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High Court of Fiji |
In the High Court Fiji
At Suva
Civil Jurisdiction
Civil Action No. 160 of 2012
Alexander Gordon Speakman
First plaintiff
AND:
Clive William Speakman
Second plaintiff
Gordon Wilson Speakman
Defendant
Counsel for the plaintiff: Ms M.Muir
The defendant is absent and unrepresented.
Date of hearing: 31st May,2013
JUDGMENT
1.1 The first and second plaintiffs are the sons of the defendant, now 83 years old. All three parties reside in Australia. The defendant has two other children by the mother of the plaintiffs, whom he divorced. He remarried and separated. He has a 21 year old child, Richard by that marriage.
1.2 The defendant promised to gift to the plaintiffs, a land owned by him known as "Bala". The land comprises of 137 acres of freehold land, in a highly residential corridor between Nasinu and Suva. The defendant reneged on his promise. The plaintiffs allege that they had expended time and monies to their financial detriment, on the defendant's promise.
1.3 By inter partes summons filed on 13 June,2012, the plaintiffs seek a declaration that: (i) the defendant holds the legal interest in the land on their behalf, and
(ii) they hold the equitable interest in the land in equal shares.
The plaintiffs also seek various orders to effect a transfer of the land from the defendant; or in the alternative, the proceeds of
its sale. The second plaintiff has filed affidavit in support.
1.4 The Master had granted leave to the plaintiffs to serve summons on the defendant out of jurisdiction. Affidavits of service of the inter partes summons and the affidavits of the first and second plaintiffs of 24th August, 2012, on the defendant, have been filed.
3.1 Express Trust
The plaintiffs contend that the defendant created a trust in their favour, by a declaration titled "CONFIRMATION OF GIFT" dated 13th June,2011. Ms Muir submitted that the three certainties required to establish an express trust are satisfied, namely the intention, subject matter and object.
3.2 The document relied on reads:
This is to confirm that I,..do hereby now gift this property to my sons...jointly.
The formality of registration of transfer of the real property through the Titles Office in Fiji is to occur at a future date convenient to all parties and
all costs associated with registration of transfer shall be borne by my sons.
Should this formality of registration of transfer not have occurred prior to the date of my demise then I direct that the executor(s) of my estate are to be bound by this gift generally and are to complete the formality of registration of transfer to my sons. (emphasis added)
3.3 This document constitutes an imperfect gift, as correctly pointed out in paragraph 59 (h) of the closing submissions of the plaintiffs. The transfer is to be at a future date.
3.4 It is trite law that "there is no equity..to perfect an imperfect gift "- Turner L.J. in Milroy v Lord, (1864) 4 D.F. & J 264,274 as cited in Snell's Equity, (30th Ed) at paragraph 7-48.
3.5 Jessel MR in Richards v Delbridge,[1874] UKLawRpEq 67; (1874) LR 18 Eq 11 stated that the following sentence from the judgment of Turner L.J. contains the whole law on the subject:
If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust.
3.6 As it so happened, the defendant did not to proceed with the transfer. He entered into a sale and purchase agreement to sell the land to a third party and decided to give the plaintiffs, the sale proceeds. Finally, by letter of 28 January,2012, he decided to give the first plaintiff 50% of the sale proceeds and exclude the second plaintiff for the following reasons:
..when I said I would proceed only if both you and Clive had applied your combined effort meaningfully. While you have done so..Clive has taken a back, seat overall and, as my situation has deteriorated markedly it appears out of place that I pass that huge portion of "Bala" return to Clive in the circumstances.
I have had no contact at all from Clive. (Not even a routine card or phone call). It seems that he lacks interest in my proposed gift – while I have had to struggle to survive. Clive's financial state is apparently very stable...I am currently not in a position to hand over a lions share of "Bala" sale proceeds. I now propose that you continue to receive 50% of funds deposited by the purchaser. ..I request that you confirm this revision of my original gift intention. (emphasis added)
The first plaintiff replied on 15 February,2012, stating:
..I don't have authority to confirm your proposal as, in my mind, the original gifting arrangement involved three parties and therefore remains until the three of us agree to change it. Clive's position is that he's sticking to the origjnal gifting arrangement, which is understandable.
The first plaintiff continued to inform the defendant of his opposition to the second plaintiff being excluded from the gift, culminating in the plaintiffs filing a caveat to protect their interests. The defendant, in a letter of 3 May,2012, to the first plaintiff, said the caveat was an "insult" to him.
3.7 Constructive trust
It is contended that the present case meets the three requirements of a constructive trust, namely: a common intention, detrimental reliance and equitable fraud.
3.8 Ms Muir submitted that the parties formed a common intention as to the ownership of the beneficial interest as may be inferred from the words or conduct of the parties. She then invites my attention to the promises made by the defendant to transfer the land, followed by his revocation of those promises.
3.9 It follows from the revocations that there was no "common intention.. (nor) an agreement, arrangement, understanding ..as to the beneficial ownership of the land", to quote Calanchini J (as he then was) in Sami v Wati, (2010) FJHC 279.
3.10 In determining whether there is a constructive trust, the question is not the actual or presumed intentions of the parties, but as to whether, according to the principles of equity, it would be inequitable for a defendant to deny the trust. As Mason J in Hospital Products Ltd v United States Surgical Corp[1984] HCA 64; , (1984) 156 CLR 41 at 108 stated quoting Cardozo CJ in Beauty v Guggenheim Exploration Co, (1919) 122 NE 378 at 380:
When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.
3.11 The other two ingredients of a constructive trust will be considered under the next sub-heading.
3.12 Equitable estoppels
I now turn to the crucial issue for determination in this case: whether the plaintiffs are entitled to an equitable interest in the land. The preliminary question that must be posed is: what consideration has moved from the plaintiffs to support the defendant's promise?
3.13 The plaintiffs submit that in reliance upon the defendant's representations and promises and the expectation that the land would be transferred to them, they acted to their personal and financial detriment.
3.14 The affidavits before me set out in detail the matters the plaintiffs state they attended to, in Fiji, from 19th to 26th June,2011, after the second declaration of gift.
3.15 The plaintiffs submit that they had several meetings with valuers, engineers and several authorities in Fiji,from 19th to 26 June,2011,obtained ministerial consent for the transfer, attended to various tasks of inspecting and securing "the main gate and boundaries", ascertaining "the existence of any squatters", "preparing and erecting boundary and entrance signage warning off potential trespassers","meeting several neighbours who were growing crops"(on the land);'establishing a reporting system with the Caretakers"(and)"paying for printed and laminated signage, timber, padlock and tools including shovels..boots".
3.16 In my view, travelling to Fiji to meet several authorities, the trivia of acts effected by the plaintiffs, as set out in the preceding paragraph such as erecting sign boards and ascertaining if there were squatters when there were none,( as subsequently reported by the plaintiffs), applying for ministerial consent by forwarding a letter from Australia with police clearance and visits to see their father within Australia, do not constitute a detriment, to bring into operation the doctrine of equitable estoppel.
3.17 The authorities expound clearly that to bring into play the doctrine of equitable estoppel, a claimant must have occasioned "material detriment"- per Rich, Dixon and Evat JJ in Newbon v City Mutual Life Ass Society Ltd,(1934-1935)52 CLR 723, 734 and been "permanently prejudiced by relying on the representation"-Equity and Trusts in New Zealand,(2nd Ed) pg 615.
3.18 The plaintiffs place great emphasis on their sending AU$ 10,000 to their step-brother, Richard for his medical treatment, when requested by the defendant. The plaintiffs did inform the defendant that they agree to gift an advance from the sale proceeds. I find there was no acceptance by the defendant of this condition. To this letter, the defendant replied that "Richy appreciates the financial support from you and says he will drop you a line about this".
3.19 The plaintiffs also submit that they obtained a valuation for the land, found a purchaser to whom they provided an indemnity, when the defendant was changing his mind. The defendant, in his letter of 8 November, 2011, to the first plaintiff opined his reluctance to proceed with the sale as follows:
The facts are -: I was presented with the contract, without notice or time to ponder..
The contract, in my view, is poorly conceived and badly set down. There was no valid reason why the contract had need to be signed hurridly-(without witness). Conversion details/result were not set down explicitly (or at all) and I believe that, technically, Clive as author of the contract and solicitor for one of the parties, should not have acted as witness to my signing. ..It should be taken
into account by all parties that I am an eighty- two year old invalid, currently suffering from dementia and serious vision impairment and hearing incapacity, among other ailments.- I live alone and have no "carer" to assist with guidance. I have no legal expertise..I have not been consulted regarding employment of Crompton (Solicitors) in Suva nor have I agreed so to be represented or acted for. ..(emphasis added)
3.20 Be that as it may, the defendant signed the sale and purchase agreement. The High Court at Lautoka has ordered specific performance of the sale and purchase agreement, on an application made by the purchaser.
3.21 The expenses claimed by the plaintiffs, under the epithet "detriment" do not in my view, give rise to a claim in equity. Their remedy, if at all, is to establish in appropriate proceedings, a claim on the basis of unjust enrichment, as Justice Calanchini,(as he then was) declared in Sami v Wati,(supra).
3.22 The plaintiffs, in their closing submissions, rely on the decisions of the Privy Council in Chalmers v Pardoe,[1963]3 All ER 552 and Sheila Maharaj v Chand, [1986] 1 AC 898. Reference has also been made to the judgment of the High Court of Australia in Waltons Stores (Interstate) Ltd v Maher, [1988] 164 CLR 387 as cited in Ramlu v NLTB,[2008] FJHC145.
3.23 These cases illustrate instances where a claimant who was encouraged to expend money on a land, in the belief that he would be granted an interest in that land and acted to his detriment in that belief, was granted that interest. The detriment was material and prejudicial, in all these cases, unlike the case before me.
3.24 In the first case, Chalmers had built a house on native land leased by Pardoe, in the expectation that Pardoe would obtain the required approval of the NLTB, as promised. It was held that Chalmers would have been entitled to an equitable charge on the land, but for the lack of prior consent of the NLTB, making the transaction illegal. Sir Terence Donovan stated:
There can be no doubt on the authorities that where an owner of land has invited or expressly encouraged another to expend money on part of his land on the faith of an assurance or promise that part of the land will be made over to the person so expending his money a court of equity will prima facie require the owner by appropriate conveyance to fulfil his obligation; and when, for example for reasons of title, no such conveyance can effectively be made, a court of equity may declare that the person who has expended the money is entitled to an equitable charge or lien for the amount so expended. (emphasis added)
3.25 In Sheila Maharaj v Chand, (supra) the de facto wife supported the family with her earnings. It was held that it was inequitable for the de facto husband who financed the acquisition of the house, to evict her.
3.26 In Waltons Stores (Interstate) Ltd v Maher,(supra) a landlord had demolished his building and completed part of a structure on a proposed tenant's promise that he would occupy the building. The landlord had executed the counterpart deed and forwarded it to the tenant's solicitor. It was held that the tenant was estopped from denying the existence of a binding contract.
3.27 The principles expounded in Waltons Stores (Interstate) Ltd v Maher,(supra) were applied by the FCA in Public Trustee of Fiji v Khrishna Nair,(Civil Appeal no ABU 0010 1996 S) and Ramlu v NLTB,(supra).
3.28 Public Trustee of Fiji v Khrishna Nair, was a paradigm of a case where the judgment of the Court found that "the detrimental effect..was only too clear". The evidence in that case showed that an industrious and successful farmer had sold his farm and was waiting in the continuing expectation of the transfer of the lease on the farm.He had to live on his capital, which was completely depleted by his living expenses and costs of temporary accommodation. He could not purchase another farm.
3.29 In Ramlu v NLTB, the detriment was such that Ramlu was "shut out" from renewal of a native lease of a land, which he had fenced and built a house on, albeit it was damaged by a cyclone.
3.30 I would also refer to two other cases on this point: Jones v Jones, [1977] 2 AER 236 and Pascoe v Turner,[1978] EWCA Civ 2; [1979] 1 WLR 431.
3.31 In the first case, a son had contributed one fourth of the cost of a house purchased by his father. He gave up work in the city he resided, and moved to this house, as his father had led him to believe that it would be his family's home for the rest of his life. Lord Denning MR held that the son had a proprietary interest of a quarter share in the house and could reside there for life.
3.32 Pascoe v Turner dealt with a declaration of gift. In that case, the plaintiff had declared to the defendant, his de facto wife, after their relationship had soured that the house they had resided in, together with its contents, was hers. The defendant, in reliance upon the plaintiff's declaration, had, over a period of two years, spent GBP 230 on repairs and improvements and also an unspecified amount to a man for working on the house. She also spent her capital on furnishings and furniture. In giving judgment, Cumming-Bruce LJ said:
This court appreciates that the moneys laid out by the defendant were much less than in some of the cases in the books. But the court has to look at all the circumstances. When the plaintiff left her she was, we were told, a widow in her middle fifties. During the period that she lived with the plaintiff her capital was reduced from £4,500 to £1,000. Save for her invalidity pension that was all that she had in the
world. In reliance upon the plaintiff's declaration of gift, encouragement and acquiescence she arranged her affairs on the basis that the house and contents belonged to her. So relying, she devoted a quarter of her remaining capital and her personal effort upon the house and its fixtures. In addition she bought carpets, curtains and furniture for it, with the result that by the date of the trial she had only £300 left. .... But the court had to regard her change of position over the years 1973 to 1976. (emphasis added)
3.33 In that case, albeit the monies expended were much less than usually envisaged in cases of proprietary estoppel, the court compelled the plaintiff to give effect to his promises, due to the material detriment suffered by the former de facto wife, as reasoned by Cumming-Bruce in the above passage .
3.34 Ms Muir, finally argued that the defendant's conduct rises to the level of unconscionable conduct as defined in Waltons Stores (Interstate) Ltd v Maher,(supra). The passage relied on reads:
..equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction "has played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it": per Dixon J in Grundt, at p 675...Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct.. (emphasis added)
3.35 In Waltons Stores (Interstate) Ltd v Maher, there was clearly material detriment caused to a landlord who had demolished his building and completed part of a structure, on a proposed tenant's promise that he would occupy the building.I would cite an excerpt from that judgment.
The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to
compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon. (emphasis added)
3.36 The principle to be gleaned from the passages I have quoted is that the concept of unconscionable conduct turns on the detriment found to be suffered by the claimant, of which I have found there is none.
3.37 I conclude that defendant's conduct was not unconscionable.
(a) The summons is dismissed.
(b) I make no order as to costs.
19th December, 2013
A.L.B.Brito-Mutunayagam
Judge
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