Supreme Court
Action No. 14 of 1978
9th July, 1980
Moe, J.

Messrs Denys Barrow and Derek Courtenay for the Plaintiffs.
Mr. Glenn Godfrey for the Defendant.

Real Property - Trust - Oral agreement between the Plaintiff and Defendant on the Plaintiff transferring legal title to Defendant creats a trust for their benefit - Need to account for income and interest thereon of trust property - Purport and effect of sections 43(1) and 51(1) of Law of Property Ordinance - Vesting of Trust property by the Court in the beneficiary.

J U D G M E N T

In these proceedings the Plaintiffs seek a declaration that the Defendant is a trustee for the Plaintiffs of the property situate at No. 25 Regent Street in Belize City and now standing in the name of the Defendant. They also seek an account of any sums received by the Defendant for and on behalf of the Plaintiffs and an order that the Defendant pay to them the sum found due to them from the Defendant with interest thereon. They further seek an order vesting the said property in the Plaintiffs absolutely.

2. It is common ground between the parties that in or about the month of September, 1967, the Plaintiffs transferred to the defendant the property subject matter of these proceedings, being lot No. 86 and a portion contiguous thereto situate at the corner of Regent and Prince Streets in Belize City and comprised in the Transfer Certificate of Title dated 11th April, 1968 and registered at the General Registry, Belize City, in the land Titles Register at Volume 6, Folio 233.

3. The Plaintiffs claim that the said transfer although purporting to have been made in consideration of the sum of $12,000.00 was in fact voluntary and entirely gratuitous and made for the sole purpose of allowing the said property to be used by the Defendant to secure a loan with which to repair and improve the building standing on the said property. That it was orally agreed prior to the said transfer by all the parties thereto that the defendant would hold the said property in trust for the Plaintiffs and would retransfer the said property to the Plaintiffs as soon as the loan with which the property stood charged was repaid.

4. The Defendant in his Defence filed pleaded (1) that he did in fact pay the purchase price of $12,000 for the said property and he relies S. 51(1) of the Law of Property Ordinance Cap. 193; (2) that he is the beneficial owner of the property and does not hold it on trust for the Plaintiffs and relies on S. 43(1) (b) of the Law of Property Ordinance Cap. 193; (3) that the Plaintiffs owe him rent for their use and occupation of the said property, since the date of his purchase of the property. He counterclaimed for mesne profits. During trial he amended his defence to plead alternatively, if he is a trustee of the said property for the Plaintiffs, the trust to retransfer the said property was conditional on (a) the payment by the Plaintiffs to the Defendant of all money expended on the purchase and repair of the property; (b) the repayment of all premiums paid on an insurance policy of the Defendant's life taken out with the Colonial Life Insurance Company and (c) the payment of interest on the above sums at the rate of 12% per annum.

5. I proceed first to determine whether or not the Defendant holds the property on trust for the Plaintiffs. On this there is an abundance of evidence. The Plaintiff, Vivienne Thompson stated that she and the other Plaintiff Doreen Kobitz are owners of the property. The property was mortgaged to Barclays Bank and as the mortgage was not paid back, Barclays was going to foreclose. In 1967 an arrangement was made with the Defendant whereby the property was transferred into the Defendant's name in order that he may borrow money on it from Colonial Life Insurance Company with whom he had a policy. The Defendant did not pay any money to the Plaintiffs for the transfer of the property. The money raised from Colonial Life paid off the mortgage with Barclays. The only object of the transfer was to enable the raising of the money to pay off the loan with Barclays. It was part of the arrangement that after the Plaintiffs had paid up the insurance and whatever was owing to him, the Defendant would transfer the property back to the Plaintiffs. She also put in evidence a deed signed by the parties to these proceedings which she says reduces to writing the basis on which the parties then agreed the property would be reconveyed to the Plaintiffs. This deed was dated 15th November, 1969. Her evidence also is that in the matter of the transfer and during discussions or proposals relating thereto the Defendant's father acted for and on behalf of the second Plaintiff and on some occasions both Plaintiffs. There is no dispute between the parties on this.

6. The Defendant on the other hand, while admitting (a) that the Plaintiffs were the owners of the property, (b) that Barclays Bank held a mortgage over the property, (c) that the Plaintiffs failed to repay that mortgage, and (d) that Barclays had taken action to foreclose on the property, stated that he purchased the property with no strings attached. The transaction was an outright sale of the property to him and was not subject to any conditions. From about two weeks after the sale there were discussions and proposals as to the basis on which he would sell the property back to the Plaintiffs.

7. The Defendant's brother Mr. Bruce Hulse also gave evidence for the Defendant and stated that he was aware of the proposal by the Plaintiffs that the Defendant buy the property as a clean sale with nothing attached, that the Defendant would pay the price of $12,000.00 and this the Defendant accepted and agreed to in 1967.

8. The account given by the Defendant and his brother is not in keeping with the terms of many letters which the Defendant himself wrote and to which I now refer. In a letter concerning the proposals addressed to the Administrative Office Manager of the Colonial Insurance Company of Jamaica and dated June19, 1971, he wrote "In the first instance, the property was transferred to me to save it from foreclosure, because of a debt incurred when it was mortgaged to Barclays Bank to obtain money loaned to a third party. The transfer was made to me as a temporary measure against the payment of the debt by the third party." The Defendant gave as an explanation that his father put up the letter and he signed it because he didn't think his father was going to use it. I took that to mean use in the way it has been used in this trial. It was also significant that the brother was shocked when shown the contents of this letter.

9. On the 11th July, 1971 he wrote his Aunt Doreen, one the Plaintiffs as follows: -

"Now my arrangement with dad was that the property be transferred in my name (this was required to get the loan from the Insurance) and that on repayment of all commitment to the Insurance Company I would transfer the property back to dad. The payments to the Company were to be made according to the company's stated request of monthly installments. I had absolutely nothing to gain."

The Defendant sought to explain this paragraph as a statement of one of the proposals made after the Defendant had bought it. I had no hesitation in rejecting this explanation. The paragraph speaks clearly of a transfer to the Defendant's name and a transfer back to his dad.

10. The Defendant wrote his Aunt Doreen again on 22nd May, 1972. "I realize that you cannot pay me what is owing to me. So I have decided to propose to you something else" and then made the following proposals: -

"(a) why do not we join in ownership of the property? You retaining 2/3 of the property and I 1/3, rightly what my dad should at least have inherited. You spend whatever money you have in repairs to the house. I am willing to supervise the spending of every penny and give you an account of every penny … As to the four thousand dollars that is owned to me personally, I donate $2,000.00 to my share, the other $2,000.00 I do not want you to pay me until the house is repaired and is in a paying situation.

(b) another proposal is that we own the property evenly, you not repaying me nothing of the $4,000.00 …."

He stated that by the expression you retaining 2/3 of the property he meant, the Plaintiffs being in possession, he couldn't throw them out. But the evidence is that the letter was to his Aunt Doreen Kobitz who was living in New Orleans, Florida. By the statement that she could not pay what was owing to him, he meant the Plaintiffs owed all the money he invested. This is clearly inconsistent with the position that the Defendant was in truth and fact the owner of the property. I could not accept that the true owner of property would have made a proposal that some other person own 2/3 of that property and he only 1/3 on the basis that the other person forego repayment of a debt that person owed to the then owner. The proposals under consideration are more consistent with the position of a person purchasing a share or interest in property owned by someone else by foregoing what the then owner owes to him; in this case 1/3 share by writing off $2,000.00 of ½ share by giving up $4,000.00.

11. Once more on the 15th June, 1972 he wrote the Aunt Doreen concerning the property and inter alia states "Dad showed me the letter you sent him. And I presume that you are willing to give me 1/3 share. I will briefly state what I have in mind: - (1) I want 1/3 share on the house". After certain proposals, he finally stated "Aunt, if you have any desire of retaining the old house please act now." Again these statements are not consistent with the position of an owner of property making proposals for resale but rather with the position of one trying to become an owner or at least part owner of the property.

12. On October 26, 1972, the Defendant addressed a letter concerning the property to Messrs. McMillan Brothers, Regent Street, Belize City in the following terms -

"Dear Sirs,

In accordance with the conversation you had with my father and acting as trustee on behalf of my aunts, Doreen Kobitz and Vivie Thompson I agree to lease you the basement of the house at No. 25 Regent Street ---" (that house is the property concerned).

The Defendant gave as an explanation that he signed that letter labeling himself as trustee because his father argued with him and he signed it. Further he didn't know the difference between trusteeship and equitable interest. This explanation was unconvincing.

13. With regard to the deed dated 15th November, 1969 which he signed and which sets out terms and conditions for the Conveyance of the property by the Defendant to the Plaintiffs, the Defendant offered the explanation that when that document was put to him to sign, he at first refused to sign by eventually signed because his father went into a fit and frothed at the mouth. This too was most unconvincing.

14. In my view the evidence is overwhelmingly in favour of the Plaintiffs. I accept the version of the transaction and arrangement as given by the Plaintiff Vivienne Thompson and on the facts before me I find -

(a) that the property concerned was transferred by the Plaintiffs to the Defendant without the payment of any money by the Defendant to the Plaintiffs for the said transfer;

(b) that the purpose of the transfer was to enable the Defendant to raise a loan with the Colonial Life Insurance Company of Jamaica by using the property and with the sum so raised pay off a loan owed to Barclays Bank thus avoiding foreclosure of the property;

(c) that it was orally arranged with the Defendant that after the Plaintiffs had discharged the mortgage with the Colonial Life Insurance Company, had paid to the Defendant that spent on repairs and the insurance premiums, the Defendant would transfer the property back to the Plaintiffs.

15. I accordingly hold that the transfer of the property by the Plaintiffs to the Defendant was under an oral arrangement between them, under which (no beneficial interest passed to the Defendant but) the property was held by the Defendant on trust for the Plaintiffs.

16. I turn now to the question raised by the Defendant by virtue of his pleading reliance on sections 51(1) and 43(1) of the Law of Property Ordinance, Cap. 193. These sections provided as follows: -

Section 51(1) "A receipt for consideration money or securities in the body of a deed or transfer shall be a sufficient discharge for the same to the person paying or delivering the same, without any further receipt for the same being indorsed on the deed or transfer."

Section 43(1)(b) "A declaration of trust respecting any land or any interest thereon shall be manifested and proved by some writing signed by some person who is able to declare such trust or by his will."

As I understood it, the Defendant is relying on the fact that the Conveyance has in it a receipt for consideration of $12,000.00 and the above provisions of Cap. 193 in order to maintain that the property is his. This therefore raises the question whether the trust on which I find the Defendant holds the property for the Plaintiffs (under the oral arrangement in accordance with which the property was transferred) is to be held void or of no effect by virtue of the above provisions of Cap. 193.

17. It should first be noted that section 43 of the Law of Property Ordinance, Cap 193 is in the same terms as section 53 of the Law of Property Act 1925 of the United Kingdom which replaced corresponding provisions of the Statute of Frands 1677. In Haigh v. Kaye (1872) 7 Ch. App. 469 a Conveyance was expressed to be in consideration of a money payment and was of an estate described as absolute. There was in fact no consideration. It was held that, although the defendant invoked the Statute of Frands, the Plaintiff was entitled to have the estate reconveyed to him. Again in the leading case of Rochefoucauld v. Boustead (1897) 1 Ch. 196 the defendant bought property on an express oral trust for the Plaintiff, subject to specified advances. The Defendant subsequently spent money on developing the property. He also raised money for himself personally by mortgages of the property; and later he or his mortgagees sold the property without the Plaintiffs' knowledge. Despite the absence of writing required by the Statute of Frands, the Plaintiff successfully contended that the property was bought in trust for her, subject to the specified advances and the defendant's outlays on the property; and for an account on that footing. Lord Justice Lindley stated in his judgment "It is established by a series of cases, the propriety of which cannot now be questioned that the Statute of Frands does not prevent the proof of a fraud; and that it is a fraud on the part of a person to whom lands is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself. This principle was reaffirmed and applied in Hodgson v. Marks and another (1970) 3 A.E.R. 513 where it was held that Defendants were not entitled to exclude parol evidence of a trust in favour of the Plaintiff because to do so was to use the statutory provision requiring writing namely section 53(1)(b) of the Law of Property Act 1925 (with which section 43(1)(b) of CAP. 193 corresponds) as an instrument offrand. I find therefore, that sections 51(1)(b) of the Law of Property Ordinance, CAP. 193 do not render the trust in favour of the Plaintiffs void or ineffective.

18. The Defendant admitted that he has received rents in respect of the property from the year 1973 until the present time as shown in a statement of accounts produced and admitted in evidence. According to that evidence there has been received up to December 1979 $11,750.00 as rent. In view of my finding above, such rent is income from property held on trust and it is the duty of a trustee to pay the income from trust property to the person who is entitled to it. See Lindley L.J. in Low v. Bouverie (1891) 3 Ch. at p. 99, reaffirmed Hawkesley v. May (1955) 3 A.E.R. 353. The Defendant must therefore account for the rent he has received.

19. There is evidence from the Plaintiff Thompson that the rent for a period was paid to the Insurance Company. At that time the rent was $125.00 per month. The tenants McMillan Brothers paid that amount less $25.00 retained by them to cover the costs of repairs which they had carried out. John Sosa also gave evidence to this effect. It was not clear for what period this was done but the impression given by the Plaintiff Thompson was that it was until her brother died which was in 1974. The accounts show such amounts i.e. $100.00 commencing November 1972 and continuing until June 1974. I hold on a balance of probabilities that those amounts received up to date were paid to the Colonial Life Insurance. The payments to Colonial Life I would hold to be a proper application of the Trust income - $100.00 per month was going to the person to whom the Plaintiffs were by the oral arrangement obliged to pay off. The $25.00 per month covered the cost of repairs to the Trust property - expenses properly incurred. From the amount of rent received, I therefore deduct the sum of $2,375.00 being $125.00 for 19 months. According to John Sosa of McMillan Brothers when the payment to the Insurance Company ceased the cheques for the rent was made payable to the Defendant and there is no evidence as to how that money was applied. He must be regarded as having used it for his own purposes. I hold therefore that the Defendant has to account for rent in the sum of $9,375.00.

20. The Plaintiff's claim that the Defendant should pay interest on the sum found to be due from him to the Plaintiffs. Now where a trustee has converted the cash consideration he received from trust property to his own use he is accountable to the beneficiaries not only for the sum he received but for interest on it and on this one proceeds on the principle that he the trustee either has made or ought to have made the ordinary rate of interest. See Gordon v. Gouda (1955) 2 A.E.R. 762. The Defendant must therefore pay interest on the sum found due from him to the Plaintiffs.

21. There remains the matter of the Plaintiffs prayer that an order be made vesting the property in them. Under section 36 of the Trustee Act, CAP. 200 provisions are made for the making of vesting orders as to land. By paragraph (f) thereof "where a trustee jointly or solely entitled to or possessed of any land --- has been required, by or on behalf of a person entitled to require a Conveyance of the land --- to convey the land --- and has willfully refused or neglected to convey the land --- for 28 days after the date of the requirement, the Court may make an order (---) vesting the land in such person in any such person in any such manner and for any such estate as the Court may direct ---." The evidence is that the Defendant has been requested since August 1973 to convey the property. He has however not done so evidently because of the dispute as to the conditions under which he would do so which resulted in these proceedings. In view of my finding as above that the failure of the Defendant to reconvey is the result of his attempt to acquire what isn't really his, the Defendant's behaviour could hardly be regarded as bona fide. Under these circumstances I take the view that the Defendant is guilty of willful refusal in declining to convey.

22. I have already indicated my finding on the oral arrangement in 1967 as to the conditions under which the property was to be retransferred. The deed executed in November 1969 after three preambular paragraphs in which the Defendant is called the Transferor, the Plaintiffs the Transferees and the mortgage which Colonial Insurance Company of Jamaica holds over the property is referred to, states as follows:

"Now the Transferor hereby agrees that whenever the said legal mortgage shall have been discharged in full AND on the refund to the Transferor by the Transferees of the sum of Three Thousand dollars expended by the Transferor in past repairs to the said premises the Transferor will thereupon execute a transfer of title of the said land premises and appurtenances free of cost to the Transferees and the Transferees agree to accept the same and this agreement shall be binding on the heirs and assigns of the Transferor …."

The Defendant's pleading in the alternative that retransfer of the property is subject to the conditions therein pleaded is not supported by any evidence relating to the terms under which the Conveyance was made and arrangement entered into in 1967. Having maintained that the transaction in 1967 was in truth and fact a sale to him the burden of the Defendant's evidence was in relation to proposals made after the transaction. Further the deed which he signed in 1969 is contrary to his pleading and he is bound by that deed.

23. The conditions under which the property is to be reconveyed to the Plaintiffs are to be found in the Deed drawn up in 1969 and are:

(1) payment of the mortgage held by the Colonial Life Insurance Company, and

(2) payment to the Defendant of $3,000.00 which relates to the sum advanced for the purpose of purchasing materials for repairs.

The Plaintiffs maintain that the sum of $3,000.00 was misspent by the said Defendant. They contend that the sum was used to purchase an old Church at Gallon Jug and the Defendant by his negligence, lost or misplaced the materials of this building after it was dismantled. The Defendant by his own evidence showed that 1/5 of the materials disappeared at Gallon Jug itself and about 90% of the remainder from the cellar at Regent Street where they had been stored when brought from Gallon Jug. Again the blame for the loss of 90% of the materials was put on his father by the Defendant but I rejected this and having accepted the Plaintiffs evidence, I acted on her evidence that the Defendant used the materials on his own house. In the result I do not find that the $3,000.00 was used for the purpose for which it was advanced and the Defendant could not properly be reimbursed that amount. In the result I find that the Plaintiffs in order to get a Conveyance are bound only to pay the mortgage held by Colonial Life Insurance Company.

24. Judgment then for the Plaintiffs. They will have:

(1) A declaration that the Defendant holds the property situate at No. 25 Regent Street in Belize on trust for the Plaintiffs absolutely.

(2) An order that the Defendant pay to the Plaintiffs the sum of $9,375.00 due from him to the Plaintiffs with interest thereon at the rate of 6%.

(3) An order vesting the said property in them absolutely when they have discharged the legal mortgage held on the property by Colonial Life Insurance Company.

They will also have their costs to be taxed and certified for two Counsels.

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