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SUPREME COURT OF SOUTH AUSTRALIA
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BYRNES & ANOR v KENDLE
 SASC 385
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Nyland and The Honourable Justice Vanstone)
18 December 2009
EQUITY – TRUSTS AND TRUSTEES – EXPRESS TRUSTS CONSTITUTED INTER VIVOS – DECLARATION OF TRUST – NECESSITY FOR INTENTION
Respondent purchased residential property in his own name – respondent signed “acknowledgement of trust” acknowledging that he held an undivided half interest in the property as tenant in common upon trust for appellant – whether respondent held part of his interest in the property on trust for the appellant.
HELD: having regard to the terms of the written document, which are a significant matter for consideration, the context in which it came into being, and the relationship between the parties, the respondent held a half interest in the property as tenant in common on trust for the appellant.
EQUITY – TRUSTS AND TRUSTEES – POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES
Respondent leased property to son – son did not pay rent to respondent, and respondent did not take action to collect rent from son – whether respondent was in breach of duty as trustee by renting property to son and by failing to collect rent from the son.
HELD: the duties of a trustee in a particular case depend on the terms of the trust, the nature of the trust, and the circumstances in which it operates – having regard to the nature of the property the subject of the trust, namely, an interest in a property as a joint tenant, the
fact that the respondent held the remaining interest in the property as a joint tenant absolutely, and the legal relationship between joint tenants, there was no duty on the respondent to rent the property or to collect rent from a tenant to whom the property had been leased.
EQUITY – TRUSTS AND TRUSTEES – POWERS, DUTIES, RIGHTS AND LIABILITIES OF TRUSTEES – LIABILITY FOR BREACH OF TRUST – EFFECT OF REQUEST OR ACQUIESCENCE OF CESTUI QUE TRUST
Whether, assuming the respondent was in breach of duty as trustee by renting the property to his son and by failing to collect rent, the appellant had acquiesced in the breach and is now precluded from charging the respondent with the breach of trust.
HELD: court must examine all of the circumstances to determine whether it is fair and equitable that a beneficiary should sue the trustee when the trustee relies upon the consent or acquiescence of the beneficiary in a breach of trust – appellant aware that respondent had leased property to son and aware that son was not paying rent, but acquiesced in decision not to press for rent and, in the circumstances, could not now require respondent to account for unpaid rent – appeal dismissed.
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In Liq) (2000) 202 CLR 588; Spellson v George (1992) 26 NSWLR 666, applied.
The Commissioner of Stamp Duties (Queensland) v Jolliffe (1920) 28 CLR 178, discussed.
Callow v Rupchev  NSWCA 148; Earl of Egmont v Smith (1877) 6 Ch D 469, considered.
BYRNES & ANOR v KENDLE
 SASC 385
Full Court: Doyle CJ, Nyland and Vanstone JJ
1 DOYLE CJ: Mrs Byrnes and Mr Kendle married in 1980. They separated in early 2007. Mr Kendle was at that time the registered proprietor of a house property at Rachel Street Murray Bridge. In 1997 Mrs Byrnes and Mr Kendle had executed an “Acknowledgement Of Trust” (“the Acknowledgement”). By the Acknowledgement Mr Kendle acknowledged that he held an undivided half interest in the property as tenant in common upon trust for Mrs Byrnes, and each of Mrs Byrnes and Mr Kendle acknowledged that their survivor was entitled to the use of the property for life.
2 Mrs Byrnes and Mr Kendle lived in the house at Rachel Street from early 1995 until 2001. They then moved to another house at Murray Bridge that Mrs Byrnes’ son, the appellant Mr Byrnes, had purchased.
3 Mr Kendle’s son occupied the house at Rachel Street from 2001 to 2007. He failed to pay the agreed rent to Mr Kendle.
4 The property at Rachel Street was sold in July 2008.
5 In the proceedings now before this Court Mr Byrnes or Mrs Byrnes (I will explain Mr Byrnes’ involvement later) claimed one half of the net proceeds of sale of the property at Rachel Street. They also claimed that Mr Kendle was a trustee of Mrs Byrnes’ interest in the property at Rachel Street, and had breached his duty as trustee by failing to collect the rent payable by his son. Mrs Byrnes and Mr Byrnes claimed that Mr Kendle should account to one of them for one half of the rent that should have been paid by the son while living at Rachel Street. They also objected to Mr Kendle deducting from the proceeds of sale an amount secured against the property which they said was attributable to a loan of $8,000 by Mr Kendle to his son. Mr Kendle made that loan by increasing the amount secured by the mortgage which Mr Kendle granted when he purchased the property at Rachel Street.
6 A District Court Judge made a declaration that Mr Kendle held one half of the net proceeds of sale of the property at Rachel Street on trust for Mr Byrnes. This aspect of the claim was never seriously disputed. The Judge dismissed the other two claims.
7 Mr Byrnes and Mrs Byrnes have appealed.
8 I would dismiss the appeal. I set out my reasons below.
Doyle CJ  SASC 385
9 It is not necessary to deal in any detail with the history of the marital relationship.
10 This was a second marriage for both parties. When they married Mrs Byrnes was 60 years of age, and Mr Kendle 57 years of age. Each of them had adult children from their previous marriages. Mr Byrnes, Mrs Byrnes’ son, is a solicitor, and from time to time he gave legal advice to his mother relating to her property and affairs.
11 In 1984 Mr Kendle bought and paid for a home unit at Brighton. It was registered in his name because by doing so he was able to obtain a loan at favourable rates. Mr Kendle and Mrs Byrnes lived in the home unit.
12 Mrs Byrnes gave evidence, that the Judge accepted, of contributions by her to their expenses, including a payment of $14,000 to Mr Kendle in July 1989.
13 At the instigation of Mr Byrnes, Mrs Byrnes and Mr Kendle on 1 August 1989 executed an “Acknowledgment Of Trust” in terms more or less identical to the Acknowledgement, but relating to the property at Brighton. The reason for this was to protect Mrs Byrnes’ interests, having regard to payments made by her to Mr Kendle. There is nothing surprising about this.
14 The property at Brighton was sold in 1994 or 1995, and Mr Kendle bought the house at Rachel Street, Murray Bridge. The price was $47,500, and the proceeds of the sale of the Brighton property were applied towards the purchase. There was no evidence that Mrs Byrnes made any cash contribution to this purchase. There is no evidence that Mr Kendle made a cash contribution. The property was again registered in Mr Kendle’s name so that he could obtain a loan at advantageous rates.
15 Before moving into the house, the parties carried out some renovations. The Judge found that Mrs Byrnes contributed $7,000 to this, and Mr Kendle contributed $14,000.
16 As already mentioned, the Acknowledgement was executed in 1997, again at the instigation of Mr Byrnes. Again, there is nothing surprising about this.
17 In 2001 Mr Byrnes bought a house at Graetz Street Murray Bridge. He agreed that Mrs Byrnes and Mr Kendle could live in it rent free. It was anticipated that they would rent out the property at Rachel Street. The Judge found specifically that Mr Byrnes did not buy the property at Graetz Street in reliance on any undertaking by Mr Kendle to collect rent in respect of the property at Rachel Street: .
18 Mr Kendle let the property at Rachel Street to his son. The Judge found that this was done with Mrs Byrnes’ knowledge: .
 SASC 385 Doyle CJ
19 However, after a week or so the son failed to pay the agreed rent. The Judge found that Mrs Byrnes and Mr Kendle were both “upset” about this: . However, on the Judge’s findings Mr Kendle failed to take action, and Mrs Byrnes did not press the issue. The Judge said that she “… chose not to do so for the sake of matrimonial harmony”: .
20 In about April 2003, Mr Kendle increased the amount secured by the mortgage on the Rachel Street property by $10,000. Of that, $2,000 was used for the joint purposes of Mr Kendle and Mrs Byrnes, and the other $8,000 was lent to his son: . In his evidence Mr Kendle did not claim that the loan was discussed “in depth”. The effect of his evidence is that he informed Mrs Byrnes about the proposed loan, but did so without taking care to ensure that she was agreeable.
21 The Judge found that the rent that the son should have paid amounted to $48,860: . The Judge also found that for the whole period during which Mr Kendle owned the property at Rachel Street, he made the mortgage repayments, paid the rates, paid water charges and insurance amounting in all to $36,240.42: . The Judge found that the mortgage payments by Mr Kendle included payments on the additional drawing of $10,000: .
22 The Judge made no finding about the extent to which, if at all, the $8,000 loaned to Mr Kendle’s son was still outstanding when the property was sold. In an affidavit tendered before the Judge, Mr Kendle said that the amount owing on the property at Rachel Street when it was sold was less than when it was purchased.
23 In March 2007 Mr Byrnes had prepared a “Deed of Assignment” (“the Assignment”), by which Mrs Byrnes assigned her interest in the house at Rachel Street to him in consideration of him paying to her $40,000: . I interpolate here that although the Assignment bearing the original signatures had been lost, and although the date when the Assignment was effective was contested, the Judge found that the Assignment was validly made in March 2007: .
24 The action before the District Court was commenced by Mr Byrnes, relying on the Assignment. Somewhat later Mrs Byrnes was joined as a plaintiff.
The Judge’s findings
25 The Judge preferred the evidence of Mr Kendle, where it differed from that of Mr Byrnes and Mrs Byrnes: . The Judge found that the Acknowledgement did not create “an express trust”: . He said that Mr Kendle “… intended only to acknowledge that, upon eventual sale of the property, half of the net proceeds would belong to his wife”: . If he was wrong in that, the Judge found that Mr Kendle was under no duty, enforceable by Mrs Byrnes, to collect rent: . In any event, even if Mr Kendle was in breach of his duty as trustee, the Judge found that Mrs Byrnes “cooperated” in the breach, and could not complain about
Doyle CJ  SASC 385
the breach: . He said, referring to the period during which the son (Kym) lived in the house: 
 Kym lived in the house for a little over six years. For all of that time, or nearly all of it, [Mrs Byrnes] was fully aware that he was not paying rent. Further, during those 6 years, she was present at numerous discussions with her son and her husband at which Martin Byrnes spelled out his view that Mr Kendle owed a duty to Mrs Byrnes to collect rent from Kym. She was well aware of the rights her son claimed for her but, for the sake of matrimonial harmony, she took no action. I find that, although unwillingly, she consented to her husband’s decision not to press for rent. Equity should not hear her complaints now, only after the marriage has broken down.
26 Mr Frayne SC, counsel for Mr Kendle, argued that there was no effective assignment to Mr Byrnes of Mrs Byrnes’ interest until 29 September 2008, when the Judge found Mrs Byrnes signed another copy of the assignment. The original signed copy had been lost. He submits that when the action was instituted Mr Byrnes had no interest in its subject matter, and that when Mrs Byrnes was joined (20 October 2008) she no longer had an interest in the subject matter of the claim. Accordingly, the action should have been struck out by the Judge. This point was raised for the first time at the trial.
27 The Judge found that the assignment was effective in March 2007: . There is no reason to disturb that finding. Accordingly, I reject the submission that the action was not properly constituted. In any event, by the time the action came to trial Mr Byrnes and Mrs Byrnes were both parties, and the action was properly constituted. It is not necessary to decide, but I am not satisfied that it would have been right to dismiss the action, even if there was no valid assignment until September 2008.
28 I cannot agree with the Judge’s decision on this point. In my opinion the Acknowledgement constituted Mr Kendle a trustee for Mrs Byrnes, he being the trustee for her of an interest as tenant in common, with a life interest in Mr Kendle’s interest in the event of Mr Kendle pre-deceasing Mrs Byrnes. The terms of the Acknowledgement are clear. So are the terms of the earlier Acknowledgement. Mr Kendle might not have fully understood what he was doing, but that is neither here nor there. In evidence, referring to the Acknowledgement, he was asked the following question and gave the following answer:
Q And you accept, do you not, that you were a trustee in respect of that one undivided half interest for your wife.
A Yes. May I make a statement here? To me that was automatic reaction, she was my wife, we were partners so naturally half of it was hers.
 SASC 385 Doyle CJ
In a general way Mr Kendle understood what was being done, and in no way resiled from it. Mr Frayne’s submission, accepted by the District Court Judge, was that everything turned on Mr Kendle’s subjective intention, and that he was intending only to acknowledge that upon sale of the property half of the proceeds would belong to Mrs Byrnes: . It seems to me that Mr Kendle’s evidence indicates that he knew that he was creating an interest in the property to be held for Mrs Byrnes at the time he signed the Acknowledgement, and not merely upon a later sale of the property.
29 Mr Frayne invoked the authority of the well known decision in The Commissioner of Stamp Duties (Queensland) v Jolliffe  HCA 45; (1920) 28 CLR 178, and in particular the observation by Knox CJ and Gavan Duffy J (at 181):
We know of no authority, and none was cited, which would justify us in deciding that by using any form of words a trust can be created contrary to the real intention of the person alleged to have created it. In our opinion the law is accurately stated in Lewin on Trusts, 11th ed., at p. 85: “It is obviously essential to the creation of a trust, that there should be the intention of creating a trust, and therefore if upon a consideration of all the circumstances the Court is of opinion that the settlor did not mean to create a trust, the Court will not impute a trust where none in fact was contemplated”.
30 But Mr Frayne’s submission appears to treat this as calling for an enquiry into a subjective state of mind and understanding, without regard to other matters. He ignores the effect of the document that Mr Kendle signed, and Mr Kendle’s own understanding of its effect.
31 When there is a written document, the terms of that document are a significant matter for consideration, as is the context in which the document came into being, and the relationship between the parties. I refer to the following observations by Gaudron, McHugh, Gummow and Hayne JJ in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (In Liq)  HCA 25; (2000) 202 CLR 588 at -:
 This is not one of those cases where the language employed by the parties for the transaction is inexplicit so that the court is left to infer the relevant intention from other language used by them, from the nature of the transaction and from the circumstances attending the relationship between the parties. An express obligation upon the buyer to keep the “proceeds” separate would have pointed to the existence of a trust if none had been explicit. This would have been because, as McPherson A-CJ has put it, such an obligation “is a hallmark duty of a trustee”. But where the existence of a trust is explicit, the absence of an express obligation to keep trust moneys separate does not deny the trust. Rather, there being a trust, it follows that equity imposes various obligations and duties on the trustee. One of these is the obligation to get in the trust property and keep it distinct from the property of the trustee and from property held on other trusts. No question presently arises of the variation or abrogation of such obligations by statute or by express provision in a settlement.
Doyle CJ  SASC 385
 In the present case there is nothing to suggest, at this subjective level, that the parties in their written instrument did not mean what they said, or did not say what they meant. There is no suggestion of a sham. It must follow that the terms of the invoices embodied the intentions of the parties. …
32 For those reasons I accept the submission by Mr Tokley, counsel for Mr and Mrs Byrnes on appeal, that Mr Kendle was a trustee for Mrs Byrnes of her interest in the property at Rachel Street.
33 In the administration of a trust, a trustee will have various powers and various duties. What those powers and duties are must depend upon the terms of the trust, the nature of the trust, and the circumstances in which it operates. There is no set or suite of duties that apply to every trustee, as of course, whatever the nature of the trust, whatever its terms, and whatever the circumstances in which it operates: Earl of Egmont v Smith (1877) 6 Ch D 469 at 475 Jessel MR.
34 Mr Tokley argued that because Mr Kendle was a trustee, the right to receive rent for the property at Rachel Street became an asset of the trust, Mr Kendle had an obligation as trustee to get in that asset and if necessary to take action to enforce the payment of rental, and that Mr Kendle allowed his interest and his duty to conflict by allowing his son to rent the property. I reject this submission, insofar as it treats a conclusion that Mr Kendle was a trustee as leading to the result that he was subject to the various duties identified by Mr Tokley.
35 This was a trust in respect of an interest in the matrimonial home, in which Mr Kendle had an equal interest. The purpose of the trust was to protect Mrs Byrnes’ interest in the matrimonial home and her contribution to the home and to the matrimonial funds. The manner in which the property was used was a matter for mutual decision.
36 If the device of a trust had not been used, Mrs Byrnes would have appeared on the Title as a tenant in common, with a life interest in Mr Kendle’s interest as tenant in common, in the event of him pre-deceasing her. As co-owners of the property, there would have been no obligation on either of them to ensure that the property was tenanted, when it was not being occupied by one or both of the co-owners. Each of them would have been equally entitled to possession of the property: Bradbrook A, McCallum S, Moore A Australian Real Property Law (4th ed, Lawbook Co, Sydney, 2007) [12-185]. Neither of them would have been under any particular obligation in relation to renting the property, or collecting the rent from the tenant. Nor would that co-ownership have given rise to a relationship of agency as between the co-owners, or to a fiduciary relationship as between them. These points are not decisive, but must be relevant when considering the nature of the trust in this case, and the duties of Mr Kendle.
 SASC 385 Doyle CJ
37 In my opinion the legal relationship as between co-owners or tenants in common provides a guide to the answer to the question of the duties owed by Mr Kendle.
38 When Mrs Byrnes and Mr Kendle moved to Graetz Street there was no affirmative duty on Mr Kendle to let out the property at Rachel Street. The question of whether the property was rented was a matter for both parties, and neither of them was under any obligation to take the initiative.
39 The Judge found that Mrs Byrnes was aware of the proposal to rent the property to Mr Kendle’s son, and the clear inference is that she agreed to and acquiesced in that proposal. In this respect, the Judge did not accept Mrs Byrnes’ evidence. This is not to say that she was pleased with the idea, but the effect of the Judge’s findings, supported by the evidence, is that she did not protest. In the circumstances, particularly bearing in mind the relationship of the parties, that was enough. They had agreed to let the property to the son.
40 I reject the suggestion by Mr Tokley that in allowing his son to rent the property, Mr Kendle allowed his interests and his duty as trustee to conflict.
41 I note also that the Judge found explicitly that Mr Byrnes did not purchase the property at Graetz Street in reliance upon an undertaking by Mr Kendle that he would collect rent from the property at Rachel Street: .
42 Mr Kendle was not in breach of any duty in failing to collect the rent from his son. In letting out the property he was not, in my opinion, subject to the duties that would normally be imposed on a trustee who lets out trust property. Mr Kendle acted as one of two co-owners. He and Mrs Byrnes agreed that the property should be let to his son. On the Judge’s findings, Mrs Byrnes was aware that the son had stopped paying the rent. She knew that she had an interest in the property. It was open to her, if she saw fit, to insist upon action being taken to enforce payment, either by suing for the rent or by evicting the son. She chose not to do so, for reasons that are understandable. She might have been unhappy about the state of affairs. But none of this gives rise to a liability on behalf of Mr Kendle for the rent that was not paid. Such a liability would arise only if the terms and circumstances of the trust were ignored. In short, Mr Kendle was under no duty to Mrs Byrnes to let the property, to let it to his son was not a breach of duty, and to fail to take action to insist upon payment of the rent was not a breach of a duty owed to Mrs Byrnes.
43 The point becomes clearer if one assumes that the property was let to a tenant on an ordinary commercial basis. If the tenant failed to pay the rent, why would Mr Kendle be liable to make up the unpaid rent? If Mrs Byrnes acquiesced in a failure to pursue the tenant for the unpaid rent, why should Mr Kendle later be liable for that unpaid rent? The circumstance that the tenant was in fact Mr Kendle’s son does not, in my opinion, alter the situation.
Doyle CJ  SASC 385
44 It is important to emphasise that there is no hint here of Mr Kendle overruling Mrs Byrnes, or dispossessing her in any way, or of denying her rights and interests in any respect. He might have treated the matter as primarily one between himself and his son, but that is all that can be said. There can be no question in this case of Mr Kendle being liable to Mrs Byrnes on the basis of him having ousted her from the property: see Callow v Rupchev  NSWCA 148.
45 In short, the failure by Mr Kendle to ensure that the rent was paid by his son does not give rise to a breach of duty, making him liable to compensate Mrs Byrnes for the unpaid rental.
46 In any event, as I noted earlier in these reasons, the Judge found that Mrs Byrnes “cooperated” in the breach, or as I would put it, that she concurred or acquiesced in the matter being let drift. The Judge made a clear finding of fact in that respect, which finding was not really challenged on appeal.
47 The position is summarised in Heydon JD and Leeming MJ, Jacob’s Law of Trusts in Australia (7th ed, LexisNexis Butterworths, Australia, 2006) at :
… a beneficiary who has assented to, or concurred in, or who has subsequently released or acquiesced in a breach of trust, cannot charge the trustee afterwards with the breach of trust, provided that at the time of the assent, concurrence, release or acquiescence, as the case may be, the beneficiary was sui juris, and did the act with full knowledge of the facts and of what exactly he or she was doing and the legal effect thereof, and that the act was not the result of any undue influence.
48 In Spellson v George (1992) 26 NSWLR 666 the Court of Appeal of the Supreme Court of New South Wales emphasised that when a trustee relies upon the consent or concurrence of a beneficiary as an answer to a breach of trust, the Court must consider all of the circumstances and decide whether it is fair and equitable that the beneficiary should sue the trustee: Handley JA at 669; Hope A-JA at 673-675; Young A-JA at 680.
49 To my mind, acquiescence and consent better describe the conduct or inaction by Mrs Byrnes, rather than the expression “cooperation”. It would be one thing if, after a little time, Mrs Byrnes had begun to protest, or if she had protested over a period and then, seeing that Mr Kendle was immovable, had acquiesced. But on the Judge’s finding, although there was some reluctance on her part, she was well aware of the issue and acquiesced in the decision not to press for rent. Mrs Byrnes herself acknowledged in evidence that she did not interfere, did not want to upset “the equilibrium”, and was prepared to go along with the situation because the tenant was Mr Kendle’s son. She agreed that she let the situation go, and that she should have done something about it.
50 I agree with the Judge’s findings in this respect, and would uphold his conclusion that even if Mr Kendle was under a duty to take steps to enforce
 SASC 385 Doyle CJ
payment, Mrs Byrnes acquiesced in that breach of duty, and in circumstances that lead to a conclusion that it would not be just and equitable that she should now require Mr Kendle to account to her for her share of the unpaid rent.
51 The precise circumstances in which Mr Kendle advanced $8,000 to his son are not clear. The Judge refers to the matter, but does not deal separately with the claim against Mr Kendle in respect of this amount. Mr Kendle agreed in evidence that he did not discuss the proposed loan with Mrs Byrnes “in depth”.
52 In the circumstances, it is arguable that Mr Kendle should account to Mrs Byrnes for any amount still outstanding, on the borrowing secured by the Rachel Street property, in respect of the loan of $8,000 to Mr Kendle’s son. If anything was stil
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