Timms v Matthews and Ors No. Scgrg-99-46 Judgment No. S248

TIMMS v MATTHEWS and ORS
[1999] SASC 248

Magistrates Appeal: Civil

PERRY J. This is an appeal against a judgment and orders of a magistrate sitting in the Magistrates Court in which he determined, adversely to the appellant (“Mrs Timms”), a disputed claim as to title to the proceeds of sale under a warrant of sale of certain property seized under the warrant.
The action has had a convoluted and somewhat complex history.
There are five respondents to the appeal. The first three respondents, Barry Matthews, SA Marine & Salvage Pty Ltd and Birkenhead Development Corporation Pty Ltd (“the judgment creditors”), are the judgment creditors entitled to the benefit of a judgment entered in the Magistrates Court against Mrs Timms’ husband, Rowan Timms, upon which there is now due and owing $12,985.40. That judgment was entered on 7 August 1997 by Mr Harry SM, following a trial before him in the Civil Division of the court. An appeal to this Court from that judgment was dismissed.
The fourth respondent is the Sheriff of South Australia. His presence is explained by reason of the fact that after entry of the judgment against Mr Timms, a number of goods were seized by the Sheriff pursuant to a warrant of sale. The major items seized were a Volvo prime mover and semi-trailer. The goods were seized on 4 February 1998 and sold by the Sheriff by auction on 23 March 1998.
Ten minutes before the auction took place, Mrs Timms’ husband, Rowan Timms, served a claim to the goods in the form provided in the relevant Rules of Court, known as a Form 36. As will be seen, it was ultimately Mrs Timms who laid a claim to title to the proceeds of sale.
At all events, the Sheriff proceeded with the auction. The proceeds were $35,085, mainly derived from the prime mover and trailer.
After fees, largely auctioneer’s fees, were paid, the balance of the proceeds of the auction were paid by the Sheriff into the Supreme Court. The amount paid in was $29,893.20. That money remains in court.
The judgment creditors disputed the Form 36 notice. That dispute went to trial before the learned magistrate, from whom the present appeal is brought. As I have observed, although the Form 36 notice had been lodged by Mr Timms, it was Mrs Timms who claimed title to the goods on behalf of a trust known as “McEwen Trust” of which she claimed to be trustee. The outcome of that trial was in favour of the judgment creditors at the expense of Mrs Timms’ claim.
Mrs Timms appealed to this Court on 2 July 1998. Debelle J allowed the appeal on the ground that the magistrate had not acted in accordance with the rules of natural justice in the hearing and determination of the claim. Debelle J referred the matter back to the same magistrate to hear the matter over again.
I turn back to an event which took place in June 1992. On 3 June 1992, a sequestration order was pronounced against the estate of Rowan Timms, an official trustee in bankruptcy being appointed trustee of the estate in bankruptcy.
Following the determination of the appeal heard by Debelle J, the matter was eventually re-listed before the learned magistrate who commenced hearing the re-trial on 21 September 1998. Official receiver in Bankruptcy in his capacity as Official Trustee in Bankruptcy of Mr Timms’ sequestrated estate (“the Official Trustee”) sought leave to intervene. After the application had been argued for a time, and before it was ruled upon, the application was withdrawn.
Eventually the trial was completed on 15 December 1998. The learned magistrate gave judgment on 21 December 1998, but did not pronounce the formal order disposing of the proceedings until 4 January 1999. He then made an order in the following terms:
“1..... ORDER that the sheriff not recognise the claim of Lisa Timms to the monies the subject of the present action.
2.ORDER that the sheriff on the 29th January 1999 do disburse the monies the subject of the respondents claim, less lawful expenses to the respondents creditors NICHOLLS GERVASI & CO.
3...... ORDER that the respondents creditors do have costs against the applicant Lisa Timms to be agreed or taxed in relation to opposing the applicant Lisa Timms’ claim.
4.ORDER that the sheriff do hold the surplus of monies in trust pending determination by a court of competent jurisdiction in relation to lawful entitlement to that surplus between Rowan Timms and the Official Trustee in Bankruptcy.”
On 17 February 1999 a notice of appeal was filed in this Court. The notice of appeal was out of time. A Master extended the time for the lodgment of the appeal, nunc pro tunc. Official Trustee then sought leave to intervene and become a respondent to the appeal. That application was heard by Martin J and allowed.
At the same time, Official Trustee sought leave to adduce fresh evidence on the hearing of the appeal as set out in five affidavits, four of which were brought into court with the application, and the remaining affidavit to be filed later. As to that application, Martin J gave leave both to Official Trustee and to the remaining respondents to lead “such admissible fresh evidence as they deem appropriate” from the five deponents.
Mrs Timms applied for leave to appeal against Martin J’s decision. He refused leave.
Put shortly, the fresh evidence which was sought to be led, if accepted, would have tended to prove that the deed purporting to create the McEwen Trust was in fact not prepared until a date between the service of the bankruptcy notice on Mr Timms which eventually led to his bankruptcy, that notice having been served on 23 March 1992, and before the sequestration order was made.
Mr and Mrs Timms, on the other hand, contend that the deed was executed much earlier, on or about the date which it bears, namely 9 October 1991. If the fresh evidence was to be accepted, it would inevitably lead to a finding of fraud against Mr Timms and possibly Mrs Timms.
As will be seen, the learned magistrate effectively found the deed of trust constituting the McEwen Trust to be a sham. To prove that it was conceived and executed fraudulently would simply provide another reason to disregard it.
Mrs Timms gave a notice requiring the deponents to the affidavits in which the fresh evidence sought to be led by Official Trustee is set out. If allowed, the calling of the fresh evidence and the cross-examination of the deponents to those affidavits, would have substantially extended the length of the hearing of the appeal.
After hearing argument, I ruled against admitting the fresh evidence with the qualification that I allowed one proposed witness, Ms Green, to be called. She had travelled all the way from Queensland, and I thought it better that her evidence be received de bene. I heard her evidence, which was brief, but I did not proceed any further with the receipt of the fresh evidence.
To adduce fresh evidence in these circumstances is unusual in that it was directed towards providing another ground upon which the learned magistrate’s decision might be upheld. More commonly, fresh evidence is sought to be adduced to support an attack upon the judgment at first instance.
When I ruled against receiving the fresh evidence, I did so on a provisional basis. This was on the footing that if, after hearing the arguments based upon the evidence as it stood before the learned magistrate and the reasons which he delivered in support of the judgment and orders under appeal, I came to the conclusion that the appeal should be dismissed ,there would be no need to have regard to the fresh evidence.
On the other hand, I intimated that if, at the conclusion of the arguments on the appeal, I felt that there was even a possibility that it ought to be allowed, I would at that stage rule on the receipt of the fresh evidence. I had in mind that it might be proper then to consider whether, if it had been called before the learned trial magistrate, it might have altered the outcome of the proceedings. In that event, it would be necessary to refer the matter back for re-hearing in the Magistrates Court, which hearing would then take place against the background of whatever evidence overall the parties at that stage put forward, including the fresh evidence foreshadowed by Official Trustee.
As will be seen, having heard the argument on the appeal, and without considering the proposed fresh evidence, I am nonetheless of the view that the appeal should be dismissed. In those circumstances, it is unnecessary to refer further to the proposed fresh evidence.
I should mention that at the outset of the appeal, Official Trustee indicated through his counsel Ms Maharaj that he made no claim on such part of the moneys in court as might be necessary to satisfy any ultimate ruling in favour of the judgment creditors. The warrant of sale was in the amount of $12,985.40, so that Official Trustee’s participation in the appeal was directed to preserving his position with respect to the balance of the moneys in court, that balance being of the order of $17,000.
Of course, the ruling on the appeal will only dispose of the attack on the judgment pronounced in the Magistrates Court which, as will be seen, will be upheld. The order disposing of the appeal will in no way operate to determine any claim or claims which there might be with respect to the remaining balance of the moneys held in Court after the judgment creditors have been paid. Whether Official Trustee or some other person or persons prove an entitlement to the balance of the moneys in court is a matter which will fall to be determined elsewhere, if necessary, in appropriate proceedings.
I should mention one other preliminary matter. At an early stage of the hearing, Mrs Timms sought to have her husband Rowan Timms joined as an appellant on the footing that he had recently been appointed a co-trustee of the so-called McEwen Trust. She admitted candidly that his action in being constituted a co-trustee was designed to provide a right of audience for Mr Timms to appear and argue the appeal. The belief was that he was likely to be able to do so in a more articulate fashion than Mrs Timms.
I ruled against that application, as it seemed to me that it would be wrong in principle to allow a lay party to be represented by another lay party by resorting to such contrived means.
So that Mrs Timms remains the sole appellant. In those circumstances, it would be wrong to allow Mr Timms to speak for her. Indeed, he made no application to that end. I did, however, volunteer the suggestion that Mr Timms be permitted to assume a role as a McKenzie friend to assist Mrs Timms in the presentation of the argument. I permitted him to sit at the bar table with her so that he could discharge that role.
In the events which happened, Mrs Timms in fact presented the argument on the appeal competently. Whatever prospects of success the appeal had did not suffer by reason of the fact that she represented herself.
I turn now to the evidence upon which Mrs Timms claims to be entitled to the subject property as trustee of the McEwen Trust.

The Evidence and Relevant Findings of the Magistrate

Only two witnesses were called, Mr and Mrs Timms.
Mr Timms, who said that he had some accounting qualifications obtained in South Africa, later studied law at Adelaide University Law School. He did not, however, qualify to be admitted. While at the Law School, he met Paul Robertson. They decided to set up an accounting firm named Aaron Stevens and White. That firm was set up in about February 1990.
Together they had the intention that when Mr Robertson was admitted as a legal practitioner, he would set up a legal practice and Mr Timms would join him in it after Mr Timms had qualified for admission.
At the end of 1990 Mr Robertson established a legal practice which he carried on under the name Beresford Robertson & Associates.
Mr Timms was involved with both businesses, that is, the accounting business conducted under the firm name Aaron Stevens and White, and the legal practice carried on under the name Beresford Robertson & Associates. As to the latter practice, Mr Timms gave evidence that he was responsible, at least initially, for the management of the accounting records.
Mr Timms gave evidence that during the course of 1991 he became concerned at the manner in which Mr Robertson was conducting the businesses, more particularly as to what Mr Timms regarded as excessive and uncontrolled spending and a lack of responsibility in conducting the legal practice. As he became increasingly concerned with the way the situation was developing, Mr Timms said that he discussed the matter with Mrs Timms, suggesting to her that they should do something to try to “separate ... our family assets from Robertson”. He said that he did not want to “go down” with Robertson.
They consulted another solicitor, Frank Boyes, who practised at Elizabeth. The evidence was that after he had explained the situation to Mr Boyes, the latter suggested that the way to deal with the situation was either to form a company or a family trust. The evidence was that Mr Boyes
“... explained basically how it worked and he said that the family trust would own all the assets - one of you, being either me or my wife would be the trustee and would hold all those assets on behalf of the trust.”
Mr Timms said that he eventually accepted that advice and gave instructions to Mr Boyes to implement it. After discussions as to what property would be the subject of the trust, it was agreed that all of the possessions owned by Mr and Mrs Timms would be included except for the house property, which was the matrimonial home. Mr Timms gave some quite extraordinary evidence as to what followed. He said that Mr Boyes told him:
“Quite right, if you’re happy with that as the arrangement that you want a family trust - he reached into his pocket picking up 40 bucks, put them on the table and said, ‘There’s the $40. Take this as trustee and look after it and look after it for you and on behalf of your children. .... Now you can go home and you can now add to this trust and anything else you want to add, provided of course you own everything’.”
Mr Timms said that Mr Boyes suggested he make a list of everything that Mr and Mrs Timms wished to add to the trust and bring the list to him.
Mr Timms said that he paid the $40 into the Aaron Stevens and White trust account and had his wife prepare a list of all their possessions.
All of this is supposed to have occurred shortly before the execution of the formal trust deed prepared by Mr Boyes. This was tendered in evidence and is an equally remarkable document. While much of the text follows the common provisions which one finds in a discretionary family trust, there are some strange entries, to say the least, in the schedule containing the variable particulars. Item 4 of the schedule, which is designed to indicate the names of the beneficiaries or class of beneficiaries, reads “Discretionary - nil appointed at establishment of trust.”
The same entry appears under item 5 headed “Additional Beneficiaries”.
Under item 7, which is headed “Specified Business”, the entry is “Nil - at the time of establishment of trust”.
At various stages Mr and Mrs Timms both gave evidence that it was intended that their three children be the beneficiaries of the trust. But if that was always intended, the entries in the schedule are difficult to explain.
At all events, in November 1991 Mr Timms established a business under the business name SA Freightlines, which he registered in his own name. He acquired the prime move and semi trailer now in question, which he said he intended to be property of the trust. He operated the vehicles for the purposes of the business. His evidence was that the business was very successful and that while it was operating it produced substantial sums of money.
Other events, however, overtook him.
On 23 March 1992 a bankruptcy notice was served upon Mr Timms which resulted in him being declared bankrupt on the date to which I have referred earlier in this judgment, namely, on 3 June 1992. The Official Trustee seized the prime mover and semi trailer on 22 July 1992, claiming that they were assets of Mr Timms.
Five days later, on 27 July 1992, a further deed was executed by Mr and Mrs Timms in which Mr Timms purported to resign as trustee of the McEwen Trust and Mrs Timms took over as trustee.
Yet another deed was said to have been executed on 30 August 1992 in which a third person, a Ms Carmalt, was appointed as an “additional trustee” to act as such if at any time Mrs Timms ceased to be trustee. The deed, dated 30 August 1992, also purported to amend the schedule in the deed dated 9 October 1991, more particularly item 4, to constitute Mr and Mrs Timms’ children as specified beneficiaries.
In April or May 1997, following a demand made by Mrs Timms, Official Trustee in Bankruptcy returned the prime mover and trailer to Mrs Timms, but they were later seized by the Sheriff in the circumstances to which I have referred.
Mrs Timms’ evidence broadly supported that given by Mr Timms as to the circumstances in which the three deeds were said to have been executed.
Both were cross-examined at some length in an effort to establish that the so-called McEwen Trust was a sham and that the deed of October 1991 had been entered into simply as a means of erecting a shield between Mr and Mrs Timms’ assets and Mr Timms’ creditors. Both Mr and Mrs Timms insisted that the trust was genuinely constituted and that it was the operating vehicle for the business carried on in the name of SA Freightlines.
During the course of the trial it became apparent that there were many inconsistencies and shortcomings in the books and records which one might expect to have been brought into existence if the trust in fact was a genuine vehicle for the operation of the business. All of the moneys to do with the business were in fact handled through Aaron Stevens and White’s accounts. While it is true that in some instances there is a reference in those accounts to the McEwen Trust, there were never any profit and loss accounts or balance sheets drawn up to record the financial transactions said to have been entered into by the trust. Despite the fact that it was said to be trading very profitably, there is no evidence that there was ever any allocation of profits in the direction of any of the children alleged to be beneficiaries. In spite of efforts by Mrs Timms to suggest to the contrary, it does not appear that there was ever any bank account in the name of the trust, or in her name as trustee of the trust.
Mr Timms’ evidence was that he never got around to preparing any formal accounts of the trust, as the books and records were seized by Official Trustee in Bankruptcy in July 1992. But it is hard to believe that he, or Mrs Timms after she is said to have replaced him as trustee, could not have attended to the accounting, which they were under a duty to see to.
The list of property said to have been prepared by Mrs Timms with the intention of recording the property the subject of the trust was never produced in evidence. It was said that Mr and Mrs Timms had made efforts to obtain Mr Boyes’ papers, but he was no longer in practice. Although it was suggested that he might have been investigated for professional misconduct, an inquiry at the Law Society indicated that the Society did not hold any of his papers.
Mr Boyes was not called as a witness.
The learned trial magistrate’s reasons for judgment are, to say the least, lacking in a number of respects. Most importantly, they do not record clear findings of fact, and they do not refer to much of the evidence which I have endeavoured to summarise above.
But I do not detect any error in the statements made by the learned magistrate as to the essential prerequisites for the existence of a valid trust. Furthermore, the learned trial magistrate understandably confessed “to being much mystified” by what he described as the “strange procedure said to found the trust initially”.

He comments on the omission in the schedule of the alleged trust deed said to have been dated 9 October 1991, and the fact that it did not detail any property as being the subject of the trust except for the $40. The learned magistrate, in the course of recording his findings, said:
“I believe and find on the balance of probabilities that Rowan Timms as trustee never acquired a knowledge of his obligations nor a knowledge of the persons who were to comprise the beneficiaries pursuant to the trust created orally between Frank Boyes and Rowan Timms.”
It is clear from his reasons that the learned trial magistrate treated with some scepticism the explanation given in evidence by Mr Timms as to the circumstances which led him in the first place to make a decision to vest the matrimonial property except for the house in the trust.
The magistrate goes on to find:
“In my belief, and I find more probable than not Rowan Timms operated the trust as a vehicle and analogous (sic) to a trading company. That ‘company’ (trust) acquired assets for the benefit of the principal behind the corporate identity. ...... Rowan Timms saw himself as analogous to the company director and his role as a breadwinner for the family, with a ‘corporate veil’, that is to say, ‘the trust’.”
Later again he observed:
“... Rowan Timms had sufficient knowledge to understand the very broad nature of a trust, but absolutely no knowledge with the duties and responsibilities implied by a trust. I disbelieve his evidence to the contrary and disbelieve him as a reliable witness on the topic. It came as no surprise that P1 (the deed alleged to be dated 9 October 1991) failed to adequately describe the property to be the subject of the trust and its formation nor the beneficiaries of the trust, because they never featured at all in Rowan Timms’ mind as a material feature of the McEwen Trust.’
Other findings indicate that the magistrate took a poor view of the credit of Mrs Timms.
As to her, he found:
“Lisa Timms operated the trust again upon the advice and direction of Rowan Timms. Regrettably, her task had been made impossible by the way in which Rowan Timms and allegedly Frank Boyes had set up the purported trust and the manner in which Rowan Timms has operated an entity which was a trust in name only. I specifically disbelieve Lisa Timms’ evidence about ascertaining the property of the trust in and around the time P1 (the purported deed dated 9 October 1991) came into being in 1991.” (emphasis added)
Elsewhere he held that SA Freightlines was a business which Rowan Timms ran “for his own benefit to earn cash for himself and his family”. He found:
“Despite his evidence to the contrary, I find Rowan Timms was being untruthful in evidence regarding the extent of his fears of being associated with Paul Robertson, Beresford Robertson & Associates and Aaron Stevens and White.”
There are other critical findings, namely, that the so-called list of property said to be subject of the trust never came into existence until after 22 August 1992. He specifically disbelieved Mr and Mrs Timms’ evidence to the contrary.
Towards the end of his reasons, the learned trial magistrate said:
“I believe and find the McEwen Trust was not legally and factually on 9 October 1991, or upon any relevant subsequent occasion thereafter ...... the truck effectively remained the property of Rowan Timms until bankruptcy on 3 June 1992. The property and the truck vested in the Official Receiver .... on behalf of Rowan Timms’ creditors as part of his bankrupt estate, and that position remains extent at law.”
Although there are some infelicities of expression in the reasons of the learned magistrate, I have endeavoured to quote from them the salient findings which make it clear that he disbelieved the evidence of Mr and Mrs Timms to the effect that the so-called trust was a bona fide trust in which the property which they said they transferred to it, had been vested. Although he does not use the word “sham”, it is clear from his reasons that effectively he found the legal ownership in the prime mover and trailer remained throughout in Rowan Timms, as did the practical day to day management of the business in which the trust was employed.
In my opinion, the critical findings made by the learned trial magistrate were fully justified by the evidence. I have separately and independently assessed the evidence, but at the same time giving appropriate weight to the findings of the learned trial magistrate as to the credit of Mr and Mrs Timms. As to his finding as to credit, he had the inestimable advantage of seeing and hearing them give evidence, including their cross-examination.
Much of their evidence is intrinsically improbable. The circumstances said to surround the execution of the deed of trust alleged to have been executed on 9 October 1991 exhibit a number of strange features. I reach that conclusion without the aid of the so-called fresh evidence which Official Trustee sought to put before me, which, as I have said, I have disregarded for the purposes of the appeal.
I would also conclude that the so called deed of trust was void for uncertainty by failing to identify the beneficiaries intended to be the objects of the trust.
I do not pause to set out the grounds set out in the notice of appeal. In various ways they amount to the assertion that the learned trial magistrate erred in reaching the conclusions upon which he based his decision.
For the reasons which I have given, in my opinion, those conclusions were correct and properly drawn from the evidence.
The appeal must be dismissed.

[1999] SASC 248

17 June 1999