Li v Tao

1. [1]

   WARD P: I agree with Kirk JA.

2. [2]

   MITCHELMORE JA: I agree with Kirk JA.

3. [3]

   KIRK JA: In these proceedings equity is called on to intervene in a dispute over some realty after a relationship breakdown, in circumstances where the property was in one party’s name but claimed beneficially by the other. The claimed arrangement had not been reduced to writing.

4. [4]

   The appellant, Ms Cheryl Li, and the respondent, Mr Zhiyong (Tommy) Tao, commenced a relationship in late 2014. In 2015 a house in St Ives in Sydney was purchased and was registered solely in Ms Li’s name. The pair separated in 2018. Mr Tao contended that Ms Li held the house on trust for him, pursuant to an express trust. The primary judge, Peden J, accepted evidence given by Mr Tao that there was an oral agreement creating such a trust.

5. [5]

   Her Honour further held that Ms Li could not rely on the writing requirements in s 23C of the Conveyancing Act 1919 (NSW) to resist Mr Tao’s claim, based upon the doctrine of part performance (no particular reliance was placed on s 54 of that Act). There was some doubt raised in this Court as to whether, in addition to that doctrine, her Honour had relied on some other basis rooted, in particular, on the doctrine for which the case of Rochefoucauld v Boustead [1897] 1 Ch 196 is said to stand. In any event, the respondent filed a notice of contention in Court, without objection, which raised the issue.

6. [6]

   On appeal there were four principal issues. The first concerned the primary judge’s findings in respect of Mr Tao’s credit, which the appellant challenged on appeal. The second was whether Ms Li did in fact declare a trust in the terms contended for by Mr Tao and found by the primary judge. The latter issue turns on the former, and I shall deal with them together. In my view the challenge to the credit finding fails, which also answers the challenge to the finding of a trust.

7. [7]

   The third issue was whether the doctrine of part-performance applied in this case. In my view the appellant has made good its challenge on this ground.

8. [8]

   The fourth issue concerned the alternative means of recognising Mr Tao’s beneficial interest notwithstanding s 23C, being the doctrine in Rochefoucauld v Boustead. I consider that this doctrine does support Mr Tao’s claim. On that basis the appeal should be dismissed with costs.

9. [9]

   I will address these issues in turn. Before doing so it is appropriate to provide some background.

Background

1. [10]

   Ms Li and Mr Tao met in July 2014 on what Mr Tao referred to as a “marriage-seeking website”. Mr Tao’s evidence was that he was living in Melbourne at the time. He was not, however, a permanent resident of Australia. The evidence revealed that Mr Tao spent considerable time in China, where he had a young son who lived with his sister. Ms Li was an Australian citizen. She was living in Sydney when she met Mr Tao.

2. [11]

   The pair met in person in late 2014 and commenced a relationship. From early 2015 Ms Li lived with her sister, Ms Jenny Lee, at a house in North Ryde. Mr Tao was frequently in China and in Melbourne, but lived with Ms Li and her sister in the house when he was in Sydney. Mr Tao began to search for property in Sydney, with a view to sending his son to school in that city.

3. [12]

   On 20 June 2015 Ms Li attended an auction for a property in North Ryde. She placed the successful bid and paid a 10% deposit using a blank cheque belonging to Mr Tao. Much of the dispute below concerned this property and the circumstances of its acquisition. Ms Li contended that Mr Tao had asked her to purchase a house for the both of them, and that he had left her the cheque for this purpose. Mr Tao contended that Ms Li had used the cheque without authorisation, but that rather than cancelling the cheque and causing her to bear the heavy liability, he had decided to fund the development of the property. He contended that she held the property on trust for him. There was also an issue about an agreement entered into with an acquaintance of Mr Tao’s, concerning investment in the development of the property. The primary judge determined that Ms Li did hold the North Ryde property on trust for Mr Tao. There is no appeal from that determination.

4. [13]

   Mr Tao’s evidence as to the making of an offer for the St Ives property was that, having identified a suitable school for his son in St Ives, he then noted that the property was for sale by auction. Having inspected it, he directed Ms Lee to negotiate with the agent of the property. He said that Ms Li suggested that her lawyers, Chess Legal, be engaged to assist with the conveyance, and that he “made no objection”. He explained that after noting “that a proposed purchasing price $3,100,000.00 may be accepted”, he went to China urgently for a business trip. His evidence was that Ms Lee then made an offer of $3,120,000 on his behalf, which offer was accepted. Ms Lee, who was called in Mr Tao’s case, gave similar evidence.

5. [14]

   Ms Li’s evidence differed considerably. She explained that it was she who identified the St Ives Property, and that she sent an email enquiry to the listing agent about this property on 20 July 2015. That email was in evidence. She explained that she attended an inspection by herself on 22 July 2015, an inspection with her sister on 25 July, and an inspection with her sister and Mr Tao on 29 July. Her evidence was that she made an offer for the property, although she says the offer was for “$3.10 million”, as opposed to the $3,120,000 which Mr Tao and Ms Lee both say Ms Lee offered, and which was the ultimate purchase price. There is no documentary evidence indicating by whom the offer was made.

6. [15]

   Mr Tao’s evidence was that he always understood “[d]uring the whole negotiation process” that he alone was the purchaser, and that he “never considered purchasing the St Ives property with Cheryl together”. In contrast, Ms Li said that she “understood that Mr Tao intended to purchase with me jointly”.

7. [16]

   On 12 August 2015 copies of contracts for the sale of the St Ives Property were executed. There are two copies of the contract in evidence, one from each side of the transaction. Both copies of the contract list both Mr Tao and Ms Li as the purchasers. One copy is signed by both Mr Tao and Ms Li, the other signed by the vendor. However, Mr Tao’s evidence was that he remembered that only his name was on the contract when he signed it on 12 August 2015. No argument was put on appeal that Mr Tao’s name was there initially, and that Ms Li’s was added later. The evidence in this regard was somewhat inconsistent, but the primary judge did not resolve the issue, and nor was she expressly asked to do so.

8. [17]

   Before the signing of the contract to purchase the St Ives property, it became apparent to the parties that Mr Tao’s status as a non-resident caused difficulties for acquisition of the property. His evidence was that on 11 August 2015 he directed Ms Li to submit an application to the Foreign Investment Review Board (FIRB) on his behalf, seeking approval for purchase of the St Ives Property. Ms Li’s evidence was that Mr Tao asked her to apply on his behalf for FIRB approval, but denied filing an application. She annexed to her affidavit a copy of a FIRB application which she says Mr Tao filed. The application is not dated. It records the contemplated purchase as being by Mr Tao and Ms Li jointly.

9. [18]

   Mr Tao deposed that about a week after the FIRB application was submitted he and Ms Li had a conversation to the following effect (as written):

10. [19]

    The primary judge noted that Mr Tao was not tested on this evidence; that Ms Li simply denied that the conversation took place; but that she did not deny he had paid for all her living expenses, nor that Mr Tao did in fact meet all the costs and expenses of the purchase (at [24]).

11. [20]

    Various emails were in evidence relating to the FIRB issue, involving Mr Tao, Ms Li, Ms Lau (the solicitor from Chess Legal acting on the purchase) and a mortgage broker. Mr Tao denied sending some of those which had been sent in his name, in circumstances where it was not in dispute that Ms Li had access to his Hotmail account. In any event, the net effect of the emails was that it was suggested that FIRB approval was not forthcoming, but that Ms Li did not need FIRB approval as she was an Australian citizen. Mr Tao claimed that it turned out some years later that approval had been given but he had not been informed of this by Ms Li.

12. [21]

    These emails provide some context for why in the end the purchase went ahead in Ms Li’s name only, even though Mr Tao’s name had been on the contract.

13. [22]

    An issue also arose in relation to the financing of the purchase. Mr Tao gave evidence that he had a conversation with his mortgage broker on 24 August 2015 in which his broker advised him that it was unlikely he could obtain a loan of 80% of the purchasing price given his existing debts. Mr Tao’s evidence was that the broker suggested that the loan be only in Ms Li’s name. Mr Tao then said the following conversation took place with Ms Li (as written):

14. [23]

    Ms Li again denied that this conversation occurred as alleged.

15. [24]

    On 26 August 2015 Ms Li sent an email to Ms Lau which read:

16. [25]

    On 1 September 2015 Ms Lau wrote to Ms Li requesting that she “confirm that the property is to be purchased in Cheryl Shu Yan Li's name ONLY for finance purposes. As we need to prepare a statutory declaration on your behalf to reflect this”. In a reply later that day Ms Li said “I hereby confirm that the property is to be purchased in Cheryl Shu Yan Li’s name ONLY for finance purposes”.

17. [26]

    On 4 September 2015 Ms Lee sent an email to Ms Lau, relaying a communication received from Ms Li and Mr Tao which the couple were unable to send to the solicitor because they were in China. It relevantly read:

18. [27]

    On 17 September Ms Li sent the following email to Ms Lau (as written):

19. [28]

    Ms Lau sent an email on the same day, attaching a statutory declaration in which she declared that “[i]t is proposed to transfer the property pursuant to the contract to Cheryl Shu Yan Li only which is not in conformity with the contract” and that “[t]he relationship between the purchaser and the transferee is that of de facto partner”. Mr Tao gave evidence that the declaration was made on 17 September, and it was emailed around that day, although it bears the date of 2 September.

20. [29]

    Settlement occurred on 23 September 2015, with the property registered in Ms Li’s name only. There was no evidence of what explanation was given to the vendor for omitting Mr Tao from the transfer. Mr Tao, Ms Li and Mr Tao’s son then moved into the St Ives property.

The trust finding and the challenge to Mr Tao’s credibility

1. [30]

   The primary judge noted, as regards both the St Ives and North Ryde properties, that Ms Li accepted that “other than the loan amounts, almost all the funds for the purchase and construction costs came from Mr Tao and Mr Bao” (at [54(3)]). Mr Bao was the fellow investor in the North Ryde property. Ms Li’s case was that the properties and the payments were made as gifts to her by Mr Tao.

2. [31]

   Her Honour concluded that Mr Tao and Ms Li agreed to the creation of an express trust in relation to both properties (at [53]). In relation to the St Ives property she said:

3. [32]

   It seems implicit in her Honour’s judgment that the express trust was created pursuant to an agreement between Mr Tao and Ms Li. Part of that agreement was Mr Tao’s promise that “I will keep paying for all expenses for this property” (see the conversation quoted above at [17]). As noted, Ms Li did not deny that Mr Tao did in fact meet all the costs and expenses of the purchase (at [24]).

4. [33]

   The primary judge’s finding of a trust was based on a range of evidence, summarised at [54]. That being said, her Honour had earlier noted that “Mr Tao’s case and Ms Li’s defence depend to a great extent on whose evidence is accepted, in light of the objective evidence and the evidence of Ms Lee” (at [9]). Her Honour found Mr Tao to be “a generally honest witness” (at [38]). She said that she considered Ms Li “an unimpressive witness” (at [44]). Reasons were given for these findings. She rejected attacks made on Ms Lee’s credibility (at [49]-[52]).

5. [34]

   Grounds 4-5 of the notice of appeal challenged the finding that the St Ives property was held on an express trust for Mr Tao. The appellant accepted that the trust finding was a factual one likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence, and that accordingly it was necessary for her to show that the finding was “glaringly improbable” or “contrary to compelling inferences”, unless the credit findings could themselves be overturned: note Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. Thus grounds 1-3 of the notice to appeal challenged credit findings. In substance, the challenge to the trust finding depended on making out errors with respect to the credit findings.

6. [35]

   In ground 1 of the notice of appeal the appellant said the finding in relation to Mr Tao’s credibility was made in error, and her Honour ought to have found that Mr Tao was an unreliable witness whose evidence should be accepted only if corroborated.

7. [36]

   Ground 3 of the notice of appeal alleged that her Honour erred in failing to find that Ms Li was a witness of truth. Senior counsel for the appellant indicated near the start of his oral address that ground 3 was not pressed, so no attempt was made to resuscitate the appellant’s own evidence. Ground 2 of the notice of appeal asserted that the primary judge erred in failing to find that Ms Lee was an unreliable witness. When addressing ground 2, senior counsel for Ms Li indicated candidly to the Court that the appellant needed to undermine Ms Lee’s credit, as well as that of Mr Tao, in order to succeed on the fact appeal.

8. [37]

   The significance of Ms Lee’s evidence was that she had sent a message to her sister on 18 October 2017 which said (as translated): “It is Tommy who owns the house not you. He wants to sell it and you should not have an objection. You are not capable of taking this! Wake up!” That message was sent at a time when a dispute had arisen between Mr Tao and Ms Li as to whether the St Ives property should be sold. The message supports the respondent’s claim that the property was held on trust, as the primary judge noted at [54(4)]. Senior counsel for Ms Li sought to undermine the force of this evidence by pointing to a text exchange between the sisters in which Ms Li asked for Ms Lee to “stand with me”, and Ms Lee responded “If you want me to help you, give me back My No 23” – referring to another property which was the subject of a dispute between the sisters – then adding “If you don’t want to return, I will go and help Tao!”. In the course of oral address, however, it emerged that that text exchange had occurred well after the email of 18 October 2017, although it was not clear precisely when it was sent. Senior counsel accepted that meant that ground 2 fell away, and it was withdrawn.

9. [38]

   However, ground 1 was not withdrawn, despite the earlier concession that the appellant needed to succeed on both grounds 1 and 2 in order to win on the fact appeal. There is thus some oddity in the appellant’s position.

10. [39]

    In any event, ground 1 is not made out. Ms Li identified two alleged instances of dishonesty on the part of Mr Tao. The first was evidence given in the course of questioning about the trust agreement with Ms Li:

11. [40]

    The appellant submitted that the evidence revealed two occasions on which Mr Tao had entered into documented trust arrangements with family, and that, therefore, Mr Tao’s assertion was a “lie” made “to advance his case”. Yet Mr Tao’s evidence was not that he never reduced trust arrangements with family members and other friends to writing. The somewhat imprecise statement that “we don’t have documents” does not rise to the level of a definitive assertion that such agreements were never reduced to writing.

12. [41]

    The first of the arrangements to which the appellant pointed was one between Mr Tao and his sister in which his sister held some shares on trust for him. Mr Tao was shown the document and the following exchange ensued:

13. [42]

    The existence of this document itself is not inconsistent with Mr Tao’s evidence that “between me and my family members and other friends, we don't have the documents”. He gave a plausible explanation for why the trust arrangement with his sister was reduced to writing relating to the view of his brother-in-law. As the primary judge observed “there was no reason advanced by Ms Li to doubt Mr Tao’s explanation” (at [41]).

14. [43]

    Ms Li pointed to another documented trust arrangement which involved Ms Lee, amongst others, holding property on trust for Mr Tao. The following exchange occurred in the cross-examination of Ms Lee:

15. [44]

    Again, this does not suggest that Mr Tao lied to advance his case. Ms Lee was the sister of Mr Tao’s girlfriend – it is by no means clear that he would have regarded her as family or a friend in the sense he spoke of when saying that with such people he did not have documents. As the primary judge observed, “Ms Lee performed some work for Mr Tao as an accountant and Mr Tao may have considered any trust relationship with Ms Lee as ‘business’” (at [42]). Mr Tao himself was not asked about this arrangement.

16. [45]

    The second alleged instance of dishonesty concerns what Ms Li referred to as “conflicting evidence as to a transfer of funds between the Respondent and one of his witnesses”. The funds in question were funds transferred in preparation for settlement of the North Ryde property. Mr Tao deposed (as written):

17. [46]

    In his cross-examination, the following exchange occurred:

18. [47]

    Ms Li says that there was an inconsistency between this evidence, and what Mr Tao said in his affidavit. But in his affidavit, he explained that the money was transferred “as directed and requested by Jenny and Cheryl”. His answers in cross-examination were not inconsistent with this, but merely provided further chronological detail: Ms Li advised him first, and after she was asked, Ms Lee agreed.

19. [48]

    When Ms Lee was cross-examined, the following exchange occurred:

20. [49]

    There is some inconsistency between Mr Tao’s evidence in his affidavit that Ms Lee suggested the money be paid into the relevant account for “taxation planning” reasons and Ms Lee’s evidence that she did not do so. The inconsistency appears to be of limited consequence, and relates to the North Ryde property which is not the subject of the appeal. No error is apparent in the statement of the primary judge that she did not “place much weight on those inconsistencies in circumstances where they concerned matters irrelevant to the question of intention about the ownership of the properties” (at [43]).

21. [50]

    There is no persuasive reason, thus, to disturb the primary judge’s finding that Mr Tao was “a generally honest witness” (at [38]).

22. [51]

    The finding of the trust agreement between Ms Li and Mr Tao was not “glaringly improbable” or “contrary to compelling inferences”. Mr Tao’s account of the conversation was not inherently implausible, nor was it contradicted by any documentary evidence. Indeed, in the context outlined above there was good reason to accept his evidence.

23. [52]

    Accordingly, there is no basis to overturn the finding of the primary judge that Ms Li agreed to hold the St Ives property on trust for Mr Tao. Grounds 1, 4 and 5 of the notice of appeal are rejected.

The doctrine of part performance

1. [53]

   There was no dispute that Ms Li’s agreeing to hold the St Ives property on trust for Mr Tao in August 2015 would, but for s 23C of the Conveyancing Act, have created some interest in land in his favour. What was in issue was whether any such interest was defeated by reason of that section, which is a descendant of the Statute of Frauds. Section 23C relevantly provides as follows:

2. [54]

   Section 23E(d) of the Act provides that nothing in ss 23B-23D shall affect the operation of the law relating to part performance.

3. [55]

   Here, the primary judge accepted that the respondent was able to sidestep s 23C by relying on the doctrine of part-performance. Pursuant to the doctrine, if a party alleging an oral agreement for the creation of an interest in land can show that they performed acts which are “unequivocally, and in their own nature, referable to some such agreement as that alleged”, then a court of equity will recognise the interest: Maddison v Alderson (1883) 8 App Cas 467 at 479; Pipikos v Trayans (2018) 265 CLR 522; [2018] HCA 39.

4. [56]

   Where the doctrine is invoked, “the logical order … is first to determine whether the acts performed establish the equity and then, and only then, to refer to the terms of the parol agreement in order to ascertain the terms in which the equity is to be enforced”: Pipikos at [55], see also [99]. Thus one does not begin with the contract and then identify acts which are referable to it. Rather, one focuses on the acts to consider if they are “consistent only with partial performance of a transaction of the same nature as that which the plaintiff seeks to have completed”: at [54]. Further, “payment of money alone is not a sufficient act of part performance because it is an equivocal act not in itself indicative of a contract concerning land”: Pipikos at [89] per Nettle and Gordon JJ.

5. [57]

   The primary judge identified four acts of part performance which she found unequivocally referable to the agreement in relation to the St Ives property (at [68]):

6. [58]

   In the course of argument on the appeal, senior counsel for the respondent conceded that none of these acts, on its own, is unequivocally referrable to an agreement of the kind alleged. He was right to do so. The first act identified by the trial judge, being payment, cannot of itself constitute an act of part performance. The same is true of the fourth act. Each is consistent with Ms Li’s claim that the house was a gift to her from Mr Tao.

7. [59]

   As to the second act, putting the property in Ms Tao’s name is obviously not unequivocally referrable to it being held on trust. As for the evidence that this was done for finance purposes, that does little to establish that the property was then to be held on trust. People in a relationship may agree to put property in one partner’s name without necessarily seeking thereby to create a trust.

8. [60]

   As to the third act, senior counsel for the respondent initially sought to contend that the act was unequivocally referrable to an agreement of the kind alleged on the basis that, because the relationship between the pair was only brief, there could be no other reason for the payment. Unsurprisingly, he abandoned this argument in the course of questioning. Many a payment is made, or property transaction occurs, in a spirit of optimism about a relationship which turns out to be misplaced.

9. [61]

   The ultimate argument of senior counsel for the respondent was that when all these things are considered together part performance can be made out. In Pipikos the High Court emphasised the high threshold set by the doctrine, rejecting attempts to water down the requirement of unequivocal referability. Mr Tao could not point to any one unequivocally referable act. Adding together a series of equivocal acts does not an unequivocal act make.

10. [62]

    The doctrine of part performance does not, therefore, allow Mr Tao to escape the provisions of s 23C of the Conveyancing Act. The primary judge erred in concluding that it did. I would uphold grounds 6 and 7 of the notice of appeal on that basis.

The doctrine in Rochefoucauld v Boustead

1. [63]

   There remains for consideration the alternative way in which the respondent sought to sidestep s 23C, as raised by the notice of contention. This issue was not addressed by the primary judge in light of her Honour’s conclusion on part performance, apart perhaps from a faint allusion at [63].

2. [64]

   In Maddison v Alderson, at 474, Lord Selborne LC said the following with respect to the doctrine of part performance:

3. [65]

   There are many authorities suggesting that the doctrine of part performance is a manifestation of a broader principle that courts will not permit Statute of Frauds provisions to be used as an instrument of fraud. The term “fraud” here is used in a broad sense that encompasses unconscionable conduct: see eg James Williams, The Statute of Frauds Section 4 (1932, Cambridge University Press) at 222–3 (Williams). In Pipikos, Kiefel CJ, Bell, Gageler and Keane JJ referred to the prevention of unconscionable conduct being the root of the doctrine of part performance: at [58] and [73], note also Nettle and Gordon JJ at [94]; see further Bahr v Nicholay [No 2] (1988) 164 CLR 604 at 656; [1988] HCA 16 per Brennan J.

4. [66]

   Consistently with the observation of Lord Selborne in Maddison, and taking account of the High Court’s concern in Pipikos not unduly to extend the notion of part performance, it is necessary to look carefully to the grounds and limits of developed doctrines which sidestep Statute of Frauds provisions. As Kiefel CJ, Bell, Gageler and Keane JJ put it in Pipikos at [73], referring to Lord Selborne’s reconciliation of tensions in older case law relating to part performance, that approach “provided an acceptable balance between parliamentary insistence on certainty in dealings in land and curial insistence on the prevention of unconscionable conduct in relation to such dealings”. There is a need for a similar balance in all of equity’s doctrines in this area.

5. [67]

   There is room for argument as to how to delimit relevant principles here. In Last v Rosenfeld [1972] 2 NSWLR 923, at 927-934, Hope J discussed a number of potentially overlapping doctrines. Here, the respondent appropriately sought to focus on the doctrine articulated in Rochefoucauld v Boustead, decided by the English Court of Appeal in 1897. In that case, Lindley LJ gave the following statement of principle (at 206):

6. [68]

   This statement sets out four requirements: the defendant has had land conveyed to them on trust; when they received it they knew it was to be held on trust; they now seek to deny the trust by relying on the Statute of Frauds provisions; and they do so in order to claim the land for themselves.

7. [69]

   Those requirements are satisfied here. Mr Tao and Ms Li agreed that the St Ives property would be conveyed to her, but as trustee holding it in trust for him (a fact, thus, that she knew). Ms Li denies the trust, seeking to rely on Statute of Frauds provisions, and claims the land for herself. That being so, applying Lord Lindley’s statement, it is competent for Mr Tao to seek to prove by parol evidence that it was so conveyed upon trust for him.

8. [70]

   Rochefoucauld v Boustead has been referred to approvingly by single justices of the High Court: Cadd v Cadd (1909) 9 CLR 171 at 187, [1909] HCA 59 per Isaacs J; Bloch v Bloch (1981) 180 CLR 390 at 403, [1981] HCA 56 per Brennan J; Bahr v Nicholay at 656 per Brennan J; see also Nelson v Nelson (1995) 184 CLR 538 at 553 per Deane and Gummow JJ, [1995] HCA 25 at 553, referring approvingly to cases discussing the doctrine. In none of these cases was the doctrine applied or considered in any detail.

9. [71]

   The appellant did not dispute the availability of some such doctrine, going beyond part performance, as part of the general law of Australia. Nor did she argue that it was excluded in this State by the terms of the Conveyancing Act. Rather, the appellant contends that the doctrine should be applied in a narrow fashion. The core arguments in this respect were as follows:

   1. (1)

      Senior counsel for the appellant suggested that there “are two species of this doctrine of cloak for fraud” insofar as it goes beyond the doctrine of part performance:

   2. (2)

      In any event, and consistently with the way in which the first category is identified, the doctrine does not extend to a case such as this where the respondent never had a legal interest in the land, but at most had only an equitable right to seek specific performance based upon his name being on the contract to purchase the land. Giving up that right was not enough for equity to override the statutory provisions requiring writing.

10. [72]

    The appellant is correct to submit that simply relying upon the Statute of Frauds provisions by itself is not a species of fraud: note Pipikos at [148] per Edelman J. However, the principle in Rochefoucauld v Boustead provides conditions under which reliance on that statute will not be countenanced. It is not necessary here to consider whether some theoretical basis can be identified uniting all of the ways in which equity allows sidestepping of the Statute of Frauds provisions: cf Bahr v Nicholay at 656 per Brennan J. A reason why equity is prepared to intervene in trust cases of the kind at issue was given by ICF Spry: “fraud in the relevant sense arises if a person, such as a trustee, who has accepted property in a fiduciary capacity attempts to set up an inconsistent personal claim” – The Principles of Equitable Remedies (9th edn, 2014, Lawbook) at 259. A trustee has a fiduciary duty to the beneficiaries of the trust. That is not to say that equity is granting a remedy for breach of fiduciary duty. Rather, the particular nature of the office of trustee, and the fact that the land was only ever obtained and held in that capacity, is sufficient to move equity to prevent a defendant from using the absence of writing to facilitate misappropriation of the beneficial interest. This understanding is sufficient to recognise the justice in the doctrine in Rochefoucauld v Boustead, where that doctrine is sufficient to resolve this case.

11. [73]

    The appellant’s argument that the “cloak for fraud” notion was limited to two species was founded to a significant extent upon the following statement by Williams in his 1932 text (at 223), which was quoted by White J in Ciaglia v Ciaglia (2010) 269 ALR 175; [2010] NSWSC 341 at [82]:

12. [74]

    White J did not indicate in Ciaglia that this delineation adequately captured relevant principles. Review of the chapter in Williams from which the quotation is taken indicates that it did not do so. Notably, the author makes no reference to Rochefoucauld v Boustead.

13. [75]

    The appellant also sought to rely on Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd (2003) ATPR (Digest) 46-242; (2004) Aust Contract R 90-181; [2003] NSWCA 305. Young CJ in Eq there said the following (with the agreement of Meagher and Beazley JJA):

14. [76]

    The appellant relied upon what was said at [68]. The significance of that paragraph was overstated. The case did not concern Statute of Frauds type provisions but rather consumer protection type provisions in the Property, Stock and Business Agents Act 1941 (NSW). The paragraphs quoted were part of a brief discussion of the ways in which equity “will not allow a statute to be used as a cloak of fraud” (quoting [65]). The case did not concern the doctrine in Rochefoucauld v Boustead. And in any event, what was said at [69] indicates that [68] was not attempting an exhaustive description of relevant principle, as [69] appears to go beyond [68].

15. [77]

    There is no need to attempt to shoehorn the doctrine in Rochefoucauld v Boustead into the two limited categories articulated by the appellant, nor any justification for so doing.

16. [78]

    The appellant’s broader point was that the doctrine does not extend to a case such as this where the respondent never had a legal interest in the land. The appellant argued that the person claiming a beneficial interest must also have been the previous legal owner, who transferred the property to defendant. On this view, the difficulty with the present case is that the property was transferred by the third party vendor to Ms Li. Moreover, the transfer was not made conditional by the third party upon Ms Li’s holding the property on trust for Mr Tao.

17. [79]

    In Rochefoucauld v Boustead itself the lands in question had been owned by the plaintiff but were mortgaged to two successive mortgagees, who sold the lands to the defendant. The plaintiff claimed, and the Court of Appeal found, that the lands were conveyed on the understanding between the plaintiff and the defendant that the latter would hold them on trust for the former. The Court held that Statute of Frauds provisions did not prevent reliance on the plaintiff’s (unwritten) evidence of the trust. Although the plaintiff there had been the legal owner (at least at some stage), nothing in the case suggests that it must be the transferor who imposes a condition on the transferee’s acquisition of the property. The core statement of principle by Lindley LJ, quoted above at [67], does not include such a requirement. And the property was actually sold by the action of the mortgagees.

18. [80]

    Indeed, it is not clear from the report of that case whether or not the plaintiff had retained legal ownership of the estates prior to the sale to the defendant, or it was held by the mortgagees. It has been suggested that it was likely to be the latter: YK Liew, “Rochefoucauld v Boustead (1897)” in C Mitchell and P Mitchell, Landmark Cases in Equity (2012, Hart Publishing) at 424-425. If so, the plaintiff held only an equitable interest – the equity of redemption – at the time she agreed with the defendant that he would acquire the estates on trust.

19. [81]

    Consistently with that understanding of the doctrine, in Cadd v Cadd Isaacs J said that “repudiation by any person of the terms upon which he has been entrusted with the legal title to property is a fraudulent use of another's confidence, and the Statute is not intended to cover fraud” (at 187). More recently, in Di Pietro v Official Trustee in Bankruptcy (1995) 59 FCR 470, Jenkinson J said that “equity regards as a fraud denial of the trust by a person taking an interest in land as trustee and permits the beneficiary of the trust to prove it by parol evidence and enforces the trust against the trustee and those claiming through the trustee” (at 479). Similarly, Sackville J said in the same case that “where land is transferred to a person absolutely, but the transferee undertakes to hold it on trust for another person, the beneficiary may prove the existence of the trust by parol evidence and obtain remedies requiring the trustee to give effect to the trust” (at 481-482). None of these statements requires that the beneficiary of the trust was the transferor.

20. [82]

    An important case for current purposes is the decision of the Full Court of the Victorian Supreme Court in Organ v Sandwell [1921] VLR 622. A married couple paid their income and savings into a bank account in the wife’s name. Some land was purchased in the name of the wife using funds from the account, and a house was erected on the land using those funds. It was established that the couple had verbally agreed that “the land and house should be held by the wife in trust for herself and the plaintiff, substantially on a joint tenancy” (at 629). After the wife’s death her executor sought to deny the trust. The husband prevailed.

21. [83]

    Senior counsel for the appellant in the present case sought to distinguish Organ v Sandwell on the basis that, there, “the husband provided all of the funds, and there was an agreement, and the judge at first instance was very critical of the brother-in-law who he said knew a lot more about what was going on than he let on, and perhaps procured the will”. As to the point about the provision of funds, there was some dispute about that, which the Full Court did not consider it necessary to determine (at 629). As to the point about the defendant executor, the trial judge’s scepticism about him (see at 626-627) formed no part of the reasoning of the Full Court.

22. [84]

    The Full Court’s statement of principle was as follows (at 630):

23. [85]

    That statement encompasses cases, like the one before that court and like the present case, where property is transferred by a third party to a transferee, who has already agreed with the claimant to hold that property on trust for the claimant upon acquisition of the property, and where there is no suggestion that the transferor was party to or aware of the agreement. The case stands squarely against the arguments of the appellant, and offers direct support for the claim of Mr Tao.

24. [86]

    Senior counsel for the appellant argued that Organ v Sandwell “would fall to a resulting trust analysis in modern thinking because it was simply a case of the husband had provided the whole of the proceeds”. Yet that was not how the issue was approached by the Full Court, and, as noted, that fact was not found by the Full Court. Moreover, the case has been referred to with approval by Brennan J in Bahr v Nicolay at 656 and by Deane and Gummow JJ in Nelson v Nelson at 553. It is also referred to approvingly in leading texts in the context of discussing Statute of Frauds cases: JD Heydon, MJ Leeming and PG Turner, Meagher Gummow & Lehane’s Equity: Doctrines and Remedies (5th edn, 2015, Butterworths) at [12-115]-[12-120]; PW Young, C Croft and ML Smith, On Equity (2009, Lawbook) at [3.520]. The appellant’s attempt to limit the significance of the case should not be accepted.

25. [87]

    Organ v Sandwell was applied by Blow CJ in Young v Young (2014) 23 Tas R 76. In that case a mother bought a house for her daughter, and paid for it, but on the basis that the beneficial interest belonged to the daughter. The house was bought in the mother’s name because of a concern about the daughter’s estranged husband locating her. It was held that the mother could not later deny the oral promise that the property, when acquired, was to be held on trust. Similarly, in Dunphy v Russell [2018] NSWSC 721 a father and daughter were found to have reached an oral agreement relating to the purchase of some realty, the effect of which was that the father would make a contribution to the purchase price and would have a one-third beneficial interest, with the property to be registered in the daughter’s name. Sackville AJA held that the daughter could not rely on s 23C(1) of the Conveyancing Act to defeat the father’s claim (at [129]-[130]), although Organ v Sandwell was not cited. These two cases are contrary to the appellant’s arguments.

26. [88]

    The appellant in the present case cited Wratten v Hunter [1978] 2 NSWLR 367 in support of her argument. Needham J there held that the doctrine in Rochefoucauld v Boustead did not apply where an owner of land made an oral declaration of trust, rather than having acquired the land subject to the trust. His Honour quoted (at 370) an extract from the first edition of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, which remains materially unchanged in the present edition (see at [12-125]):

27. [89]

    The phrase “the conveyor would never have transferred the land to him” might be read as suggesting that it is necessary that the conveyor transferred the land on the conveyor’s understanding that the conveyee would hold the land on trust. But this is not made explicit and is not a limitation which is express in the cases. Organ v Sandwell is to the contrary and, as noted, the learned authors discuss that case with approval. The substance of the point being made is a causal one, namely that the conveyee only obtained the property on the basis that it would be held in trust.

28. [90]

    In Wratten v Hunter itself it was not the identity of the transferor but the voluntary nature of the declaration which Needham J relied on in reaching his decision, with his Honour saying (at 371):

29. [91]

    In the present case there was no mere voluntary declaration of trust. Before the property was transferred to Ms Li and registered in her name, Ms Li and Mr Tao entered into the agreement that the property would be conveyed to her only but held on trust, in whole, for him. It is true that both Ms Li’s and Mr Tao’s names were on the contract to purchase the property, albeit there was some unresolved dispute as to when and how Ms Li’s name came to be so (see above at [16]). Yet it was only Ms Li who became the registered proprietor, and this occurred after the agreement that she would hold the whole of the property on trust. She never held any legal interest in the property prior to the agreement that she would hold that interest on trust; the land was only conveyed to her, alone, on the basis of her acceptance of the trust.

30. [92]

    Further, even if the doctrine did require that the claimant had given up an interest in the property (contrary to the decision in Organ v Sandwell) that would have been satisfied here in any event. At the time the oral agreement between Mr Tao and Ms Li was entered into – and assuming that both names were already on the contract of purchase at that point – both parties had an equitable interest in the property in the form of a possible right to specific performance of the contract: note Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [45]-[53]. Mr Tao gave up that right by agreeing that the property be transferred only to Ms Li. Senior counsel for the appellant contended that where the interest was only equitable the principle did not apply. No reasons for this argument were clearly articulated, except “because the authorities have applied the doctrine in a narrow sense”. The argument appears inconsistent with Rochefoucauld v Boustead itself, taking account of what is said above about the plaintiff there seemingly only having had an equitable interest at the time the defendant bought the estates.

31. [93]

    Senior counsel for the appellant also seemed to argue that, even if the doctrine applies, Mr Tao’s having only an equitable interest should alter the application of the doctrine, contending that “then the outcome would be that it's only as to a half interest that the transfer is made”. But this ignores the fact that the agreement was that Ms Li would hold the whole of the property on trust for Mr Tao, and she acquired sole legal title on the basis of that agreement.

32. [94]

    The appellant made some faint suggestion that Mr Tao’s claim should not be enforceable because at some stage during the breakdown of the relationship he stopped making the loan payments on the property, contrary to his promise to do so. This argument appeared to be suggesting that this affected an assessment of unconscionability. In Pipikos it was explained that the doctrine of part performance is distinct from equitable estoppel, despite a common root of a concern to prevent unconscientious conduct (at [58]). Similarly here, the doctrine in Rochefoucauld v Boustead does not depend upon some weighing up of the merits of the conduct of the parties. It is sufficient that the requirements of the doctrine are made out. No defence of unclean hands was pleaded.

33. [95]

    It can be accepted that courts should not readily extend categories where Statute of Frauds provisions are sidestepped. However, this case falls squarely within the doctrine articulated in Rochefoucauld v Boustead as applied in Organ v Sandwell. No extension of legal doctrine is required. Ms Li only obtained her full and sole legal title to the St Ives property on the basis of her acceptance of a trust. Consistently with longstanding authority, she cannot invoke s 23C of the Conveyancing Act so as to seek to defeat the legitimate claim of the beneficiary to his trust property.

34. [96]

    The ground raised in the notice of contention should be upheld.

35. [97]

    Some submissions were made on the question of whether the Court is then giving effect to the express trust or to a constructive trust. That issue has been the subject of some (strongly expressed) academic debate: cf YK Liew’s chapter, referred to above, with William Swadling, “The Nature of the Trust in Rochefoucauld v Boustead”, in C Mitchell, Constructive and Resulting Trusts (2010, Hart Publishing). It was not suggested by either party that the issue affects the orders that were made by the primary judge. It is thus unnecessary to weigh into the quarrel.

Conclusion

1. [98]

   In light of the above analysis the primary judge reached the correct conclusion, albeit for reasons which differ somewhat from those given by her Honour.

2. [99]

   Ms Li made some brief written submissions directed to appeal ground 11 to the effect that the primary judge erred in making orders for the Registrar to execute necessary documents for the transfer of the St Ives property without first ordering that she was entitled to an indemnity as trustee. Yet the orders made by her Honour also allow for distribution of the net proceeds of any sale of the property “in accordance with the entitlements determined by agreement, or failing such agreement, by directions to be made by the Court”. That order protects any claim Ms Li may have as trustee.

3. [100]

   The orders of the Court should be as follows:

   1. (1)

      The appeal is dismissed.

   2. (2)

      The appellant is to pay the respondent’s costs.