17 & 18 February 2015, oral submissions 20 March 2015
Date of Orders:
10 April 2015
Decision Date:
10 April 2015
Before:
Sackar J
Decision:
See [187]-[192]
Catchwords:
REAL PROPERTY – voidable transactions – transfer of property – transfer made pursuant to alleged trust agreement – intent to defraud creditors – future creditors – whether agreement made with intent to defraud creditors – whether transfer made with intent to defraud creditors – requisite state of mind – inferences to be drawn
TRUSTS – existence of trust – express trust – intention to create trust – impact of subsequent conduct
TRUSTS – abandonment or abrogation – conduct inconsistent with existence of trust – inferences to be drawn
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Young v Smith [2015] NSWSC 400
Case
[2015] NSWSC 400
Decision Date
CaseChat Overview and Summary
The case of Young v Smith involved a dispute over the transfer of real property, with the plaintiff, Young, arguing that the transfer was made with the intent to defraud creditors. The matter was heard in the Supreme Court of Western Australia. The central legal issue was whether the transfer was made pursuant to an express trust agreement and whether it was made with the intent to defraud creditors. The court had to consider the requisite state of mind for such intent and the inferences that could be drawn from the parties' conduct.
The court examined the existence of an express trust, considering whether the parties' conduct and statements demonstrated an intention to create a trust. The court noted that an express trust arises when a person expresses an intention to create a trust, which need not be communicated to the beneficiary. The court further assessed whether the defendant's conduct was inconsistent with the existence of a trust, and what inferences could be drawn from such conduct. The court emphasised the importance of examining all circumstances and not solely relying on the appearance of witnesses, as per the observations of Cubillo v Commonwealth (No 2) and Fox v Percy. The court found that the defendant's actions, including the transfer of property into an account described as a trust account, did not necessarily establish a trust and could be interpreted as an attempt to defraud creditors.
In conclusion, the court determined that the transfer of property was not made with the intent to defraud creditors, as there was insufficient evidence to establish the requisite state of mind. The court held that the transfer was not pursuant to a valid trust agreement, and therefore, the defendant was not liable for defrauding creditors. The final orders of the court were that the plaintiff's claim was dismissed, and the defendant was not required to compensate the plaintiff for the alleged fraudulent transfer.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
In Counsel v The Estate of James Albert Counsel (dec’d) [2007] WASC 101, Hasluck J made the following remarks at [163]-[165]:163 Having regard to the decided cases, I consider that I am entitled to receive as admissible evidence statements allegedly made by the deceased at about this time which bear upon the transaction. Further, and in any event, the statements attributed to the deceased are admissible as declarations against interest, for in the various conversations he is said to have been making concessions against his interest about his entitlement to either capital or interest. However, it is for me to assess by reference to the credibility of the witnesses and related matters, whether the various statements attributed to him were in fact made, and to determine what weight, if any, is to be given to them.Conclusion164 The decided cases establish that an express trust arises when a person expresses an intention to create a trust. The intention need not be the subject of formal language; it may even be inferred from conduct. A trust may be created without communication to the beneficiary.165 Further, the mere opening of an account in trust for another is not necessarily sufficient to make the person who opens the account trustee for the other person. This means, in the present case, that it is not necessarily decisive of the central issue that the deceased paid the money into an account described as a trust account. All the circumstances of the case have to be investigated. In this case the credit of both the defendant and Mr Young was put squarely in issue. I observe that a trial judge is in no way restricted in his or her assessment of a witness. He or she is not bound to accept any of that which the witness attests to or indeed may only accept part thereof: Cubillo v Commonwealth (No 2) (2000) 103 FCR 1 at [118]-[123]. Nor is a judge bound to accept the testimony of a witness where there has been no cross examination. I am similarly mindful of the remarks of Gleeson CJ, Gummow and Kirby JJ in Fox v Percy (2003) 214 CLR 118 at [30]-[31] where they said:30. It is true, as McHugh J has pointed out, that for a very long time judges in appellate courts have given as a reason for appellate deference to the decision of a trial judge, the assessment of the appearance of witnesses as they give their testimony that is possible at trial and normally impossible in an appellate court. However, it is equally true that, for almost as long, other judges have cautioned against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses. Thus, in 1924 Atkin LJ observed in Société d’Avances Commerciales (Société Anonyme Egyptienne) v Merchants’ Marine Insurance Co (The “Palitana”):“... I think that an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.”31. Further, in recent years, judges have become more aware of scientific research that has cast doubt on the ability of judges (or anyone else) to tell truth from falsehood accurately on the basis of such appearances. Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility.