephen were in regular employment in Sydney; his earnings paid for the building of the house, and hers paid for their living expenses.

45 At about the time of their marriage, Stephen told her, in effect, that he was aware that Stanley held the property in trust for him. She said that Stephen’s postal address was his parents’ house at Dobie Street, Grafton until they moved to the property. Thereafter until Stephen’s death his mail went to the property and was forwarded on by Stanley.

46 The plaintiff said Stanley did not assist them with the work, and did not contribute to the cost of materials. She said that in about 1978 Stanley and Jean sold their home at Dobie Street, Grafton and came to live at the property. After Jean’s death on 26 May 1990 it was decided not to ask Stanley to leave the property. After receiving the declaration on 19 October 2000 she decided not to ask Stanley to move out of the property as Stephen would not have wanted that to happen. She caused the lodgement of the Registrar General’s caveat on 4 September 2004 to protect her interest.

47 Under cross-examination, the plaintiff confirmed that, by the date of their marriage, Stephen had told her the property was held on his behalf. She also conceded that Stanley assisted in working on the house and land from time to time. Although I am satisfied that she endeavoured to give her evidence truthfully, the cross-examination of the plaintiff demonstrated that her memory for details such as the year in which an event happened, or as to the state of the property or the stage of construction at a particular time, was often imperfect. She accepted as much. It is unsurprising, as much of her evidence was of events which occurred about 35 years ago. However, taken overall, I accept her evidence which shows, and I find, that for several years from about the time of their marriage she and Stephen regularly visited the property on many occasions and carried out substantial work for the construction of the building, and Stephen paid for some materials. Her evidence also shows, and I find, that they were assisted from time to time by their friends. Her evidence also supports the finding, which I make, that Stanley and Stephen enjoyed a friendly relationship although their personal contact was infrequent.

48 The evidence of Sarah Michelle Strang was contained in her affidavit of 21 July 2008. She was not required for cross-examination. Her evidence was uncontradicted. She is the daughter of the plaintiff and Stephen. During their school holidays in the 1980s, she and her sister regularly stayed with their grandparents, Stanley and Jean, at the property. After Jean’s death she visited the property with Stephen. The last time Stephen went to the property was in February 1999.

49 The evidence of Peter Richard Brennan was contained in his affidavit of 26 May 2008. He is a partner in the firm Pollack, Greening & Hampshire. He identified the signature of the witness to Stanley’s signature on the trust deed as that of Eric Sutherland Greening, then a solicitor of the firm. He was not required for cross-examination, and his evidence was uncontradicted.

50 The defendant gave evidence of discussions with Stanley about the property and the trust deed. On an occasion in 2000 he showed her the letter from the plaintiff’s solicitors of 6 June 2000 which requested information concerning Jean’s estate, and details of a trust involving their client. He told her, in effect, that he did not know anything, and there was no need to reply to the letter. On occasions in 2006 Stanley told the defendant that he built the house at weekends and paid for the materials as he went. He also said he was assisted by Mr Hans Siewert and other tradesmen, but she was unable to locate them, or to find financial records relating to the building work except for work in 1993 in the total sum of $1,054. (Unsuccessful attempts to find Mr Siewert were described in the unchallenged affidavit of Kerri Lea Murdoch-Moore of 9 July 2008.)

51 The defendant said that on 25 May 2006 she learnt of the caveat when she submitted Stanley’s application for conversion of the perpetual lease to freehold title. On 29 May 2006 she accompanied Stanley to see Mr Abbott, his solicitor, for advice about the caveat, and in relation to the application. She said that some time in September 2006, when she showed Stanley a copy of the trust deed, he denied that it bore his signature. He also denied that Stephen lent him any money for the house. She said that on occasions in 2006 when she questioned him about the trust deed he replied to the effect (affidavit 8 July 2008, par 73):

“I do not know how it came into existence. I do not have any knowledge as to why it was written in 1967 and sent to be registered 10 years later.”

52 In cross-examination the defendant said that Stanley claimed the trust deed was a fraud, but she did not recommend to him to take up the matter with either the police, the Law Society of New South Wales or Pollack, Greening & Hampshire.

53 The defendant said that on about 13 March 2007 Stanley paid the sum of $14,332.04 to the Department of Lands to complete the purchase of the property, and on 19 July 2007 the certificate of title was issued in his name. She made an estimate of the rates payable to the Coffs Harbour City Council for the property between 1978 and 1988, which was necessary because the Council records had been destroyed.

54 The defendant also gave evidence in support of the cross-claim, to which I refer when dealing with that issue.

55 Mr John Gabb, a retired teacher, said that during the period 1963 to 1970 he regularly stayed during school holidays with his parents on their land at Arrawarra which was situated opposite the property in these proceedings. He observed Stanley, and sometimes Jean, working on the property at weekends over a number of years. He did not recall seeing anybody else at the property other than Stanley and Jean, and nobody other than Stanley carrying out building work or activities which he described in cross-examination as “… pottering around with the house on and off” (T p 91). He was unshaken in cross-examination, and I accept his evidence.

56 Mr Abbott’s evidence was that he was instructed by the defendant and Stanley on about 29 May 2006 to prepare a will for Stanley, and to proceed with the conversion application for the property. His search of the title revealed the Registrar General’s caveat. On 25 July 2006 he attended Stanley at the property, who gave him a handwritten document addressed to Pollack, Greening & Hampshire authorising them to forward to Mr Abbott all papers held on his behalf including the trust deed and any papers relating to its preparation. Mr Abbott also prepared a handwritten statement as instructed, and signed, by Stanley in which, relevantly, he denied that Stephen helped build the house, except on about two occasions, and denied Stephen paid him any money, or paid for any part of the building. He stated that the house reached live-in stage in 1977. He denied knowledge of the trust deed, said it was a fraud, denied signing it, and attending the office of Pollack, Greening & Hampshire at the time. Mr Abbott said that he received no reply to this letters to the defendant of 30 August 2006 and 13 September 2006, and no further instructions in relation to the trust deed. I accept his evidence.

57 The evidence of Janine Maree McCann was contained in her affidavit of 8 July 2008 which was read without objection. She was not required for cross-examination. She has been employed by Pollack, Greening & Hampshire almost continuously since 1976 as a clerk in charge of the firm’s estate files and security packet records. She identified a file card in the name of “STRANG, S.R.” which recorded a “Declaration of Trust: 21.2.67” and “Sale to S.C. & C.M Wood. 28.2.78”.

58 Ms McCann said it was the practice, before a file was archived, to remove any original documents and place them in a safe custody packet to be held in the safe. A security packet index card was created which recorded the documents held for the client. She identified such a card in the name of “STRANG S.R. & S.J” which recorded “Declaration of Trust: 21.2.67”. It was her belief that the safe custody packet was held for Stephen until 2000. (No ground for this belief was stated.)

59 Ms McCann said that she was unaware of the date on which the trust deed was stamped. With reference to the registration of the trust deed on 31 March 1977, the records did not indicate from whom the instructions to register came, although she said it has been the firm’s policy only to release documents or take instructions from the person for whom the documents are held. Following contact from the plaintiff’s solicitors on 7 September 2000, Ms McCann found that the firm was holding Jean’s will of 29 March 1967, and the trust deed. Those documents were sent to the plaintiff’s solicitors on 19 October 2000.

The plaintiff’s claim

60 The plaintiff claims that Stephen became beneficially entitled to the property upon the making of the declaration on 21 February 1967. She seeks an order under s 71 of the Act vesting the property in her. Relevantly the Act provides:

“71 Vesting orders

(1) The Court may make an order in this Act called a vesting order, which shall have effect as provided in section 78.

(i) where a trustee neglects or refuses to convey any property, or to receive the dividends or income of any property, or to sue for or recover any property according to the direction of the person absolutely entitled to the same for twenty-eight days next after a request in writing has been made to the trustee by the person so entitled,

(n) where the Court might have made a vesting order if this Act had not been passed,

(o) where property is vested in a trustee, whether by way of mortgage or otherwise, either solely or jointly with any other person, and it appears to the Court to be expedient to make a vesting order.

Real Property Act 1900

Conveyancing Act 1919

Crown Lands Act 1989

Mining Act 1992

Offshore Minerals Act 1999

61 In Re Purkiss [1999] VSC 386; (1999) 3 VR 223 Warren J observed (p 228):

“The underlying purpose of the vesting provisions must be 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 receive the benefit or interest to which they are so entitled.”

62 The plaintiff’s case was that, as the defendant had declined her request made in the letters of 24 December 2007 and 16 January 2008 to transfer the property to her, a vesting order was necessary to give effect to Stephen’s equitable right to the property under the declaration. Her claim, in effect, was that under the rule in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 Stephen had an absolute, vested, and indefeasible interest in the property, and the right at any time to require its transfer to him, and to wind up the trust (CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53; (2005) 224 CLR 98, p 119).

63 The defendant denied the existence of any trust principally on the ground that Stanley did not have the requisite intention. She did not allege that the declaration was a sham.

64 At the outset, the plaintiff stated that her case rested entirely on the declaration to establish the existence of the trust for Stephen. She contended that it was effective according to its terms as a declaration of trust which unambiguously evidenced Stanley’s intention to create an immediate and absolute trust in favour of Stephen, then and there. The defendant accepted that the document provided some evidence of intention, but it was undermined by Stanley’s subsequent conduct which demonstrated, in fact, that he had no genuine intention to establish a trust under which he held the property for Stephen.

65 The defendant accepted (T p 165) that if the declaration was effective, a bare trust was created, and Stephen was the beneficial owner of the property with rights to immediate possession and to call for a transfer. However, as indicated earlier, she raised a number of defences to the claim for a vesting order which are considered later in these reasons.

66 In Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 Young CJ in Eq. (as he then was) summarised the relevant principles as follows:

“34 The onus of establishing a trust is on the person who alleges it.

Collinson v Pattrick

Sheslow v Kostin

Hughes v Stubbs

Commissioner of Stamp Duties (Queensland) v Jolliffe

Lewin on Trusts

"It is obviously essential to the creation of a trust, that there should be the intention of creating a trust, and therefore if upon a consideration of all the circumstances the Court is of opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated."

Jolliffe’s case,

Jolliffe’s case

Gaskell v Gaskell

Kauter v Hilton

Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd

Kauter v Hilton,

Jolliffe

Arthur v Public Trustee

“equity will only enforce a trust to the extent that the intention to create a trust is clear. …. Words alone may suffice but where those words are at odds with the donor’s action proof may be lacking”.”

67 In Re Lamshed [1970] SASR 224, Bray CJ said (p 239):

“It is clear law that despite the unambiguous words of the declaration the trust apparently created by them can be rebutted by evidence of a contrary intention (Commissioner of Stamp Duties (Qld) v. Jolliffe (1920) 28 CLR 178). But the onus is on those who seek to prove such an intention and strong evidence is required for the purpose (In Re Steele [1925] SASR 272). Many cases were cited to me where this had been done successfully. In some of these cases the depositor was alive and gave evidence of his own intention and was believed (Jolliffe’s case; Starr v. Starr [1935] SASR 263). In other cases when the depositor was deceased there was evidence of specific declarations made by him during his life time (Winter v. Grady (1921) SR(NSW) 686 at 691), though sometimes these related to the interest only and the trust stood as to the principal (Kauter v. Hilton (1953) 90 CLR 86; Re Armstrong (Deceased) [1960] VR 202 at 206). And in some cases the trust was held to be rebutted after the death of the depositor by evidence entirely or largely circumstantial (In Re Appleby’s Estate (1930) 25 TasLR 126; Re McGuire, Deceased (1937) 41 WALR 120; Teasdale v. Webb (1940) 57 WN(NSW) 151; Abbot v. Miles (unreported, Supreme Court of South Australia, Napier, CJ, 12 May 1952); Jeffrey v. Miles (unreported, Supreme Court of South Australia, Mayo J, 10 December 1952)”

68 The crucial question is whether there was the requisite intention at the time the declaration was made. In order to determine the true position it may be necessary to consider the circumstances which existed at the time of execution of the instrument, and also subsequent events which may negate the expression of intention to create a trust (e.g. Hyhonie, and on appeal Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72). However, it must be kept in mind that strong evidence of a contrary intention is required to rebut the unambiguous words of a declaration of trust (Lamshed p 239). The question is one of fact in all cases.

69 For the plaintiff it was put that it is self evident that the declaration was carefully drawn by Stanley’s solicitor on his instructions in terms which are unambiguous. It was common ground that it was signed by Stanley, and there was evidence that his signature was attested by his solicitor, Mr Greening. It was put that the recitals concerning the weekend lease and the provision of money for the erection of the residence by Stephen were statements consistent with the evidence that at the time the house was incomplete and under construction, and reflected Stanley’s situation of need for money to complete construction in compliance with the terms of the lease. It was submitted that relevant circumstances indicative of a genuine intention included the payment of stamp duty in the sum of $54, and leaving the document with the solicitor for safe keeping. Furthermore, it was argued that the registration of the deed by his solicitors on 31 March 1977 was an affirmation by Stanley of the existence of the trust, in that the evidence supported the inference, as a matter of probability, that registration was arranged by Pollack, Greening & Hampshire on his instructions or with his knowledge.

70 It was put that evidence indicative of intention was that at latest by about November 1967 Stephen had told the plaintiff of the existence of the trust, from which it might be inferred that on an earlier occasion Stanley had told him about it.

71 In anticipation of the defendant’s submissions that Stanley’s subsequent conduct was inconsistent with an intention to create a trust, the plaintiff referred to Stanley’s failure to challenge the validity of the trust deed although there was ample opportunity to do so after becoming aware of the plaintiff’s claim in about June 2000, and although in July 2006 he had denied to the defendant and to Mr Abbott knowledge of its existence and/or that he signed it, and claimed to them that it was a fraud. It was put that such failure supported the inference that Stanley accepted the validity of the document, and chose to do nothing about it.

72 In short, the plaintiff submitted that the terms of his declaration were sufficient to establish Stanley’s intention to create an immediate and absolute trust in favour of Stephen and the evidence of subsequent conduct simply confirmed such intention. The consequence was that the onus was squarely upon the defendant to demonstrate a want of intention at the time.

73 For the defendant it was submitted that Stanley’s conduct after making the declaration on 21 February 1967 was inconsistent with an intention to create a trust. It was put that from then until he died he exercised undisputed dominion over the property. In support, reliance was placed on the evidence of his dealings with the Land Board in order to achieve compliance on 18 March 1970 with the conditions of the grant, and of obtaining the grant of a perpetual lease on 5 October 1977 in his name, and thereafter obtaining the conversion to freehold and the issuing of a certificate of title on 19 July 2007 in his name as registered proprietor for which he paid the sum of $14,332.04. Further, it was submitted that the fact that he and Jean lived on the property as their home from about 1978, and paid the rates and other expenses in relation to it, was further evidence of dominion. Other matters relied upon as evidence of exercise of personal dominion over the property were Stanley’s will of 2 April 1971 in which he left the whole of his estate to Jean, and of his will of 11 September 2000 in which he left all to the defendant. Support was said to be found in Stanley’s statement to the defendant on about 25 May 2006 that he wished to leave the property to her. It was submitted that his assertion to Mr Abbott on 25 July 2006 to the effect that the declaration was a fraud should be understood in the context of his denial of knowledge of the document as indicating, after the lapse of about 40 years, that he had completely forgotten about it. That he had no recollection at this time, so it was put, further demonstrated his lack of intention at the time of the declaration.

74 In essence, it was put that during the whole of the period from 1967 to 2007, Stanley acted as though he was the absolute owner of the property, which conduct undermined the intention to create the trust prima facie evidenced by the terms of the declaration. The absence of evidence that he sought Stephen’s consent to live on the property was said to support this conclusion.

75 Further, the defendant submitted that it was not open to find that the registration of the deed on 31 March 1977 was at Stanley’s request. It was argued that the unchallenged evidence of Ms McCann demonstrated that the solicitors were then acting for Stephen, thus supporting the inference that it was probable that either Stephen, or someone on his behalf, had requested registration.

76 The defendant also challenged the efficacy of the declaration on the ground, as I understood it, that there was no evidence of its delivery to any person. It was put that Ms McCann’s evidence showed that after the document was signed on 21 February 1967 it was held in the solicitors’ file, and transferred to their safe custody packet in 1974 where it remained until sent to the plaintiff’s solicitors on 19 October 2000.

77 Finally, the existence of the trust was challenged on the ground that if it had been created, it failed because it was conditional upon the payment by Stephen of money for the erection of the residence, but there was no admissible evidence which established that the condition had been fulfilled. It was put that the plaintiff’s evidence of payments made by Stephen towards the building costs should not be accepted unless corroborated and, as there was no corroboration, it followed that the plaintiff had failed to discharge the onus of proof on this issue.

Consideration

78 In my opinion, the precise and unambiguous terms of the declaration manifest Stanley’s intention to create a trust of the property for Stephen. Its terms record certainty of intention, subject matter, and the object. To understand its meaning it is unnecessary to look beyond its words, or to resort to evidence of surrounding circumstances at the time it was made. Nothing more was required for completion of the trust. Unless invalid because unlawful, its immediate effect was that Stephen became the beneficial owner of the property and, for as long as the trust continued, Stanley held the legal title.

79 In my opinion, the defendant’s submission that the trust was conditional upon the future advance by Stephen of sums for the erection of the residence should not be accepted. The terms of the declaration, upon their proper construction, do not support the proposition that the existence of the trust was conditional, as claimed. The relevant passage from the document is:

“AND WHEREAS the moneys to be provided for the erection of the said residence are being provided by STEPHEN JOHN STRANG (hereinafter called “the Beneficiary”) of the other part NOW THESE PRESENTS WITNESS that in consideration of the premises and in further consideration of the sums advanced and to be advanced by the Beneficiary to the Trustees for the erection of the residence as aforesaid IT IS HEREBY DECLARED AND AGREED that the Trustee shall stand and be seised of and interested in the said Lease UPON TRUST for the Beneficiary absolutely.”

80 In my opinion, the effect of these words, read as a whole, is to explain that the declaration is made in consideration of, or an acknowledgment of, the sums (already) advanced and of those expected to be advanced in the future by Stephen. They stand as an admission or acknowledgement that Stephen is, in fact, the source of money for the erection of the residence. Had it been intended that the trust was to be conditional upon Stephen making, or continuing to make, advances of money, it may reasonably be expected that clear words would have been used to express such intention. The declaration is clearly the product of careful and precise draftsmanship. The fact that it contains no words indicative of conditional operation supports the conclusion to which I have come. As I have found, the trust was effective upon the making of the declaration.

81 To succeed on the issue of intention the defendant’s task is to demonstrate, with reference to subsequent conduct, that, in fact, it was not Stanley’s real intention at the time to create the trust; in other words, he did not mean what he said. It is relevant to recall the following history.

82 At some time before November 1967 the existence of the trust was communicated to Stephen. Absent evidence otherwise, it may be assumed that this was by Stanley or by Jean, she having been told by Stanley. On 2 April 1971 Stanley made a will under which he left his estate to Jean. On about 15 June 1977 he applied for the grant of a perpetual lease of the property. In about late 1977 or early 1978 Stanley and Jean came to live at the property as their home. Either or both paid rates and outgoings, doubtless as a normal incident of living there. Over the years, Stephen and his family frequently stayed with his stepfather and mother, including for holidays. Jean died on 26 May 1990. Stephen continued visiting Stanley until about 1999. Stephen died on 26 January 2000.

83 When the defendant raised with Stanley questions about the trust as referred to in the plaintiff’s solicitors’ letter of 6 June 2000 he denied knowledge of it. On 11 September 2000 he made a will under which he left his estate to the defendant. On 29 May 2006 he made his last will in which he left his estate to the defendant. He also then proceeded with the application to convert title to the property to freehold. On 25 July 2006 he denied to Mr Abbott knowledge of the declaration, and claimed it was a fraud. The issue was not pursued. He continued living at the property until his death on 14 November 2007.

84 In my assessment, the evidence of Stanley’s conduct after making the declaration, taken overall, is incapable of proving that he lacked the necessary intention as claimed. To the extent it may be said Stanley exercised dominion over the property, he only did so as its legal owner and occupier in circumstances where, from almost the beginning, Stephen was aware of his beneficial interest. This was not conduct inconsistent with the expressed intention.

85 The history shows that it was not until a few months after Stephen’s death that Stanley first denied knowledge of a trust, and made the will of 11 September 2000 in favour of the plaintiff in apparent disregard of Stephen’s interest. He maintained the denial when attended by Mr Abbott on 29 May 2006 for the purpose of the conversion application and making his last will, and on 25 July 2006 for the purpose of obtaining a copy of the declaration and related documents. In my opinion this conduct is no support for a finding that the intention at the time of the declaration was not genuine.

86 It is difficult to accept as an explanation for this conduct that Stanley had forgotten making the declaration which, as it was put, indicated no real intention. He was reminded of it by the defendant in September 2000, and by Mr Abbott in July 2006, yet did nothing about it. I find such inaction consistent with his acceptance of the existence of the trust. Alternatively, his conduct after Stephen’s death supports the finding, which I make, that he developed a mental reservation not to fulfil what he had openly undertaken by his declaration; in other words, he changed his mind. However the conduct relied upon by the defendant might be explained, I am entirely unpersuaded that it contradicts Stanley’s expressed intention on 21 February 1967 to create an immediate trust of property for his stepson.

87 In reaching this conclusion I have found it unnecessary to decide whether or not the registration of the trust deed on 31 March 1977 was under Stanley’s instruction or with his knowledge or consent. Also, in my opinion, it is unnecessary to decide the issue of delivery. It is irrelevant. In any event, as I have found, the intention was clearly expressed, and although not essential, the existence of the trust had been communicated to Stephen.

88 Accordingly, I hold that by his declaration made on 21 February 1967 Stanley established a trust under which he held the property for Stephen.

Illegality under Crown Lands Consolidation Act 1913

89 On 16 October 1963 Stanley became the holder of a week-end lease of the property under s 136B CLC Act, when his application was confirmed. On 5 October 1977 a perpetual lease of the property was granted to him. On 19 July 2007 the certificate of title of the property was issued to Stanley as the registered proprietor of the property, with the effect that the property ceased to be Crown land. At the time of the declaration, Stanley’s interest in the property was as the holder of a week-end lease.

90 The defendant submitted that if the effect of the declaration was to create a trust in respect of the property for Stephen it was illegal in that the declaration was a dealing by Stanley with Crown land in breach of s 6 CLC Act.

91 Section 6 provides:

“6 Crown lands shall not be sold leased dedicated reserved or dealt with except under and subject to the provisions of this Act.

The Governor on behalf of His Majesty may grant lease or make any other disposition of Crown lands in any case where he is hereby authorized so to do, but only for some estate interest or purpose authorized by this Act and subject in every case to its provisions.

The Minister on behalf of His Majesty may lease dedicate reserve or make any other disposition of Crown lands in any case where he is hereby authorized so to do, but only for some estate interest or purpose authorized by this Act and subject in every case to its provisions:

Provided always that this section shall be read subject to the provisions of sections two and four hereof.”

92 The procedure by which the Minister may set aside Crown lands for disposal by way of week-end lease, and the manner in which areas so set apart shall be dealt with are prescribed by s 136A. The procedure for application for a week-end lease, and terms of tenure, are contained in s 136B – s 136H. It has been held that s 136A – s 136H constitute an exclusive code relating to week-end leases (Minister for Lands v Cassin (1966) 45 LVR 26).

93 The defendant submitted that as Stanley was always the holder of a week-end lease he was bound by the CLC Act which included no provision which authorised or permitted him to create a trust of his interest. It was put that “… to the extent that Stanley purported to create an equitable interest in Stephen he was doing so other than in accordance with the proscription contained in s 6” (T p 171). It was argued that, upon its proper construction and with particular regard to its first sentence, s 6 is not limited to acts of the Crown but applies also to holders of property interests granted under the CLC Act. Thus it was put that as the CLC Act contains no express authority for the creation of an inter vivos trust it was unlawful for Stanley to purport to do so.

94 Statutory construction is, ultimately, a text-based activity (Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2004] HCA 14; (2004) 218 CLR 273, pars 87, 89).

95 In Walsh v Minister for Lands for NSW [1960] HCA 52; (1960) 103 CLR 240 Windeyer J said (p 254):

“The underlying object of Crown land’s legislation from 1861 onwards was to control the Crown prerogative of disposing of the waste lands of the Colony at will and to provide the subjects of the Crown with a statutory right, upon the performance of conditions, to have a grant of land from the Crown.”

96 In Davies v Littlejohn [1923] HCA 64; (1923) 34 CLR 174 Knox CJ said (p 183):

“The mutual rights and obligations of the Crown and the applicant for, or holder of, a conditional purchase are to be ascertained by reference to the provisions of the Act and Regulations, for the Crown has no power to dispose of the land except in strict accordance therewith.”

“Looking at the Crown Lands Consolidation Act, we find that it is meant to be an exhaustive code for the disposal of the Crown lands of the State (sec 6).”

97 In the same case, Issacs J (p 188) held that the Crown has no power to dispose of land except in strict accordance with the Crown lands legislation. He also said (p 187):

“… (the Act) is necessarily a code, because it starts with a basic declaration in s 6 …Whatever estates, interests or other rights are created by the Crown must owe their origin and existence to the provisions of the statute. In other words, they are statutory or legal estates, interests and rights … The Act, then, must be looked at as the sole repository of the respective rights and obligations of the Crown on the one side and its conditional purchaser on the other.”

98 A similar view was expressed by Bryson J in Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072, pars 5, 8. In NSW v Scharer [2003] NSWCA 328, pars 59-61 Tobias JA (Sheller, Ipp JJA agreeing) reviewed authorities extending for a century which concluded that under the proscription contained in s 6 the Crown has no power to create an interest in Crown lands except under the Crown lands legislation.

99 These authorities establish in my opinion, that s 6 operates to oblige the Crown to deal with Crown lands only in accordance with the CLC Act. Under the legislation the Minister is empowered to dispose of Crown land in various specified ways, and not otherwise. Transactions which are illegal and void, including those involving a week-end lease, are the subject of s 236 and s 237. They do not include trusts created by the holder of an interest under the CLC Act. The provisions relevant to a week-end lease are s 136A – s 136H. These provisions constitute the code which governs the Minister’s power to deal with areas set aside for week-end leases, and also the rights and obligations of the holder thereof.

100 I accept the defendant’s submission that nothing in the legislation expressly authorises the holder of an interest acquired thereunder to create a trust of it in favour of another. However, it must also be observed that there is nothing in the legislation concerning the grant and holding of a week-end lease which either expressly or impliedly prevents a holder from creating a trust in respect of his interest. In other words, there is nothing in the legislation which forbids the creation of an equitable interest by the holder of a week-end lease.

101 As the authorities show, the CLC Act has for a long time been treated as an exhaustive code. In my opinion, contrary to the defendant’s approach, it is necessary to interpret s 6 as a whole, and not merely to attend to the first sentence in isolation. So read, its ordinary language demonstrates that its purpose and intention is to constrain the Crown to adhere to the requirements as to the manner in which it must deal with Crown lands. The details, including the terms upon which interests following grant are held, are spelt out. The code relating to week-end leases is contained in s 136A – s 136H. Illegal transactions are found in s 236 and s 237. They say nothing which forbids a holder from creating a trust of his interest. They contain no constraint, for example, similar to s 145A(1) which invalidates dealings with holdings within irrigation areas made without the consent of the Water Conservation and Irrigation Commission, and was considered in McWilliam v McWilliam Wines Pty Ltd [1964) HCA 6; (1964) 114 CLR 656.

102 The evidence shows that the property was leased or dealt with as a week-end lease under the applicable provisions of the CLC Act. The Crown dealt with the property in accordance with its statutory obligations and Stanley complied with the terms of the week-end lease, with the consequence that, in this case, there was full compliance with the requirements of s 6.

103 The illegality of which the defendant complains must be found in the legislation. In my opinion the absence of any prohibition makes clear beyond argument that the legislature did not intend that a transaction of the kind relied upon by the plaintiff should be illegal and unenforceable.

104 Accordingly, I hold that s 6 CLC Act provides no basis for a finding that the declaration was illegal and inoperative. This ground of defence is rejected.

105 The defendant also relied upon a ground of defence based on the provisions of s 234(1), but after brief discussion appeared to abandon it (T p 173). It provides:

“234(1) No Crown grant issued after the passing of this Act shall be expressed or purport to be in trust for private persons or purposes.”

106 The provision plainly relates to the terms of the Crown grant. It has no application in this case. The submission is rejected.

107 An additional ground relied upon was based on s 274A which provides:

“274A A week-end lease may be transferred in the prescribed form to a qualified person at any time.

A transfer of a week-end lease shall not be valid unless the consent thereto of the Minister has been obtained: Provided that a week-end lease which does not exceed one acre in area and on which a dwelling has been erected may be transferred without the consent of the Minister where the Minister has certified in the prescribed form that such week-end lease may be transferred without his consent and any subsequent transfer of any such week-end lease in respect of which the Minister has so certified shall be valid without the consent thereto of the Minister having been obtained.”

108 As I understood the submission it was that under the declaration Stanley became a bare trustee of the interest in the week-end lease, and the beneficial ownership thereof was transferred to Stephen. In these circumstances, it was put, the declaration effected a transfer which attracted the application of s 274A. However, apart from accepting that it was open to transfer the week-end lease with the Minister’s consent, the submission was taken no further, and I took it to have been abandoned (T p 174). In any event, as the area was less than one acre it came within the proviso. Accordingly, all that was required for transfer was the Minister’s certificate in the prescribed form that such week-end lease may be transferred without his consent. Furthermore, in my opinion, the declaration did not operate to transfer legal title as holder of the weekend lease, and s 274A has no application in the circumstances of this case. The submission is rejected.

Defences under Limitation Act 1969

109 The defendant contended that the claim for a vesting order was statute barred. The defence was pleaded in the amended defence as follows:

“19. In further answer to the whole of the Statement of Claim, the Defendant says:

(a) To the extent that the Plaintiff claims any equitable estate or interest in the property, that estate or interest, on the Plaintiff’s case, was one that was created on, or before, 31 January 1996, a date more than 12 years prior to the commencement of the proceedings by the Plaintiff.

Limitation Act

110 To consider this issue it is desirable to go back to basics.

111 The claim is for a vesting order under s 71(2) of the Act which, relevantly, under (subpar (i)) may be made where the trustee has declined to convey the property at the direction of the person absolutely entitled 28 days after a written request to do so, and/or under (subpar (n)) where the court might have made a vesting order if the Act had not been passed, and/or under (subpar (o)) where property is vested in a trustee and it is expedient to do so. In this case the defendant has declined the requests to transfer the property to the plaintiff contained in the letters from her solicitors of 24 December 2007 and 16 January 2008. The statement of claim was filed on 4 February 2008.

112 Upon the making of the declaration there was created for Stephen an equitable estate which entitled him to require Stanley to exercise his rights and powers over the property, so far as is practicable, as Stephen might direct (DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510, p 521). The effect of such a transaction was explained by Brennan J in DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431, p 474. It was that the trustee held the legal estate, as trustee, and the beneficiary had as against the trustee “… what Maitland calls ‘the benefit of an obligation’”. He said that an equitable interest is not carved out of a legal estate but is impressed upon it.

113 In Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271, p 281, Gummow J pointed out that a trust created by express declaration is often called a “bare” trust, under which the trustee holds no interest in the property other than that existing by reason of the office and the legal title as trustee. He said (p 282) that under such a trust where the trustee never had active duties to perform or has ceased to have those duties, the property awaits transfer to the beneficiary or at his direction.

114 The trust relationship established by the express declaration in this case attracts the application of the rule in Saunders, the modern formulation of which was recognised by the High Court of Australia in CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53; (2005) 224 CLR 98 to be:

Thomas on Powers

Saunders v Vautier

115 Earlier the Court observed (par 44):

Saunders v Vautier

"[b]y breaking up the trust, the beneficiaries do not compel the trustees to carry out any part of their office as active trustees; on the contrary, they bring that office to an end”.”

116 In DKLR Holding [1980] 1 NSWLR 510 Hope JA said (p 519):

“Where the trustee is the owner of the legal fee simple, the right of the beneficiary, although annexed to the land, is a right to compel the legal owner to hold and use the rights which the law gives him in accordance with the obligations which equity has imposed upon him … If the trustee holds as a bare trustee for a beneficiary absolutely entitled, that beneficiary is, in equity, entitled to be put into possession if he so wishes, but he cannot sue the trustee in ejectment. His right can be enforced only by an order made in the exercise of the equitable jurisdiction of the court … (p 520) … Where the trustee holds absolutely for the beneficiary, the beneficiary has a right in equity to be put, so far as practicable and generally subject to appropriate indemnities being given, into a position where directly, or indirectly, or for all practical purposes, he enjoys or exercises the rights which the law has vested in the trustee.”

117 The rule in Saunders establishes the right of an adult beneficiary who is absolutely entitled to trust property, as was Stephen in this case, to request the transfer of the property to him at any time. Under the declaration Stanley had undertaken an obligation to transfer the legal title to Stephen when requested by Stephen to do so. In this case, the obligation crystallised when the requests were made by the plaintiff’s solicitors. As the obligation is one which equity will recognise and enforce, the defendant’s refusal to comply entitled the plaintiff to call immediately for the exercise of the Court’s equitable jurisdiction to make an order vesting the legal title in her.

118 In my opinion it was the defendant’s refusal which necessitated the plaintiff’s resort to this Court, and provided the basis for a claim to a vesting order under the Act. The plaintiff’s right to claim relief under s 71(2)(n) and (o) of the Act arose at the time of the defendant’s refusal, alternatively, under s 71(2)(i) upon the lapse of 28 days from her solicitors’ requests to transfer the property. As the statement of claim for relief was filed on 4 February 2008 it is plain that the plaintiff commenced proceedings immediately after becoming entitled to do so. There was no occasion to make a claim for relief before the requests had been refused.

119 Accordingly, in my opinion, the provisions of s 27(2), s 30, s 36 and s 47 Limitation Act 1969 can have no application. It is unnecessary to give further consideration to the issues raised by the defendant in reliance upon these provisions. I find that the grounds of defence under the Limitation Act 1969 must be rejected.

Laches

120 The defendant raised laches as an additional ground of defence. Although this defence was not specifically pleaded, the parties proceeded on the basis that it was properly before the Court.

121 The defendant contended that there had been such unreasonable delay in the commencement of proceedings as to amount to laches sufficient to bar the claim in that, in the circumstances, the grant of relief sought would be unfairly prejudicial to the defendant. In support, it was submitted that at all times since 1963 until his death on 14 November 2007, Stanley had acted as if he were the legal and beneficial owner of the property. Since he learnt of the existence of the trust in 1967, Stephen stood by and permitted Stanley to act as such owner, which included the payment of outgoings in respect of the house and land. It was put that, taken overall, the evidence was that, between them, Stephen and the plaintiff had been aware of the existence of the trust for over 40 years before action was taken to enforce it against Stanley through the defendant. It was put that this delay caused prejudice in that, as a consequence of the deaths of Stanley and Stephen, their evidence which might have disproved the existence of the trust was lost to the defendant. In addition, it was said that there was prejudice from the unavailability of documents such as bank records which may have evidenced payments by either person in respect of the property.

122 In opposition, the plaintiff’s first submission was that as laches was an equitable defence to an equitable cause of action, it had no application [sic] for the plaintiff’s statutory rights under the Act. It was then submitted that there was no evidence of acquiescence by Stephen in respect of any dispute as to his rights under the declaration, or to support the proposition that he stood by and failed to exercise his right to demand the transfer of the property to him in circumstances which would preclude the grant of the relief claimed. Also, it was argued, Stanley suffered no prejudice as a result of delay. Relevantly, he took no action in response to the plaintiff’s solicitors’ letter of 6 June 2000 which sought information about a trust, and he continued living at the property as before. Absence of prejudice was said to be also demonstrated by Stanley’s denial on about 29 May 2006 of the existence of the declaration when he learnt of the caveat based on the interest under it claimed by the plaintiff.

123 I turn first to the plaintiff’s submission that a defence of laches is unavailable to meet a claim for a vesting order under s 71 of the Act. Laches may defeat the right of a beneficiary to his entitlement in an express trust (Hourigan v Trustees Executors and Agency Co Ltd [1934] HCA 25; (1934) 51 CLR 619; Orr v Ford [1989] HCA 4; (1989) 167 CLR 316).

124 Section 71 of the Act deals with vesting orders of property the subject of a trust. The scope and effect of this and related provisions, and of a vesting order, was explained in Re McCready [2004] NSWSC 887, per Barrett J in terms which I respectfully adopt:

in personam

By this and certain other statutes the Supreme Court of New South Wales in its equitable jurisdiction is now empowered in certain prescribed cases to cause certain forms of property to be divested from one person and vested in another, by means either of a vesting order or of a conveyance made by a person nominated by the Court to convey.””

125 Thus it is the jurisdiction of the Court to make vesting orders with which s 71 is concerned. In the exercise of its jurisdiction on a claim for a vesting order the Court is required under s 57 Supreme Court Act 1970 to administer concurrently rules of law including rules of equity. Relevantly, under s 59 Supreme Court Act 1970 the Court is required to deal with equitable defences to the plaintiff’s claim. There is nothing in the Act which precludes the pleading of a defence of laches to a claim for a vesting order, or which ousts the jurisdiction of the Court to uphold such a defence if justified in the circumstances. Absent an unambiguous contrary intention appearing in the Act, I hold that this defence is available in proceedings for a vesting order (Minister for Lands & Forests v McPherson (1991) 22 NSWLR 687). The submission of the plaintiff on this question is rejected.

126 In explaining her case, the defendant placed much reliance on the principles in Hourigan in which it was held that, having regard to the lapse of time, the circumstances of the case, and the nature of the relief claimed, the beneficiary’s rights under an express trust were barred by laches, acquiescence, and delay. The principles were stated by Rich J (p 629) as follows:

Blake v. Gale

Bowen

127 In Orr Deane J (p 337) referred to the considerable criticism of:

“… the loose use of the word "acquiescence" as a broad conjunctive or disjunctive companion to "laches" (see, e.g., per Lord Cottenham L.C., Duke of Leeds v. Earl of Amherst (1846) 2 Ph 117, at p 123; (41 ER 886, at p 888); De Bussche v. Alt (1878) 8 ChD 286, at p 314). Such criticism has obvious force in that, so used, the word has a chameleon-like quality which adds little besides confusion to an already vague area of equity doctrine. Strictly used, acquiescence indicates the contemporaneous and informed ("knowing") acceptance or standing by which is treated by equity as "assent" (i.e. consent) to what would otherwise be an infringement of rights …”

128 After reviewing judicial analysis of the concepts of “laches” and “acquiescence” Deane J said (p 340-341):

“On balance, the preferable approach is to treat the phrase "gross laches" as an intentionally imprecise one which involves not merely considerations of the period of the relevant delay but which invokes the traditional notions of equity and good conscience which are the general determinants of whether a plaintiff should be refused relief by reason of laches in the circumstances of a particular case. On that approach, the phrase refers to circumstances where inaction or standing by (with knowledge) by a plaintiff over a substantial period of time assumes an aggravated character in that it will, if the plaintiff is granted the relief which he seeks, give rise to serious and unfair prejudice to the defendant or a third party. So understood, the use of the phrase "gross laches" does little to aid in the identification of particular circumstances in which a defence of laches will preclude relief being granted to a beneficiary in an action for the enforcement of an express trust. The ultimate test effectively remains that enunciated by Lord Selborne L.C. (not, as is often said, Sir Barnes Peacock (see Errata)), speaking for the Privy Council, in Lindsay Petroleum Company v. Hurd (1874) 5 PC 221, at pp 239-240, namely, whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable "to place him if the remedy were afterwards to be asserted" (see Erlanger v. New Sombrero Phosphate Company (1878) 3 App Cas 1218, at p 1279, and also, per Rich J., Hourigan, at pp 629-630).

Ordinarily, it is difficult to envisage circumstances, falling short of waiver, release, election or estoppel, in which the laches of a beneficiary would produce a situation in which it was inequitable and unreasonable to grant relief in proceedings for the enforcement of an express trust in relation to trust property which remained in the possession of the trustee (or his personal representative). There are, however, at least two categories of case where that is not so. The first is where there is or has been dispute or mistake about the existence of the trust or the identity or extent of the trust property. The second category is where prejudice to third parties, such as other beneficiaries, is involved.”

129 The present case is not one of the two exceptional categories of cases referred to.

130 The question here is whether the laches of Stephen and/or the plaintiff has produced a situation in which it would be inequitable and unreasonable to make a vesting order.

131 It was difficult to discern from the defendant’s submissions whether “laches” was intended to encompass more than mere lapse of time before the claim was brought. As I understood them, no attempt was made to establish waiver, release, or estoppel. The essence of the issue seemed to me to be an assertion that relief should be refused by reason of Stephen’s and/or the plaintiff’s standing by, or the lapse of time for action, which resulted in prejudice to the defendant (Orr pp 338-339).

132 On my assessment, the evidence in the case provides no support for this defence, and it must fail.

133 It is to be remembered that Stephen and, after his death, the plaintiff was entitled to request the transfer of the property at any time, a right not lost by mere inaction. Stanley’s duty was always to observe the trust. I am unpersuaded that the defendant can escape the obligation to transfer upon request merely by reliance upon the non-interference of the beneficiary.

134 Although Stephen knew of the trust prior to November 1967, there was no evidence that he knew of his rights under it. There was no evidence that the conduct or inaction of either Stephen or the plaintiff induced any belief in Stanley that these rights had been abandoned and/or that Stanley thereafter had acted on the belief that they had been. The fact that Stanley and Stephen’s mother, and after her death Stanley alone, lived on the property does not of itself support the inference that Stephen knowingly gave up his right to request transfer of it to him. (It would be necessary to demonstrate that Stephen fully understood what he was giving up.) Nor was there evidence otherwise, explicit or inferential, that Stephen or the plaintiff had relinquished that right.

135 Such little evidence as there was relevant to this issue showed that after the death of his mother, Stephen and the plaintiff decided not to ask Stanley to leave the property, and after receiving the declaration on 19 October 2000 the plaintiff decided not to do so as Stephen would not have wanted that to happen. Causing the lodgement of the caveat on 4 September 2004 was not conduct inconsistent with that approach.

136 I am entirely unconvinced that delay caused any relevant prejudice. The evidence suggests the contrary. As earlier found (par 83) Stanley came with Jean to live at the property as their home, paying expenses as the normal incident of living there. Further, when Stanley was informed, in effect, that the plaintiff was expressing an interest in the trust he denied its existence. These occasions were opportunities for Stanley to assert, if it was the truth, either that Stephen and/or the plaintiff had led him to believe the rights under the trust had been abandoned, or that he had suffered detriment as a result of delay. The lack of evidence of this kind supports the finding, which I make, that the delay complained of caused no relevant prejudice to Stanley or to the defendant’s case. This conclusion is reinforced by the evidence of Stanley’s failure to pursue his denial of the declaration, or his claim that it was a fraud, in response to Mr Abbott’s quest for instructions on these matters. Such failure strongly suggests that, in the words of the majority in Orr (p 331):

“The question of the loss of evidence as to such matters is entirely suppositional and is thus not a matter which can properly be said to amount to prejudice of the character which might defeat the appellant’s claim.”

137 Accordingly, I hold that the evidence did not establish that, in all the circumstances, it would unfair and inequitable for the beneficiary in this case to claim against the trustee.

The cross-claim

138 The defendant claims indemnity out of the trust estate for the payment by Stanley of expenses said to have been incurred in performance of his duties as trustee and/or in the course of his conduct of the trust.

139 The categories of claims, excluding interest, were as follows:

Coffs Harbour City Council:	$
1965: building application fee	26.30
Council rates
1963 -1977	1,260.00
1978-1988	1,925.00
1989-2009	22,625.84
Building works:
February 1969: cost per Lands Department records	4,000.00
Cheque butts: 15.09.76 – 06.06.77	1,601.49
Lands Department:
Weekend lease: rental 1963 - 1977	183.00
Perpetual lease: rental 1977 – Oct 2006	2,940.80
15.06.77: perpetual lease fee	32.00
Freehold:
29.05.06 application fee	398.00
18.04.07 stamp duty	181.00
19.04.07 purchase price	14,332.04
14.05.07 registration fee	79.00
Country Energy:
27.03.08	25.87
11.06.08	28.38
Invoice date 03.12.08	61.11
Invoice date 04.09.08	60.77
Invoice date March 2009	62.40
Repairs: 17.04.08	300.00
Home buildings & contents:
House insurance 22.10.07	569.27
House insurance 05.02.09	188.81
Lock service: 03.04.08	136.40
Bananacoast Bricks: 15.02.93	580.00
Coffs Harbour auctions: 04.02.93	474.00
Land tax (not paid)	4,660.00

140 The plaintiff conceded liability for payments for expenses incurred after the death of Stanley (T p 241), excluding those for Country Energy, repairs, and lock service.

141 As to the other claims, the plaintiff submitted that there was either no, or insufficient, evidence to prove that Stanley made the payments claimed, at least during the period Jean was alive. It was also put that merely because, for example, an invoice or rate notice was in Stanley’s name, it should not be assumed that it was paid by him. Additionally, as to payments claimed for council rates, for rentals for the week-end lease and the perpetual lease, and for expenses related to the building, liability was denied on the ground that these were not costs and expenses incurred in the administration of the trust but rather by Stanley personally as the legal owner and occupier of the property until his death. It was put that, as a matter of substance and reality, these were payments made for the personal benefit of Stanley and his wife and, after her death, for himself alone.

142 Section 59(4) of the Act provides:

“A trustee may reimburse himself or herself, or pay or discharge out of the trust property all expenses incurred in or about execution of the trustee’s trusts or powers.”

143 It has been held that the relevant enquiry pursuant to this statutory provision is whether or not expenses incurred do in fact answer the description of having been so incurred “in or about execution of the trustee’s trusts or powers”, and that the right of indemnity cannot be availed of if expense was incurred by conduct outside the scope of the trust or in excess of the powers conferred by the trust (Gatsios Holdings Pty Ltd v Kritharas Holdings (in liq) [2002] NSWCA 29, pars 9, 14).

144 Given the scope of the items claimed some history is relevant. On 16 October 1963 Stanley was granted the week-end lease. On 9 June 1965 the building application was approved, and building work commenced. On 21 February 1967 the declaration was made. On 18 March 1970 compliance with the conditions of the grant were certified by the Land Board. On 5 October 1977 Stanley was granted a perpetual lease. In late 1977 Stanley and Jean moved to live at the property as their home. Jean died on 26 May 1990. Stephen died on 26 June 2000. On 29 May 2006 Stanley applied for a freehold title, and on 19 July 2007 a certificate of title was issued to him. Stanley died on 14 November 2007.

145 It appears that Stanley incurred expenses for council rates, weekend lease rental, and building costs from the time of the grant. The situation did not change upon the making of the declaration. However, there was no evidence of any discussion to the effect that following the declaration Stanley would seek indemnification from Stephen for such payments and expenses. There was no evidence that Stephen ever knew of or authorised any expense met by Stanley in relation to the house or the land. No demand was ever made by Stanley upon either Stephen or the plaintiff for reimbursement. Upon becoming aware in June 2000 of the plaintiff’s interest in the existence of the declaration, and thereafter, he denied the trust and the beneficial interest of either person in the property. His occupation of the property, for which no question of payment ever arose, was for the personal use of himself and Jean, and after her death, for himself alone.

146 Under the declaration Stanley had no duties to perform as trustee except to prevent wastage of the property. The declaration, in terms, did not provide for Stanley to live on the property as his permanent home. The fact that he did, in my opinion, indicates that he accepted that he would continue to bear the costs of ownership.

147 The matters to which I have referred supports what, in my opinion, is the inevitable conclusion that Stanley always accepted that the expenses for which indemnity is now claimed were to his personal account as being ordinarily incidental to occupation of the property as his home, and that he never intended recoupment from Stephen or the plaintiff. Had it been otherwise, it is impossible to think that Stanley would have left Stephen or the plaintiff in ignorance, or would have made no claim for indemnity before he died.

148 Accordingly, with the exception of items referred to below, I find that the defendant has failed to prove that the expenses incurred by Stanley prior to his death for which indemnity is claimed were incurred in the conduct of the trust or in relation to trust affairs. As a matter of substance and reality, I find the expenses were incurred for the purpose of his occupancy, and in the course of residing at the property. The defendant’s claims for indemnity for these expenses are rejected.

149 The plaintiff also defended claims in respect of expenditure prior to 4 February 2002 on the ground that they were statute barred, presumably under s 14(1)(d) and/or s 15 Limitation Act 1969. It appears that notice of the claims was first given to the plaintiff in the cross-claim filed on 28 April 2008. Accordingly, it was the plaintiff’s case that as the relevant limitation period was one of six years, only claims for expenses incurred within that period until 4 February 2008, when the statement of claim was filed, were maintainable. The defendant did not attempt to meet this defence and, in my opinion, it should be upheld. Accordingly, I find that the defendant’s claims for indemnification for expenses incurred prior to 4 February 2002 were extinguished by operation of the Limitation Act 1969.

150 The conclusion to which I have come renders it unnecessary to decide whether the evidence was sufficient to prove, whilst Jean was alive, that it was probable Stanley made the payments, and whether, absent documentation, the quantum of council rates should be accepted. However, without deciding, my inclination would be in favour of the defendant’s case on these issues.

151 On the issue of interest, the principle is that ordinarily when a trustee advances his or her own money to the trust he or she is not entitled to interest thereon (Stafford v Kekatos (No. 4) [2008] NSWSC 1338, par 19; Sichel v O’Shanassy (1877) 3 VLR (E) 208; Jacobs’ Law of Trusts in Australia 5th Ed, par 2107). No basis was established for departure from this principle and accordingly, to the extent applicable, I reject the defendant’s claims for interest.

Conclusion

152 The plaintiff accepts the claims for Freehold in the total sum of $14,990.04, and for Home buildings and contents insurance in the total sum of $758.08.

153 As to land tax, the defendant is entitled to an indemnity for any amount paid thereon.

154 As to the remaining claims for expenses after Stanley’s death, the question is whether they were incurred in or about the execution of the trustee’s trusts or powers or, in the circumstances, whether they were for the maintenance and upkeep of the property. In my opinion, within this category are the following:

(i) Council rates for the period post 14 November 2007.

(ii) Lock service for the sum of $136.40. The circumstances in which this expense was incurred are described in the defendant’s solicitors’ letter to the plaintiff’s solicitors of 7 March 2008, and in the defendant’s affidavit of 8 July 2008, par 94. The refusal of the plaintiff to provide access to the defendant to clear the property was unreasonable, as it was for the benefit of the trust that this should happen. The connection is established. Contrary to the plaintiff’s submission, I find the expense to have been both necessary and reasonable.

(iii) Country Energy payments from 27 March 2008 to date. Self-evidently the continuation of the service provided is directly related to the maintenance and upkeep of the property.

155 I note that in the defendant’s schedule of claims there is a claim for expenses for lawn mowing on the property in the total sum of $400, incurred between 27 December 2008 and 24 February 2009 (Ex 6). There was no response to this claim by the plaintiff. Prima facie, the claim should be upheld but, as it may have been overlooked, I defer ruling until the plaintiff makes her position clear.

Disposition

156 The plaintiff is entitled to a vesting order under s 71 of the Act, as claimed.

157 As to the cross-claim, the parties requested that no final order be made pending enquiry as to whether further expenses for the property have been incurred since final submissions were made. There will be opportunity to address further on any outstanding claims, and in respect of any claim identified in the defendant’s schedule and the plaintiff’s response which has been overlooked, should it be necessary to do so.

158 It is appropriate to direct the plaintiff to bring in short minutes to give effect to these reasons.

159 The question of costs remains outstanding. Failing agreement, I will afford the parties the opportunity to address me on this issue. Arrangements should be made with my associate by 14 August 2009 for the re-listing of the matter.

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Citations

Strang v Strang [2009] NSWSC 760

Most Recent Citation

BD Corporation Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 163

Cases Citing This Decision

11

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In the matter of Elegant Swan Pty Ltd (in liquidation) (controllers appointed) [2022] NSWSC 1451

Cases Cited

22

Statutory Material Cited

4

CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53

Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624

CITATION:	Strang v Strang [2009] NSWSC 760
HEARING DATE(S):	12.02.09, 13.02.09, 16.04.09, 17.04.09
JUDGMENT DATE :	5 August 2009
JUDGMENT OF:	Nicholas J
DECISION:	Par 156 - 159
CATCHWORDS:	EQUITY – trusts and trustees – vesting orders – written declaration of trust – whether requisite intention existed at time of declaration – equitable defences – laches and delay – general principles considered REAL PROPERTY – Crown land – week-end leases – whether declaration of trust an illegal dealing under Crown Lands Consolidation Act 1913 LIMITATION OF ACTIONS – trusts and trustees – trustee’s executrix refuses to transfer trust property to beneficiary’s executrix – whether plaintiff statute barred – when claim for a vesting order arises – rule in Saunders v Vautier considered STATUTORY INTERPRETATION –Trustee Act 1925 – whether laches available as a defence to a claim for a vesting order under s 71 Trustee Act 1925 – principles considered CROSS-CLAIM – equity – powers and duties of trustee – trustee seeks indemnity out of trust estate for payment of expenses – whether expenses related to conduct of the trust or trust affairs – question turns on its on facts – no general principles considered
LEGISLATION CITED:	Crown Lands Consolidation Act 1913 Limitation Act 1969 Supreme Court Act 1970 Trustee Act 1925
CATEGORY:	Principal judgment
CASES CITED:	CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) [2005] HCA 53; (2005) 224 CLR 98 Davies v Littlejohn [1923] HCA 64; (1923) 34 CLR 174 DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 DKLR Holding Co (No. 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431 Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072 Gatsios Holdings Pty Ltd v Kritharas Holdings (in liq) [2002] NSWCA 29 Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 Hourigan v Trustees Executors and Agency Co Ltd [1934] HCA 25; (1934) 51 CLR 619 Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 McWilliam v McWilliam Wines Pty Ltd [1964] HCA 6; (1964) 114 CLR 656 Minister for Lands v Cassin (1966) 45 LVR 26 Minister for Lands & Forests v McPherson (1991) 22 NSWLR 687 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2004] HCA 14; (2004) 218 CLR 273 NSW v Scharer [2003] NSWCA 328 Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 Re Lamshed [1970] SASR 224 Re McCready [2004] NSWSC 887 Re Purkiss [1999] VSC 386; (1999) 3 VR 223 Saunders v Vautier (1841) 4 Beav 115; 49 ER 282 Sichel v O’Shanassy (1877) 3 VLR (E) 208 Stafford v Kekatos (No. 4) [2008] NSWSC 1338 Walsh v Minister for Lands for NSW [1960] HCA 52; (1960) 103 CLR 240
TEXTS CITED:	J D Heydon and M J Lemming, Jacobs' Law of Trusts in Australia, 5th Ed (2006) Lexis Nexis Butterworths
PARTIES:	Stephanie Kay Strang - plaintiff Rosalind Prudence Strang - defendant
FILE NUMBER(S):	SC 1346/08
COUNSEL:	G A Sirtes SC - plaintiff P Hallen SC/E T Finnane - defendant
SOLICITORS:	Graeme J McKimm - plaintiff Watkins Tapsell - defendant