Drummond v Davidson and Drummond v National Trade & Finance Co Pty Ltd as trustee for the Monaghan Property Trust [2024] QSC 187

SUPREME COURT OF QUEENSLAND CITATION: Drummond v Davidson and Drummond v National Trade & Finance Co Pty Ltd as trustee for the Monaghan Property Trust [2024] QSC 187 PARTIES: DAMON LESLIE DRUMMOND (plaintiff) v LEONA GAYE DAVIDSON AS EXECUTOR OF THE ESTATE OF LESLIE HARROLD DRUMMOND (DECEASED) (defendant) BS3249/24 and DAMON LESLIE DRUMMOND (plaintiff) v NATIONAL TRADE & FINANCE CO PTY LTD (ACN 007 936 638) AS TRUSTEE FOR THE MONAGHAN PROPERTY TRUST (defendant) BS5166/24 FILE NO/S: BS 3249 of 2024 and BS 5166 of 2024 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland at Brisbane DELIVERED ON: 28 August 2024 DELIVERED AT: Brisbane HEARING DATE: 15 August 2024 JUDGE: Treston J ORDER: 1. The application for a permanent stay in each proceeding is dismissed. 2. I will hear the parties as to costs. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – where the -- 1 of 11 -- 2 plaintiff commenced a proceeding against the executor of his father’s estate seeking a declaration that the estate held an interest in a property on trust for the plaintiff – where the plaintiff also commenced a proceeding against the trustee of a family trust that the trust held the proceeds of sale of a property on trust for him - where the plaintiff became the registered owner of the properties between 1994 and 1997 – where the plaintiff claims that he made an oral agreement to transfer these properties to his parents and his brother-in-law on the basis that ownership of the properties would be transferred back to the plaintiff on his request – where ownership of the properties was thereafter transferred to the plaintiff’s parents and the family trust – where the plaintiff’s parents and brother-in-law are now deceased – where the defendants apply for a permanent stay of the proceedings – where the defendant submits that the proceedings are oppressive and unfair because of the lapse of time since the apparent formation of the oral agreement, the lack of documentary records still available, and because all witnesses of the apparent oral agreement are now deceased – whether those matters ought to be fully ventilated as equitable defences at trial – whether the proceedings ought to be permanently stayed on the basis of equitable defences that would ordinarily be raised at trial Briginshaw v Briginshaw (1938) 60 CLR 336, cited GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 414 ALR 635, cited Lindsay Petroleum Company v Hurd, Farwell & Kemp (1874) LR5PC 221, cited Merker & Ors v Merker & Anor [2023] QCA 33, cited Merker & Ors v Merker & Anor [2021] QSC 285, cited Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218, cited Neylon v Dickens [1987] 1 NZLR 402, cited Orr v Ford (1989) 167 CLR 316, cited R v Dunwoody [2004] QCA 413, cited Willmot v State of Queensland [2023] HCA Trans 155 (9 November 2023), cited Willmot v State of Queensland [2023] QCA 102, cited Willmot v State of Queensland [2022] QSC 167, cited COUNSEL: S Trewavas for the applicant/defendant N Shaw for the respondent/plaintiff SOLICITORS: OMB Solicitors for the applicant/defendant Rose Litigation Lawyers for the respondent/plaintiff -- 2 of 11 -- [1] On 14 March 2024, the plaintiff, Damon Drummond (Damon), commenced a proceeding against the executor of his father’s estate seeking a declaration that the estate held an interest in a property at 5/27 Duet Drive, Mermaid Waters (27 Duet) on trust for Damon to the extent of Damon’s equitable interest in that property. On 24 April 2024, Damon commenced a further proceeding against National Trade & Finance Co Pty Ltd (as trustee for the Monaghan Property Trust) (NTF Co) seeking a declaration that NTF Co holds the proceeds of sale of a property described as 5/29 Duet Drive, Mermaid Waters (29 Duet) on trust for Damon. [2] The defendants in both proceedings apply for a permanent stay of the proceedings. [3] Orders were made that the matters be heard together, and the evidence in one be the evidence in both. [4] I refer to the parties throughout by their first names without intending any disrespect to any of them. Background to both proceedings [5] Leslie and Raelene Drummond were the parents of three children, Damon, and his sisters Leona Davidson and Petrea Stokes. [6] Leona was previously married to John Monaghan. Up until John’s death in October 2008, he was the director and authorised agent of NTF Co as trustee for the Monaghan Property Trust. After his death, Leona assumed the role as the director and authorised agent of NTF Co. [7] On 20 September 1994, Damon became the registered owner, as tenants-in-common with his mother Raelene, of an apartment at 27 Duet. On 21 January 1997, Damon became the registered owner of the apartment at 29 Duet. [8] In 1997, Damon was residing in Hong Kong and was employed at a university there. He became a party to a defamation proceeding in Hong Kong commenced by another employee of the university. Because of those proceedings, Damon alleges that he formed a view there was a risk of an adverse monetary judgment against him at some time in the future. [9] According to the statement of claim in the estate proceedings, in or about March 2000 Damon had a telephone conversation with his parents, which conversation he alleges proceeded along the following lines: (a) Damon told his parents about the Hong Kong proceedings and the view he had formed of the risk of an adverse monetary judgment at some time in the future; (b) Damon said he wanted to ensure that he did not have property easily discoverable in his name in Australia and that he wished to provide financial support for his parents by allowing them to receive rental income from 27 Duet; (c) Damon said he would like to put in place an arrangement whereby: -- 3 of 11 -- 4 (i) he would transfer his interest in 27 Duet to his father without requiring any payment from his father; (ii) the loan secured by a mortgage which was presently in Damon’s name would be transferred to his father; (iii) 27 Duet would remain Damon’s property and his father would need to return it to Damon’s name when Damon requested him to do so; (iv) the cost and expense of the transfer, and the ongoing expenses in respect of the property including mortgage payments, would be paid for by the rental income; and (v) any remaining rental income would be kept by Leslie and Raelene for so long as the property was held in their names. [10] Damon alleges that both Leslie and Raelene said that they were agreeable to this arrangement and that Leslie would make all necessary arrangements for the transfer of the property since Damon was residing overseas. This was said to be the oral agreement which Damon reached with his parents in respect of 27 Duet. [11] Between March and July 2000, Damon alleges that Leslie and Raelene instructed solicitors at Greg Comben & Associates to make the necessary arrangements to carry out the oral agreement. Further, it is alleged that they engaged an accountant, Ron Goudie, to assist with carrying out the agreement. They subsequently withdrew the instructions from Greg Comben & Associates and instructed Robinson & Robinson Solicitors to carry out the oral agreement. Those solicitors caused a Form 1 transfer of landform to be prepared transferring 27 Duet from Damon and Raelene as tenants-in-common to Leslie and Raelene as joint tenants. The Form 1 was signed on 7 March 2000 and a loan was taken out with the Westpac Bank secured by a mortgage over 27 Duet. Leslie and Raelene then caused, through Robinson & Robinson, funds obtained from the Westpac loan to pay out the balance of Damon’s loan and the mortgage securing Damon’s loan to be cancelled and replaced with a mortgage securing Leslie and Raelene’s loan. [12] From 23 May 2000 onwards, Leslie and Raelene have been the registered owners of 27 Duet as joint tenants. They have received all the payments for rent and paid the expenses from that income. They have retained surplus funds received from the rent and Damon has not received any of the rental income. Nevertheless, Damon claims to have regularly communicated with real estate agents managing 27 Duet and regularly carried out inspections of the property as well as carried out maintenance, renovation and painting. [13] Around the same time as having the discussions regarding 27 Duet with his parents, Damon alleges he had a similar conversation with Leona’s husband, John, regarding 29 Duet. Damon pleads in his statement of claim, and gives evidence that he expressed, that for the reasons associated with the Hong Kong defamation proceedings he wanted to transfer his interest in 29 Duet to NFT Co on effectively the same terms, such that 29 Duet would remain Damon’s property and NFT Co would return it to him when requested to do so. In the meantime, the income from the property would be used to fund any expenses, including mortgage payments, and NFT Co could keep the rental income for so long as the property was held in its name. -- 4 of 11 -- 5 [14] Again, the transfer was perfected with the assistance of the accountant, Mr Goudie and the solicitors, Robinson & Robinson. [15] There are three relevant witnesses to the alleged oral agreements who are deceased: (a) John; (b) Raelene; and (c) Leslie. [16] There are other witnesses however who are still alive, including: (a) Leona, John’s wife; (b) Mr Goudie, the accountant; and (c) Petrea, the sister of both Damon and Leona. [17] As to 29 Duet, Leona gave oral evidence before me; she described that she knew that Damon “was in a case” in Hong Kong and that he “wanted to release” the properties but she was “not 100 percent sure why”. She recalled John telling her that Damon was “in a situation” and John was going to purchase a property from him. As to 27 Duet, Leona also gave evidence that her parents had never told her about an oral agreement with Damon to the effect that he alleges, or at all. [18] Mr Goudie gave advice to John in relation to the purchase of 29 Duet. John told him that Damon needed to sell his property at Surfers Paradise and queried how it was that John should buy the property. Mr Goudie gave John advice to buy it in his family trust. [19] While Mr Goudie denied that he had had any conversation with John in which John had described his conversations with Damon about the transaction, he did give evidence that John had “mentioned that Damon needed to transfer two properties out of his name to avoid some sort of litigation that he was in in Hong Kong.” [20] Petrea gave evidence that she knew that Damon was in court in Hong Kong, and he needed to sell the properties as soon as possible, and the quickest way to do that was to sell it to family. She primarily obtained that information from her father, Leslie, and brother-in-law John. [21] The transfers of 27 and 29 Duet were affected on 5 June 2000. [22] John died on 11 October 2008. [23] Damon alleges that in 2010 he had a conversation with his sister Leona, and Leslie and Raelene in Adelaide, whereby he asked for the return of Leslie’s interest in 27 Duet. Damon further alleges that in 2010, around the same time he had a conversation with his parents about the return to him of 27 Duet, he raised with Leona words to the effect of seeking the return of 29 Duet as well. [24] Leona alleges that Damon asked for the return of 29 Duet in a conversation which took place in her parents’ driveway in 2010. He told her that he had an agreement with John to take 29 Duet back. Nothing further transpired after this conversation in 2010. -- 5 of 11 -- 6 [25] Raelene then died on 9 December 2015, and Leslie died on 24 July 2023. [26] In 2023, some weeks after Leslie died, Damon renewed his request to Leona for the properties to be returned to him. She enquired of Mr Goudie his knowledge of the arrangement, and he described the transfers to NFT Co and Leslie as “sales”. Damon disputed that they were sales “at market value”, describing them as “temporary”, and for the purpose of “protecting the asset” and “trying to help (Damon)”. [27] Neither the estate proceedings nor the proceedings against NFT Co were commenced while the above witnesses were alive. Principles for a permanent stay [28] The grant of a permanent stay to prevent an abuse of process involves an ultimate decision that permitting a matter to go to trial and the rendering of a verdict following a trial would be irreconcilable with the administration of justice through the operation of the adversarial system.1 It is only an exceptional case which justifies the exercise of the power of the court to permanently stay a proceeding. The decision is one of last resort on the basis that no other option is available. [29] The principles have been described by Bell P, as his Honour then was, in Moubarak by his tutor Coorey v Holt2 as follows:3 “(1) the onus of proving that a permanent stay of proceedings should be granted lies squarely on a defendant… (2) a permanent stay should only be ordered in exceptional circumstances… (3) a permanent stay should be granted when the interests of the administration of justice so demand… (4) the categories of cases in which a permanent stay may be ordered are not closed… (5) one category of case where a permanent stay may be ordered is where the proceedings or their continuance would be vexatious or oppressive… (6) the continuation of proceedings may be oppressive if that is their objective effect… (7) proceedings may be oppressive where their effect is ‘seriously and unfairly burdensome, prejudicial or damaging’… (8) proceedings may be stayed on a permanent basis where their continuation would be manifestly unfair to a party…; and 1 GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (2023) 414 ALR 635. 2 (2019) 100 NSWLR 218. 3 Per Bell P at 233 [71] (citations omitted). -- 6 of 11 -- 7 (9) proceedings may be stayed on a permanent basis where their continuation would bring the administration of justice into disrepute amongst right-thinking people”. [30] Whilst the High Court has recently reconsidered the question of a stay in GLJ’s case, the particular relevant feature of that case, being the abolition of a statutory limitation period in relation to child sexual abuse claims, is not relevant here. The matter proceeds on the basis that the principles from Moubarak are the relevant principles. Consideration of grounds for a permanent stay [31] The defendants contend that the proceedings must be permanently stayed for four reasons: (a) first, the proceedings or their continuance would be oppressive because they are seriously and unfairly burdensome due to the significant lapse of time, the lack of documentary records, and the inability to obtain any instructions from any relevant witnesses because they are all deceased; (b) second, the continuation of the proceedings would be manifestly unfair to a party because the entire case rests on oral conversations that occurred more than 24 years ago, the lack of documentary records and the death of relevant witnesses; (c) third, in light of the matters in (a) and (b) above, the continuation of the proceedings would bring the administration of justice into disrepute amongst right thinking people; and (d) fourth, the defendants have demonstrated, on the balance of probabilities, that it will not be possible to obtain a fair trial. [32] I address each of these aspects of unfairness in the context of the evidence that I set out below. [33] First, as to witnesses, it can be accepted that the deaths of John, Leslie and Raelene create significant difficulties for the defendants in defending these proceedings. They are the persons with whom Damon alleges he made his agreement. The defendants contend that it will be impossible to provide a factual contradiction to Damon’s assertion regarding the oral agreements reached with Leslie in relation to the estate claim, or with John in relation to the claim against NFT Co when both are deceased. [34] However, other witnesses such as Mr Goudie, the accountant, Leona and Petrea are alive and able to be cross-examined. All gave evidence before me, and despite the passage of almost two and a half decades, all appeared to recall some of the key facts surrounding their own involvement. The defendants deny that those witnesses’ evidence is relevant to the oral agreements because Damon’s pleaded case is that the oral agreements were with Leslie and John, not Leona, Petrea and Mr Goudie. While that can be accepted for present purposes, and having regard to the very limited scope of cross-examination before me, the fact remains that they have some admissible evidence relevant to the conduct of John, Leslie and Damon at the relevant times. -- 7 of 11 -- 8 [35] Furthermore, the loss of certain witnesses to challenge Damon’s version of the oral agreements does not mean that his version will be uncritically accepted. To the contrary, the death of those witnesses means that the process by which reasonable satisfaction may arise means his version will be subject to caution.4 [36] Second, there are several categories of documents that may assist in explaining the circumstances. [37] In the first category of such documents, there exists signed copies of the transfer documents in relation to each of the transfers, as well as copies of some correspondence from Greg Comben & Associates at the relevant time in March 2000. Similarly, mortgage documents exist. Damon asserts that there may well be other documents which have not yet been obtained, such as banking records, which might shed some light on the transactions, although I accept that the effluxion of time gives no particular confidence in relation to that issue. [38] At this early stage of the proceedings, it is impossible to identify whether in fact any further documents exist or not. Requests have been made, for example, to Robinson & Robinson for copies of their documents. Originally that firm maintained that they did not act for any of the parties in the proceedings at all in relation to the transfer. When that error was subsequently corrected, the firm responded saying they no longer held any file, the transaction occurring over 20 years ago. Whilst that might well ultimately prove to be correct, the evidence does not seem to me to be particularly compelling that there are no such documents. [39] The second category of documents is that certain trust records exist pertaining to the purchase in 2000 and ultimately the sale of 29 Duet in 2023. Those records ought to provide evidence of the amount paid on the ‘purchase’ (if that is the correct description) in 2000. Mr Goudie says those records exist, but they have not yet been produced. While it is less likely there are similar such records in respect of 27 Duet, investigations are continuing. At the very least, the records for 29 Duet do exist and have not been produced. [40] The third category of documents was located just prior to the hearing. Damon located an email stream with his parents from February 2000 which included Leslie telling Damon that Leslie had spoken to Leona and she wanted to make sure Damon was feeling comfortable “with John’s involvement with (29 Duet)”. The email stream is at least suggestive of the fact that further evidence of this sort might be available but has not yet been located. [41] The fourth category of documents arises out of Damon’s sister Petreas’ evidence that she could “go through (her) emails” looking for dates that certain events took place, suggesting she also may have access to documents not yet produced. It is currently speculation as to whether other witnesses may be in a similar position. [42] The fifth category of documents arises out of Damon’s mother’s handwritten diaries. Some entries already appear in the evidence, but Damon’s solicitor gave evidence that he had not yet reviewed the diaries, suggesting there might be more available. 4 Briginshaw v Briginshaw (1938) 60 CLR 336. -- 8 of 11 -- 9 [43] In the sixth category of documents, are those going to the value of the two properties transferred. Damon’s allegation is that the oral agreements were that the properties were to be transferred for no consideration. There is evidence to suggest that that is not what transpired. I make no findings either way. But there is currently little evidence of the properties’ value for the purpose of assessing whether the arrangement was in fact a sale for value, which might undermine the alleged oral agreement. [44] This is not intended to be an exhaustive list of the documents which might be available to be produced, but the list is at least suggestive of the possibility that with further enquiry, more may be located. And whilst I am cognisant of the fact that the subject matter is some 24 years old, the proceedings themselves are only 6 months old. It would be premature to conclude at this stage, that no further documents will be located. [45] Third, there is the prejudice suffered by the effluxion of time. Here, the delay is substantial, some 24 years since the alleged oral agreements were formed. The defendant relies upon the ‘impoverishment of the evidence’5 available to determine the claim, but for the reasons of the availability of witnesses and documents which I have referred to above, I think the issue of impoverishment is, at the moment at least, also premature while further investigations into locating documents is taking place. I accept that the issue is one which is more acute where the case is exclusively or heavily dependent on oral evidence. This may, or may not, turn out to be, but at the moment, it is too early to tell. [46] Fourth, Damon was criticised, after his cross-examination in the application, for an alleged change in his version of events to that which is contained in the statement of claim being inconsistent with his affidavit evidence and indeed, his cross- examination. Again, it might transpire that this criticism is valid, but it would be impossible for this court on the hearing of an application where limited evidence was adduced and cross-examination was necessarily confined, to draw any conclusions in relation to credit or inconsistency. [47] Fifth, I raised with the parties at the hearing whether there was any reason why I would not simply leave open the defence of laches (and any other equitable defences, including clean hands6) where the issues as to delay, loss of evidence, prejudice etc. could be properly explored. The application of the defence of laches, where relief is refused by reason of standing by or lapse of time7 before action such as to give rise to serious or unfair prejudice, is a discretionary one and the burden of proving that it would be inequitable to allow the claim to proceed remains on the defendant.8 In Lindsay Petroleum Company v Heard,9 the court said: 5 Willmot v State of Queensland [2022] QSC 167, confirmed in Willmot v State of Queensland [2023] QCA 102, noting that the appeal to the High Court is currently reserved; see Willmot v The State of Queensland [2023] HCATrans 155 (9 November 2023). 6 Because at least one of the purposes of the alleged transfer of 27 and 29 Duet was the frustration of creditors in anticipation of a judgment debt: R v Dunwoody [2004] QCA 413. 7 Orr v Ford (1989) 167 CLR 316 per Deane J at 339 at 339. 8 Neylon v Dickens [1987] 1 NZLR 402 at 407 per Cooke P. 9 Lindsay Petroleum Company v Hurd, Farwell & Kemp (1874) LR5PC 221 at 239–40. -- 9 of 11 -- 10 “The doctrine of laches in courts of equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because a party has, by his conduct done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy…”. (emphasis added) [48] Whilst courts have been reluctant to spell out the precise considerations that should be taken into account in deciding whether or not to apply the defence, in Orr v Ford,10 the sorts of matters which are seen as relevant to balancing the justice or injustice of a claim to include: (a) the nature of the claim; (b) the nature of the property to which the claim relates; (c) the identity of the party against whom the defence is claimed; (d) the length of the delay; (e) whether the delay has affected the defendant’s ability to resist the claim; and (f) the acts of each party during the delay. [49] A similar question to that which I raised with the parties during submissions was considered by Dalton J (as her Honour then was) in Merker & Ors v Merker & Anor.11 In that case, the defendant made an application for summary judgment or, in the alternative, an order that the proceeding be permanently stayed. The circumstances in question were not dissimilar to the current case. The land the subject of the claim was in Dayboro. It was owned by a person who had left it in her Will to her two children. One of her children wished to sell her share to the other who could not afford to pay for it. It was alleged an oral arrangement was reached between the two siblings. The contention was that one sister would hold the property, or at least one half of it, on trust for her five children pursuant to a common intention constructive trust. Many years passed before any rights were sought to be relied upon, ultimately leading to litigation in which it was alleged there was a breach of the common intention trust. 10 (1989) 167 CLR 316 per Deane J. 11 [2021] QSC 285. -- 10 of 11 -- 11 [50] Justice Dalton declined to grant a permanent stay on the basis that because the laches defence was available to the defendants, in conjunction with an available limitation period defence, she ought not to permanently stay the proceedings. Her Honour concluded that the trial judge would have the advantage of seeing all the available evidence and assessing the witnesses’ recollections. Her Honour observed that whilst it may be that at the end of the day the laches defence succeeds, her Honour did not consider that she ought to deprive the parties of a trial by staying the proceeding. [51] That decision to refuse the permanent stay the proceedings was not overturned on appeal.12 [52] It seems to me, with the greatest of respect, that her Honour’s approach was plainly the correct one. Equitable defences are arguable in relation to this claim, and perhaps more than one. Every argument which is raised by the defendants in support of the permanent stay going to issues of prejudice and unfairness are ones which can be articulated as a defence to the proceedings. However, each of them ought to be determined after the court has had the opportunity to consider all of the available evidence. [53] In the circumstances, whilst the delay is substantial, and largely unexplained, I cannot be satisfied that the issues of unfairness are such as to meet the threshold of exceptional circumstances as described in Moubarak because: (a) some witnesses remain available and they recall some of the relevant circumstances; (b) whilst some witnesses are deceased, the loss of their evidence makes the plaintiff’s case more difficult to succeed, not less so, such that the unfairness is, potentially, militated; (c) contemporaneous documents exist and it sems probable more will be located; (d) given the short time the proceeding has been on foot, it would be premature to decide the permanent stay now; and (e) the unfairness and prejudice issues might more properly be addressed through equitable defences. [54] The defendants have not satisfied me, as their onus requires them to do, that continuation of the proceedings would be manifestly unfair to them, or seriously and unfairly burdensome. That does not, of course, mean that those same features might not lead to a successful equitable defence to the claim. They may, but that cannot be decided until the matter has been heard in full. [55] In the circumstances, I decline to grant a permanent stay. [56] I will hear the parties as to costs. 12 Merker & Ors v Merker & Anor [2023] QCA 33 at [3]. -- 11 of 11 --