Brickwood v Young and Minister for Public Works (NSW) [1905] HCA 12

'The fact that the tenant in common has already received without objection "portion of the fund does not necessarily prevent the application of this Principle,

'The appellant was for several years in exclusive possession and enjoyment af the rents and profits of certain land, of which he believed himself to have Yarehased the fee simple, whereas in fact he had acquired only an estate pur ure vie of the entirety, with an equitable tenancy in common with certain of therespondents in remainder, his share being one fourth. Permanent im- Movements had been erected upon the land by one of the appellant's predeces- 'orsin title, After the death of the cestui qui vie the land was resumed by the Minister for Public Works, under the Public Works Act (N.8.W.) 1900. 'The Mibister paid the appellant one fourth of the compensation moneys, and, at erequest of the appellant, paid the balance into Court, 'The appellant

accepted the amount paid to him, without prejudice to auy claim hy } have in respect of the balance.

Held, that, on a petition by the other tenants in common for under see. 48 of the Public Works Act (N.S.W.) 1900, the appellant wa the position of a defendant, and was entitled to assert an equitable lien ays, the fund in Court to an amount equal to three fourths of the increase ist, value of the land attributable to the improvements, but that, before 5 allowed the benefit of this equity, he should be required to account for rents and profits which he had received while in exclusive possession alee death of the cestwi qui vie, in order that the amount to which the other were entitled in respect of them might be set off against the amount de him in respect of the improvements.

Decision of A. H. Simpson C.J. in Equity, (1904) 4 SR, (N.S.W), 78,01 this point reversed.

Apreat from a judgment of A. H. Simpson OJ. in Equity of New South Wales.

The following statement of the facts is taken from the judgma of Grifith CJ.: -

This appeal relates to the distribution of a sum of money into Court by the Minister for Publie Works, representing value of land resumed by the Crown for public purposes 18th May, 1869, the appellant's predecessor in title, one Gannon

six persons, Elizabeth Young and her five children, who were of full age. Elizabeth Young was tenant for life of the under her deceased husband's will, and it appears to have b assumed that the other five vendors were tenants in common it remainder. In fact, however, they had only executory int the actual trusts of the will having been for the use of the for life, and after her death for such of the testator's children as should be living at her decease, but the testator directed that, in

the children died unmarried. Three of the others died in lifetime of the tenant for life, leaving issue, who consequen took the shares of their deceased parents. One of the child survived the tenant for life, who died in 1890.

'he result was that the deed of 18th May, 1869, only operated a conveyance of the life estate and of the undivided fourth fiwre in remainder of the son who survived her, Upon her death the appellant, who had by the effect of several mesne conveyances acquired Gannon's title, beeame an equitable tenant jn common with the respondents other than the Minister, who ae the children of those children of the testator who predeceased "the tenant for life, his share being one fourth.

One of his predecessors in title, one Porter, had in 1872 erected houses upon the land, by which it was alleged that its value was considerably increased. The appellant continued in possession of the land and in receipt of the rents and profits until the resump- tion.

When the amount of compensation had been settled, he, in the "fst instance, claimed the whole of the money, alleging that the title of the respondents other than the Mit posession. This fact being disputed by these respondents, the appellant asked for and received payment of the one fourth to which he was admittedly entitled, and asked that the other three fourths might be paid into Court under the Public Works W.) 1900, which was done.

A petition was then presented by the respondents, other than the Minister for Public Works, for payment of the fund to them. The appellant first claimed the whole fund on the ground above _ Stated, but failed to establish his claim. He then claimed to be

• tatited to be recouped out of the fund to an amount equal to three-fourths of that by which the purchase money was increased by reason of the improvements by his predecessor in title.

AH. Simpson C.J. in Equity rejected this claim on the grounds, (1) that there was no instance in which the Court had fiven effect to the equity relied on when it was not administering the whole fund, (2) that the appellant had not himself made the ®pediture of which he claimed the benefit: In re Young; Brickwood v. Young (1). He thought that the appellant's pre- Aeeessor in title, Porter, who actually made the expenditure, had retrived the benefit of it on his sale to his successor in title; that.

he could not keep the whole purchase money as owner in fee at the same time set up an equity as tenant in common; th he claimed as tenant in common, he must bring into 'account th purchase money he received ; and that as the appellant eo y do this, his claim must fuil,

Dr. Cullen K.C. (with him Harvey), for the appellant, 'Te appellant had an equity to so much of the money in Court, represents three fourths of the increased price due to the impo. ments, and is entitled to an inquiry as to what is the amount | that inerease. If Porter, the person who made the improvemen had not parted with the land before resumption he would h been entitled to set up this equity, and the appellant, ha acquired by purchase, is entitled to stand in Porter's shoes, is in the same position as if he had purchased direct from Po Upon the sale of the property the purchaser must be taken have paid for the value added to the land by the improvements 'The payment of the purchase money, so far from being a reas for holding that the equity was extinguished, is the fact upon whih the argument for its continuance is based, for it results in appellant being the person who has actually paid for the impro ments. The principles applieable to proceedings for payne out are the same as those applied in suits for partition money paid direct to the appellant was admittedly his, and acceptance of it was without prejudice to his claim against balance. The equity is a lien on the estate itself: Story's Equi Jurisprudence, see. 1234, et seq. It is not to be confined suits for partition, it is to be applied to any ease in which property has been sold by order of the Court, or the proceeds its sale are being distributed by the Court: Leigh v. Dickesm(l) 'The person who claims the equity need not be the person who actually expended the money. Where the owner of a moiety Property, who was also tenant for life of the whole, borm money upon the security of the estate, and expended it in pe manent improvements, it was held, in an action for partition after her death, that the present value of the improvements must b

LR) ne rateably by the owners of both moieties: In re Jones; rringlon v.Forvester (1). 'There the representative after death vethecaim. [He referred also to Teasdale v. Sanderson (2)] isa right attaching to the land, and passes with the land. 'The

ont value of improvements due to expenditure by a tenant jncommon in fee of one half, and tenant for life of the other half, real estate was allowed in distributing the surplus proceeds of 'ale by a paramount mortgagee among the persons entitled to the ity of redemption, one of whom was the heiress-at-law of the ent who made the improvements: In re Cook's Mortgage; Invledge v. Tyndall (3). There is no reason why the equity id not be set up equally effectively in a proceeding for dis- tribution of money paid into Court as compensation for resump- ti, By see. 39 of the Public Works Act (N.S.W.) 1900, all tlius in respect of the Jand are converted upon resumption into thins for compensation. 'The rule was applied in the distribution of the proceeds of a sale under an administration: Boulter v. Boulter (4). 'The equity is analogous to that of a person who tuilds upon land belonging to another, in the belief that the land ishis own; this was held to be assignable: Hamilton v. Geraghty (5, The fact that part of the money has been paid to the appel- lint does not prevent his setting up the equity. 'The only sum

"tenants in common have any claim against the appellant in tepect of the rents and profits received by him while in exclusive passession, that is a matter for inquiry, which the Court of Equity las power to order (sec. 54), and the amount to which they prove they are entitled can be set off against the appellant's present tim. Under the present order the appellant loses the benefit sthis capital expenditure, and remains liable in an action at com- 'won law for rent which has been inereased by that expenditure. The order as to costs should be reversed, and the appellant Id be allowed the costs of this appeal.

now (with him Rich), for the respondents other than the Minister. In the petition for payment out, the petitioners were not (1) 0899) 2 oh,, 481, (3) (1896) 1 Ch., 923.

(2) 33 Beav, (4) 19 N.S.W. LR. (B), 135. (5) (1901) 1 S.R, (N.S.W.) (E.), 81.

4&5 to which there is any dispute is in Court. If the other

H.¢. or. invoking the Court as a Court of Equity, but as the machiney 1905. seribed by the Act (sees. 47, 48), and in such cases the Cont Brickwoon 20 power to apply principles of equity. The same steps

% have had to be taken by the claimants if all the interests had

'pene' legal. It is an accident that they are all equitable in this

But, if the principles of equity are to be applied, the appe has by his own act deprived himself of the right to set up particular equity. He has accepted his share of the eompens money, and so severed the tenancy, and put it out of the po

the inquiry that the balance is against him. He should asserted this right before taking any of the money from Crown. It is an equity that may be set up only in a suit partition. The appellant is not asking for partition; he m claims a certain portion of a fund, not the share of a tenant common. If the whole fund had been paid into Court, the Comt on partition could have done complete justice to all patti

has been made after partition has been effected. Moreoverthisis purely a defensive equity, and therefore the appellant, who isi the position of a plaintiff, cannot set it up.

[O'Conor J. - Has not the Court under sec. 54 power to en sider every kind of claim or interest that may be set up in respiet of the fund?]

That might be if the whole fund were in Court. 'Theappell should have offered to bring the sum which he had received in Court; then the proceedings could fairly have been concluded of the principles applicable to a partition suit.

[GrirrirH C.J. - Why should the act of the Minister in pa the money into Court, res inter alios acta, be allowed to any right which the appellant had to this extra sum 7]

Tt was not res inter alios, but his own act; in accepting onefo he severed the tenancy in common, and therefore he eannot e0t plain. But the appellant never was entitled to this equity. It not aright which passes with the land. It only benefits thepet who made the improvements, and a personal equity does not pis on conveyance. Porter had the equity and never conveyed it

oe (3); Kay v. Johnston (4); Fisher's Law of Mortgage, ha, p.259.] In Zn re Cook's Mortgage; Lawledge v. Tyndall the point was not argued. There is no analogy to the right 'enon building on land which he believes to be his own sie the real owner lies by. 'That is based upon estoppel; there aan be no estoppel here because there is no lying by. Even if there were a lien, it is at an end, now that the appellant has received tis one fourth share: Lingen v. Simpson (6); Fisher's Law of Movtgage, 5th ed.,p. 256. But there is no lien: Swan v. Swan {), When Porter made the improvements he was not a tenant in ommon, His estate was pur autre vie, with a remainder in fee inthe entirety, liable to be defeated in the contingency of any ofthe persons who conveyed to him dying before the life tenant nd Ieaving issue. 'There was no evidence that the buildings were in the belief of ownership. Only the bare conveyance sinevidence, 'The appellant therefore bought land with a bad tl, there was no deception, and he must suffer. He had the t of the improvements while he held the exclusive posse has been paid his one fourth share of the property held in 'tonmon, and is entitled to nothing more. [He referred to Ridgway Bolerts (8); Floyer v. Bankes (9.)]

Ifthe appellant has a good claim against the money in Court, should be compelled to bring in also the amount he has already natived, as a condition precedent to obtaining his relief. 'The tiher tenants in common have a claim against him for rents and

'its which he received while in possession, and there may be a Tihinee against him. The appellant has never offered to bring themoney into Court, nor to account for the rents and profits,

nis therefore to blame for the refusal of the Equity Court to grant him relief.

_Stvet (with him Manghan), for the respondent, the Minister for Fublie Works, on the question of costs.

a 5) (1896) 1 Cl (92. &B. bee (6) {sire and St, 600. ere (7) 8 Prive, 518; 22 R.R., 770. "av., 536, (8) 4 Hare, 106, (9) L.R., 8 Eq., 115.

fe eierred to Leslie v. French (1); Ex parte Young (2); Ex parte B.C. o¥ A.

Dr. Cullen K.C,, in reply. The right claimed is based tpon prineiple of equity upon which the Court acts, independeniy any question of pleading or of offer by the parties. By se, 99 the Public Works Act 1900, every interest is converted y resumption into a claim for compensation, and when money hy been paid into Court, the Court, in distributing it, should make every inquiry which the constructing authority would haye | to make in so doing : Clissold v. Perry (1).

This is not a defensive equity only; it may be set up by plaintiff as well as by a defendant : Zn re Jones; Farrington y, Forrester (2). It is not restricted to partition suits, but mayb, asserted in all eases where a tenancy in common is being wound up: Pascoe v. Swan (3). There was no determination of co-tenancy here before the petition. That can only be effected by deeree or by agreement. The acceptance of the one fourth byth appellant, under the circumstances, did not amount to sueh a agreement.

'The assignability of the right does not depend upon wheth is alien or not. It is an interest in the land. [He refered Seton on Judgments and Orders, 6th ed., vol. IL.,p. 1860; Wil vy. Williams (4).)

The other co-tenants have no right to insist upon the appellant bringing into Court the amount already received. It was pal without prejudice to the appellant's rights as to the balance, -

GrirrirH C.J. - {Having referred to the facts as already out, His Honor continued :] 'The doctrine relied upon by the appellant is of comparative

(5); and as late as 1883 so learned a Judge as Fry J. expres doubts as to the validity of the doctrine. In Leigh v. Dik (6), however, decided in the following year, it is assertel Cotton LJ. as follows(7): " No remedy exists for money expen'

(2) (1803) 2 Gh, a1." (3) 8 Price, 518 ; 22 RAR, 7 27 Beav., 5 (6) 15 Q.B.D., 60.

(4) 81 Ler, 163; 68 LJ., (7) 15 Q.B.D., 60, at p. 67

"yhen it is desired to put an end to that state of things, it is then wesary to consider what has been expended in improvements orrepairs: the proper 'value by the improvements and repairs; and whether the property divided or sold by the decree of the Court, one party cannot fake the increase in value, without making an allowance for at has been expended in order to obtain that increased value.

There is, therefore, a mode by which money expended one tenant in common for repairs can be recovered, but the 'poeedure is confined to suits for partition." 'The application of hedoetrine was extended in Jn re Jones; Furrington v. Forrester to a case of an expenditure by a tenant for life in entirety, ho was also owner in remainder of a moiety in fee; and in In 'rCook's Mortgage; Lawledge v. Tyndall (2), to a case of division funds in an administration suit. In Boulter v. Boulter (3), the 'ane learned Judge from whose decision this appeal is brought, 'teil that the rule applies in suits for administration as well as in aits for partition, and when the improvements are made while te estate of the tenant in common is only an estate in remainder, 'Swell as when his estate is an estate in possession. In the present ease the person who made the improvements was tenant mr autre vie of the whole, and also tenant in remainder of an tufivided fourth. It appears from the ease of Leigh v. Dickeson

that the equity in question is not one which can be ively,

sserted except in a suit for partition or administration, in which ll the parties are equally regarded as actors, but is what was tin argument a defensive equity. And this point was relied m by Mr. Knox for the respondents, who contended that the Melt having accepted his own fourth of the purchase money Bytble on the resumption, must be considered as an actor in of the other three fourths paid into Court. He also con- ed that this payment to the appellant operated as a partition

of the land and an allotment to the appellant of his one fo share, so that the fund in Court represents only the other fourths to which he has no title.

With regard to the second ground of the learned Judge' dag sion, I cannot regard the equitable right of tenant in eommm Gritith ©. to compensation as against his co-tenants as merely personal the individual tenant who effects the improvements, "The ring appears to be that the making of permanent improvements by og tenant in common in sole occupation gives rise to an equity a ing to the land, analogous to an equitable charge created by owners for the time being, but enforceable only in the event

tenants in common. 'here can be no reason why sueh a chi should not run with the land in favour of purchasers from th person originally entitled to it. It is clearly a right incident the possession of the land, and cannot be asserted until tht possession is disturbed. It appears to me, therefore, that th equity passes with the land, and may be asserted by the for the time being, who, I think, may claim the benefit of th improvements effected by his predecessor in title. It is true that Porter, who made the improvements, has been paid for them, bit not by the respondents. 'The purchase money which the appellat paid for the land primd facie included the enhanced value,

T can see no reason why hes whose rights he acquired for valuable consideration, This was acted on without objection in In re Jones; Farrington.

Sudgments and Orders, 6th ed., Vol. I1., p. 1860, the right ofthe tenant in common in possession to take advantage of the expen ture of his predecessors in title was allowed, apparently #68 matter of course. In my opinion this objection fails. With regard to the other objection, regard must be had to the substam rather than to the form of the matter. When the land ws resumed, the appellant was in possession as tenant in comm and the respondents could only have asserted their title (1) (1893) 2 Ch., 461. (2) 81 L.T.,N.S., 1635 68. Lad. Ch.

tin bya suit for partition, in which he could have set up his nity to compensation for'the improvements. Upon the resump- inthe land was represented by the purchase money. By see. ofthe Public Works Act the appellant, as the person in posses- on of the land, is to be deemed to have been lawfully entitled to the land.until the contrary is shown. It is the respondents, there- ore who are in the position of actors, asserting a claim to that sich prima fucie is the property of the appellant. 'The equity ot up by him is, therefore, compensation before effect is given to the better title of the sspondents. Having regard to the principle of the doctrine invoked by the appellant, it seems quite immaterial that he has aleady received without objection part of the property to the whole of which he is primd fucie entitled. 'The parties asserting the adverse claim are in either case equally bound to do equity. Nor, in my judgment, can the payment of one fourth of the pur- tase money to the appellant affect his right to set up this equity. Noone disputed his right to receive it, and his solicitor's letter to the Crown Solicitor of 13th October, 1903, which asked for payment of the one fourth, and contained a request that the other jee fourths should be paid into Court, added "upon which I 'would made application for payment out." It is clear that under "these cireumstances no abandonment of the appellant's right to thethree fourths or any part of it can be inferred, any more than

"if,on an application for payment of part of a fund in Court to a Jenson admittedly entitled to it, it were ordered to be paid to him without prejudice to his right to claim the residue, he could be sid fo have abandoned his claim to the residue.

Por these reasons it appears to me, both on principle and Authority, that the appellant, who is defending his primd facie im to the fund representing the three fourths, is entitled to ett his lien upon it for the value of the improvements. It was, 4ovever, contended that he is debarred from doing so, because it 'may turn out that he is indebted to the respondents, in respect of -theefourths of the rents and profits received by him since the tath of the tenant for life, in an amount greater than that which leis entitled to claim under his lien, and that in that event the 'spondents ought to be in a position to take the difference out of

his fourth share which he has already received. 'The indeb is not disputed. The claim to recover from him three fonth the rents and profits existed before the resumption, and i affected by it. 'The respondents had no lien for it upon the and the payment into Court of the three fourths did not giveth any lien upon the sum paid in, and, a fortiori, gave them ym uupon the other fourth. No doubt the Court may, and I th ought to, impose as a condition of allowing the appellant to asgat his equity in respect of the improvements that he shall accom for the rents and profits so far as they may exhaust the amom of his charge: see Teasdale v. Sanderson (1). I doubt wl in this proceeding any more onerous terms could be imposed up him without his consent ; but, as he is willing to submit top any amount that may be found due from him upon a balanes accounts, it is not necess:

In my opinion, therefore, the learned Judge ought to hn directed an account of the money expended by the appellant his predecessors in title in permanent improvements on the la

extent to which the compensation money paid on resumption was inereased by such expenditure, and there should have bens declaration that the appellant is entitled to a lien upon the in Court for an amount equal to three fourths of the amount of such increase, There should then have been directed an ing prefixed by the appellant's submission, as to what sum is dueby the appellant to the respondents, in respect of three fourths of the rents and profits of the land received by him since the death of the tenant for life, with a direction that the amount so fou

against him, be paid by him into Court in augmentation of the! before any claim is made by him to receive costs out of the fun The order for payment of costs by the appellant must be omitte and an order substituted for payment of his costs and those af the Minister occasioned by adverse litigation between adverse claimants out of the fund. 'The order appealed from must be

Buntox J. Ihave had the opportunity of reading the judg- wnt which has just been delivered by the Chief Justice, and I

QCoxxor J. [Having shortly stated the facts His Honor _preeeded,] It was admitted by the respondents' counsel that if the appellant had during his possession of the land made the improvements, and if the one fourth share of the compensation money had not been paid over to him, he would have been entitled tobe recouped to the extent claimed, less certain deductions which shall mention later on; but they contended that under the cireum- stances existing there were two fatal obstacles in his way - the fist, that the moneys disbursed for improvements had been ex- pended not by him but by his predecessor in title, who had been

• rvimbursed for that expenditure in the purchase money he had
• neeived. 'The second, that the appellant's receipt of the one fourth af the compensation money was a severing of the tenancy in cmmon which disentitled him from making this claim in the distribution of the fund.

As to the first objection, I entirely agree with my learned nother the Chief Justice in his statement of the principles to be applied in such circumstances as this, namely, that the making of Jetmanent improvements by one tenant in common in sole oceupa- tion gives rise to an equity attaching to the land analogous to an tquitable charge created by the owners for the time being, await- lng enforcement pending partition or distribution of the value of theland as against the tenants in common. If the resumption had taken place during the possession of the person, who actually 'pended money on the improvements, the respondents would fave been bound to recoup him. But in the purchase money Which the appellant paid for his interest a sum representing that 'Spenditure must have been included. It is difficult to see on what Minciple the respondents are entitled on distribution to get the 'bmefit of that expenditure without any obligation to reimburse siyone, As to the other objection it seems to me that a complete

Buickwoop vested in the Minister the estate and interest of every Seem diem interested, and converted that entate and interest into a claim fy Ormes. compensation to the extent of the interest. ; oOtmers. At the date of the resumption the appellant was tenant in

common with the respondents in the land resumed, and his inte

have been bound, apart from other objections, to give effect both of those rights. I do not see how the appellant ean lose of them - the right to reimbursement out of that portion of compensation money - which belongs to the respondents, beean before the money had been paid into Court he accepted, wit prejudice to his rights, that portion of the compensation which admittedly belonged to him. In other words the rights d all parties interested are fixed and stereotyped as at the date o resumption, and the compensation money must be distributed in accordance with those tights subject to proper allowances for part payments if any made before final adjustment. In my view, therefore, the appellant was entitled to make his claim for te imbursement, notwithstanding the fact that the improvements were made by his predecessor in title, and that he was paid his fourth share of the compensation before the fund was paid Court. I agree with the Chief Justice that the principle down by Lord Justice Cotton in Leigh v. Dickeson (1), and which has been applied in the distribution of the fund in partitions aat administration, ought to be applied to the case of a distributional compensation for land resumed under the Public Works Act, Iti true that the principle applied as what is called a defensive equity, but it is properly raised here. 'The respondents in this appeal the moving parties in this proceeding for distributing thefund. Thr appellant, who came into Court to deny the respondents' right to

fhe fund, is at least entitled to set up this defensive equity jon of it, He is entitled to say: "Although I have no

sétomore than the one fourth of the compensation money, which Thave vesived, you are not entitled to take the enhancement of our compensation money brought about by my expenditure fhout reimbursing me." In order to effectually exercise this 'git the appellant is entitled to the inquiry he asks, and I with the Chief Justice that it should be on the lines

ition precedent to his right to the inquiry claimed by him. as it might tum out on the inquiry that the amount of sand profits for which the appellant is accountable to the sspondents exceeds the amount of reimbursement for improve-

Appeal allowed. Order of the Chief Judge in Equity varied accordingly. Costs of the appellant to be paid out of the und.

Solicitor for respondent Minister, Zhe Crown Solicitor of New auth Wales.

Solicitors for respondents other than the Minister, Perkins &