McCoy v Estate Peter Anthony Caelli

LEGISLATION CITED : (NSW) Real Property Act 1900, ss 12A, 41(1), 97, 101 Uniform Civil Procedure Rules r 7.10(2)(a)

Corin v Patton (1990) 169 CLR 540 Freed v Taffel [1984] 2 NSWLR 322 CASES CITED : In re Hewett [1894] 1 Ch 362 McNab v Earle [1981] 2 NSWLR 673 Patriche v Powlet (1740) 2 Atk 54, 26 ER 430 Williams v Hensman (1871) 1 J&H 546, 70 ER 862

Valerie Doris Mary McCoy (plaintiff) PARTIES : Estate of Peter Anthony Caelli (first defendant) Registrar General of NSW (second defendant)

COUNSEL : Mr S T O'Brien (plaintiff) Mr M W Sneddon (first defendant)

Donovan Oates Hannaford (plaintiff) SOLICITORS : Hinterland Lawyers (first defendant) Kelvin O'Keefe, Dept of Lands, Legal Services (second defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY LIST

4469/08 Valerie Doris Mary McCoy v Estate of Peter Anthony Caelli & anor JUDGMENT 1 HIS HONOUR: The plaintiff Valerie Doris Mary McCoy claims an injunction restraining the second defendant the Registrar-General from registering a transfer unilaterally severing joint tenancy signed by her late son the deceased Peter Anthony Caelli on 11 July 2008 but not lodged until 7 August, after his death on 4 August 2008, in respect of a property situate at and known as 1 Tuffins Lane, Port Macquarie in the State of New South Wales of which Mrs McCoy and Peter are registered as proprietors as joint tenants, the Registrar-General having given notice under (NSW) Real Property Act 1900, s 12A, of his intention to register the transfer unless restrained from doing so.

2 Mrs McCoy and Peter became registered as proprietors as joint tenants of the property by a transfer registered on 7 April 1999. Mrs McCoy says that she provided all of the purchase money and the costs of acquisition. She says that she was aware at that time that Peter had a serious drug problem, and purchased the land so as to give him a place where he could live on his own and try to sort himself out. She says that she specifically wanted the title to be joint tenancy in case something untoward became of him. Mrs McCoy says that she has paid all the rates and other outgoings ever since. She says that Peter moved into the house on the land shortly after the purchase and lived there for a couple months, but then moved to Queensland and never returned.

3 By 2007, Peter had been diagnosed with prostate cancer. It appears that on 11 July 2008, Peter made and executed his Last Will and Testament, and signed a form (for the purposes of Real Property Act, s 97) of transfer unilaterally severing joint tenancy in respect of the land. Mrs McCoy visited Peter on 4 August 2008 in the oncology ward at Royal Brisbane Hospital, where he died that day.

4 On 7 August 2008, the transfer severing joint tenancy was lodged - it is not at this stage apparent by whom - with the Registrar-General, and given dealing number AE137074. Although it is not clear precisely on whose instructions this was done, an inference is available from the form of transfer that it was lodged by agents for Hinterland Lawyers. On 8 August 2008, the Registrar-General gave notice pursuant to Real Property Act, s 12A and s 97(5) of his intention to register the transfer in 30 days unless a court order stopping him from doing so was lodged within that time, in which case "I will register it and the joint tenancy will then be severed as set out in this letter".

5 Ms McCoy received that notice on or about 12 August 2008. On 15 August 2008 Messrs Donovan Oates Hannaford, solicitors acting for Mrs McCoy, sent a facsimile letter to Hinterland Lawyers advising that they had been instructed to prepare and lodge a Notice of Death, and that they intended to institute proceedings in the Court unless the transfer unilaterally severing joint tenancy were withdrawn. Hinterland Lawyers responded on 19 August, seeking to ascertain whether the deceased had been given independent legal advice regarding the nature and effect of the tenancy. Donovan Oates replied on 20 August that they had not acted on that transaction, but that Mrs McCoy had provided the whole of the purchase price.

6 Also on 15 August, Donovan Oates wrote to the Registrar-General advising that they would be lodging a Notice of Death but might not be able to obtain a death certificate within the 30 days allowed by the notice. The Registrar-General replied on 20 August, to the effect that insufficient evidence of death had been furnished but that in lieu of a death certificate a statutory declaration verifying that the registered proprietor had died would suffice. The Registrar-General wrote: When I receive sufficient evidence, which should be lodged before the expiration of the notice, I will write to the lodging party of the transfer unilaterally severing joint tenancy AE137074 and raise a requisition that I have received information which may render AE137074 unregistrable. Therefore it will be up to the necessary parties to negotiate. Until that time the notice dated 08 August 2008 is effective. The expiration of time contemplated by that notice is 08 September 2008. I also refer you to section 12A(3) of the Real Property Act 1900. 7 On 28 August, Mrs McCoy signed a Notice of Death annexing a death certificate and lodged it with the Registrar-General where it was given dealing number AE187549. On 29 August, the Registrar-General wrote to Hinterland Lawyers as follows: I note that on 08 August 2008 a Notice of Severance of Joint Tenancy pursuant to section 12A, as required by section 97(5) of the Real Property Act 1900, was sent to Valerie Doris McCoy. Subsequently, I have been advised by Valerie Doris McCoy's lawyers that Peter Anthony Caelli died on 04 August 2008, being a date before the expiration of time contemplated by the aforementioned notice. Please note that the following requisition is raised: It would appear that section 101 of the Real Property Act 1900 has come into operation and that the more appropriate dealing should be a Notice of Death (Form 01ND). I advise that the solicitor for Valerie Doris McCoy is Mr Stephen Miles of Donovan Oates Hannaford, … and I have been advised that they intend on filing a Notice of Death in due course. The proceedings and issues

8 On 29 August, Mrs McCoy instituted proceedings by an ex parte application, when she obtained leave to file a summons returnable on 4 September with an abridgement of time for service, and an order that until further order, pursuant to Uniform Civil Procedure Rules r 7.10(2)(a), the proceedings continue in the absence of a representative of the Estate of Peter Anthony Caelli; however, notice to the Estate was directed by service on Hinterland Lawyers. 9 On the return of the summons on 4 September, Mrs McCoy sought leave to file an amended summons, claiming the following relief: 1. A Declaration that the Plaintiff is the sole owner of the land described in the schedule ("the Land"). 2. A Declaration that the Plaintiff is entitled to be recorded in the register maintained by the Second Defendant as the sole registered proprietor of the Land. 3. A Declaration that the Notice of Death dealing number AE187549 ("Notice of Death") is entitled to be registered in priority to the Transfer unilaterally Severing Joint Tenancy dealing number AE137074 ("the Transfer"). 4. An Order that the Second Defendant register the Notice of Death in priority to the Transfer. 5. An Order that the second Defendant be restrained from registering the Transfer. 6. An Order that the First Defendant be restrained from proceeding with the application to have the Second Defendant register the Transfer. 7. In the alternative, a Declaration that upon registration of the Transfer by the Second Defendant the First Defendant is to hold on trust, for the benefit of the Plaintiff, that share of the Land held by the First Defendant as tenant in common with the Plaintiff which the Plaintiff is entitled to as the beneficiary of a constructive trust. 8. A further Order that following registration of the Transfer the First Defendant duly execute and lodge a transfer in registrable form with the Department of Lands NSW transferring that share of the Land to which the Plaintiff is entitled as beneficiary of the constructive trust referred to in order 7, such as to constitute the Plaintiff as sole legal owner of the Land. 9. An Order that the First Defendant pay the Plaintiff's costs. 10. Such further or other order as the nature of the case requires. 10 An interlocutory hearing, within the constraints of a busy duty list, took place on 4 September 2008, when I reserved judgment but, in the meantime, upon the plaintiff by counsel giving to the court the usual undertaking as to damages, ordered that until further order the Registrar-General be restrained from registering the notice unilaterally severing joint tenancy. 11 For present purposes the issue is a narrow though not straightforward one. Mrs McCoy's claim to be beneficially entitled pursuant to a resulting trust (which would in any event encounter the presumption of advancement) may for the time being be set to one side; the present issue is whether Mrs McCoy has a seriously arguable case for a final injunction restraining registration of the transfer upon the basis that, the deceased having died before it was lodged let alone registered, her claim to be entitled by survivorship has priority. The question is one of law. Generally speaking, on an interlocutory application where the question is one of law the court should endeavour to determine the question, unless there is good reason (such as the impracticability of doing so, or the possibility that it will be affected by controversial facts) for not doing so. There is no such reason in the present case. The material facts are straightforward and uncontroversial: Mr McCoy and Peter were joint tenants of the property; Peter signed the transfer on 11 July 2008; he died on 4 August 2008; the transfer was lodged for registration on 7 August 2008, and has not yet been registered. The critical question is whether execution of the unilateral transfer effected a severance in equity prior to Peter's death, although it had not yet been lodged, let alone registered.

The statutory provisions 12 Real Property Act, s 97, provides as follows: Severance of joint tenancy by unilateral action

(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. (4) The Registrar-General may require any information provided for the purposes of this section to be provided by statutory declaration. (5) The Registrar-General must give notice of the lodgement 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). Section 12A (2) and (3) applies to and with respect to a notice given under this section. (6) Despite subsection (5), the Registrar-General is not required to give notice of the lodgement of a dealing for registration or recording that may sever a joint tenancy to a joint tenant in any of the following circumstances: (a) if the proposed severance is to arise from the recording of a court order made in proceedings to which the joint tenant is a party,

(b) if the proposed severance is to arise from the registration of a transfer pursuant to a writ in respect of an interest of any of the joint tenants,

(c) if the dealing concerned is witnessed by the joint tenant and the dealing indicates that the joint tenancy is to be severed,

(d) if the dealing is accompanied by a written acknowledgment by the joint tenant that he or she has received legal advice as to the effects of the severance of the joint tenancy,

(e) if the proposed severance is to arise out of registration following an application under section 90. 13 Real Property Act, s 101, provides as follows: 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. (2) Subsection (1) does not authorise the Registrar-General to bring land under the provisions of this Act. 14 Under s 97(1), it is the act of registration that severs a joint tenancy. This is reinforced by s 97(2), which recognises that before recording the instrument of severance the Registrar-General may require information to be provided by a person who proposes to sever a joint tenancy by unilateral action. After lodgement but before registration or recording of the dealing, its status is that of a "proposed" severance [see s 97(5), (6)]. Section 101, on the other hand, recognises that a surviving joint tenant becomes entitled to an estate or interest in land upon death of the other joint tenant, and that entitlement is a precondition to registration. Thus entitlement by survivorship arises before and independently of registration, although it is a precondition to it. 15 On that analysis, the joint tenancy remains on foot and is not severed until the transfer is registered (as distinct from lodged). On the other hand, entitlement by survivorship arises upon death, not upon registration of the Notice of Death. In this case, the transfer had not been registered (indeed it had not even been lodged) at the date of death. The joint tenancy remained on foot at the date of death, and accordingly Mrs McCoy as surviving joint tenant became entitled by way of survivorship.

Equitable severance of joint tenancies 16 However Mr Sneddon, for the estate, contends that execution of the unilateral transfer on 11 July effected an immediate severance of the joint tenancy in equity, before Peter's death.

17 It is well established that a joint tenancy may be severed in three ways, as explained in the oft-cited judgment of Page-Wood VC in Williams v Hensman (1871) 1 J&H 546; 70 ER 862 (at 557-558; 867): 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. 18 For the purpose of severance by an act operating on a joint tenant's own share, a legal alienation is not necessary; a binding and enforceable contract to alienate will suffice to sever the jointure in equity [Freed v Taffel [1984] 2 NSWLR 322, 325C; In re Hewett [1894] 1 Ch 362, 367]. But there must be an actual alienation, in equity if not at law, as distinct from a mere intention or proposal to alienate, before a severance occurs [Patriche v Powlet (1740) 2 Atk 54, 26 ER 430; Freed v Taffel, 325C]. As Helsham CJ in Eq explained in Freed v Taffel (at 325E): … the simple position is that either at law or in equity there must be an effective alienation of his interest by one joint tenant before the unity of title is affected and the jointure severed.

19 In the absence of a legal alienation, that requires either an enforceable agreement to alienate, or the creation of a valid and enforceable trust by declaration in favour of a stranger [cf Freed v Taffel, 325D], or the perfection of a complete gift [cf Corin v Patton (1990) 169 CLR 540].

A unilateral transfer effects no equitable severance before registration

20 Even before the amendment of Real Property Act, s 97, to provide for transfers unilaterally severing joint tenancy, a joint tenant could severe the jointure by a transfer of its interest to itself as tenant in common [Freed v Taffel, 324G], where Helsham CJ in Eq explained that while, on the one hand it was beyond argument that a mere declaration by one joint tenant of an intention to sever - communicated or uncommunicated, written or oral - was insufficient to effect a severance; on the other, a conveyance by one joint tenant of its interest to itself as tenant in common was capable of severing the jointure. The critical question is whether in that context anything less than actual alienation at law will suffice.

21 In Corin v Patton, a joint tenant of Torrens Title land executed and delivered a transfer of her interests to a trustee to be held on trust for herself, but died before the transfer was registered. The Certificate of Title was at all times held by a mortgagee. It was held that the joint tenant had not alienated any interest to the transferee at the date of death: by the majority (Mason CJ, Deane and McHugh JJ) on the ground that she had not done all that was necessary for her to have done to effect a transfer, because she had not authorised the mortgagee to hand the Certificate of Title to the transferee. The majority appeared to accept that an equitable estate could pass to a donee, notwithstanding Real Property Act, s 41(1), under a completed gift (although Toohey J took a different view). However, the joint tenancy was not severed because the transferor had not done all things necessary on her part to effect a transfer, because she had not authorised the mortgagee to hand the Certificate of Title to the transferee. Had she done so, the jointure would have been severed in equity. 22 Corin v Patton therefore may be taken to have established that a joint tenancy may be severed by a completed gift of the joint tenant's interest to a third party, albeit as trustee for the donor. Such severance results from the perfection of the gift vesting an equitable interest in the donee, prior to registration, so as to effect an actual alienation in equity of the interest. Where, as in Corin v Patton, there is a transfer by a joint tenant to a trustee to be held on trust for the transferor, that would be achieved by execution, delivery of the transfer to the transferee, and production of the Certificate of Title to permit registration. Once the transfer was in the hands of the transferee and the title deed produced, the transferor would have done all things necessary on its part to perfect the transaction - it would be in the transferee's power exclusively to lodge the transfer for registration.

23 But it does not follow that mere execution of a unilateral transfer in registrable form has that effect, even if production of the Certificate of Title is not required for its registration. While it can be accepted that a joint tenant can convey its interest to itself as tenant-in-common, a conveyance (of old system land) operates on delivery to vest title at law; whereas a Real Property Act transfer vests title only on registration. Such a transfer could sever a joint tenancy upon execution only if an equitable interest were thereby alienated. That it does not do so is established both by principle and by authority.

24 In McNab v Earle [1981] 2 NSWLR 673, albeit before the insertion of s 97, it was held that such a transfer was inoperative until registration. A husband and wife were the registered proprietors as joint tenants of Real Property Act land. The wife executed a memorandum of transfer of her interest to herself for a consideration of $1.00, with the intention of severing the joint tenancy, but withheld it from registration until she died. Needham J held that the memorandum of transfer, being inoperative until registration, was revocable up until the moment of her death, and that no severance was therefore effected.

25 The explanation for that conclusion is, first, that there was no binding and enforceable agreement to transfer her interest, and, secondly, that mere possession of a registrable transfer (as distinct from a purchaser's contractual right) did not vest an equitable interest in the transferee, the transfer being inoperative to alienate any interest until registration. As Brennan J pointed out in Corin v Patton (at 570): Upon this analysis, a right to registration, the effective exercise of which is essential to the vesting of title to the gifted land, is a statutory right dependent (at least) on delivery of a registrable transfer. That statutory right is confined by s 41 and, unlike a purchaser's contractual right, gives rise to no equitable estate or proprietary interest. As I read the cases, the only passages which might be construed as acknowledging an equitable estate or interest between the time of delivery of a registrable transfer and its registration which depends solely on delivery of the transfer are to be found in the judgments of Windeyer J in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9, 28-9, and in Olsson v Dyson [(1969) 120 CLR, at pp386-7]. Perhaps his Honour intended to assign to equity no greater role than preventing retraction of what he has given by a donor who has done all in his power to complete the gift of the land. However that may be, the orthodox view, being founded on the judgment of Dixon J in Brunker , denies the existence of an equitable estate or interest in the interregnum between delivery and registration.

26 In Freed v Taffel, the deceased and his widow were registered proprietors as joint tenants of a home unit. Prior to his death the deceased had executed memoranda of transfer purporting to transfer his interest from himself as joint tenant to himself as tenant in common for a consideration of $1.00, with the intention of severing the joint tenancy, so that the unit could be sold and the proceeds divided. Their son - who held the Certificates of Title on behalf of the widow - refused to produce them to enable registration, and the transfers were never registered. His Honour concluded that the actions of the deceased were ineffectual to pass any estate or interest at law, and did not operate in favour of himself to affect his beneficial interest in the land in any way. The conclusion that the deceased's actions did not operate in favour of himself to affect his beneficial interest in the land in any way must again involve (1) that they did not give rise to a binding and enforceable agreement to alienate his interest, and (2) that mere possession of a registrable transfer (at least in the absence of production of the Certificates of Title) did not vest an equitable interest in the transferee. 27 Section 97 was inserted in 1997, after Corin v Patton, to facilitate severance of a joint tenancy by unilateral action, by providing a new statutory method of severance, namely registration of a unilateral transfer. The circumstance that the Registrar-General is required to give notice to the other joint tenants of the lodgement of the dealing for registration, and that it is only a "proposed severance" at that stage, tells strongly in favour of a construction that there is no severance until registration. Section 97 operates to sever a joint tenancy only upon registration of the transfer. It does so by operation of statute. Its effect is contingent upon registration. It does not provide merely for recognition by registration of a pre-existing entitlement [cf s 101], nor does it create a right to sever a joint tenancy arising before registration. It does not contemplate or support any pre-existing equitable severance upon lodgement, let alone on execution, of a unilateral transfer. An unregistered unilateral transfer effects no equitable severance.

The transferor had not done all things necessary on his part 28 Moreover, even if there could be an equitable severance under a unilateral transfer prior to registration, it cannot be said on the facts of the present case that the deceased had done all things necessary on his part to effect the severance so that there was a perfected transaction before his death. The transfer was admittedly not even lodged for registration until 7 August 2008. Lodgement was a thing necessary to be done on the deceased's part to effect the severance. In this respect, the case differs from Corin v Patton, where there had been delivery to the trustee/transferee, thus placing the transferee in the position to become registered (save for the failure to procure production of the Certificate of Title). Although in Freed v Taffel Helsham CJ in Eq disapproved of analysing the position as one involving whether the transferor had gone past the point where it could "withdraw", in the context of a unilateral transfer it can be seen that in the present case, the transfer was (like that in McNab v Earle) revocable up until the moment of death, as it remained in the control of the deceased and had not been lodged for registration. There was on any view no perfected transaction such as might arguably have effected a severance in equity.

Conclusion 29 My reasons may be summarised as follows.

30 Section 97 operates to sever a joint tenancy only upon registration of the transfer, and does so by operation of statute. An unregistered unilateral transfer effects no equitable severance.

31 Even if by doing all things necessary on its part to procure registration of a unilateral transfer a transferor could effect an equitable severance, in this case the transferor had not lodged the transfer before he died, and as it remained in the control of the deceased it was revocable up until the moment of his death, so that on any view there was no perfected transaction such as might arguably have effected a severance in equity.

32 Accordingly, the joint tenancy remained on foot up to the moment of the deceased's death, and Mrs McCoy is entitled to become registered by survivorship pursuant to s 101. 33 As this is a conclusion of law apparently based on uncontroversial facts, it may save time and trouble for the parties if the consequent judgment is treated as a final one, rather than an interlocutory one, from which there may be an appeal as of right rather than by leave. I shall afford the parties an opportunity to consider whether they would prefer that course. In the meantime, and otherwise, the existing interlocutory injunction pronounced on 4 September 2008 will simply continue. If the parties desire that I give effect to this decision on a final basis then additional declaratory relief, as to the entitlement of Mrs McCoy to registration, would be appropriate. **********

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