Wade v Wade - [2009] WASC 118

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: WADE -v- WADE [2009] WASC 118

CORAM: TEMPLEMAN J

HEARD: 14 - 16 APRIL 2009

DELIVERED : 7 MAY 2009

FILE NO/S: CIV 1627 of 2007

BETWEEN: STANLEY ALAN WADE
MARILYN LYNETTE WADE
Plaintiffs
AND
ALAN ANDREOUS FRANKLYN WADE
Defendant

Catchwords:

Equity - Family arrangements for interests in land - Arrangements not in writing - Purchase of dwelling by funds from parents and son - Purchase by son 'in name only' - Son becomes sole registered proprietor - Parents claim to be beneficial owners - Cohabitation for two years before parties fall out with each other - Son asserts rights as sole registered proprietor - Whether son a bare trustee - Whether son due reimbursement - Vesting order

Legislation:

Property Law Act 1969 (WA), s 34
Transfer of Land Act 1893 (WA), s 182(1)
Trustees Act 1962 (WA), s 78(2)(n)

Result:

Defendant a bare trustee for plaintiffs
Plaintiffs reimburse defendant $7,000 plus interest

Category: B

Representation:

Counsel:

Plaintiffs: No appearance
Defendant: No appearance

Solicitors:

Plaintiffs: In person
Defendant: In person

Case(s) referred to in judgment(s):

Bannister v Bannister [1948] 2 All ER 133

TEMPLEMAN J: The plaintiffs, Stanley Alan Wade and his wife Marilyn Lynette Wade are the parents of the defendant, Alan Andreous Franklyn Wade. I shall refer to the parties as Mr and Mrs Wade and Alan.
Mr and Mrs Wade commenced this action by writ issued on 22 June 2007, following an order made by Master Sanderson on 8 June. The learned master held that subject to their commencing the action, Mr and Mrs Wade were entitled to maintain a caveat they had lodged on 8 September 2003 in respect of the property of which Alan is the registered proprietor, at 31 Johnson Street, Redcliffe, being the property referred to in vol 1970, folio 595 of the Register. I shall refer to the property as Johnson Street.
In their statement of claim, Mr and Mrs Wade claim that, having regard to the agreement made between them and Alan when Johnson Street was purchased, they own the property beneficially, as joint tenants.
Mr and Mrs Wade claim also an order that they are 'trustees of the sum of $7,000 for the benefit of [Alan]'. That sum represents the First Home Buyers Grant which was credited to Alan on the purchase of Johnson Street.
The statement of claim was settled by counsel. However, Mr and Mrs Wade have long since been unrepresented. Alan is also acting in person. Alan drew his own defence and counterclaim. This document does not plead directly to the statement of claim. However, it serves to identify the principal issue between the parties, namely, the basis on which Alan became the registered proprietor of Johnson Street.
In essence, Mr and Mrs Wade claim that Johnson Street was purchased for their benefit and that Alan agreed to become the nominal purchaser because he was able to obtain a loan of some $96,000 which, because of their circumstances, was not available to them. The loan, together with $35,000 provided by Mr Wade and the First Home Buyers Grant, enabled the purchase to be funded. The purchase price was $133,500.
On Mr and Mrs Wade's case, therefore, Alan is a bare trustee of Johnson Street.
Alan does not dispute that he agreed to become the purchaser of Johnson Street in order to assist Mr and Mrs Wade, although he claims that the arrangements were made, at least initially, without any reference to him. However, in par 3 of his defence and counterclaim, he alleges that on or about 12 May 2001 there was an express agreement between the parties that he would sign all the papers and do all acts necessary to obtain finance to fund part of the purchase price of Johnson Street, that he would be recorded as the registered proprietor and that he would
retain legal ownership of the land and act as Trustee to [Mr and Mrs Wade] over their invested financial interest in the property.
Alan goes on to allege that Mr and Mrs Wade would use Johnson Street as their principal place of residence, and that after settlement they would
pay towards (a fair and even amount) shire rates and water rates and usage and expenses included [sic], including utilities and repairs and maintenance to the property. As with the land the plaintiff Marilyn Wade would be the principal account keeper, receiving and forwarding necessary monies for expenditure thus acting in accordance to maintain and further my credit rating to my best interests.
Alan alleges also that Mr and Mrs Wade would indemnify him for non‑payments.
In par 4 of his defence and counterclaim, Alan alleges that it was an implied term of the agreement that Mr and Mrs Wade would not attempt to deal with Johnson Street in any way contrary to his interest as registered proprietor, and that Mr and Mrs Wade would be reimbursed the $6,000 deposit from the $7,000 received from the First Home Buyers Grant.
In essence, therefore, Alan contends that he holds the property on a resulting trust for himself and Mr and Mrs Wade in proportion to their respective contributions to the purchase price: his contribution including the amount of $96,000, borrowed in his name. This is reflected in Alan's prayer for relief in which he seeks the following:
a)to remove the caveat for sale and declaration that I the defendant am the sole registered proprietor and hold all legalities to the sale of the land;
b)a declaration the Plaintiffs have an invested financial interest to the sale of the property to the value of $55,000 plus calculated to the percentage of gross sale price less with this percentage in relation to fees, charges, tax, real estate fees and encumbrances sale of the property;
c)the return of the $7,000 First Home Buyers Grant from the plaintiff's equitable return;
d)All my expenses, legal fees etc paid for by the Plaintiffs;
e)Such other declaratory relief that the Court may seem fit;
f)$30,000 in financial damages relating to stress and emotional damage or subject to the court findings;
g)an order that the Plaintiffs do all acts necessary for the sale of the property without hindrance;
h)an Order that on settlement of the sale all monies owing to the Plaintiffs be direct debited to an account in the sole name of Stanley Alan Wade, the account being at his discretion at any financial banking institution of his choice as in turn being his direct financial interest without clause.
I pause to note that prayer (f) has not been pursued. The claim is without foundation in any event.
Following the purchase of Johnson Street, Alan lived there with Mr and Mrs Wade until about August 2003, apart from a period of about six to eight weeks when relations were strained and Alan stayed with his sister and her family.
In August 2003, there was a major falling out between the parties and Alan left permanently. Subsequently, Mr and Mrs Wade obtained a Violence Restraining Order against Alan. This order, which has been extended, prohibits him from entering or remaining at Johnson Street. Alan claims that the order was obtained fraudulently, but that is irrelevant for present purposes.
As I have noted, on 8 September 2003, Mr and Mrs Wade lodged a caveat on the title to Johnson Street. In their statutory declaration in support of the caveat, they claimed to be beneficial owners of the property, on the basis to which I have referred above.
Following a notice issued by Alan under s 138B of the Transfer of Land Act 1893 (WA), Mr and Mrs Wade sought to extend the caveat. Their application came before Master Sanderson on 8 May 2007.
On 8 June 2007, the learned master delivered a judgment in which he held that Mr and Mrs Wade's application raised a serious question to be tried and that the caveat should be maintained. In his reasons, the master set the scene in a way which is equally appropriate now:
The matter has dragged on for years. Both parties are unrepresented and they are dealing with legal issues of some complexity. Mediation has been tried but was spectacularly unsuccessful. The level of animosity that now exists between the parties makes any settlement unlikely [2].
In accordance with the master's order, Mr and Mrs Wade commenced their action on 22 June 2007. The action was managed by a registrar until 18 November 2008, when it was admitted to the Commercial and Managed Cases List. By that stage, under the direction of the registrar, the parties had completed discovery and inspection.
The action first came before me on 10 December 2008, when I gave directions. On that occasion, Mr and Mrs Wade both appeared. However, Mr Wade has not appeared at subsequent directions hearings because he is suffering from mesothelioma and is terminally ill. His health has deteriorated to such an extent that he is unable to participate in court hearings. Although Mrs Wade cannot, of course, act for or represent her husband, her case is the same as his. I have therefore permitted the action to continue in Mr Wade's absence.
The trial took place on 14, 15 and 16 April 2009. I took evidence from Mrs Wade and two of her daughters, Felicia Anne Holgate and Tracey Wilhelmina Pascoe.
Mrs Wade also called her brother‑in‑law Malcolm Wade. However, it was apparent that he had no direct knowledge of any matter in issue and I therefore declined to take his evidence.
I then took evidence from Alan and from Mr Lucio Marco Baroni, who was called by Alan and attended in answer to a subpoena. Mr Baroni is a finance broker who obtained a loan offer for Alan from Bankwest for the purchase of Johnson Street.
Mr Baroni had no recollection of the relevant events. However, he produced his file which I admitted into evidence as exhibit 21. The file, and Mr Baroni's evidence about his usual business practices, provided some assistance in establishing the facts to which I shall refer below.
A person who might have been expected to give evidence, but who was not called, was Mr Bernie Ryan, a real estate agent and friend of Mr Wade. Mr Ryan apparently acted for the vendors of Johnson Street, and was involved in submitting an offer naming Alan as the prospective purchaser.
On Alan's application, I issued a subpoena in respect of Mr Ryan. As I understand it, Mrs Wade (who also wanted to have Mr Ryan called as a witness) attempted to serve the subpoena, but was unsuccessful.
I therefore draw no adverse inference against either of the parties by reason of Mr Ryan's non‑attendance.
Both Mrs Wade and Alan tendered, as their respective evidence in chief, affidavits sworn in the caveat proceedings and statements made subsequently, as well as numerous financial records.
I received all of this evidence out of an abundance of caution, although much of it is irrelevant and inadmissible.
I have had regard also, at Alan's request, to the transcript of the hearing before Master Sanderson.
In addition, I received a statement made by Mr Wade on 11 February 2009. This was tendered by Mrs Wade as part of her case and admitted under s 79C of the Evidence Act 1906 (WA), on the basis that Mr Wade was a 'qualified person' for the purpose of s 79C(1) and satisfied the criterion set out in s 79C(2)(b), being unfit by reason of his bodily condition to attend or give evidence as a witness.
Mr Wade's statement contains a good deal of hearsay and irrelevant evidence, which I have not taken into account in reaching my decision.
Mrs Wade and Alan cross‑examined each other and their respective witnesses. However, not surprisingly (and I intend no criticism of them) they did not confine themselves to putting their respective cases. Their questioning often strayed into irrelevant matters and often consisted of statements of their own evidence, from which it was difficult to discern precisely what question was being put. I found it necessary to intervene on numerous occasions in order to clarify both questions and answers.
Despite the unsatisfactory nature of the proceedings, the evidence has enabled me to make the findings of fact I now set out. In doing so, I emphasise first, that the findings are made on the balance of probabilities; and secondly, that I have not attempted to resolve every conflict of evidence in relation to matters of detail. I do not consider it necessary to do so.
As to credibility; the principal conflicts of evidence were between Mrs Wade and Alan. Mrs Wade appeared to me to have a clear recollection of relevant events and was consistent throughout her evidence. Alan, however, tended to be long on rhetoric and short on detail. Where their evidence conflicts, whether it be evidence given in court or in written form, I prefer that given by Mrs Wade.

Findings of fact relating to the purchase of Johnson Street

In May 2001, Mr and Mrs Wade were living in rented accommodation at 62 Somers Street, Belmont with Alan, their daughter Felicia, her then husband Jamie Holgate and Felicia and Jamie's baby son, Mathew Holgate Wade (ts 89).
Mr Wade had been diagnosed with asbestosis. He had received a Workers' Compensation award of some $84,000, after payment of legal fees. Mr Wade wanted to buy a house for himself and Mrs Wade, and for any member of their family who might need accommodation.
Alan was then aged 23 years. He had completed three years of an apprenticeship as a heavy duty mechanic with his former employer, Centurion Transport. He had recently taken employment with N & L Transport, commencing on 28 April 2001.
Alan wanted a home of his own. He thought it preferable to build a new house rather than to buy. However, as he admitted in cross‑examination, and as I accept, 'I had no idea how I was going to do it …' (ts 243).
On or about 10 May 2001, Mr Wade was introduced to Johnson Street by Mr Ryan and decided that he would like to purchase the property.
Following negotiations with the vendors of Johnson Street, either conducted by Mr Wade or Mr Ryan on his behalf, a price of $133,500 was agreed.
Mr Ryan introduced Mr and Mrs Wade to Mr Baroni. He advised them that, having regard to their age, health and their financial circumstances, they would be unable to obtain a loan sufficient for them to purchase Johnson Street. Mr Baroni advised further, that Alan's income would enable him to obtain and service a loan of no more than $100,000.
At that time, Alan's assets (as appears from a loan application prepared by Mr Baroni) comprised only $100 in a Bankwest account and a 1978 Toyota Crown motor vehicle, valued at $2,000.
Mr Baroni advised Mr and Mrs Wade that if Alan was to purchase Johnson Street, he would have to be put in funds such that he would require a loan of no more than $100,000.
Acting on that advice, Mr Wade signed a handwritten letter in the following terms, as dictated by Mr Baroni:
To Whom It May Concern
I, Stanley Wade hereby declare that I will gifting [sic] my son Alan, the sum of $35,000.00 to assist in the purchase of a home.
Alan viewed Johnson Street in the company of Mr Wade and/or Mr Ryan on 10 and 12 May. He agreed (on the basis to which I shall refer below) to be named as the purchaser.
Mr Ryan completed an offer and acceptance form in which Alan was named as the purchaser, and which he signed. The offer is dated 10 May. The acceptance is dated 11 May. I accept Mrs Wade's evidence that it was not actually signed until 14 May. The completed document was faxed by Mr Ryan to Mr Baroni on 14 May.
The contract required the purchaser to pay a deposit of $6,000 within three days of acceptance. The deposit was paid by Mr and Mrs Wade.
The offer was subject to 'Bank Finance' in an amount of $100,000, to be obtained within seven working days of acceptance. Settlement was to be on or before 30 days of acceptance.
On 14 May, Mr Baroni attended at Somers Street with Mr Ryan. This was his second visit. Mr and Mrs Wade asked Mr Baroni to obtain finance for Alan, if possible from the credit union of which they were longstanding customers. The credit union was then known as Endeavour Advantage Credit Union Ltd (the Credit Union).
Mr Baroni did not normally deal with the Credit Union and did not apply to it on this occasion. He applied on Alan's behalf to Bankwest for a loan of $96,000. This was based on a purchase price of $133,500 and fees estimated at $4,500, being a total of $138,000, less Alan's contribution of $42,000. This was made up of $35,000 from Mr Wade and the First Home Buyers Grant of $7,000.
Mr Baroni prepared the application, which Alan signed on 14 May 2001.
Bankwest approved the loan on 22 May and notified Mr Baroni by fax on the afternoon of that day.
Mr and Mrs Wade did not want to deal with Bankwest. Mrs Wade approached the Credit Union and explained this situation. She was informed that it would match Bankwest's offer by way of a loan to Alan.
On 6 June, the Credit Union made an offer of a loan of $97,311.69 to Alan. This amount included the sum of $96,000 to be paid under the contract for the purchase of Johnson Street, and various fees and statutory charges.
At the interest rates then current, repayments of $289.96 were to be made fortnightly for a period of 30 years.
Alan accepted the offer, which he signed on 7 June. His signature was witnessed by Felicia.
At some time between 7 June and settlement, an employee of the Credit Union telephoned Mrs Wade and said that a further payment of $7,000 was required, this being the amount of the First Home Buyers Grant, which had not then been received.
Mr and Mrs Wade paid a further $7,000 to enable the settlement to take place. They did so without reference to Alan.
On 12 June, Alan signed the transfer for Johnson Street. His signature was witnessed by Mrs Wade.
On 13 June, Alan was registered as the proprietor of Johnson Street, for an estate in fee simple.

The agreement between Mr and Mrs Wade and Alan

Alan's evidence is that on or about 8 May, shortly after his arrival at Somers Street after work, Mr Wade said to him words to the effect 'You just bought a house'. Alan said he was 'pretty certain' that Mr Wade told him he had by then paid $6,000 as the deposit for Johnson Street.
I understand Alan to mean that he knew nothing of the proposal that he be the purchaser, until after the deposit was paid. I do not accept this evidence. No deposit was payable until after the offer and acceptance had been signed by Alan, as the prospective purchaser. I accept Mrs Wade's evidence that the deposit cheque was written on the occasion of Mr Baroni's second visit. I accept that Mr Baroni visited Somers Street twice: and that his second visit was on 14 May.
I accept Alan's evidence that at some stage in the days leading to the purchase of Johnson Street, Mr Wade said the words which I have referred above. In a joint affidavit sworn by Mr and Mrs Wade on 20 March 2007, they say they cannot confirm or deny that the words were used, and that they may have been said 'in a state of exuberance': [14].
However, I do not accept that Mr Wade thereby intended to assert that Alan was to be the beneficial owner of Johnson Street. Nor do I accept that Alan could reasonably have understood that to be Mr Wade's intention.
In my view, it is clear from the facts set out above that the whole purpose of Alan being nominated as the purchaser and as the mortgagor was to enable Mr and Mrs Wade to acquire Johnson Street as a permanent home for them and their family, including Alan, if he so wished.
I accept the evidence of Mrs Wade and Felicia that they emphasised to Alan, before he signed the offer and acceptance and the loan contract, that he would become the owner of Johnson Street 'in name only', and that Alan proceeded on that basis.
I do not accept Alan's evidence that he agreed to do so only because, as he asserted in his statement of March 2009 (exhibit 12) - but not in his defence and counterclaim - that he succumbed to 'emotional blackmail' or that he was a victim of 'COWERSHION'.

This assertion is contrary to Alan's own evidence, in his March 2009 statement, that he discussed with Mr Wade the possible future use of the equity in Johnson Street:
[T]o later buy another house for them or him to live in, a stud farm, a pub, or a car loan for Alan [15].
This accords to a certain extent with Mr Wade's evidence in his statement (exhibit 6) that if Alan 'did the right thing':
… maybe in a few years time if he wanted to buy a home of his own or a car, then I would look at helping him by putting up the equity of the house as surety, but first he had to promise to look after us.
I accept that evidence.
I accept also the evidence of Mrs Wade that she was initially against Alan becoming the purchaser, and that she said to him, in the lounge room of Somers Street:
You do realise that if it does go into your name it is your father's house. It is not yours but it's to help you.
I accept also that on another occasion at about that time, Mr Wade said to Alan, in Mrs Wade's presence, words to the following effect:
Because your name will be on the loan and on the title, if you keep a good job, the mortgage payments will come out of it but that's what you will pay instead of board and rent … But remember … it is my home, your mother's home and it's a home for the family (ts 110).
I find that Alan acknowledged and agreed to the proposition. On his behalf, Mrs Wade arranged for mortgage payments to be debited from his wages.
I accept Mrs Wade's evidence that it was agreed further that because Alan's name would be on the title, the council and water rates and the electricity account would be in his name. He would pay a portion (unspecified) of the rates, but would not be required to pay for electricity while he was paying the mortgage instalments by deduction from his wages. Alan would, however, pay for his telephone usage, as he was making long‑distance calls. Mr and Mrs Wade would be responsible for paying 'the biggest portion' of the rates, and for maintenance of the property (exhibit 2, [118] ‑ [119]). It is common ground that there was no discussion about what might happen if Alan wanted to be released from the agreement (ts 129).
Having regard to the vague and inconclusive nature of the discussions to which I have referred above, I am not persuaded that the parties reached a binding agreement, or, if they did, that they intended to enter into legal relations. I therefore find that the only clear agreement between the parties was that Alan would become the owner of Johnson Street 'in name only'.

The legal relationship between Mr and Mrs Wade and Alan

Having regard to my findings as to the nature and extent of the agreement between Mr and Mrs Wade and Alan, I conclude that the appropriate legal analysis of the agreement was that Alan, although the registered proprietor of Johnson Street, held the property upon trust for Mr and Mrs Wade as joint tenants, to provide a permanent home for them, and for such members of their family (including Alan) as they chose to accommodate.
I do not consider there was a resulting trust. The $35,000 'gift' to Alan was intended to be used by him only for the purchase of Johnson Street. And the loan from the Credit Union, although taken in Alan's name, was arranged by Mrs Wade in order to benefit her and Mr Wade.
The $7,000 First Home Buyers Grant was Alan's. But in my view, it was not intended to provide him with an interest in Johnson Street. I have referred above to the vague agreement or understanding that at some time in the future, Alan might derive some benefit from the equity in the property.
I therefore conclude that Alan was a bare trustee of Johnson Street. In reaching that conclusion I gratefully adopt the definition proposed by the authors of Jacobs' Law of Trusts in Australia (7th ed, 2006) [315]:
… a more precise use of the term 'bare trustee' is to identify a trustee who has no interest in the trust assets other than that existing by reason of the office of trustee and the holding of the legal title, and who never has had active duties to perform or who has ceased to have those duties with the result that in either case the property awaits transfer to the beneficiaries or at their direction.
In the present case, there is no written declaration of trust: nor is there any writing constituting Alan as the trustee and Mr and Mrs Wade as beneficiaries. Section 34(1) of the Property Law Act 1969 (WA), so far as relevant, provides:
(1)Subject to the provisions hereinafter contained in this Act with respect to the creation of interests in land by parol -
(a)no interest in land is capable of being created or disposed of except by writing signed by the person creating or conveying the interest, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;
(b)a declaration of trust respecting any land or any interest therein shall be manifested and proved by writing signed by a person who is able to declare the trust or by his will.
It is therefore clear that these provisions have not been satisfied. However, it is well settled that a statute can never be used a cloak for a fraud. I refer again to Jacob's Law of Trusts in Australia which contains the proposition that:
… equity considers it a fraud for a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust; in such cases, parole evidence of the trust may be adduced to establish the trust, and a declaration obtained [709].
In my view, that is precisely the position here. Alan accepted that he would become the registered proprietor of Johnson Street 'in name only' and would do so for the benefit of Mr and Mrs Wade. It would not therefore be proper for him to deny the trust and regard himself as the beneficial owner.
Section 34(2) of the Property Law Act provides that the section does not affect the creation or operation of resulting, implied or constructive trusts.
In my view, an alternative analysis which is arguably open is that Alan holds Johnson Street as the trustee of a constructive trust for the benefit of Mr and Mrs Wade. That was the result in Bannister v Bannister [1948] 2 All ER 133. In that case, the plaintiff had agreed orally that the defendant could live in a cottage rent free, for as long as she wished. Later, the plaintiff sought possession of the cottage on the basis that the defendant was merely a tenant. It was held that the oral agreement had created a life interest in the cottage in favour of the defendant. The plaintiff could not, therefore, rely on his title to claim possession. It was held that a constructive trust had arisen: the plaintiff was the trustee and the defendant the beneficiary.
I repeat: this is an alternative analysis. However, I respectfully agree with the learned authors of Jacob's Law of Trusts in Australia that:
… the better view is that the removal of fraudulent reliance on the statute clears the way to show an express trust as what was intended [1305].
On either analysis, Mr and Mrs Wade, as the beneficial owners of Johnson Street, are entitled to call for the property to be vested in them and to be registered as proprietors as joint tenants for an estate in fee simple.

What are Alan's duties, rights and obligations as trustee?

In general terms, the principal obligation of a trustee is to preserve the trust property. Where this requires the trustee to incur expenditure, he is entitled to be indemnified by the beneficiaries in respect of any liabilities properly incurred. That is because persons who are the beneficiaries of the property should also bear its burdens.
Further, a trustee is not permitted to make a profit from his trust.
In the present case, the preservation of Johnson Street required, as a minimum, the payment of mortgage instalments, council rates and water rates.
As I have noted above, the mortgage payments were deducted from Alan's wages. However, the arrangement was short‑lived because Alan's employment with N & L Transport was terminated on 28 November 2001. He made only six payments of $290 each (a total of $1,740) between 19 July and 27 September. I find that all subsequent payments in relation to the mortgage have been made by Mr and Mrs Wade.
In my view, although the mortgage payments made by Alan were for Mr and Mrs Wade's benefit, the circumstances are not such as to require Alan to be reimbursed. That is because, as I have noted above, the arrangement was that Alan would make mortgage payments in lieu of paying for board and reimbursing Mr and Mrs Wade for other expenses they incurred on his behalf.
I find that all other payments made in respect of Johnson Street, including council rates and water rates, have been made by Mr and Mrs Wade.
I do not accept Alan's evidence that he paid several hundred dollars to Mrs Wade intending that she should use the money to pay outgoings. I accept Mrs Wade's evidence that those payments were made in respect of Alan's board and other personal expenses and in repayment of loans Mrs Wade had made to him when he was unemployed, and short of money.

The First Home Buyers Grant

The $7,000 First Home Buyers Grant was, in effect, paid to Alan. It therefore represents a payment made by him towards the purchase of Johnson Street. But for the reasons set out above the payment did not give rise to a resulting trust.
Mr and Mrs Wade acknowledge a moral obligation to repay this money to Alan because, having received the grant in relation to Johnson Street, he would not be regarded as a first home buyer subsequently. He would not, therefore, qualify for any similar grant which might be available should he wish to purchase a property of his own.
In my view, Alan is entitled to be repaid the sum of $7,000. Mr and Mrs Wade have more than a moral obligation to make that payment. Alan's entitlement arises under the principle to which I have referred above: that a trustee is entitled to be indemnified by the beneficiaries for his expenditure in relation to the trust property.
There are two matters of particular concern to Alan in relation to the amount of $7,000. The first arises from the fact that when the grant was received it was paid to Mr and Mrs Wade. Alan claims that the payment was made without his authority.
In my view, there is nothing sinister in this. As I have noted above, settlement of the sale of Johnson Street took place before the grant had been received. Mr and Mrs Wade paid an amount of $7,000 to the Credit Union to enable settlement to take place. When the grant was received, the Credit Union reimbursed them. It is immaterial for present purposes whether or not Alan authorised that repayment. Mr and Mrs Wade were clearly entitled to it.
The second matter of concern to Alan arises from the fact that Johnson Street has increased in value substantially since 2001. Alan contends that what he regards as his investment in the property has increased in value proportionately. However, I emphasise that Alan cannot regard the grant of $7,000 as an investment. No such benefit can be retained by a trustee because a trustee is not permitted to profit from his trust.
Further, as I have noted above, Alan's agreement with Mr and Mrs Wade was such as to provide him with an opportunity to benefit from the equity in Johnson Street, albeit in some unspecified way, if he continued in employment and demonstrated his suitability for obtaining such a benefit.
The question then arises, whether Alan should be entitled to interest on the sum of $7,000. This, I think, raises the further question; whether Alan was entitled to receive the First Home Buyers Grant, having regard to the circumstances in which Johnson Street was purchased. It may well be that Alan was so entitled, having regard to the fact that he lived at Johnson Street for over two years from the date of purchase. However, Alan's entitlement is not in issue in this action and I therefore do not express any view as to that matter.
If Alan was not entitled to the grant and was required to repay it, he would no doubt be required to pay interest. Conversely, if Alan was entitled to the grant and used it for the benefit of Mr and Mrs Wade, they should pay him interest for the use of his money.
On any view, therefore, I consider that as a condition of having the title to Johnson Street transferred into their names, Mr and Mrs Wade should repay Alan the sum of $7,000 and interest thereon, in accordance with s 32 of the Supreme Court Act 1935 (WA). However, I consider that interest should be payable only from August 2003. Until then, Alan lived at Johnson Street and therefore had the benefit of the $7,000 payment.

Alan's credit rating

Alan is concerned that what he describes as his credit rating has been ruined by the fact that there have been defaults in payment of mortgage instalments, council rates and water rates for which he has been primarily responsible, as the registered proprietor of Johnson Street.
The difficulty faced by Mr and Mrs Wade was that although the statutory authorities have been willing to accept payments from them in respect of Johnson Street, they would not (until more recent times) disclose the state of Alan's account because he was the registered proprietor. And Alan did not bring the accounts to Mrs Wade's attention. Further, although Alan agreed to have the mortgage payments deducted from his unemployment benefits after he left N & L Transport, he failed to do so.
Matters came to a head when Alan left Johnson Street in August 2003. I accept Mrs Wade's evidence that on 3 or 4 August 2003, at the conclusion of a hearing before a magistrate in relation to the Violence Restraining Order, Alan threw at her an overdue account in an amount of $1,034.25 from the Water Corporation addressed to him. Mrs Wade paid $1,000 in respect of that account on 7 August: exhibit 9. At some stage after Alan left Johnson Street, apparently in an attempt to sever his connections with his family, he directed the statutory authorities not to receive funds from Mr and Mrs Wade. This is evident from a letter dated 22 November 2005 from the senior rates officer of the City of Belmont to Alan, in which he was informed that he had an outstanding rates debt of $3,234.15 and had not made any recent payments. The officer said:
In the past, Mrs M Wade was making payments in respect of this rates debt. However, you indicated to the City that you did not want the City to accept payments from Mrs M Wade (exhibit 10).
If Alan had not attempted to prevent Mr and Mrs Wade from making the payments of accounts for which, as registered proprietor, he was primarily liable, or if he had authorised the statutory authorities to deal with Mr and Mrs Wade, the difficulties referred to above would not have arisen and Alan's credit rating would not have been affected.

Receipt of rent assistance

Between 3 September 2001 and 2 March 2005, Mr and Mrs Wade received from Centrelink, 90 rent assistance payments in amounts totalling $3,929.35 (exhibit 2, page 16).
These payments were apparently made on the basis that Mr and Mrs Wade were Alan's tenants at Johnson Street and that the mortgage payments they were making should be regarded as having been received by Alan as rent. This, of course, is inconsistent with Alan's trusteeship of the property for Mr and Mrs Wade's benefit.
I accept Mrs Wade's evidence that she was informed by an officer of Centrelink that because Alan was the registered proprietor of the property, she and Mr Wade were entitled to receive rent assistance.
Mrs Wade said that a document was submitted to Centrelink, albeit not by her, in which Alan was named as the landlord. Alan's evidence is that he made representations to Centrelink to the effect that Mr and Mrs Wade were his tenants: and that he did so at their request: exhibit 12, [43].
Later, when Mrs Wade spoke to Centrelink about rent assistance, the payments were stopped. However, payments were resumed two months later. Mrs Wade returned again to Centrelink which again stopped the payments.
Mrs Wade said she had made four approaches under the Freedom of Information Act 1992 (WA), as I understand it, to discover how and on what basis the rent assistance payments had been made.
I received a letter dated 5 February 2009 from Centrelink to Mrs Wade, together with a number of Centrelink documents relating to her pension. Some of those documents referred to rent assistance. Others contained the statement that rent assistance had been cancelled 'because you have not given us proof of your rent payments'. The documents (exhibit 7) do not assist me in resolving this issue. However, I am not concerned in this action with the question whether or not Mrs Wade was entitled to rent assistance. I mention the matter only to explain the apparent inconsistency between Mr and Mrs Wade's case and the fact that they received rent assistance.
For the purposes of this action, I do not consider that the receipt of rent assistance by Mr and Mrs Wade, on what must have been Alan's application, should disentitle them from receiving equitable relief.

What order should now be made?

For the reasons given above, I consider that Mr and Mrs Wade are entitled to a declaration of their interest in Johnson Street and an order vesting the property in them. In my view, having regard to the breakdown in the relationship between the parties, it would be expedient to make a vesting order under s 78(2)(n) of the Trustees Act 1962 (WA) rather than to require Alan to execute a transfer.
The order will be conditional upon Mr and Mrs Wade paying Alan the sum of $7,000 and interest.
It will, of course, be necessary for Mr and Mrs Wade to discharge the existing mortgage or, with the consent of the Credit Union, to assume all the liabilities arising under that mortgage.
Mrs Wade told me that she and Mr Wade had an arrangement with 'Aussie Homes' (which I take to be a reference to Aussie Home Loans) to lend them an amount sufficient to discharge the existing mortgage.
Clearly, such a loan will be made only on the basis that Mr and Mrs Wade will become the registered proprietors of Johnson Street, so as to provide security for the loan.
The registration of Mr and Mrs Wade as proprietors (or of Mrs Wade, should Mr Wade not survive) may be effected under s 182(1) of the Transfer of Land Act. It provides, so far as relevant:
Whenever any person interested in land under the operations of this Act or any estate or interest therein shall appear to the Supreme Court … to be a trustee of such land estate or interest within the intent and meaning of any Act now or hereafter to be in force relating to trusts and trustees and any vesting order shall be made in the premises by the said court … the Registrar on being served with such order or an office copy thereof shall enter on the certificate of title and duplicate instrument (if any) the date of the said order the time of its production to him and the name and address of the person in whom the said order shall purport to vest the said land estate or interest …
The Registrar is then required to make the appropriate entry on the duplicate certificate of title: and by s 182(1)(a), upon such entry being made, Mr and Mrs Wade (or Mrs Wade if appropriate) would become the transferees and would be deemed to be the proprietors of Johnson Street.
By O 36 r 20 of the Rules of the Supreme Court 1971 (WA), in computing interest payable under s 32 of the Supreme Court Act, the rates prescribed under s 8 of the Civil Judgments Enforcement Act 2004 (WA) may be used as a guide, subject to any evidence adduced.
There being no relevant evidence, I will adopt the prescribed rate, which is 6% per annum. Interest at that rate for (say) five years eight months (to 30 April 2009) on an amount of $7,000 is $2,377.
The daily rate, until the judgment is satisfied, will be $1.15.
I do not expect Mr and Mrs Wade to draw the order giving effect to these reasons. It will therefore be necessary for that to be done by a Registrar of the court, to whom I shall refer the matter.