Yay & Sim v Sarunn - [2008] SADC 78

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
YAY & SIM v SARUNN
[2008] SADC 78
Judgment of His Honour Judge Tilmouth
20 June 2008
EQUITY - TRUSTS AND TRUSTEES - EXPRESS TRUSTS CONSTITUTED INTER VIVOS - DECLARATION OF TRUST - NECESSITY FOR INTENTION
Held:
A trust qualified by the words 'until such time as outstanding family matters have been reached ...' is nevertheless an unambiguous express trust capable of enforcement.
District Court Act 1991 (SA) s31; District Court Rules 2006 r247, referred to.
Re Armstrong (decd) [1960] VR 202; CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic) (2005) 224 CLR 98, applied.
Cretanor Maritime Co Limited v Irish Maritime Management Ltd [1978] 1 WLR 966; State of Victoria v Sutton (1998) 195 CLR 291; Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415; Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd (1998) 165 CLR 107; Saunders v Vauiter (1841) Cr & Ph 240, considered.

YAY & SIM v SARUNN
[2008] SADC 78
The proceedings

An interim order was made in this action on 7 May 2008 requiring the proceeds of sale of a vacant block of land at Moorook in the Riverland, to be paid into the Suitor’s Fund pending resolution of the underlying proceedings. Those proceedings, issued on 6 May 2008, comprise a simple money claim against both defendants, based upon a loan made to them by the plaintiffs in July 2003 of $170,000.00, on condition of the payment of interest at the rate of $2,833.00 per month, as to which they were allegedly $61,000.32 in arrears as of the date of the summons. The interim order was founded on material then before the court, suggesting the property might be sold.
The interlocutory proceedings
The first defendant, Michael Sarunn, is the registered owner of that property situated on Hogg Road, Moorook. The second defendant, Cindy Sarunn, is the owner of property at Mawson Lakes. Fearing any judgment might not be satisfied, the plaintiffs filed a specially returnable interlocutory application seeking orders restraining the defendants from dealing with those properties and for summary judgment of the loan agreement. They produced evidence showing the Mawson Lakes property was currently listed for sale with a real estate agent, although the Moorook property was not. The Certificate of Title relating to the Moorook property (Vol 5981 Folio 898) being Sections 192 and 272 in the Hundred of Moorook, was also produced. This was endorsed by a registered mortgage in favour of the National Bank of Australia Limited. The Title also reveals a caveat was registered in the name of Toeng Touch (“Mr Touch”) during September 2003. It appears the Moorook property was transferred to the first defendant in April 2000.
When the interlocutory application initially came before the court, the first defendant appeared in person. Counsel for the plaintiffs sought an order pursuant to s31 of the District Court Act 1991 (SA), which furnishes the court with an unfettered discretion to grant a restraining order, preventing or restricting dealing with any property of a defendant, provided the applicant satisfies three preconditions, which are:
(a)the action appears to have been brought on reasonable grounds; and
(b)the property may be required to satisfy a judgment that has been, or may be, given in the action; and
(c)there is a substantial risk that the defendant will dispose of the property before judgment is given, or before it can be enforced.
At the conclusion of that hearing, the orders referred to earlier were made on an interim basis, without enquiry into the substantial merits of the case. An order was also made that copies of the orders of the court were to be served on Mr Touch.
At this time the first defendant indicated that the plaintiffs were his cousins. He informed the court they “entrusted me with their money to trade for them”, that he lost all of his money following the bankruptcy of a United States firm Revko. Mr Sarunn was in fact a currency trader and investor. He also told the court that the Moorook property, although registered in his name, in fact belonged to his brother Mr Touch, because Mr Touch was unable to obtain a loan at the time, so the first defendant bought the property on his behalf. The first defendant also told the court that Mr Touch was struggling with repayments of a mortgage in respect of another property and therefore envisaged selling the Moorook property.
When the matter came before the court for a second time, Mr Touch was executed at the time of settlement and that it was proposed to sell the property soon, so he was seeking orders to discharge the earlier orders, to enable settlement to proceed. Mr Camatta submitted an express trust was created contemporaneously in April 2000, under which the first defendant was trustee of the Moorook property and Mr Touch the beneficiary.
Underlying facts
The status and legal effect of the alleged trust was fully argued on a third occasion when the matter came before the Court. By that time an interlocutory motion seeking primary relief by way of discharging the orders relating to the Moorook property, was also argued: Cretanor Maritime Co Limited v Irish Maritime Management Ltd.[1] It was supported by an affidavit of Mr Touch to the effect that there was a declaration of trust on 4 April 2000 relating to the Moorook property (which was exhibited), confirming he had personally made all the mortgage repayments, paid a deposit, paid rates, taxes and outgoings in relation to it, as well as assuming responsibility for maintenance and upkeep, and that in order to protect his position, he lodged the caveat referred to earlier. As it happens, that situation, if proved, may well have brought about a resulting trust, but such a trust was not subsequently pursued by Mr Touch’s later counsel, Mr Ower. The matter was adjourned on this occasion, because the plaintiffs had not had sufficient notice of these facts, to argue the matter effectively.
[1] [1978] 1 WLR 966
Mr Touch further deposed that by August 2007, he decided the property should be sold, as he was in arrears of mortgage payments, as mentioned earlier, with respect to another property. On 11 March 2008, he signed a contract for the sale and purchase of the Moorook property, for which settlement was scheduled on 10 April 2008. However the purchaser defaulted on settlement. In light of the subsequent orders, settlement did not take place when rescheduled for 13 May 2008. It remains pending whilst the court resolves the issues now under consideration. The matter is said to be urgent because the purchaser has the right upon giving three days notice, to terminate the contract. A summons under Part XVII of the Real Property Act 1886 (SA) for possession taken out against Mr Touch, in the Supreme Court on 8 May 2008, by the mortgagee of the other property, was also tendered.
The position of the parties
The narrow issue ultimately agitated by both parties was the effect of the trust instrument of 4 April 2000. In sum, the submission for the plaintiffs was that the trust failed, was ineffective, and if not was expressed in contingent or conditional terms which had not accrued. On the other hand counsel for Mr Touch argued the intention to form a trust was clearly expressed, was plainly capable of enforcement, contained no ambiguity, uncertainty or condition of the kind argued by the plaintiffs and was capable of fulfilment. Mr Esau for the plaintiffs accepted that if the trust was upheld, that would be the end of the matter, so that no inquiry of other considerations, such as the balance of convenience was necessary.
The terms of the alleged trust
In order to appreciate the respective positions of the parties, it is necessary to set out the terms of the handwritten instrument in question. This was stamped on 10 April 2000. No issue was taken that it is not an otherwise genuine contemporary document. It was:
Declaration of Trust
I, Michael Vuthy Sarunn, hereby declare that I am holding the property at Block 192 and 272 at Moorook in C/L 659/19 as trustee for Toeng Touch of 30 Margaret Ave, Salisbury, until such time as outstanding family matters have been resolved and there are no legal impediments to transfer the property to his name.
Signed
Dated 04/04/00
Witnessed by John Radovanovic
Stamped by Commissioner of State Taxation on 10/04/2000.
The document was witnessed and prepared by the conveyancer “from instructions conveyed verbally” to him at the time[2]. It can be seen from the clear language that it is straight forward enough, until it reaches the point where it is expressed to endure “until such time as outstanding family matters have been resolved and there are no legal impediments to transfer the property to his name”.
[2] Letter from Mr Radovanovic, Port Adelaide Conveyers, 16 May 2008 to Mr Esau
The arrangements between the respective parties to this action, in no way created an equity, charge or any other caveatable interest within the meaning of s191 of the Real Property Act. When the interim orders were made pending hearing on the substantial merits, the legal owner of the Moorook property was of course, a defendant, so that it was open to make orders against him in that capacity, pursuant to s31 of the District Court Act (above).
A submission was later advanced that because the property was beneficially owned by Mr Touch, it was not within the jurisdiction of the court vested by s31, to make a restraining order against him, because he was not a “defendant”, as the section requires. Alternatively, a similar order under the rubric of freezing orders within the meaning of Rule 247 of the District Court Rules 2006, might be made against an non‑party, where that party was in possession of assets of the first defendant as a prospective judgment debtor: Rule 247(5)(e)(i)(B). It was submitted that insofar as the Rules permitted an order of that kind as against non-parties, it was invalid as going beyond or being repugnant to the jurisdiction conferred by s31 of the District Court Act. For reasons that follow, it has not become necessary to pursue that intriguing question any further[3].
[3] Compare Earlscroft University Limited v George Brown [2003] 226 LSJS 194; [2003] SADC 39
Was there an effective trust?
It is a necessary component of an effective trust, for the creator to employ language clearly expressing an intention to create a trust, or from which one can be implied. Where there is uncertainty as to intention, there can be no trust: Jacobs Laws of Trust of Australia, 17^th Ed para [306]. In Re Armstrong (decd)[4] Herring CJ said, in a passage cited with the apparent approval of Gaudron, Gummow and Hayne JJ in State of Victoria v Sutton[5]:
To constitute himself a trustee it is not necessary that a person should use precise words. For, as Jessel MR pointed out in Richards v Delbridge (1874), LR 18 Eq 11 at p 14: ‘It is true he need not use the words, ‘I declare myself a trustee’, but he must do something which is equivalent to it, and use expressions which have that meaning; for, however anxious the court may be to carry out a man’s intentions, it is not at liberty to construe words otherwise than according to their proper meaning.
[4] [1960] VR 202 at 205
[5] (1998) 195 CLR 291 at [19]
The overall question is whether in all the circumstances and on the proper construction of what was written, a sufficient intention to create a trust is manifested: Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation[6]. The fact of the matter in this instance is that the document is not only entitled “Declaration of Trust”, but the ownership of the Moorook property is clearly expressed to be held on trust for the benefit of Mr Touch. The latter words do not compromise, qualify, or cast doubt upon that intention. This situation was in no sense one involving a so-called precatory trust.
[6] (1995) 130 ALR 415 at [422]
The fact of the matter is also that those subsequent words by way of “rider”, (quoted above) provide for, in non-legal language, one means of discharge. Furthermore, nothing in the instrument would prevent Mr Touch from calling upon the first defendant to surrender the property, if he chose to. He would have an immediate right to compel the performance of the trust obligation. The subsequent conduct of the parties, to the extent that it was proved, is perfectly consistent with that conclusion: Trident General Insurance Co Ltd v McNiece Brothers Pty Ltd[7].
[7] (1998) 165 CLR 107 at [124,148-149,156]
There is an alternative way of looking at the subject instrument in this case. The “rider” so to speak, can be seen as doing no more than giving unsophisticated effect to the principle in Saunders v Vautier[8], namely that:
Where a legacy is directed to accumulate for a certain period, or where the payment is postponed, the legatee, if he has an absolute indefeasible interest in the legacy, is not bound to wait until the expiration of that period, but may require payment the moment he is competent to give a valid discharge.
This principle was accepted as part of the law of Australia by the High Court in CPT Custodian Pty Ltd v Commissioner of State Revenue (Vic),[9] citing Thomas on Powers (1998) at 176:
Under the rule in Saunders v Vautier, an adult beneficiary (or a number of adult beneficiaries acting together) who has (or between them have) an absolute, vested and indefeasible interest in the capital and income of property may at any time require the transfer of the property to him (or them) and may terminate any accumulation.
Lightman J said in Don King Productions Inc v Warren[10] that the rule only applies if, as was not so there, the beneficiaries were entitled to wind up the trust and require the trustee to assign to them the subject matter of the trust.[11]
[8] (1841) Cr&Ph 240 [49 ER 282]
[9] (2005) 224 CLR 98 at [47] per Gleeson CJ, McHugh, Gummow, Callinan and Heydon JJ
[10] [2000] 2 Ch 291 at 321
[11]
Therefore, the words following the declaration of trust in this case “until such time…”, did no more and no less than give effect to an express right in the beneficiary to extinguish the trust in the circumstances there referred to, albeit in perhaps less formal terms than lawyers might employ. The fact that the settlor was not called, is neither here nor there, in these circumstances. Indeed, the onus was on the plaintiffs, given the unambiguous words used here, to produce strong evidence if they were seeking to show an intention other than to create a trust: Re: Lamshed[12].
[12] [1970] SASR 224 at 239
Conclusion and orders
For the above reasons, the conclusion of the court is that there was an express trust in this case, perfected by clear intention, supported by the conduct of the parties, to the effect that the beneficial ownership of the Moorook property is held by Mr Touch, even though legal title is registered in the name of the first defendant.
The parties are entitled to be heard as to the orders necessary to give effect to these findings, any consequential issues, and of course in relation to costs.

(1841) 4 Beav 115 [49 ER 282]; affd Saunders v Vautier (1841) Cr & Ph 240 [41 ER 482]

[102] [2000] Ch 291 at 321; affd [2000] Ch 291 at 324ff