Crichton v Crichton [1930] HCA 14

Crichton v Crichton [1930] HCA 14 - HCA 1930 case summary — Zoe

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received and held them for him. On 11th July 1918 the appellant deposited the first and on 16th July 1918 he deposited the second with the Commonwealth Bank of Australia at Melbourne for safe custody. An official receipt of the Bank was given to the appellant. The Bank entered his holding in a book kept as a register of bonds held for safe custody. In that book there appeared a record showing that the number of his official receipt was A6407, that he was the holder of the two bonds mentioned, that they were received on the dates mentioned, and there was, of course, a blank in the column for entries of date when given up. He collected the interest accruing on the £2,000 worth of bonds in 1918; it was paid into his bank account. How the interest could be paid by the Commonwealth on bonds, that is, on coupons of the bonds, which the Bank must have forwarded to the Treasury or have cancelled for the Treasury, without the bonds having been actually issued, it is difficult to imagine. It is equally difficult to understand how non-existing bonds could be converted. By way of internal practice for its own housing convenience, however, and without any direction of the customer, or, indeed, so far as appears, any knowledge on his part, all bonds lodged for safe custody are cancelled. An equivalent amount of the same issue and rate is inscribed in stock in the name of the Bank. The cancelled bonds are forwarded to the Treasury, and there destroyed. This was done with respect to the bonds of the appellant; for otherwise Mr. Jeffrey's evidence as to the practice would be nonsense in this case. The result as between the Bank and the appellant was that the bonds lodged still existed and were demandable on production of the receipt. The receipt represented the obligation of bailment. True, the identical pieces of paper called bonds could not be insisted upon, but bonds corres- ponding in rate and issue could. The appellant's right vis-d-vis the Bank was not and could not be a right by way of contract to issue bonds, but a right of property, a right to have restored to him in specie or in kind the bonds he had lodged and delivered to the bank as bailee. This right is beyond question (Wilkinson v. Verity (1) ). The Bank, it must be remembered, does not issue bonds: that is the function of the Treasury.

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her or taken into her presence, or seen by her, until years afterwards, when she obtained it from his drawer in the safe. Possession of it was always retained by the appellant, and it was taken from the safe without his consent or knowledge. In those circumstances the question is was there a gift or a trust of the bonds? Irvine O.J_ held that there was a gift because, in addition to the undoubted intention of the appellant to transfer to his wife the property in the bonds, there was also in law the necessary act of delivery. The learned Chief Justice considered the words "I will keep the safe custody receipt in my safe" as meaning " for you." With that I agree. Once the wife's story is accepted, it is only consistent with the intention to transfer the property to her that the safe custody receipt should be kept for her, and not for the appellant. But the learned Chief Justice further thought that these words brought the case within the law of delivery as stated by P. O. Lawrence J. in In ve Hawkins; Watts v. Nash (1), quoting In re Wasserberg ; Union of London and Smiths Bank Ltd. v. Wasserberg (2). The distinction between the two cases, however, is clear. To make the quoted passage applicable, the safe custody receipt would have had to be actually given to Mrs. Crichton and handed back to the appellant for safe custody. P.O. Lawrence J. (3) is careful to say that the subject matter of the gift had been " actually " delivered to the donee. To constitute a gift, there must be a change of property at law (see Strong v. Bird (4) ). And " words of present gift show an intention to give over property to another, and nof retain it in the donor's own hands for any purpose, fiduciary or other- wise" (Richards v. Delbridge (5) and Heartley v. Nicholson (6) )- There must, in short, be a dispossession of the donor and an investment of possession in the donee. In Milne v. Grant's Bxecutors (7) Lord Young says : - Gifts inter vivos. - I quite agree that a gift of any amount of money or of any article of property may be completely made and well established by parole evidence. But it must be made. An expression of an intention to give anything - a piece of plate, or a horse - is nothing of itself, it willimpose no legal

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mey - if the donor hands the money or gift out of his own possession o that of the donee - then that he has so handed it over with the tention of bestowing it in gift is always capable of being proved parole. But it must be handed over. The party giving must spossess himself - put it entirely beyond his own control and his nuse - and put it in possession of the party to whom he gives it." M'Nichol v. M'Dougall (1) Lord Young, speaking of a deposit ceipt, says : - " In order to make the gift thereof either inter vivos or mortis causa, the donor must divest himself of and invest the donee with the subject of the gift. I think that this is an essential of every gift, whether inter vivos or mortis causa. Taking the case of donation inter vivos, if anything remains to be done in this way, th en there is no gift, for no Court will interfere to compel to be done that which remains ex hypothesi to be done. If there has been omplete divestiture of one party and complete investiture of the other, then the gift is irrevocable, but otherwise there is no gift." passing, I may observe that the authorities cited as to a pledgor's ! nged nature of possession, so as to complete the pledge, are not plicable, for the reason that, being a transaction for value, the does not act on the same principle as in the case of a gift, by to interfere to compel the actual delivery of possession. lf a donor has already parted with the possession to the donee to another person who is directed to hold and consents to hold eforth for the donee, that is sufficient. But so long as the r still retains possession, a verbal statement that he holds for e donee does not constitute delivery requisite to perfect a gift. But though there was no gift, there was a trust. The bonds were 'safe custody, and not immediately obtainable. The receipt was indicium or muniment of title. It was not a mere symbol, what Lord Hardwicke L.C. in Ward v. Turner (2) called dence of the thing, or part of the title to it," or "' the way of ing at the possession" of the bonds. If actually delivered, hat would have been enough to perfect the gift. But still, not ing been delivered, it does not follow that the intended benefit

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quite distinct as to that. But that does not conclude the matter. Besides words of intended gift, there may also be words of intended trust. Thatis plainly stated by Bacon V.C. in Heartley v. Nicholson (3). He says: " Without incurring the danger alluded to" (that is, in Milroy v. Lord), "it is not impossible that an intending donor may by acts or words, in addition to and independent of the imperfect gift, have constituted himself a trustee." In the present instance, if the donor had in conclusion said "I hold the safe custody receipt in trust for you," then no doubt the key, so to speak, to the bonds would have belonged to the wife, the right to obtain them from the Bank as between husband and wife would have been hers. Now, in Richards v. Delbridge (4) Jessel M.R. says that if the owner of a bond, of course with the intention of passing his interest to another, says "I undertake to hold the bond for you," that would undoubtedly amount to a declaration of trust. Consequently, in the present instance, the words "I will keep the safe custody receipt in my safe," with the necessary implication, "for you," must, in view of their collocation be regarded as a declaration of trust, carrying with the receipt that of which it was the title instrument, namely, the bonds. I therefore think that as to the wife's bonds, this appeal fails. 2. The Son's Bonds. - The bonds now held by the son are the result of his conversion in 1927 of bonds purchased by the appellant in 1919 in the following circumstances : - In July 1919, while at Vancouver, he was going to give his son a present of £1,000 in bonds, and they would be for him when he became twenty-one. He obtained a bank draft on the Bank of Australasia, Melbourne, expressed to be in favour of his son, and, without so far as appears, his son knowing what it was or its intended purpose, told his son - to sign his name on the back under the words written by the appellant himself, "' Pay to the order of John Cooke & Co." His son, thena » youth of thirteen, obeyed. Except for the physical act of writing his A

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{ Commissioner of Stamp Duties (Q.) v. Jolliffe (1) covers case, as I venture to think, with a considerable margin to Now, when the circumstances are taken into consideration as to intention, we find that (1) the declared intention was to let the son have the bonds when he became twenty-one, that is, in about ight years' time ; (2) the son was told nothing except to sign his name, as he had done for his father in other matters ; (3) the onds were stated to be held on the appellant's account, and he so regarded them; (4) on appellant's return he obtained the bonds, and on 9th March 1920 lodged them for safe custody with the Com- monwealth Bank on his own account and directed the interest to be paid into his own Savings Bank account, which was done; (5) the son's understanding was in accord, because in exhibit M, Tth September 1927, a few months after he obtained the bonds and interest on the Master-in-Equity's order, he used the expression "my getting through law on your money." Both parties being alive and giving evidence, the case comes directly within the words Lindley L.J. in Ex parte Cooper ; In re Foster (2), cited in Lewin on Trusts, 13th ed., at p. 188, that "' there is no occasion to resort 'to any presumption; the question is one of fact." And the evidence sall one way. It is, I think, impossible to hold that the original bonds up to 1927 were other than those of the appellant, legally and equitably. No doubt he had earmarked them as a prospective advancement to his son, and very probably had, as in the case of wife, prepared, as he thought, the ground for saving probate duties in case he died before the son arrived at twenty-one. But $ to his son, his only intention was in futuro, and so there was neither present gift nor trust. 'This entirely accords with the view taken by Irvine C.J. up to this point. His Honor says: " At that stage no effectual gift was made to the son, nor was there, in my opinion, any enforceable declaration of trust in his favour." "But i, says his Honor, "it was contended that what was subsequently done was sufficient to create such a gift perfected by ery." The learned Chief Justice then proceeds to state the s relative to the third ground of the son's claim to the bonds,

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as above mentioned. He holds that though the terms of the Lunacy Act are not followed, yet that what was done was equally good. That is to say, the Master-in-Equity's own order given in May 1927 to the Commonwealth Bank, without any authority from the appellant, to hand to the son the bonds held on account of the appellant followed by the appellant's written approval in the follow- ing August while he was still a patient, was legally equivalent to an alienation by the appellant in May, then consented to by the Master under sec. 195. That section is as follows: "195. Until a patient has obtained his discharge under this Act he shall be deemed incapable of dealing with or transferring or alienating or charging his property or any part thereof without the order of a Judge of the Court or without the written consent of the Master, except as. to moneys or property which have been handed over to the patient by the Master in the exercise of the discretion vested in him by the last preceding section." Ido not think it is a correct construction. of the section that it enables a Judge or the Master to alienate the property of a lunatic, provided the lunatic at any time after, and while still under disability, expresses his thanks to the Judge or the Master for what he has done. Such a construction entirely overlooks the real pith of the section. Primarily, a lunatic patient: is incapable of exercising the necessary mental capacity for dealing with property. But there are degrees of insanity, and there are possible intervals of lucidity. Provision is made, therefore, if at a given time it is thought by Judge or Master that the patient is in a position that he can and ought to dispose of his property for a. given purpose, the Judge may, by order, and the Master, by consent, enable the patient to exercise his will. " Nothing is more unfortunate: than a disturbance of the plain language of the Legislature by the attempt te use equivalent terms," said Lord Denman C.J. in Everard v. Poppleton (1); and that dictum applies with great force to sec. 195. of the Lunacy Act. Apart from all other considerations, it is a totally different thing to separate the times of the lunatic's action and the official consent. The consent is a recognition of capacity at a certain time. Here there is no such recognition of capacity in August 1927. The alienation relied on must be at that date, and.

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name of his wife of the bonds, or of the right to the bonds, but said_ he would like the account marked in trust for him, and that the bonds were his property. The Bank officer could not, under his regulations, recognize any trust, and said that once a transfer was made into the wife's name the Bank could recognize her only. The appellant left the Bank, but he called again a few days later, and on this occasion he signed the following directions in the Bank's record of bonds held for safe custody: " Please transfer two thousand - pounds to the name of Penelope Crichton." The transfer was : completed on 22nd May 1919. The entry of the appellant's name in the Bank's record as the holder of the bonds, or of the right to ' the bonds, was struck out and the wife's name substituted. The - safe custody receipts in the appellant's name were cancelled, and a safe custody receipt was issued in the name of Penelope Crichton, his wife, for £2,000, and it was handed to the appellant. It is not clear on the evidence whether the wife, at this date, signed an authority to the Bank to hold the bonds for safe custody on her account, but it is clear that the Bank officer required such an authority and that the appellant promised to obtain it. The appellant opened an account on 22nd May 1919 in the name of his wife, with a deposit of 1s., in the Commonwealth Bank (Savings Bank Branch), obtained a specimen of her signature for the Bank, and instructed it to pay all interest accruing upon the £2,000 into that account. He kept the bank book in his possession, but he told his wife that he had opened the account in her name. So far as the evidence goes, however, the transfer of the bonds, or of the right to the bonds, into her name was not communicated to her. - The appellant, his wife and family soon after left for Vancouver, and returned again early in 1920. The appellant then discovered that his instructions to the Bank to pay interest on the £2,000 into his wife's account had not been observed. He thereupon obtained his wife's signature to the following document addressed to the Bank : - ' I desire you to hold Treasury bonds in the Commonwealth war loan of £2,000 which have been taken up by me for safe custody on my account at your Melbourne Bank. I shall be glad if you will pay interest half-yearly to the Commonwealth Bank." At the same time he said to his wife : - " Penny, I am giving yo

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the right to the issue of the bonds. Again I do not stay to inquire whether these acts of the Master, coupled with the appellant's subsequent approval, operated to complete and perfect the gift or trust in favour of the son. (See Lunacy Act 1928, sees. 131, 182, 195, 207.) In 1927 the appellant accused the son of " sponging " upon him and obtaining his education out of the appellant's money. The son resented the imputation, and said he would let him have the bonds back; in September 1927 he wrote to the appellant as follows : - "I propose therefore to replace this year's interest and all future interests to accumulate, you to have the capital and interest when you get better. If you wish me not to hold it in trust 4 am willing to transfer it to the Master to hold on your behalf." But the son never handed the bonds to the appellant, nor did he transfer the right to obtain the bonds to either the appellant or the Master : the restoration rested in intention, and was never perfected or completed. The appellant was discharged from the mental hospital in February 1929, and at that time was of sufficient capacity 'to understand what he was doing. About April of 1929 the son found, as he says, that "it would be intolerable to stay in the house" with his father "and study as a law student," and he proposed to go to Western Australia. The mother was very upset, and intervened. Ultimately the son agreed to remain at home if the appellant confirmed him in possession of the bonds or of the tight to the bonds. The son then drafted the following document, dated 3rd April 1929, which the appellant signed: "I William Francis Crichton hereby undertake to waive any cause of action that I may have against my son John Burns Crichton, and I further undertake to destroy all letters written by the said John Burns Crichton in which he stated that he is holding £800 and £200 bonds in trust forme. . . ." Now the bonds had been purchased on the appellant's instructions for the son: they had either been handed over to the son by the Master, or the Master had transferred the son the right to obtain them from the Bank. Moreover, the Bank had entered in its record of bonds held for safe custody t the son was the holder of the bonds, and had issued the usual receipt to and in the name of the son. All this the appellant

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which had been opened in her name on 21st May 1919, but whether

this was handed to the Bank on 22nd May 1919 or sent later pursuant _ to a request made on that day is uncertain. The Bank, however, noted up its register "Transfer completed and receipt issued
-22.5.1919." The appellant retained possession of the receipt issued in his wife's name and did not hand it to her; but the oral evidence, which describes the transaction and narrates the discussions _ between the Bank's officer and the appellant, makes it clear that he did not take his wife's name as a mere alias. He intended to invest _ her with the title to the bonds and the Bank intended to become responsible for them to her as an independent person. But the same evidence suggests that he did not mean them to advance his wife, and that, although he considered the transaction would provide for her in case of his death, his immediate purpose was to evade income tax. If this be so, it would follow that his wife, by reason of this transaction, became the repository of a legal right ex contractu _to receive from the Bank bonds amounting to £2,000 and that the appellant, subject to any question of illegality of purpose, was the object of a resulting trust in respect of this valuable right. Shortly afterwards the appellant, with his wife and son (who is the other respondent upon this appeal), left Melbourne for Vancouver whence they returned in February 1920. The appellant upon his return found that the Bank had not in fact paid into his wife's Savings Bank account the two half-yearly sums which, in the meantime, had accrued for interest in respect of the bonds. The evidence does not make it clear how this omission came about, but it seems ely that the Bank had mislaid the instructions which the _ appellant's wife had signed requesting it to hold the bonds on her account for safe custody and to pay the interest to her Savings Bank count. At any rate he obtained his wife's signature to another "document to the same effect and handed it to the Bank, requesting 'it to credit her with the two sums of interest already accrued. According to the evidence of the appellant's wife, which the learned Chief Justice of Victoria, whose judgment is under appeal, accepted 'as in substance correct, when the: appellant asked her to sign this ument he showed it to her and said '' Penny, I am giving you

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His Honor, having considered the appellant's subsequent conduct including a letter written in January 1928 in which he says he made provision for his wife and son, adopted the view that, by this conversation, the appellant expressed his intention of then giving the bonds to his wife and of holding the safe custody receipt on her behalf. This finding was attacked upon the ground that the proper conclusion from the evidence was that no conversation in which the appellant so expressed himself took place; but an examination of the documents put in and of the transcript of the testimony given before the learned Chief Justice shows that the evidence amply warrants his conclusion. It follows that the question whether the appellant or his wife had the beneficial interest in the right to the bonds must be determined upon a basis of fact which, shortly stated, is that the appellant formed and communicated to his wife an intention of then and there giving to her the beneficial interest in a chose in action which at law was vested in her subject in equity to a resulting trust to him, and of holding the written evidence of her legal right as bailee for her. The question is whether the person who has such an equitable right can voluntarily release or impart it to the repository of the legal title by mere oral expression, or communication, of his present intention to do so. The provisions of sec. 9 of the Statute of Frauds, which stood as sec. 73 of the Victorian Trusts Act 1915, required only that grants and assignments of any trust or confidence should be in writing. These words do not naturally describe or include a transaction by which the equitable or beneficial interest. is released or made over to the legal owner, and no judicial decision has so extended them. Sec. 53 (1) (c) of the Victorian Property Law Act 1928, which replaces these provisions and uses language which perhaps has a more general operation, does not apply to thiscase. The absence of a writing, as distinguished from a deed, is therefore unimportant. But a deed is not generally necessary to assure equitable interests. An equitable assignment

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for the father and not for the son, so that, when he became a lunatic tient, his intended gift remained imperfect, and that what was done by the Master could not in point of law, even with the patient's subsequent approval, operate to divest the patient of his beneficial interest. But, even so, the appellant took a final step after he became sui juris which left his son beneficial owner of the right to the bonds. He was discharged in February 1929. Some difficulties arose soon afterwards between the father and the son, as a result of which the latter drew up a document for his father to sign by which the appellant undertook to waive any cause of action that he might have against his son, and further undertook to destroy all letters written by his son in which he stated that he was holding the bonds in trust for the appellant. At the instance of his wife the appellant signed this document. Its language, if construed apart from the circumstances to which it was intended to apply, might appear to express a future intention or promise to refrain from setting up or enforcing an equitable claim rather than its present renunciation or release. But, when the situation of the parties is considered, the meaning and object of the document appear to be in enough. Although it is loosely expressed, it sufficiently discloses an intention to confirm the son's title to the bonds as eneficial owner and to abandon to him any equitable interest in them. It is true that it expresses an intention to waive or relinquish in favour of the legal owner a possible equity rather than to give him n admittedly outstanding beneficial interest. But this distinction ot be material. What is material is the difference between a 'mere statement on the one hand of future intention not to insist upon an equitable right, which probably is ineffectual unless it is accompanied by the other elements requisite to the formation of contract, and on the other hand an immediate renunciation or elease to the intent that the legal owner shall thereupon be or become the full beneficial owner. In the latter case the principles eady discussed apply to make unnecessary both a consideration daseal. The son contended that in fact he did give a consideration ; but, be this as it may, it is enough that the father definitely expressed an immediate intention of giving up to him as legal owner any

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