The term deposit
31The document given by Mr Gibson to Ms Hobbes on 26 December 2010 relating to the term deposit was issued by St. George Building Society in a booklet called "Fixed Term Investment". The booklet described a fixed term investment with a particular nine-digit account number that is a different account number from term deposit for which interest was credited to the passbook account. It appears from the affidavit of the branch manager of the NSW Trustee and Guardian administering Mr Gibson's estate that the deceased had an account with St. George Bank in a single amount of $100,000 referable to a particular account number that corresponds with the number of the term deposit on which interest was credited to the passbook account. This is different from the account number shown on the document given to Ms Hobbes. No submissions were made about the significance, if any, of the different account number. I understood it to be common ground that the $100,000 term deposit shown in the affidavit of the officer of the NSW Trustee as an asset of Mr Gibson is the same term deposit as was referred to in the document entitled "Fixed Term Investment" given by Mr Gibson to Ms Hobbes. The NSW Trustee and Guardian adduced no evidence of his having any other document recording the term deposit.
32The document given to Ms Hobbes related to an investment having an inception date of 27 February 1990 that was to mature on 27 February 1991. The interest rate was 14 per cent per annum for the complete term of the investment. The document stated that interest would be paid monthly to an associated numbered account. The document stated that maturity of the investment would renew. Two transactions were referred to on the document: one dated 27 February 1990 against the notation "DEP" in the sum of $27,126.02 and the other also dated 27 February 1990 against the notation "CQN" in the sum of $72,873.98 for a total of $100,000. The back of the card was headed, "TERMS AND CONDITIONS" and included the following:
"AMOUNT: The minimum investment amount may vary from time to time and is quoted on the Application form.
TERM: The investment is fixed until the expiry date shown on the application and is not available for withdrawal prior to that date (EXCEPTIONS see WITHDRAWALS).
INTEREST RATE: The interest rate payable will be a 'FIXED RATE' for the period of your current term investment.
METHOD OF INTEREST CALCULATION: Interest will be calculated on a DAILY rate for the number of days that the investment is held by the Society. In calculating the number of days, the day of the lodgement will be included, but the day of withdrawal will be excluded.
WITHDRAWALS: A request for closure prior to the expiration of the term of the investment will require ONE (1) DAY's notice and upon such request being accepted, interest will be calculated at a lesser rate.
All withdrawals of term investments will be made by cheque or by transfer to a 'NO FIXED TERM' account upon written request signed by the person/s authorised to operate on the account.
NO NOTICE is normally required if a withdrawal request is made at a Society Office on the expiry date.
Note: The St. George (A.C.T.) Society accepts money on terms that under certain circumstances, not less than one month's notice may be required by the Board before repayment."
33The question is whether delivery of the passbook and the card satisfied the second requirement for a donatio mortis causa, namely that there be "delivery of the subject matter of the gift to the donee or a transfer of the means or part of the means of getting at the property, or, as has been said, the essential indicia of title".
34In Ward v Turner (1752) 2 Ves. Sen. 431; 28 ER 275, Lord Hardwicke LC held that delivery was necessary to make a good donatio mortis causa and that symbolic delivery was insufficient. There, delivery of receipts given on the purchase of annuities was insufficient. Delivery of a broker's note recording purchase of the annuities would also have been insufficient (at 443, 282). His Lordship opined that a donatio mortis causa of stock or annuities, which in their nature were not capable of actual delivery, could not be the subject of a donatio mortis causa without a transfer "or something amounting to that" (at 444, 283).
35In Duffield v Elwes (1827) 1 Bligh NS 497; 4 ER 959, Lord Eldon LC held that there was a valid gift mortis causa of mortgage debts by delivery of the deeds of mortgage and bond.
36In Moore v Darton (1851) 4 De G & Sm 517; 64 ER 938, a borrower provided his lender with a receipt of the moneys borrowed which stated that the loan was to bear interest at four per cent per annum and was not to be withdrawn at less than six months' notice. The lender, wishing to forgive the debt on her deathbed, provided the receipt to her maid to be delivered to the borrower after her death so that the debt would be cancelled. Sir James Knight Bruce (then Vice Chancellor) held that this was a good donatio mortis causa of the debt. He said (at 520-521, 939):
"The delivery of an instrument creating a specialty debt, without which it would not be a specialty debt, as in the case of the bond, would be sufficient for the purpose of a donatio mortis causa; and so Lord Eldon decided as to a mortgage. That, however, I agree does not go to the length of deciding that the delivery of the mere evidence of a debt would be sufficient. In this case there was something more. The document has been called a receipt, and is a receipt in a sense, but it is not a receipt in the ordinary acceptation of that term. It was a document contemporaneous, I take it, with the creation of the debt. ... A mere debt of ₤500 would have arisen from a loan without any writing. But it would not have been a debt carrying interest, without a contract to that effect beyond the advance. That particular contract, I agree, might have been entered into without writing; but as it was created by writing, proof of the writing, if possible, was essential to recovery upon the contract. This writing was therefore in a sense essential to the proof of the contract; and it is this writing which was in substance delivered mortis causa to the person owing the money. ... This was a sufficient delivery to constitute a donatio mortis causa ... "
37Hence, delivery of the receipt which contained the terms of the loan was sufficient delivery because proof of the writing "if possible" and "in a sense" was essential to recovery on the contract. This did not mean that the loan could not have been sued for if the receipt were missing. In such a case the loan could be proved by parol evidence if it was in dispute. But if the writing were available it would need to be tendered to recover on the contract. This distinguished it from the receipts of the annuities in Ward v Turner, where it can be inferred there were more formal documents containing the terms of the annuities.
38In a number of cases the delivery of a deposit receipt issued by a bank when the deposit was made, was held to be sufficient to effectuate a gift mortis causa of the debt the subject of the receipt. In some cases the deposit receipt included a term that it must be presented to the bank to redeem the deposit (Cassidy v The Belfast Banking Co. (1887) 22 LR Ir 68; Re Dillon; Duffin v Duffin; Cartledge v Heals (1898) 24 VLR 576), or such a requirement could be inferred (Porter v Walsh (1895) 1 IR 284; (1896) 1 IR 148). In some cases the report is silent as to whether the deposit receipts contained such a requirement. It can be inferred that if the deposit receipt did contain such a term it was not considered to be material (Amis v Witt (1863) 33 Beav. 619; 55 ER 509 (the terms of the note are briefly described in Witt v Amiss (1861) 1 B & S 109; 121 ER 655); Moore v Moore (1874) LR 18 Eq 474; Cormack v Permanent Trustee Co. of NSW Limited (1903) 4 SR (NSW) 17; Hudson v Spencer [1910] 2 Ch 285); Public Trustee v Young (1940) 40 SR (NSW) 233).
39In In Re Weston; Bartholomew v Menzies [1902] 1 Ch 680 Byrne J held that a gift of shares in a building society was not an effective gift mortis causa by delivery of the share certificates, but that delivery of a Post Office Savings Bank passbook was an effective gift mortis causa of the moneys standing to the credit of the deceased's account with the Post Office Savings Bank. Byrne J followed Re Dillon and Moore v Darton. An Irish case of M'Gonnell v Murray (1869) IRR 3 Eq 460 was distinguished on the ground that in that case it was not part of the contract that the book must be produced whenever any money was deposited or withdrawn, nor that every deposit must be immediately entered in the book, whereas those were the terms of the contract in In Re Weston. Byrne J held that the passbook was more than evidence of, or a voucher for, the debt (at 687). Byrne J said that the "test appears to be whether or not the document, besides acknowledging the receipt of the money, expresses the terms on which it is held, and shows what the contract between the parties is. See Moore v Darton and the judgment of Cotton LJ in Re Dillon." That test was satisfied.
40In Re Andrews [1902] 2 Ch 394 Kekewich J held that whilst delivery of a Post Office Savings Bank passbook was a good gift mortis causa of the balance standing to the credit of the account, the delivery of the book and an investment certificate issued to the deceased by the Post Office Savings Bank recording an investment made by the Post Office on her behalf of government loan stock was not a good gift mortis causa of the investment. The reason was that this would be an extension of the existing authorities which should not be undertaken by a primary judge (at 398).
41In Cormack v Permanent Trustee Co of NSW Limited, there was a gift mortis causa of a sum deposited in a building society and sums deposited to savings banks. The building society issued a "deposit receipt" that acknowledged receipt of the deposit "as per arrangement of December 9th 1898" and set out the terms on which interest was payable. The reference to the arrangement of 9 December 1898 was to an arrangement approved by the Court under the Joint Stock Companies Act. It was the custom of the building society to require production of the receipt before paying instalments of the deposit. There was no dispute that the gift of the money in the savings banks was valid. AH Simpson CJ in Eq applied what was said by Byrne J in Re Weston; Bartholomew v Menzies in dealing with a Post-Office Savings Bank deposit book that the test was whether or not the document, besides acknowledging the receipt of money, expressed the terms on which it was held and showed what the contract between the parties was. His Honour considered that the deposit receipt satisfied that test by saying that the money was held on the terms contained in the arrangement of 9 December 1898 and specifying the rate at which interest would be paid and the times at which interest would be paid.
42In Delgoffe v Fader [1939] Ch 922; 3 All ER 682, a woman in expectation of death delivered a bag to her friend stating that she wished her friend to have everything in the bag including the contents of an envelope within the bag. In the envelope was a deposit book with the Midland Bank showing a credit balance on an account owed to the donor. Luxmore J held that the gift, which was otherwise effective to pass title to the contents of the bag, was ineffective to the moneys in the account because the passbook did not contain the terms of the contract between the bank and the donor and the evidence of the bank manager was that moneys could be withdrawn from the account on written instructions of the customer without its being necessary to produce the passbook. Luxmore J said (at 927-928):
"... there are to be found in the books many cases dealing with the subject-matter of donatio mortis causa-three essentials to constitute such a gift-namely (i) the gift must be made in contemplation of the death of the donor, although not necessarily in expectation of death; (ii) there must be delivery of the subject-matter of the gift to the donee, or, I think, a transfer of the means of, or part of the means of, getting at the property; and (iii) the circumstances must be such as to establish that the gift is to take effect only on the death of the donor. It follows that the title of the donee is not complete until the donor is dead. If the subject-matter of the gift is not completely vested, the question arises whether or not the donee can call upon the legal personal representative of the donor to complete the title. Where there is a donatio mortis causa of a subject-matter which is not completely vested, I think that the true legal aspect is that a trust has been raised under which the donee can call on the legal personal representative of the donor to complete the gift. I think that that aspect of the case was settled in Duffield v Elwes, and has been recognised for years. Of course, in the case of a chose in action, physical delivery is impossible, but it has been held that in such cases the delivery of a document essential to its recovery may be sufficient. The test of whether the delivery of the document constitutes a good donatio mortis causa of a chose in action depends on the answer to the question whether the document expresses the terms on which the subject-matter of the chose in action is held by the donor, or the terms under which the chose in action came into existence."
43In Public Trustee v Young the deceased intended to make a gift to be effective on his death of amounts standing to his credit in an account with the Commonwealth Savings Bank and a sum on fixed deposit with the bank. The bank had issued a deposit receipt in relation to the fixed deposit that specified the terms of the deposit and set out the whole of the terms of the contract between the parties. Williams AJ held that because the document set out all of the terms of the contract between the parties, there was a good donatio mortis causa of the fixed deposit. The passbook for the savings account included a term that the passbook must be presented at the bank whenever it was desired to pay money into the account or to withdraw it. Williams AJ held that the passbook was similar to the passbooks considered in In Re Weston and In Re Andrews and in Cormack v Permanent Trustee Co of NSW Limited and that it was effective. He distinguished Delgoffe v Fader by saying that the passbook in that case was similar to an ordinary passbook of a current account (at 239).
44In an article entitled "Donationes Mortis Causa of Bank Credits" (1943) 17 ALJ 167, Mr R. Else Mitchell (as his Honour then was) queried the line of authority concerning savings bank accounts and suggested that the doctrine of donationes mortis causa should not be extended to choses in action generally. He did not query the authorities to the effect that fixed deposit receipts handed to the donee in contemplation of death could be the subject of valid gifts mortis causa where the receipts contain the full terms of the contract between the bank and the depositor and their production was necessary for the withdrawal of the deposit. He said that in such a case the receipts could be regarded as documents of title to the moneys deposited. He argued that nonetheless in the case of an ordinary account with a savings bank different considerations should apply because a passbook is not contemporaneous with the deposit, because a deposit may be reduced or drawn out at will, and because means are almost invariably provided for issuing a new book to replace one which is lost (at 168). In other words, he considered that the extension of the cases concerning receipts issued for fixed term deposits to credit accounts in savings banks was unwarranted.
45The question as to whether delivery of bank passbooks or deposit books could be an effective gift mortis causa of moneys standing to the credit of the accounts was again considered by the Court of Appeal in England in Birch v Treasury Solicitor [1951] Ch 298; [1950] 2 All ER 1198. In issue was whether delivery of certain savings bank passbooks (other than a Post Office Savings Bank book which was admitted to be governed by the decision in Re Weston) could satisfy the second requirement for a valid gift mortis causa. It was argued (at 306) in reliance on Delgoffe v Fader that delivery of the bank passbooks was not an effective gift of the credit balances in the accounts to which they related because the books did not contain all of the terms of the contract between the customer and the bank and because it was not essential for the books to be produced to effect withdrawals.
46The Court of Appeal said (at 308) that:
"As a matter of principle the indicia of title, as distinct from mere evidence of title, the document or thing that possession or production of which entitles the possessor to the money or property purported to be given, should satisfy Lord Hardwicke's condition",
viz, Lord Hardwicke's condition in Ward v Turner that there be a "transfer or something amounting to that".
47The Court of Appeal held that it was not necessary that the document record all of the essential terms of the contract (at 309, 311). The real test was "whether the instrument 'amounts to a transfer' as being the essential indicia or evidence of title, possession or production of which entitles the possessor to the money or property purported to be given" (at 311). The essential matter was whether production of the books was necessary to effect withdrawals (at 312). The books stated that their production was required to effect withdrawals, but this term was not always insisted on by the banks. One bank officer said, "We always insist on the production of the passbook except in exceptional circumstances where hardship may be caused - for instance with a lost passbook". An officer of another bank gave evidence that, "The rule is that the book must be produced ... but ... the bank is a little easy about the rule and is prepared to relax it from time to time". The Court of Appeal held that such practices did not mean that the contractual term as to production of the book had ceased to be operative or had become a dead letter (at 313) and therefore the passbooks were the essential indicia of title and that delivery of the book "amounted to transfer" of the chose in action to which the book related (at 313).
48In Public Trustee v Bussell Cohen J held that delivery of a share certificate could be an effective gift mortis causa as a share certificate constituted the indication of title issued by the company which was an essential document for the purposes of the shares being transferred, and not merely evidence of title in the way in which the phrase was used in Birch v Treasury Solicitor (at 119). His Honour said (at 118):
"It seems to me that on principle there is no distinction between the delivery of a bank passbook, where it is necessary to have a signed withdrawal slip in order to obtain the money in the account, and the delivery of a share certificate where it is necessary to have a signed transfer in order to have the shares put in the name of the donee. In each case there has not been an immediate gift but a necessary means of obtaining the property has been delivered on a conditional basis."
49In Tawill v Public Trustee of NSW, Estate of Birukoff [2009] NSWSC 256 Brereton J held (at [20]) that it was too late to consider that the passbook of a savings account could not be the subject of a valid donatio mortis causa due to the number and antiquity of the authorities. In that case it was held both by Hodgson CJ in Eq (as his Honour then was) in 1998 and by Brereton J in 2009 that delivery of bank statements did not satisfy the requirement for delivery of indicia of title. The same conclusion was reached in respect of a document entitled a "certificate of deposit". Brereton J explained (at [26]) that the certificate was not a certificate of deposit properly so called. It was not issued as a receipt or a record of contractual terms contemporaneous with the relevant deposit being made. Rather, it was a statement of an account which stated an opening balance, a closing balance and interest accrued during the interval and the interest rate. Brereton J said (at [26]):
"It could not be suggested that the presentation of either of these documents was essential to allow withdrawal of the funds in question. If anything was required for that purpose, it would have been the original certificate issued at the time of the deposit being made. I do not think either of these documents can conceivably be regarded as indicia of title in the sense which that term is used in the context of donatio mortis causa."
50Applying these authorities it seems clear that the delivery of the bank passbook was delivery of an essential indicium of title to the money in the bank account to which the passbook related within these principles. The passbook contained a stipulation that it be presented for each transaction even if the bank might have waived that requirement, the document is on all fours with the passbooks considered in Birch v Treasury Solicitor. The passbook was an essential indicium of title to the account so that delivery of the book "amounted to transfer" of the chose in action to which the book related, even though there was no effective inter vivos gift because Mr Gibson did not do all that was necessary to be done on his part to transfer the moneys in the account to Ms Hobbes which would have required in addition to the delivery of the passbook the signing of a withdrawal form.
51The position of the $100,000 term deposit is more difficult. There was no term or condition stated on the card that the presentation of the card was necessary in order to withdraw the deposit. There was no evidence from the St. George Bank (as the St. George Building Society had become) that there was any need to present the card to make a withdrawal, or otherwise deal with the account. Hence, counsel for the defendant submitted that applying Birch v Treasury Solicitor, it could not be concluded that the card was an essential indicium of title to the deposit. It was not shown that the card was part of the means that would be needed to obtain the deposit. Although the card contained what appeared to be the essential terms of the contract at the time the deposit was originally made, in Birch v Treasury Solicitor the Court of Appeal held that that was not the relevant criterion.
52I acknowledge the force of this submission. The real difficulty lies in distinguishing between the "essential indicia of title" as distinct from "mere evidence of title" in relation to a chose in action that is not required to be evidenced in writing, and for which the writing could therefore not be truly essential to recovery of the debt. In all of the cases concerning deposit receipts and passbooks it is highly unlikely that the deposit receipt or the passbook was in truth a document without which the accountholder could not obtain repayment of the debt owed by the bank. It is hard to believe that any bank would say:
"We acknowledge you deposited this money with us on terms that it would be repaid by now, but it was a term of our contract that the passbook or the certificate of the deposit be produced to obtain repayment. As you cannot produce that document we do not have to repay the money you deposited with us."
The evidence in Birch v Treasury Solicitor showed that the banks did not insist upon such a term. A term requiring the passbook or the certificate of deposit to be produced to claim repayment would almost certainly be qualified by an implication that it be still within the power of the depositor to produce the document.
53In Moore v Darton, Sir James Knight-Bruce said of the writing that was the essential indicium of title in that case that "proof of the writing, if possible, was essential to recover upon the contract." (my emphasis). If the writing were available and the lender were put to proof, the lender would need to tender the writing to prove the terms of the contract. That would be so notwithstanding the absence of any express term that the writing had to be produced to obtain repayment. But that would not preclude proof of the loan by other evidence (e.g. the borrower's own books) if the writing could not be produced.
54In this case I infer that the card was created contemporaneously with the deposit. It was the proof given by the Building Society to Mr Gibson of the deposit. In all likelihood he would not have needed to produce the card in order to redeem the deposit, provided he produced satisfactory proof of identity. The St. George Building Society would have had its own record of the deposit. However, if it were necessary for Mr Gibson to sue to recover the debt, then production of the card to prove the fact of the deposit, to prove that the deposit was made by him, and the terms on which the deposit was made, would be as essential as would have been proof of the form of receipt provided to the lender in Moore v Darton. In my view, notwithstanding the absence of any statement on the document that it needed to be presented to effect a withdrawal of the deposit, the document was the indicium of title, delivery of which made the gift of the deposit moneys effective.