McCoy v Caelli [2010] NSWSC 1233 | Case summary

McCoy v Caelli [2010] NSWSC 1233 | Case summary | Zoe

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" I GIVE all my title and interest in the property at Tuffins Lane Port Macquarie in the State of New South Wales and more fully described as Lot 1 on DP511056 to such of my son PAUL ANTHONY CAELLI and my daughter FIONA MAREE CAELLI absolutely as survive me for the thirty days and if more than one then as tenants in common." 10 On 15 July 2008, Mr Illidge arranged for the transfer to be sent to an agent in Sydney to lodge it for registration at the Department of Lands. On 8 August 2008, the Sydney agent advised Mr Illidge's office that the transfer had been lodged. There is no evidence as to the exact date of lodgment, but it was common ground that it was lodged after Mr Caelli's death on 4 August. Mr Sneddon, counsel for the first defendant, conceded that it was lodged three days following his death. Mr Illidge says that he only became aware of Mr Caelli's death in the following week. 11 On 8 August 2008, the Registrar-General wrote to Mrs McCoy to notify her under s 12A and s 97(5) of the Real Property Act 1900 (NSW) that the transfer had been lodged and given dealing no. AE137074, and that it was the Registrar-General's intention to register it within 30 days in which case the joint tenancy would be severed under s 97, unless a court order prevented such registration. After some correspondence between the Registrar-General and Mrs McCoy's solicitors, Mrs McCoy lodged a Notice of Death with the Department of Lands on 28 August 2008 where it was given dealing no. AE187549. She instituted these proceedings the next day. 12 On 4 September 2008, Brereton J ordered that the Registrar-General be restrained from registering the transfer until further order. Thus the title to the property currently shows two unregistered, conflicting dealings being the transfer and the Notice of Death. His Honour's reasons were published in McCoy v Estate of Caelli [2008] NSWSC 986; (2008) 13 BPR 25,515. The claims for relief 13 The plaintiff contends that Mr Caelli's acts in signing the transfer and instructing his solicitor to lodge it for registration did not sever the joint tenancy before he died, such that his interest in the property devolved onto her on his death. Thus the plaintiff seeks declarations that first, she is the "sole legal and beneficial owner" of the property and secondly, that she is entitled to be recorded as the sole registered proprietor in the register of titles maintained by the Registrar-General. She also seeks orders that the Registrar-General reject the transfer and register the Notice of Death. 14 The plaintiff advances two alternative claims in the event that the court finds that the joint tenancy was severed. First, that the first defendant holds the property on resulting trust for her because she paid the full purchase price, stamp duty and other costs associated with the purchase of the property, rates, water charges, and insurance and maintenance costs, as well as the costs of various improvements and repairs from the time of purchase to the present day. Secondly, that the first defendant holds on trust for the plaintiff a share of the tenancy in common in proportion to her contributions to the improvements and repairs to the property. 15 Ms Caelli denies that Mrs McCoy paid the acquisition costs for the property and contends that Mr Caelli paid half of the purchase price. By her cross-claim, the Ms Caelli seeks declarations to the effect that she has a beneficial interest in one half of the property or that Mr Caelli severed the joint tenancy at law or in equity. 16 I consider first whether the joint tenancy was severed, and consider the alternative grounds if it was not. Was the joint tenancy severed? 17 As the transfer was not registered prior to Mr Caelli's death, there is no issue about its effecting a severance at law. 18 Mr Sneddon, counsel for the first defendant, submits that Mr Caelli severed the joint tenancy in equity before his death. He contends that the relevant inquiry is whether Mr Caelli did all that was necessary for him to have done to effect a transfer and perfect a gift to himself, and that Mr Caelli had met that test. That submission is grounded in the doctrine of perfected gift discussed by the High Court in Corin v Patton (1990) 169 CLR 540. 19 Mr O'Brien, counsel for the plaintiff, submitted that the inquiry identified by Mr Sneddon is incorrect as the perfected gift doctrine has no application in this case, and that the question is whether Mr Caelli's execution of the transfer severed one of the unities of title, ownership or possession that characterises a joint tenancy. The plaintiff's submission that there had been no severance at equity was put forward on two bases. First, Mr Caelli's execution of the transfer, making of the bequest in his will, and giving of instructions for lodgment, were insufficient acts to sever the joint tenancy in equity. Those acts amounted to nothing more than a "mere declaration" of an intention to sever, which is insufficient to effect severance. In short, nothing short of registration would have severed the joint tenancy either at law or in equity. Secondly, Mr Caelli's death revoked Mr Illidge's authority to lodge the transfer for registration and therefore it could not effect severance. 20 I will first consider the question whether Mr Caelli's acts were sufficient to sever the joint tenancy in equity. 21 In granting an interlocutory injunction, Brereton J decided this question. His Honour held that there could be no unilateral severance of a joint tenancy of land under the Real Property Act until registration of the transfer, and that an unregistered unilateral transfer effects no severance in equity. His Honour also held that if there could be a severance in equity by unilateral transfer prior to registration, it was not effected in this case because the deceased did not do all things necessary on his part to be done to effect a severance (at [20]-[32]). His Honour observed that the issues were issues of law and did not depend on the resolution of contested issues of fact. 22 I would not depart from his Honour's conclusions unless satisfied that they were clearly wrong. I do not consider them to be clearly wrong. Rather, I have come to the same conclusion on the first issue, and it is unnecessary to decide the second. 23 In William v Hensman (1861) 1 J & H 546 (at 557-558) Page Wood VC said: "A joint-tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi . Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund - losing, of course, at the same time, his own right of survivorship. Secondly, a joint-tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested. You must find in this class of cases a course of dealing by which the shares of all the parties to the contest have been effected…" 24 Only the first method of severance identified in Williams v Hensman, that is, "an act of any one of the persons interested operating upon his own share," is relevant for present purposes. Section 97 of the Real Property Act provides a statutory mechanism for severing a jointure in respect of Torrens title land in that way. Had the transfer been registered before Mr Caelli's death, the joint tenancy would have been severed under that provision. 25 Section 97 relevantly provides as follows: "97 Severance of joint tenancy by unilateral action

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(1) Registration of a transfer by a joint tenant of the joint tenant's interest in the land that is the subject of a joint tenancy to himself or herself severs the joint tenancy. (2) If a joint tenancy is proposed to be severed by unilateral action by one joint tenant, the Registrar-General may require the person who proposes to sever the joint tenancy to provide the Registrar-General, before recording the instrument that severs the joint tenancy, with: (a) the names and addresses of the joint tenants or, if the addresses are unknown, evidence of the efforts made by the person to locate the addresses of the joint tenants, and (b) a statement that the person is not aware of any limitation or restriction on his or her capacity or entitlement to sever the joint tenancy (arising, for example, from the capacity in which the person holds an estate or interest in the land concerned or from a private agreement). (3) The Registrar-General may require the person who proposes to sever a joint tenancy to provide additional information concerning: (a) other persons who may be affected by the severance of the joint tenancy, and (b) any limitation or restriction on the capacity or entitlement of the person to sever the joint tenancy, and (c) any other matter that the Registrar-General considers appropriate. … (5) The Registrar-General must give notice of the lodgment of a dealing for registration or recording that may sever a joint tenancy to all joint tenants in the joint tenancy (other than any joint tenant who executed the dealing, or on whose behalf the dealing was executed)… (6) Despite subsection (5), the Registrar-General is not required to give notice of the lodgment of a dealing for registration or recording that may sever a joint tenancy to a joint tenant in any of the following circumstances: … (c) if the dealing concerned is witnessed by the joint tenant and the dealing indicates that the joint tenancy is to be severed…" 26 The ability to convey property to oneself is made possible by s 24 of the Conveyancing Act 1919 (NSW), which provides:

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"101 Registration of survivor of joint proprietors (1) Where a person becomes entitled to an estate or interest in land: (a) upon the death of a person registered with the person as joint proprietor of that estate or interest, or (b) by the determination or defeasance, by death or the occurrence of some other event, of an estate or interest in land, the Registrar-General may, upon application in the approved form by the person so entitled and proof to the Registrar-General's satisfaction of the death or other event, as the case may require, register that person as proprietor of the estate or interest…" 28 Prior to s 97's coming into force on 1 January 1998, there was authority for the proposition that a person could unilaterally sever the joint tenancy by transferring his or her interest to himself or herself (McNab v Earle [1981] 2 NSWLR 673 and Freed v Taffel [1984] 2 NSWLR 322). Those authorities establish that a unilateral severance requires an actual alienation of the property interest at law or equity. 29 In McNab v Earle, Needham J said the question was whether the act of the joint tenant "in executing the transfer to herself, an act not communicated to the other joint tenant and not perfected at law by registration, amount[ed] to an 'assignment … of (her) share' or to an 'act … operating upon (her) own share'" (at 676). In that case, a joint tenant, Mrs McNab, did not want her husband, the other joint tenant, to know that she wanted to sever the joint tenancy. She executed a memorandum of transfer to herself in consideration of $1 and left the unregistered transfer with her solicitor to retain until her death. The transfer was kept secret until she died. She died leaving a will that gave her interest in the property to her son to hold on trust for her husband. Needham J held (at 677): "There is, of course, in respect of Real Property Act land, no act which equates with delivery of a deed. Apart from equities or protection against notice by virtue of s 43 A of the Real Property Act , 1900, a transfer has no operation prior to registration. In the present case no equity can arise nor can protection be required or acquired against notice. The transfer, in my opinion, being inoperative, was at all times revocable, just as the will was, and, if Mrs McNab had directed [her solicitor] to destroy one or other or both of them he would have been under a duty to comply with such an instruction." 30 In Freed v Taffel, Mr Taffel sought to sever a joint tenancy by signing a memorandum of transfer purporting to transfer property to himself as a tenant in common, but the transfers were not registered before his death. He had manifested a clear intention to sever the joint tenancy by issuing a summons to seek a declaration that he and his wife held the property as tenants in common and an order that trustees for sale be appointed pursuant to s 66G of the Conveyancing Act, and by swearing an affidavit in support. He deposed in the affidavit that he wanted to sell the property and use his share of the proceeds, but averred that due to his wife's mental incapacity, it was not possible to do by arrangement with her. The summons never came on for hearing. 31 Helsham CJ in Eq considered that McNab v Earle had already determined the question presented to the court as to whether severance had been effected before Mr Taffel's death. Consistent with McNab v Earle, his Honour considered that a joint tenant could sever the joint tenancy by transferring his or her interest to himself or herself. His Honour said that it was "beyond argument" that the law in Australia was that a mere declaration by a joint tenant of his intention to sever the joint tenancy, whether communicated or not, or written or otherwise, was insufficient to effect a severance. His Honour stated the problem (at 324-5) as: "…how far along the path between these two extremes [an intention to sever and legal assignment] must the party who formed the unilateral intention to sever the joint tenancy go before he, or his legal personal representative, can claim that a severance has been effected? Whether he had gone past the point where he could 'withdraw' if he wanted to, and so leave the jointure unaffected, was one way of putting it; whether he has 'carried his acts to such a point as to preclude him from claiming any further right by survivorship' was another ( Re Wilks [1891] 3 Ch 59 at 62); whether he could have destroyed the deed by which he purported to convey his interest before registration might be a third ( Re Sammon ); whether he had supplemented his intention with some act that would make it impossible in equity to abandon that intention was the way it was put in the case before me." 32 His Honour stated his conclusion as follows (at 325):

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Alienatio rei praefertur juri accrescendi [Alienation is favoured by the law rather than accumulation] , is a maxim in equity; but then it must appear to be an actual alienation, and not from inference and implication only, without any express declaration of the parties." (citations omitted) 34 In Corin v Patton Mason CJ and McHugh J observed that the Lord Chancellor's view has been consistently applied in Australia, including in McNab v Earle (at 547). 35 In Corin v Patton, Mr and Mrs Patton were joint tenants of property. Mrs Patton executed a memorandum of transfer in registrable form under which she purported to transfer her interest in the land to her brother, Mr Corin, to hold on trust for her. The transfer was said to be subject to a mortgage to a bank which held the certificate of title. No steps were taken to seek production of the certificate of title for Mr Corin to procure registration of the transfer. Mrs Patton also made a will under which left her estate to her children. She died before the transfer was registered. The issue before the High Court was whether at the time of Mrs Patton's death, Mr and Mrs Patton were joint tenants, so that Mr Patton's interest was enlarged on her death and he took by survivorship the entire fee simple estate in the land. 36 Mr Corin argued that the joint tenancy had been severed because Mrs Patton intended to deal with the property in a manner inconsistent with the continuation of the joint tenancy, or alternatively, because Mrs Patton had done all that was in her power to effectuate a gift of her interest in the property, such that there had been a transfer of her interest in equity. The High Court held that the execution of the transfer did not sever the joint tenancy and that at the date of her death, Mrs Patton had not alienated any interest in land to Mr Corin because there had not been a perfected gift at equity. 37 The High Court accepted that a unilateral act could sever the joint tenancy if there were an actual or effective alienation of the severing tenant's share in the property. However, the High Court held that a unilateral declaration of intention inconsistent with the continuation of a joint tenancy was insufficient to effect a severance, citing Patriche v Powlet. Mason CJ and McHugh J identified the first method of severance identified in Williams v Hensman as relevant and considered whether a unilateral declaration of intention could suffice for the purposes of that method of severance. Their Honours stated at 548: "Unilateral action cannot destroy the unity of time, of possession or of interest unless the unity of title is also destroyed, and it can only destroy the unity of title if the title of the party acting unilaterally is transferred or otherwise dealt with or affected in a way which results in a change in the legal or equitable estates in the relevant property. A statement of intention, without more, does not affect the unity of title. ...

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Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognise the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity. 'Necessary' used in this sense means necessary to effect a transfer. From the viewpoint of the intending donor, the question is whether what he has done is sufficient to enable the legal transfer to be effected without further action on his part." 40 Deane J expressed the test (at 582-583) as whether: "the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title. In that regard, it is not a matter of equity ignoring the provisions of s. 41 of the [Real Property Act] and treating the unregistered transfer as effective of itself to assign the beneficial interest in the land. It is simply that equity, acting upon the 'fact or circumstance' that the donor has placed the vesting of the legal title within the control of the donee and beyond the donor's recall or intervention, looks at the substantial effect of what has been done and regards the gift as complete …" 41 Mason CJ, Deane and McHugh JJ concluded that the gift was imperfect because Mrs Patton had not authorised the mortgagee to hand the certificate of title to Mr Corin so that he could obtain registration of the transfer. Brennan J held that in the absence of the certificate of title or dispensation from the Registrar-General for its production the transfer was not able to be registered. Toohey J held that no consideration had been given for the transfer, so there was no transaction for equity to enforce. Numerous subsequent cases have applied the principles enunciated in Corin v Patton in respect of whether there has been an alienation of property at equity by way of perfected gift, but for the reasons that follow, it is not necessary to examine those cases. 42 Corin v Patton established that a joint tenancy may be severed by way of a completed gift of a joint tenant's interest to a third party prior to and without registration. Equity recognises that the donee acquires an equitable interest or estate in the property under the completed gift, thus treating the donor has having alienated an interest in equity. In this case, unlike Corin v Patton, but like McNab v Earle and Freed v Taffel, there is no separate donor and donee.

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45 However, I do not think that the question whether the joint tenancy was severed is to be resolved by placing the question in the perfected gift paradigm, namely by asking whether Mr Caelli had done all that he needed to do to transfer title to himself short of registration. That obscures the real question, which is whether there was an actual alienation in equity of Mr Caelli's interest through some act that affected the unity of title and thus severed the joint tenancy (Freed v Taffel at 325 quoted at [31] and [32] above). As a matter of principle and authority, the first defendant's submission that the issue is to be resolved by reference to the test for a perfected gift is misplaced where a person purports to transfer property to himself or herself. Even in Corin v Patton, counsel for the donee accepted that the rationale for the gift rules was inapplicable in the context of a unilateral transfer (at 562). The rationale behind the perfected gift doctrine is that equity intervenes to bind the conscience of the donor as against the donee (who must necessarily be a different person to the donor) because it would be inequitable to allow the donor to resile from the gift once a certain point is reached in the transaction. Equity prevents a donor from resiling by imposing a trust over the property in favour of the donee pending the vesting of legal title. In that way, equity looks to intent over form in that context. That is made clear from Corin v Patton (see paras [39]-[40] above). It would be absurd to suggest that equity would bind Mr Caelli's conscience to prevent him from resiling from the "gift" to himself, or that he held the property on trust for himself pending registration. Such a proposition would also be contrary to McNab v Earle and Freed v Taffel. 46 In my view, the outcome of this case is determined by McNab v Earle and Freed v Taffel. It is clear from those cases that Mr Caelli's execution of the transfer, making of the bequest in his will and giving of instructions to his solicitor to lodge the transfer for registration did not alienate his interest at law or in equity. Those acts may be characterised as a unilateral declaration of intention to sever the jointure, and it is clear from the authorities referred to above that that does not effect severance. 47 Although McNab v Earle and Freed v Taffel were decided before Corin v Patton, they were cited with approval by members of the High Court (at 547 by Mason and McHugh JJ, 584 by Deane J citing the latter only). They were also decided before s 97 was introduced into the Real Property Act, but I do not think that the provision alters this conclusion. Those cases stand for the proposition that a conveyance by a joint tenant to himself or herself of his or her interest in Torrens title land can unilaterally sever a joint tenancy. That proposition is not inconsistent with s 97, which simply confirms the effectiveness of such a conveyance upon registration and provides a procedural mechanism for achieving it. Before s 97 was introduced, a unilateral severance in respect of Torrens title land could have been effected by registration of such a conveyance, although without the procedural mechanisms now provided for by s 97. 48 As this case is not to be resolved by asking if Mr Caelli had done everything necessary on his part to perfect a gift to himself, contrary to Mr Sneddon's submission, it matters not that s 97 does not require the production of a certificate of title for registration of a unilateral transfer. Such production would be significant the question is whether a jointure has been severed by way of a gift to another person, but not in a unilateral transaction. 49 This conclusion does not deny that equitable estates or interests in respect of Torrens title land may pass or be alienated even where an instrument of transfer remains unregistered. In Corin v Patton, Mason CJ, McHugh, Brennan and Deane JJ accepted that although s 41 of the Real Property Act requires registration in order for an estate or interest to pass under the Act, the Act does not prevent an equitable estate or interest from passing to the donee (at 560, 563, 572). This has been accepted since Barry v Heider (1914) 19 CLR 197 was decided. An unregistered transfer itself would have no operation either at law or equity, but as Mason CJ and McHugh J point out, the equity arises not from the instrument of transfer itself, but from the execution and delivery of the transfer and certificate of title in circumstances that will enable the donee to procure the vesting of legal title (at 560). That is because, as Brennan J stated, there is "some fact or circumstance which a court of equity regards as binding the legal owner in conscience to hold the property upon trust for the [transferee]" (at 563). For the reasons set out above, no such fact or circumstance exists in the context of a unilateral transfer. 50 For these reasons, I conclude that the question whether the joint tenancy was severed before Mr Caelli's death is not to be answered by treating the unilateral transfer as a gift by Mr Caelli to himself and asking whether he personally had done all that was necessary on his part to perfect the gift. Rather, the question is whether Mr Caelli had alienated his interest as joint tenant. The answer to that question is no, because the transfer was not registered. 51 This conclusion is supported by part of the reasoning of Hutley JA (with whom Glass JA agreed) in McVey v Denis (1984) 55 ALR 201. There a decree nisi had been made for the dissolution of the marriage of Mr and Mrs McVey but Mrs McVey died before it was made absolute. At the time of her death, Mr and Mrs McVey were joint tenants of property. The decree nisi included an order by the court, made by consent of the parties, that Mr McVey transfer his interest in the property to Mrs McVey. Mr McVey's solicitors delivered an executed transfer and certificate of title to Mrs McVey's solicitors to be held in escrow pending the decree nisi being made absolute. The transfer was, in a way that was not clear, registered by Mrs McVey's solicitors after her death. The Court of Appeal held that Mr McVey was entitled to set aside the transfer and to orders for the register to be rectified. 52 There were three grounds for the decision. The first was that the parties' agreement was that the transfer be held in escrow until the decree of divorce became absolute. The divorce proceedings abated on Mrs McVey's death. The condition of escrow failed. The agreement pursuant to which the transfer was to be made came to an end. The administratrix of Mrs McVey's estate had no right to register the transfer (at 205, 208-209). This ground of the decision is not of present relevance. 53 A second ground was expressed by Hutley JA as follows (at 205): "There is a further objection to the validity of the effectiveness of the registration. At the time it took place, Mrs McVey was dead. At common law, a person dead at the time of the execution of a deed could take no benefit under it: In Re Corbishley's Trusts (1880) 14 Ch D 846; Re Tilt; Lampet v Kennedy (1896) 74 LT 163. Registration created an interest which was in the name of Mrs McVey in the same way as a registered forged dealing can create an indefeasible title: Frazer v Walker [1967] 1 AC 569; Breskvar v Wall (1971) 126 CLR 376. As there have been no dealings with the title since registration, the appellant is entitled to have the instrument treated as void and the register rectified in exactly the same way as any other voidable transfer can be set aside. It is exactly as though this was a deed which came into force after Mrs McVey's death. On this ground, also, the appellant is entitled to have the transfer to Mrs McVey set aside." 54 Section 36(11) of the Real Property Act provides: " (11) Upon registration, a dealing shall have the effect of a deed duly executed by the parties who signed it. "

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On this ground, as Mr Caelli died before the transfer severing the joint tenancy was registered, there was no alienation of his interest. In Davis v Williams [2003] NSWCA 371; (2003) 11 BPR 21,313 Young CJ in Eq (as his Honour then was) said that an unregistered transfer by a joint tenant to himself could not be registered after his death (at [208]-[212]). 55 Mr Sneddon for the defendant relied on Watt v Lord [2005] NSWSC 53; (2005) 62 NSWLR 495. There Gzell J held that the death of a transferor did not preclude the transferee from registering the transfer where the transferee had done all that was necessary to perfect the transfer by registration (at [51]-[54]). This is consistent with National Trustees, Executors and Agency Company of Australasia Limited v Boyd (1926) 39 CLR 72 at 84 and not inconsistent with Brunker v Perpetual Trustee Company Limited (1937) 57 CLR 555 at 583. Gzell J referred to Cope v Keene (1968) 118 CLR 1 in the context that it concerned an imperfect gift (at [32], [39]) (without reference to a secondary reason put forward by Kitto J (with whom McTiernan J agreed) (at 7) that the instrument of transfer ceased to be registrable on the registered proprietor's death). His Honour held that all the cases which cast doubt on whether a transfer could be registered after the transferor's death, concerned imperfect gifts (at [32]-[41]). 56 However, the fact that the death of a transferor may not preclude the transferee from proceeding to registration does not answer the objection based on McVey v Denis in the passage quoted above, namely that the death of a transferee before registration requires the register to be rectified because on registration the transfer takes effect as a deed, but a deed transferring land to A is ineffective if A has died before the deed was executed. 57 There is a further objection reflecting the third ground of decision in McVey v Denis that the death of Mr Caelli terminated his solicitor's authority to lodge the transfer for registration (Brunker v Perpetual Trustee Co Ltd at 599, 609). It is unnecessary to pursue this objection. If, contrary to my view, Mr Caelli's interest in the land did not pass to the plaintiff by survivorship, there would be a question whether his solicitor's conduct in lodging the transfer for registration could be ratified by the defendant as executrix of Mr Caelli's estate. But as Mr Caelli had not alienated his interest prior to his death the question of the solicitor's authority does not arise.

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58 The consequence of there being no alienation of Mr Caelli's interest at law or in equity, and therefore no severance of the joint tenancy, was that upon the death of Mr Caelli the entire equitable estate vested in the plaintiff pursuant to her right of survivorship. It is unnecessary to consider whether, if the doctrine of perfected gift applies, Mr Caelli had done all that was necessary on his part to transfer the land to himself where he was personally incapable of doing more; but a person in his position had more to do, namely lodging the transfer for registration. 59 For these reasons, I conclude that the Notice of Death, not the transfer, should be registered. Resulting trust argument 60 In case I am wrong in my conclusions as to severance of the joint tenancy, I will also deal with the plaintiff's submission that there is a resulting trust to her if the plaintiff and first defendant hold the property as tenants in common in equal shares. Had I accepted the first defendant's argument that the joint tenancy was severed, I would not accept the plaintiff's submission that the deceased's interest was held on a resulting trust for her. 61 In Calverley v Green (1984) 155 CLR 242, Gibbs CJ stated the principles as follows (at 246-7): "Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser…. For the presumption to apply the money must have been provided by the purchaser in his character as such - not, e.g., as a loan….

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64 The plaintiff had no documentary evidence to prove that any of the acquisition costs or costs of repairs and improvements came from her own funds. She asserted that she had paid all of those costs, but produced no corroboration. The plaintiff provided a settlement sheet created by her solicitors at the time of the purchase, but that document does not show who provided the funds. She also provided quotes and invoices issued to either her, or to her and Mr Caelli, in support of her claim for the costs for repairs and improvements. But those documents merely indicate what the repairs and improvements cost. She did not adduce any evidence of receipt by a third party of the payments that she alleged she made. 65 I do not regard Mrs McCoy as a reliable witness. She was unable to remember clearly the relevant events. She provided vague and sometimes inconsistent evidence as to the payment of the acquisition costs. She was unable to remember correctly the purchase price. She was unable to recall from which bank she sourced the funds for the purchase price. She ventured that she "probably" wrote a cheque for it, but was unable to remember if she wrote a bank cheque or a personal cheque. She said in cross-examination that prior to the purchase of the property she had had four property deals, so her recollection of this acquisition may have been mixed up with her recollection of the others. 66 The plaintiff deposed that she has done extensive searches of her own papers and has made inquiries of the solicitors who acted on the transaction, and the various banks in which she held accounts and from which she may have paid the acquisition costs, but was unable to obtain any records evidencing payment. She admitted in cross-examination that she had not made any inquiries of her accountant at the time she purchased the property. 67 Some of her answers in cross-examination were simply not plausible. For instance, she said that she recalled that part of the acquisition costs that she paid included a payment in cash in the "hundreds" of dollars to the vendor's real estate agent for organising the property inspections for her. That would have been an unusual arrangement in a property transaction. She also proffered the following as one reason for the absence of documentary evidence of her payment of the acquisition costs: "[Plaintiff]: At one stage I put all the documents that I had regarding [the property] together and took them up to Tony so that he would have them should anything happen to me. Whether that [the settlement sheet for the conveyance] was one or not, I cannot say for sure.

[37]

[Mr Sneddon]. And when you say in relation to who paid for, you don't make any reference in any of your four affidavits to giving any documents to Tony in relation to who paid for what, correct? [Plaintiff]. Correct." 68 She said in cross-examination that she only remembered this about six months ago but had not communicated it to her solicitors. Her affidavit sworn less than six months before the hearing makes no reference to her having put all the documents together and giving them to her son. The plaintiff did not explain why she should give important documents to her son, when she did not think that he would outlive her. 69 The plaintiff also gave inconsistent evidence as to how long Mr Caelli lived in the property. 70 In a claim against the estate of a deceased person which depends on things alleged to have been said by the deceased, the court scrutinises the plaintiff's evidence very carefully to see whether it is true or untrue. That is to guard against the danger of false claims being brought against a person who is dead and not able to come forward and give an account for himself or herself. (See Plunkett v Bull (1915) 19 CLR 544 at 548-9.) Mr O'Brien, counsel for the plaintiff, described Mrs McCoy's recollection as "at times shaky". Given the difficulties outlined above, I think it goes beyond that. I do not accept her evidence as to payment. 71 For these reasons, I am not satisfied that Mrs McCoy paid the acquisition costs or the costs of improvements and repairs. 72 Therefore if I had found that the joint tenancy had been severed, Mrs McCoy would not succeed in her claim that the first defendant holds the interest in the property as tenant in common upon resulting trust for her. Nor would she succeed in her claim that the first defendant holds a share of the tenancy in common on trust for the plaintiff in proportion to her contributions to the costs of the improvements and repairs. 73 Even if the plaintiff were able to establish payment of the acquisition costs, two further issues would remain: first, whether the resulting trust is displaced by the presumption of advancement such that Mr Caelli is presumed to have had an interest commensurate with the legal title despite contributing less or nothing; and secondly, if there were such a presumption, whether it can in turn be rebutted if it can be shown that she did not intend for him to have an interest. 74 Mr O'Brien for the plaintiff rightly conceded that there was no issue that the presumption of advancement applies as between a mother and son (Nelson v Nelson (1995) 184 CLR 538 at 548-549, 576, 585-586 and 601). 75 In Buffrey v Buffrey [2006] NSWSC 1349; (2006) 12 BPR 23,619, Palmer J summarised the relevant principles on which the court proceeds on the issue and stated (at [14]) that whether the presumption of advancement is rebutted depends upon the intention solely of the party who provided the larger contribution. That is because the question is whether that person intended to make a gift conferring equality of interest in property on a person who did not contribute equally to its acquisition. Evidence of intention at the time of the transaction is admissible but the court will treat that evidence with caution as the evidence of an interested party. 76 The plaintiff submitted that evidence of her intention and acts as set out in paragraphs [4]-[5] of these reasons rebut the presumption of advancement but I do not think that it has been so rebutted. The plaintiff's evidence was that she specifically intended that she and her son hold the property as joint tenants. What that evidence demonstrates is that the plaintiff understood the legal form of the transaction and understood and intended at least one of the legal consequences of it, namely that both tenants had a right of survivorship. That shows that the plaintiff intended the deceased to have a beneficial interest in the property as a joint tenant. The evidence confirms the presumption of advancement if (which I do not accept) the plaintiff had provided all the acquisition costs. 77 Mr O'Brien also submitted that the plaintiff only intended that her son have a legal interest as recorded on the register and nothing further but did not otherwise intend that he have a beneficial interest in the property. I do not accept that the plaintiff grappled with the distinction between legal and equitable interests at the time she bought the property. 78 I conclude that the parties' equitable rights would be at home with the legal title. The presumption of advancement is not rebutted if (which I do not accept) the plaintiff paid the whole of the purchase price. Cross-claims 79 The first defendant's cross-claim sought alternative declarations: first, that Mrs McCoy holds on resulting or constructive trust for the deceased's estate that part of the property that he paid for with his own moneys; secondly, that Mrs McCoy holds one half of the property on resulting or constructive trust for Mr Caelli's estate by reason of the presumption of advancement; and thirdly, that Mr Caelli severed the joint tenancy at law or equity to create a tenancy in common in equal shares. Appropriate orders to rectify the register are also sought. For the reasons I have given, the third claim fails. 80 The claims for the first and second declarations are premised on the court's finding that Mr Caelli did not sever the joint tenancy before his death. 81 The first claim for the first declaration must fail. The first defendant did not adduce any evidence of the alleged payment by Mr Caelli. Further, the claim misunderstands the circumstances in which a resulting trust arises. If the deceased had paid for half of the purchase price, the equitable title would have been squarely at home with the legal title to reflect the equal contributions of the parties unless there is some reason that is should not be. No such reason was put forward. 82 The claim for the second declaration must also fail. A presumption of advancement may rebut or displace a presumption of a resulting trust which would otherwise arise if the plaintiff had established that she had paid the whole of the purchase price. It is not that a resulting (or constructive) trust arises in favour of the deceased because there is a presumption of advancement. If the plaintiff provided the purchase price, the deceased was advanced by being a joint tenant at law and in equity. For the reasons I have given, I have concluded that a resulting trust did not arise in favour of the plaintiff. The presumption of advancement is not a presumption that the legal owners hold the joint tenancy in trust for themselves as tenants-in-common. Orders 83 As legal ownership is determined by registration, it is not possible for the court to declare that the plaintiff is the sole "legal" owner of the property until the Registrar-General has registered the Notice of Death and registered her as sole proprietor under s 101 of the Real Property Act. However the plaintiff is entitled to a declaration that she is the sole beneficial owner of the land. 84 Accordingly, I declare that the plaintiff is the sole beneficial owner of property comprised in Folio Identifier 1/511056 and known as 1 Tuffins Lane, Port Macquarie, NSW (the "property") and that she is entitled to be recorded as the sole registered proprietor of the property in the register of titles maintained by the second defendant. 85 I order that the second defendant not register the Transfer Unilaterally Severing Joint Tenancy (dealing no. AE137074) executed by the deceased. 86 I order that the second defendant register the Notice of Death (dealing no. AE187549) and register the plaintiff as the sole proprietor of the property. 87 I dismiss the other claims for relief in the amended statement of claim and I dismiss the cross-claim. 88 The exhibits may be returned after 28 days. 89 Prima facie as the plaintiff has succeeded she is entitled to her costs. I will hear the parties on costs.

McCoy v Caelli

At a glance

Court

Decision date

Before

Source

Judgment (38 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (16)

Cited By (3)