FAMILY LAW – APPEAL – PROPERTY – where the husband took funds from his sister’s bank account in Germany under the terms of a power of attorney executed in Germany – where the husband purchased a property in the wife’s name with those funds – in the course of property settlement proceedings between the husband and wife to which the sister had been joined, the sister claimed that the wife held the property on trust for her – where the trial judge found that the wife held the property on constructive trust for the sister and ordered that the wife transfer the property to the sister – the wife’s claims on appeal that the husband had borrowed the funds from the sister, that a fiduciary relationship did not exist between the husband and the sister, and that the wife’s title to the property was indefeasible under the Land Title Act 1994 (Qld) were rejected by the Full Court – appeal dismissed – directions made for submissions in relation to the costs of the appeal.

Grefeld & Grefeld and Anor [2012] FamCAFC 71 (1 June 2012)

Last Updated: 14 June 2012

FAMILY COURT OF AUSTRALIA

GREFELD & GREFELD AND ANOR

[2012] FamCAFC 71

FAMILY LAW – APPEAL – PROPERTY – where the husband took funds from his sister’s bank account in Germany under the terms of a power of attorney executed in Germany – where the husband purchased a property in the wife’s name with those funds – in the course of property settlement proceedings between the husband and wife to which the sister had been joined, the sister claimed that the wife held the property on trust for her – where the trial judge found that the wife held the property on constructive trust for the sister and ordered that the wife transfer the property to the sister – the wife’s claims on appeal that the husband had borrowed the funds from the sister, that a fiduciary relationship did not exist between the husband and the sister, and that the wife’s title to the property was indefeasible under the Land Title Act 1994 (Qld) were rejected by the Full Court – appeal dismissed – directions made for submissions in relation to the costs of the appeal.

Family Law Act 1975 (Cth) Land Title Act 1994 (Qld)

Allen v Snyder [1977] 2 NSWLR 685 Bahr v Nicolay [No.2] [1988] HCA 16; (1988) 164 CLR 604 Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137 Breskvar v Wall [1971] HCA 70; (1971) 126 CLR 376 Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 Equiticorp Finance Ltd (in liq) v Bank of NZ (1993) 32 NSWLR 50 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Field v Shoalhaven Transport Pty Ltd [1970] 3 NSWR 96 Frazer v Walker [1967] 1 AC 569 Hospital Products Ltd v United States Surgical Corp & Ors [1984] HCA 64; (1984) 156 CLR 41 Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342 Marriage of Davidson (1994) 17 Fam LR 656 Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 Metwally v University of Wollongong (1985) 60 ALR 68 Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331 Picwoods Pty Ltd v Panagopoulos [2004] NSWSC 978 Poulet Frais v Silver Fox [2005] FCAFC 131; (2005) 220 ALR 211 Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491 Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 Tara Shire Council v Garner [2002] QCA 232; [2003] 1 Qd R 556

APPELLANT:

Ms H Grefeld

1ST RESPONDENT:

Mr Grefeld

2ND RESPONDENT:

Ms J Grefeld

FILE NUMBER:

BRF

2504

of

2005

APPEAL NUMBER:

NA

90

of

2010

DATE DELIVERED:	1 June 2012

PLACE DELIVERED:

Canberra

PLACE HEARD:

Brisbane

JUDGMENT OF:

Finn, Strickland & Austin JJ

HEARING DATE:

12 August 2011

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

22 June 2010

LOWER COURT MNC:

[2010] FamCA 504

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Galloway

SOLICITOR FOR THE APPELLANT:

Peter J Sheehy Solicitors

SOLICITOR FOR THE 1ST RESPONDENT:

Mr Grefeld in person

COUNSEL FOR THE 2ND RESPONDENT:

Mr McGregor

SOLICITOR FOR THE 2ND RESPONDENT:

Jones McCarthy Lawyers

ORDERS

(1) The appeal against the orders made by the Honourable Justice Barry on 22 June 2010 is dismissed.

(2) The wife is granted an extension of time until 12 August 2011 to file a notice of appeal against the orders with respect to costs made by the Honourable Justice Barry on 22 June 2011 (“the costs orders”) and she is permitted to rely on the Further Amended Notice of Appeal filed in Court on 12 August 2011 as her Notice of Appeal against the costs orders.

(3) All other parties have 28 days from the date of the making of these orders to file any notice of appeal or cross appeal against the costs orders.

(4) As soon as mutually convenient after the expiration of 30 days from the date of the making of these orders, the Appeal Registrar shall conduct a procedural hearing for the purpose of ensuring that all necessary papers for the determination of the appeal or appeals (and any cross appeal) against the costs orders are available to all parties and to the Court.

(5) At the procedural hearing the Appeal Registrar shall direct a timetable for the filing of:

1. written submissions in support of any appeal, appeals (or cross-appeal) against the costs orders and for any submissions in response; and
2. written submissions in support of any application for costs in relation to the unsuccessful appeal against Orders 1, 2 and 3 of the orders made by the Honourable Justice Barry on 22 June 2010, (with such application to be included in the written submissions) and for any submissions in response.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Grefeld & Grefeld and Anor has been approved by the Chief Justice pursuant to
s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 90 of 2010
File Number: BRF 2504 of 2005

Ms H Grefeld

Appellant

And

Mr Grefeld

First Respondent

And

Ms J Grefeld

Second Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. This appeal relates to the adjudication at trial of a claim in equity brought by the second respondent (“the sister”), which claim was heard and determined byBarry J within the Court’s accrued jurisdiction appurtenant to pending property settlement proceedings under the Family Law Act 1975 (Cth) (“the Family Law Act”) between the appellant wife (“the wife”) and first respondent husband (“the husband”). “The sister” is the sister of the husband.
2. The trial judge found and declared that the wife held a parcel of real property on trust for the sister, and ordered the wife to convey the property to the sister so as to ensure the sister held both legal and equitable interest in the property.
3. The trial judge also made property settlement orders between the wife and the husband by consent under the Family Law Act.
4. The wife appeals against the orders determining the claim in equity.
5. The husband did not appeal against any of the trial judge’s orders. Nonetheless he filed comprehensive written submissions about the outcome of the appeal, from which it was quite plain he continued to support the wife’s appeal against the orders of the trial judge.
6. The husband was self-represented on the appeal, as he was at the trial. He made numerous written and oral submissions to the effect that the trial judge erred in certain ways, but in the absence of an appeal by him it is unnecessary to consider any of the husband’s submissions which go beyond the grounds of appeal contended by the wife.

BACKGROUND

7. The wife and the husband married in 1980 and finally separated in 2002 or 2003. There is dispute about the separation date but it is immaterial
   (Reasons 5).
8. The husband is the eldest of five siblings, all of whom are adult (Reasons 2).
9. The sister is the youngest of those siblings (Reasons 3).
10. In 1983 the sister granted a power of attorney to the husband in Germany
    (“the power of attorney”) (Reasons 31). The husband also held powers of attorney for his mother and his other three sisters (Reasons 2).
11. In 1984 the husband used funds provided to him by his mother to purchase and become the sole registered proprietor of a parcel of real property described as
    Property A (Reasons 4). In 2004 the husband transferred his title in that property to the sister (Reasons 6).
12. In 1996, in reliance upon the power of attorney, but without the sister’s knowledge (Reasons 69), the husband withdrew funds from the sister’s German bank account and used those funds to purchase a parcel of real property described as Property B (Reasons 34).
13. The contract to purchase Property B was in the wife’s sole name as purchaser, but the contract was executed by the husband on behalf of the wife. Once the funds (from the sister’s account) were paid by the husband to the vendor to complete the contract, title was registered in the sole name of the wife.
14. Property settlement proceedings under the Family Law Act were commenced by the wife against the husband in September 2005 (Reasons 39).
15. At that time, the wife lived in Property B, the sister lived in Property A, and the husband lived in Germany.
16. Dispute arose in the property settlement proceedings about the identity of assets available for division between the husband and the wife.
17. In September 2006 the wife joined the sister to the pending family law proceedings, and sought an order that the sister transfer Property A to her (Reasons 42). This claim was later abandoned (Reasons 3, 13).
18. Once joined to the proceedings, the sister filed a Response seeking the transfer of Property B to her. Having recently learned of the circumstances in which it had been acquired, the sister alleged the wife held that property on trust for her (Reasons 42, 69). The wife denied this claim.
19. During the proceedings the parties were directed to file pleadings in relation to the claim in equity. The sister filed a Statement of Claim in December 2008, in response to which the wife filed a Defence and later an
    Amended Defence in June 2010.
20. The husband did not file any pleading, but his position was still clear from his case outline document and his evidence. He opposed the sister’s claim and supported the wife’s contention that Property B was an asset in which the wife should enjoy both the legal and the equitable interest pursuant to the agreement reached between them in the property settlement proceedings (Reasons 15-16).
21. The husband alleged that, under the imprimatur of the power of attorney, he quite properly borrowed from the sister the funds needed to purchase
    Property B. That transaction, he contended, gave rise only to an action in debt against him at the suit of the sister. However, the husband further alleged he had subsequently repaid monies to the sister to discharge the debt he owed her (Reasons 28, 36).
22. At the time of trial, given the husband and the wife had resolved their
    property settlement dispute (Reasons 14), the Court was only called upon to determine the claim in equity made by the sister against the wife (Reasons 17).
23. The trial proceeded on 1 to 3 June 2010 and the trial judge made the orders now appealed and delivered his reasons for judgment on 22 June 2010.

THE CLAIM IN EQUITY

24. The ambit of the equity claim was necessarily apparent from the pleadings, which his Honour recited in full in the judgment (Reasons 21-24). The sister pleaded that the wife held Property B for her upon either a resulting trust or a constructive trust, which was the subject of express denial by the wife.
25. The pleadings and evidence revealed that there were many facts and circumstances which were uncontroversial at trial and which are as follows.
26. The wife was the sole registered proprietor of Property B.
27. The wife’s acquisition of title in Property B was orchestrated by the husband on her behalf. He instructed the solicitors to act on the purchase and he signed the contract of purchase for the wife.
28. The funds used to acquire Property B were provided in totality from the sister’s German bank account.
29. The funds for the purchase were withdrawn from the sister’s account by the husband in reliance upon the power of attorney.
30. The terms of the power of attorney properly entitled the husband to make that withdrawal.
31. Once withdrawn, at the husband’s direction, the funds were channelled directly to the Australian solicitors acting upon the purchase of Property B who then used the funds to complete the purchase.
32. Until about 2006, the sister was ignorant of both the husband’s withdrawal from her account and the use to which her funds were put.
33. The wife was ignorant of the true source of the funds used for the purchase of Property B. She believed the husband used funds received by him in the form of proceeds of an earlier insurance claim.
34. The pivotal issues in the case formulated by the parties, therefore, were:
    1. Whether the sister:

i) Merely acquired a personal action in debt against the husband by reason of him borrowing the funds from her and expending those funds at his discretion; or

ii) Subject to sub-paragraph (b) acquired an equitable interest in Property B by reason of the use of her funds for the express purpose of acquiring legal title in that property in the name of the wife; and

2. If the latter, whether the creation of a trust in favour of the sister was precluded by reason of the wife’s ignorance of the origin of the funds used for the purchase, as opposed to the husband, who was knowingly responsible for the use of the funds for that purpose.

35. The potential issue of the sister’s alleged indebtedness to the husband disappeared. The husband’s assertion that he had more than repaid his alleged loan to the sister, thereby warranting her repayment of monies to him, was struck out because it was not supported by any pleading and it was more appropriately dealt with in the German jurisdiction (Reasons 29, 36).
    The husband filed no appeal or cross appeal and must be taken to accept the validity of that decision. An identical claim of repayment due by the sister to the husband was made by the wife in her Amended Defence, but was withdrawn (Reasons 24).

THE REASONS FOR JUDGMENT OF THE TRIAL JUDGE

36. Albeit at the conclusion of his reasons, the trial judge recorded that the exercise of accrued jurisdiction was not the subject of objection by any party.
    As his Honour noted, it was necessary to exercise accrued jurisdiction to entertain the equity claim in order to determine whether or not Property B was matrimonial property and therefore amenable to distribution in the
    matrimonial cause between the spouses (Reasons 128-129).
37. The trial judge plainly understood the issue which required determination.
    He succinctly described it as:
    17. ...a civil claim between [the sister] as Plaintiff and [the wife] as Defendant for the transfer of the [Property B] property.
38. Although the parties relied upon a panoply of affidavits from various witnesses (Reasons 18-20), only the husband and the sister were cross examined at trial (Reasons 30). Neither the wife nor other family members were cross examined on their evidence (Reasons 12). Nonetheless, because of the conflicting evidence, credibility was a salient issue in the determination of the litigation (Reasons 88).
39. His Honour found the sister to be a “consistently honest witness”
    (Reasons 12, 90), but conversely found the husband unreliable, “primarily due to significant inconsistencies in his sworn testimony relating to important issues” (Reasons 52, 89). The inconsistencies in the husband’s evidence and approach to the case were laid bare by his Honour in the reasons
    (Reasons 44-58). No aspect of the wife’s appeal challenged the legitimacy of the trial judge’s findings about the respective credit of the husband and the sister.
40. The trial judge accurately recounted the case presented by the husband (Reasons 93-94), who was actively supported by the wife (Reasons 118).
    His Honour was aware the husband asserted that he had acted as the
    sister’s agent under the power of attorney to lend money, on the sister’s behalf as creditor, to himself as debtor, which money he intended to repay with interest as an ordinary commercial loan. His Honour was cognisant of the husband’s assertion that the mere loan of the money by the sister to him did not create a trust and invest the sister with proprietary rights in Property B. The husband’s further submission was that his intention alone determined the character of the transaction of funds between them, as the sister was not privy to his intention at that time.
41. The wife knew nothing about the circumstances in which the purchase of Property B was funded either. She believed the husband used funds of his own, derived from an insurance claim, to purchase the property. Consequently, the wife’s defence to the sister’s claim in equity heavily depended upon the evidence given by the husband, who had direct knowledge of the circumstances.
42. Before the Court were incontrovertible facts proving the flow of money from the sister’s bank account, directly through the hands of the husband and the solicitors he engaged to the vendor of Property B, in consideration for which title to the property was conveyed to the wife. As would be apparent, such facts were consistent with, and certainly did not preclude, the creation of a trust.
43. Conversely, the trial judge could identify no characteristic that would permit the transfer of money from the sister’s bank account to the husband to be construed as a loan (Reasons 95, 99, 117). The only available evidence that the transaction, under which money was taken by the husband from the
    sister’s account without her knowledge, was a loan by her to him was the husband’s bare assertion that it was such. The husband’s uncorroborated opinion about the legal characterisation of a transaction was apt to carry little weight, particularly when the trial judge found him an unsatisfactory witness.
44. The trial judge found the husband “used the monies he received pursuant to the power of attorney as if the money was his own and with no record of proper accounting” to the sister (Reasons 92, 99).
45. His Honour found the power of attorney created a fiduciary relationship between the sister and husband within this country (Reasons 102), which precluded the husband from acting in conflict with the sister’s interests or from profiting from her resources without her informed knowledge and assent (Reasons 104-105). His Honour concluded the husband breached his
    fiduciary duty to the sister by not informing her about the withdrawal of money from her account, either in the form of a loan or otherwise (Reasons 107-108). The husband’s argument that a breach of fiduciary duty was not expressly pleaded by the sister was not considered fatal by his Honour, because the
    wife’s pleading and the evidence expressly raised the probity of the
    husband’s conduct (Reasons 113-115).
46. His Honour found that the transaction between the husband and the sister was not “a case of arm’s length borrowing” and the husband’s conduct was “unconscionable”. His Honour then concluded that where Property B had been purchased entirely with the funds of the sister “the only appropriate remedy is a declaration that the property is held on trust for her” (Reasons 117-121).
47. Although the trial judge considered the species of the trust to be “somewhat academic” (Reasons 125), it is clear that his Honour was well aware of the distinction between resulting and constructive trusts. His Honour knew that the sister pleaded the existence of a resulting trust, and a constructive trust in the alternative (Reasons 21). His Honour also expressly considered the law distinguishing such trusts (Reasons 122-123).
48. His Honour found, first, the trust existed because Property B was “acquired entirely” with funds of the sister (Reasons 121), which finding,
    his Honour observed, is consistent with a resulting trust, even though no express finding to that effect was made (Reasons 127). His Honour instead found that the trust was a constructive trust (Reasons 126), because Property B was acquired with the sister’s money in circumstances involving breach of fiduciary duty (Reasons 130).
49. Pursuant to those findings the trial judge declared that the wife held title in Property B on trust for the sister (Order 1) and ordered the wife to forthwith transfer her title in the property to the sister (Order 2), in default of which the Registrar could execute documents on behalf of the wife (Order 3). These are the orders which are subject of this appeal.

GROUNDS OF APPEAL

50. At the commencement of the hearing of the appeal we gave leave, with the consent of the respondents, to the wife to further amend the grounds of appeal, primarily to introduce an appeal against orders for costs made by the trial judge on 22 June 2011, but also to amend Ground 1 of the initial grounds of appeal.
51. Although the appeal against the costs orders was out of time, the other parties took no issue about the expiration of the time prescribed for filing a
    Notice of Appeal. Ground 10 of the wife’s grounds of appeal is directed to the costs order and as will later be explained will be considered by us at a later time.
52. At the hearing of the appeal Ground 3 of the grounds of appeal was abandoned. The remaining eight grounds of appeal which were then pursued before us will be set out or otherwise explained where necessary in the discussion which follows.
53. The orders now sought in relation to the appeal are that Orders 1, 2 and 3 made on 22 June 2010 be set aside and the sister pay the wife’s costs of the appeal.

Ground 1

54. Ground 1 asserted that the trial judge erred in fact in finding that the sister had provided all of the purchase price of the Property B, in that the husband paid the deposit from his own funds and borrowed from the sister the balance of the purchase price.
55. The wife contended that not all of the funds used to purchase Property B were provided by the sister, it being suggested that the deposit of $15,000 was provided by the husband from his own resources. However, this proposition could not be sustained on the state of the pleadings and evidence, and Counsel forthe wife ultimately accepted this.
56. Thus, this ground of appeal must fail.

Ground 2

57. Ground 2 asserted in effect that the trial judge’s finding that the transaction between the husband and the sister could not be characterised as a loan was both “against” and “contrary” to the evidence.
58. In support of this ground the wife contended the trial judge was bound to find the removal of funds by the husband from the sister’s account was a loan merely because, first, the terms of the power of attorney permitted such a loan, and secondly, “money was [then] had” by the husband.
59. The term in the power of attorney which was claimed by the wife to permit a loan was as follows:

The powers of attorney are authorised to negotiate transactions in my name with themselves in their own name or as a representative of others.

60. We do not accept such an appraisal of the evidence or the law. The mere fact that a loan to the husband was possible under the power of attorney did not, without more, require or even permit the fact to metamorphose into a probability.
61. It was common ground that the power of attorney permitted the husband to act as the sister’s agent to lend the sister’s money to himself, but there was no objective evidence to characterise the transaction that occurred in February 1996 as a loan. Just because the husband asserted in evidence in these proceedings many years later that his subjective intention at the time was to borrow the funds from the sister, the trial judge was not bound to accept the veracity of the husband’s evidence. Indeed, the trial judge found the
    husband’s evidence contained “numerous inconsistencies” and was unreliable.
62. The trial judge expressly searched the evidence for corroboration of the husband’s characterisation of the transaction as a loan and found none. There were not any of the orthodox characteristics of a genuine commercial loan, such as agreement about the loan term, frequency or quantum of repayments, or interest rate.
63. Counsel for the wife submitted in effect that his Honour erred because it was open to him to find that the transaction was a loan. However, such an argument misconstrues the task of an appellate court. The test is not whether an alternative outcome was open, but rather whether the outcome found was not open. Here, it was beyond doubt that the finding that the transaction was not a loan was open to his Honour. Thus there is no merit in this ground of appeal.

Ground 4

64. By Ground 4 the wife asserted that the trial judge could not have found the existence of a fiduciary relationship between the husband and his sister.
65. It is not entirely clear, but it seems that the primary basis for this assertion is that the power of attorney was a German instrument, that it had been executed in Germany at a time when the husband and the sister were both in that country, that it related to “German funds and German assets”, and when the power was exercised by the husband the money was withdrawn from a German bank account. Thus, it is said, given there was no evidence of the effect of this document in German law it was not open to the trial judge to apply Australian law to it and to the relationship between the husband and his sister.
66. We do not accept this submission. Not only was foreign law not pleaded but there was no expert evidence presented as to what the foreign law provided.
    It is well settled that if a party wants to rely on foreign law it has to be pleaded with full particulars (Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491, 515-520), and that was not done here. Further, the onus of proving that the foreign law is different from the lex fori rests on the party alleging that, in this case the wife, and in the absence of satisfactory proof of foreign law the lex fori will be applied (Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331, at [125]). Indeed, in those circumstances it is also presumed that the foreign law is the same as the
    lex fori.
67. On that basis, applying the law of Australia, the relationship created by the power of attorney was one of agency, and that is ordinarily a fiduciary one
    (see Hospital Products Ltd v United States Surgical Corp & Ors [1984] HCA 64; (1984) 156 CLR 41 at 68, 96, 141) in which the agent is not permitted to put his interest in conflict with the principal’s, nor to act for different principals with conflicting interests, nor to profit from the agency, at least without full disclosure to the principal (see Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; (1958) 100 CLR 342 at 350; Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; (1975) 132 CLR 373 at 377, 392-394; Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 at 198-199;Hospital Products v United States Surgical at 67).
68. No matter how broadly the terms of the power of attorney were drawn, its terms did not authorise the husband to act contrary to those legal principles.
    In circumstances where the husband conceded using the sister’s money, without her knowledge or consent, to acquire real property for the mutual benefit of the husband and wife, the existence and breach of the husband’s fiduciary duty to the sister were patent.
69. Thus there is no merit in this ground of appeal.

Ground 5 to 9

70. The remaining grounds of appeal were argued compendiously by the wife and it is convenient to address them similarly. They are to the following effect:
    • That the trial judge erred in failing to find, as a matter of law, that the Appellant’s title to Property B, was indefeasible (Ground 5).
    • That the trial judge ought to have determined that the sister failed to advance any case sufficient to impeach the wife’s title (Ground 6).
    • That the trial judge has given no reasons for failing to uphold the wife’s title in that he:
      1. Had before him uncontested evidence concerning the wife’s acquisition of her title; and
      2. Ought to have sought submissions or alternatively further submissions, on the sufficiency of the claim of the sister to dislodge the wife’s title (Ground 7).
    • That the trial judge erred in law in failing to have any regard to the provisions relating to the indefeasibility of the wife’s title for the subject property afforded to her by the provisions of s 184 of the Land Title Act 1994 (Qld) and failed to have any regard for the insufficiency of the case made by the sister that the wife’s title should not be indefeasible
      (Ground 8).
    • That the trial judge erred in misunderstanding the nature of a resulting or constructive trust and, in this case, erred in failing to understand that the obligations of any trust attached, if at all, to the husband, not to the property itself, nor to the registered proprietor, the wife (Ground 9).
71. The wife’s arguments were somewhat circuitous, but we perceive her submissions can be encapsulated within the following propositions: she was an innocent recipient of title in Property B, untainted by knowledge about the sister being the source of the funds to enable its purchase, and thereby acquired indefeasible title in Property B under the provisions of the Land Title Act 1994 (Qld), which could not be disturbed by any equitable interest of the sister arising by way of a resulting or constructive trust.
72. In responding to the wife’s arguments the sister relied, amongst other matters, on the proposition that the wife acquired legal title in Property B entirely through the agency of the husband. He negotiated the purchase with the vendor, he instructed the solicitors to act on the purchase, he executed the contract on behalf of the wife, and he made all of the arrangements for use of the sister’s funds to pay for the purchase. The wife only knew the husband was arranging the acquisition of the property in her name, and approved of him so doing. The husband therefore had the wife’s authority to act as necessary in order to purchase Property B for her.
73. The wife submitted, correctly it seems, that the issue of the husband’s agency for the wife in the acquisition of Property B was not the subject of direct argument before the trial judge. However, the question of the agency relationship between the husband and wife is an issue of law, and the facts pertaining to that issue were before the trial judge and were unchallenged. Accordingly, the wife conceded, again correctly in our view, that the issue of agency could be properly agitated on the appeal. It was not an issue of fact about which contrary evidence could have been raised at first instance so as to now give rise to prejudice on the appeal (see Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 438; Metwally v University of Wollongong (1985) 60 ALR 68 at 71; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7; Marriage of Davidson (1994) 17 Fam LR 656 at 669).
74. No formality is needed to establish an agency relationship. If the facts fairly disclose that one party is acting for another by the other’s authority, the agency exists. The creation of agency does not depend upon the principal’s conscious intention to confer authority upon the agent (see Field v Shoalhaven Transport Pty Ltd [1970] 3 NSWR 96 at 103; Equiticorp Finance Ltd (in liq) v Bank of NZ (1993) 32 NSWLR 50 at 132-134; Picwoods Pty Ltd v Panagopoulos[2004] NSWSC 978 at [81-82]; Poulet Frais v Silver Fox [2005] FCAFC 131; (2005) 220 ALR 211 at 236).
75. Application of those principles to the facts leaves little or no room for argument about the husband’s status as an agent, for the wife as principal, at the time he acquired title for her in Property B.
76. A principal is bound by the acts of an agent done within the scope of the agent’s actual or ostensible authority. As against a third party, the law imputes to a principal knowledge gained by his/her agent in the course of, and which is material to, a transaction in which the agent is employed on behalf of the principal, under such circumstances that it is the duty of the agent to communicate it to the principal. The principal is precluded from relying upon personal ignorance of that knowledge (see Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 at 658-659; Watts, P. G and Reynolds, F. M. B, Bowstead & Reynolds on Agency, (2010, 19th ed), Sweet & Maxwell, London, paras 8-207(1), 8-207(2)).
77. Accordingly, although the wife was ignorant of the use of the sister’s money, the husband’s knowledge of that material fact is imputed to the wife by reason of the husband acting as her agent.
78. The wife’s argument – also apparently raised for the first time on appeal – about the indefeasibility of her title in Property B proceeded from the provisions ofs 184 and s 185 of the Land Title Act 1994 (Qld), which relevantly provide as follows:
    184. Quality of registered interests
         • (1) A registered proprietor of an interest in a lot holds the interest subject to registered interests affecting the lot but free from all other interests.
         • (2) ...
         • (3) However, subsections (1) and (2) do not apply:
           • (a) to an interest mentioned in s 185; or...
    185. Exceptions to s 184
         • (1) A registered proprietor of a lot does not obtain the benefit of section 184 for the following interests in relation to the lot –
           • (a) an equity arising from the act of the registered proprietor;
79. For the purposes of that legislation, the “lot” was Property B and the wife was the sole registered proprietor of it. She thereby enjoyed an indefeasible title to the property.
80. The indefeasibility provisions of the Land Title Act 1994 (Qld), as with other State legislation dealing with land under Torrens title, confer upon registered proprietors of land indefeasibility of title in such land, affording them protection against unregistered interests in the land. However, such legislation does not deny the right of a plaintiff to bring against a registered proprietor a claim in personam founded in law or in equity that may sound in relief affecting the registered proprietor’s title (see Frazer v Walker [1967] 1 AC 569 at 585; Breskvar v Wall [1971] HCA 70; (1971) 126 CLR 376 at 384-385, 400;Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137; Bahr v Nicolay [No.2] [1988] HCA 16; (1988) 164 CLR 604 at 613, 638, 653-654;Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at 169-171).
81. Some State legislation expressly recognises such a right, as is the case with
    s 185(1)(a) of the Land Title Act 1994 (Qld). But as the sister submitted,
    s 185(1)(a) does no more than state the pre-existing law (see Tara Shire Council v Garner [2002] QCA 232; [2003] 1 Qd R 556 at 564, 572).
82. The wife submitted that the indefeasibility of her title in Property B, conferred by s 184 of the Land Title Act 1994 (Qld), precluded the creation of an equitable interest in the property in favour of the sister by way of a trust, otherwise than through “the narrow portal” of s 185.
83. Section 185(1)(a) of the Land Title Act 1994 (Qld) expressly subjected the indefeasibility of the wife’s title to any equity arising from an act of the wife. The acts of the husband, which the trial judge found did give rise to an equity in the sister’s favour, were the acts of the wife because of the agency relationship between them. Consequently, the Land Title Act 1994 (Qld) affords the wife no protection.
84. The wife also sought to argue that her title to Property B was impregnable on the basis of principles developed or explained by the High Court in Farah Constructions, but this argument is ill-founded.
85. Farah Constructions was concerned with the indefeasibility of title enjoyed by registered proprietors of land, whose acquisition of title in the land had been facilitated by Farah Constructions Pty Ltd (“Farah”) using information about the land which Say-Dee Pty Ltd (“Say-Dee”) argued ought have been confidentially shared with it. Farah owed a fiduciary duty to Say-Dee, and
    Say-Dee submitted Farah had breached that duty in failing to disclose that information to it and instead sharing it with the registered proprietors, some of whom were alter egos of Farah and some of whom were not, and that caused the registered proprietors to hold the land upon constructive trust for it. The High Court held that, although Farah owed a fiduciary duty to Say-Dee, there was no breach of the duty because there was satisfactory disclosure to Say-Dee and no relevant provision of confidential information to the registered proprietors. Accordingly, the registered proprietors’ indefeasible title in the land was undisturbed by any constructive trust.
86. The wife sought to equate herself with the registered proprietors, the husband with Farah, and the sister with Say-Dee. However, the situation in
    Farah Constructions was materially different from the case at bar for several reasons.
87. In Farah Constructions the constructive trusts were contended to arise from the registered proprietors’ use of Farah’s knowledge that should have been confidentially imparted to Say-Dee, the failure to do so being allegedly unconscionable. That argument failed. Here, the constructive trust was contended by the sister to arise quite differently, namely from the secretive use of her money by the husband in breach of his fiduciary duty to her not to profit, or derive profit for another principal with conflicting interest, through exploitation of his agency for her without her informed consent.
88. Persons who receive trust property become chargeable if it is established they received it with notice of the trust (see Farah Constructions at 141). That is so whether the knowledge is actual or imputed. The registered proprietors in Farah Constructions retained indefeasible title in their land because the allegedly confidential information, of which they were found ignorant, could not be traced into the land they acquired. The land was not therefore the traceable proceeds of trust property (see Farah Constructions at 144). Importantly, it was neither proven nor found that Farah or its alter ego entities acted as agents for those innocent registered proprietors (see
    Farah Constructions at 147). In this case, however, the husband clearly did act as the agent of the wife in her acquisition of Property B and the sister’s funds could be traced directly into that property.
89. Finally, Farah Constructions said nothing about resulting trusts. We do not accept the wife’s submissions that Farah Constructions should be so broadly construed as to cover and restrict creation of any equitable interest, howsoever arising.
90. So it was in this case that the sister was obliged to establish her case against the wife, proving a trust arose in her favour, creating an equitable interest in Property B. The sister sought to prove the existence of either a resulting or constructive trust, and the trial judge found that the sister established her case.Farah Constructions does not prevent that finding.
91. We turn then to consider the elements of the trusts pleaded by the sister.
92. A resulting trust arises where some party other than the legal proprietor of property provides a portion or the whole of the purchase price of that property. A trust is presumed in favour of the party providing the whole or part of the purchase price and the equitable interest, which is held on trust for that party by the proprietor of the legal interest, is proportionate to the financial contribution (see Allen v Snyder [1977] 2 NSWLR 685 at 689-690; Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 246). Of course, if the totality of the purchase price is provided by a party then the whole of the property is held on trust for that party by the proprietor of the legal interest.
93. It is as well to mention that the countervailing presumption of advancement did not apply in the circumstances of this case, and indeed no party suggested it did (see Martin v Martin [1959] HCA 62; (1959) 110 CLR 297 particularly at 303-305; 
    Allen v Snyder at 690; Calverley v Green at 268-269; Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 590).
94. To imply such a trust the Court looks to the intention of the parties, inferred as a matter of fact from their conduct and representations, but the implication of the trust will yield to the actual intention of the parties (see Allen v Snyder at 690, 691, 698).
95. The evidence disclosed that the sister had no actual intention. She was ignorant of the transaction and the use of her money. Nor did the wife have any relevant actual intention. She knew Property B was being purchased by the husband for her, but was ignorant of the true source of the funds. As for the husband, there is no doubt he actually intended to use money withdrawn from the sister’s bank account to fund the purchase. Although the husband contended his intention was to borrow the money from the sister and apply those funds at his discretion towards the purchase, the trial judge found his credibility wanting and did not accept his evidence that such was his intention.
96. The husband admitted that he contracted to purchase Property B on behalf of the wife. The contract was due for completion on 28 February 1996 and the husband deposed that he arranged to withdraw money from the sister’s account a week before that date in order to ensure completion of the purchase.
    The sister’s funds comprised the entirety of the purchase price and those funds were withdrawn by the husband from the sister’s account for the express purpose of funding the acquisition of Property B. In the face of the trial judge’s finding that the withdrawal from the account was not properly characterised as a loan, the finding of a resulting trust was well open. The factual circumstances surrounding the husband’s conduct rationally permitted an inference that the property was acquired on trust for the sister. The sister provided the funds for the purchase, through the husband acting as her agent, and the wife acquired legal title in the property, through the husband acting as her agent.
97. A constructive trust differs from a resulting trust in that it is created by operation of law without reference to the parties’ intentions. The inquiry is not as to the actual or presumed intention of the parties but rather as to whether, according to principles of equity, it would be unconscionable to allow a legal owner of property to enjoy sole beneficial ownership of that property
    (see Muschinski v Doods at 614-617, 620-621; Baumgartner v Baumgartner at 148-150).
98. His Honour concluded in the circumstances of this case that the husband breached his fiduciary duty to the sister by the manner in which he resorted to use of the sister’s money, which conduct was unconscionable (Reasons 117), and found such conduct formed a basis for a constructive trust (Reasons 126).
99. The wife conceded the trial judge’s findings about the husband’s conduct could well have formed the basis of a constructive trust pursuant to which the husband held Property B on trust for the sister, provided he was the
    legal proprietor of it. However, it was contended the wife’s legal proprietorship of the property changed the complexion of the case, in that the wife was removed from the husband’s unconscionable conduct and was not therefore caught by any such trust because “she did not receive trust monies”.
100. The answer to that submission is that the husband used the funds he acquired from the sister in his capacity as agent for the wife as principal. When an agent acts, even beyond the scope of actual or ostensible authority, by obtaining money or property of a third party, in this case the sister, and the money or property is received or applied for the benefit of the principal, in this case the wife, the principal becomes liable to the extent of the benefit received (see Bowstead & Reynolds on Agency, paras 8-201, 8-203(1), 8-203(2); Halsbury’s Laws of Australia, Vol 1(2), Butterworths, para 15-260).
101. The facts as found by the trial judge permitted the imposition of a constructive trust.
102. Nevertheless, there was little or no practical difference in this case between the imposition of a resulting or a constructive trust. That is because, in either case, the trust provided the sister with an equitable proprietary interest in
     Property B.
103. In our view, no error of law is demonstrated and the conclusions reached by the trial judge were open on the evidence.

CONCLUSION

104. Given we have found no merit in any of the grounds of appeal, the wife’s appeal against the orders made by the trial judge in respect of the equity suit must fail.
105. During the hearing of the appeal it emerged that on 22 June 2011, the
     trial judge had made orders in relation to the costs of the proceedings before him and that the appellant wife, and possibly also the husband, wished to appeal those orders. The wife’s desire to appeal the costs orders was apparent from Ground 10 and Order 3 of the Orders Sought in her Further Amended Notice of Appeal, on which she was permitted to reply at the hearing before us. As mentioned earlier no issue was taken that such an appeal might be out of time by some weeks. We therefore indicated that in this judgment we would make the usual directions for written submissions to be filed in relation to any appeal that might be pursued against the trial judge’s orders in relation to costs and also with respect to the costs of the appeal which we have determined by this judgment. Before such submissions are filed, it will be necessary for the Appeal Registrar to conduct a procedural hearing in order to ensure that all necessary papers (including any relevant transcript) are available to this Court in addition to the written submissions to enable it to determine the appeal or appeals. Our orders will so provide.

I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 
1 June 2012.

Associate:

Date: 1 June 2012