Court of Appeal (Vic)|2023-10-19|Before: McMillan J, Leish JA, Kennedy JA, Walker JA

The applicant, Ms Whitty, submitted that the course of conduct leading up to and including the execution of the deed and loan agreement on 6 March 2018 made it plain that the siblings knew that the Nicholson Street property was being acquired by way of joint tenancy and they were not going to have security over the property or its proceeds if sold. The siblings' solicitor acknowledged that there was to be joint ownership in the email which proposed the amendments now said to evidence an intention to the contrary. The correspondence showed that Ms Whitty's consistent purpose, including in executing the deed, was to enable Mr Caruso to obtain a loan from his siblings without jeopardising her interest in the property or any proceeds of its sale. The applicant submitted that the judge had failed to have regard to the negotiations.
Senior counsel for the applicant placed emphasis on the evidence of Ms Whitty's intention, noting that the question raised by the third method of severance in Williams v Hensman concerned the objectively ascertained mutual intention of the parties. It was submitted that the correspondence made it clear that Ms Whitty was not prepared to agree to anything that might impinge on her interest as a joint tenant, going no further than permitting a sale in identified circumstances.
The applicant relied on the presumption in equity that a matrimonial home owned by parties to a marriage is held as a joint tenancy, at least so long as the marriage subsists. The trial judge had rightly accepted this proposition, citing The Trustees of the Property of Cummins v Cummins.[26] The applicant referred also to Abela v Public Trustee in this context.[27] It was submitted that this meant that equity's general aversion to joint tenancies was inapplicable in this case. Senior counsel submitted that the matter was, in any event, to be resolved by evidence rather than presumptions. It was said that the intention to sever must be 'unequivocal' on the evidence.

The respondents participating in the appeal (the siblings) submitted that by entering into the deed, Mr Caruso and Ms Whitty had objectively manifested an intention that he maintain an interest in the Nicholson Street property after his death. This could only be consistent with them holding the property as tenants in common, because it was at odds with the right of survivorship. It was submitted that the right to sell the property was an incident of ownership, being a core right in the bundle of rights making up 'property'.[31]
The rights conferred on Mr Caruso and expressly exercisable after his death were said to make no sense if the property vested in Ms Whitty absolutely upon Mr Caruso's death. It would, in particular, be absurd for Ms Whitty to have a right of first refusal to purchase the property from herself. It was submitted that making provision for a right of first refusal was objective evidence of an intention that Mr Caruso maintain a separate interest in the property after his death, again at odds with any right of survivorship.
It was further submitted that the objectively discernible purpose of the parties in executing the deed, in circumstances where the loan agreement was also negotiated and executed as part of a package, was to enable Mr Caruso, or his estate, to be put in funds so that the obligations under the loan agreement could be satisfied. The respondents submitted that the involvement of the siblings in negotiations set the case apart from those involving only the parties to a marriage, so that the presumption in favour of joint tenancy within a marriage did not apply. Conversely, the fact that the siblings understood that the purchasers wanted to hold the property as joint tenants was irrelevant to the objectively ascertained intention of the purchasers.
As to the operation of the deed, the respondents submitted that its effect was, relevantly, to give one co-owner, Mr Caruso and his estate, the ability to bind the other (Ms Whitty) to dispose of the co-owned property at the first co-owner's discretion, subject only to the right of first refusal.
The respondents emphasised that the negotiations showed that Mr Caruso and Ms Whitty had executed the deed after having had it explained to them that the new cl 6 would result in the rights under the deed being enforceable by each of their estates. That was said to imply that the deed would operate effectively in that circumstance.
The respondents took issue with the applicant's reliance on email communications showing the subjective intentions of Ms Whitty. They submitted that the objective intentions of the parties were revealed instead by the terms of the deed.[32]

As indicated earlier, the case has been argued on the basis that severance in equity was effected by the course of conduct in which Mr Caruso and Ms Whitty engaged, the question being whether it may objectively be inferred from that course of conduct that they intended to hold the property as tenants in common.
The critical event in the course of conduct was the entry into the deed, but it is not said that it was an agreement to sever the joint tenancy, express or implied, being the second method of severance identified in Williams v Hensman. The question is therefore not whether the deed, properly construed, achieved severance. As such, it is not necessary to have resort to principles of construction to determine the legal meaning and operation of the deed. The issue is what the deed, seen as part of a course of conduct on the part of those who executed it, reveals about their intention with respect to the joint tenancy.[33]
On the applicant's case, Ms Whitty, in particular, manifested a continuing intention to hold the Nicholson Street property as a joint tenant and declined to give the siblings recourse to the property as a means of securing the loan which they were to advance to Mr Caruso to help fund its purchase. Further, while the deed might not therefore have had a practical commercial operation in the event of Mr Caruso's death while the loan remained outstanding, it was what the siblings had asked for, and was drafted by their solicitor. Accordingly, it was said, Ms Whitty's execution of the deed involved no change in her consistent position in favour of a joint tenancy.
The parties were in broad agreement with the judge's characterisation of the commercial purpose of the deed, read with the loan agreement, as being 'to provide Mr Caruso's siblings with comfort with respect to the loan'.[34] That finding is supported by the fact that settlement would not be achieved without the siblings' loan. Ms Whitty had implored them not to cause a default on the purchase, when she rejected their draft document proposing a charge over the property and obliging Mr Caruso and Ms Whitty to meet the siblings' own repayment obligations. In the circumstances, the parties needed to agree on terms that would give the siblings sufficient comfort for the transaction to proceed.
There is no evidence as to what might have been said between the provision of the final draft documents on Friday 2 March 2018 and their execution on Tuesday 6 March 2018. All that is known is that the siblings' solicitor sent an email which, relevantly, acknowledged that he had been told by the purchasers' solicitor that 'title will be joint' but went on to say that the proposed deed had not given 'sufficient nexus' to his clients to enforce Ms Whitty's covenants. This was the reason for proposing cl 6. The email noted that Mr Caruso's executor would be able to enforce the covenants, and that was most likely to be Ms Whitty herself.
Mr Caruso and Ms Whitty were in turn advised by their solicitor that the revised wording enabled the undertaking (that is, the right to sell the property) to be enforced if Mr Caruso should die or become totally and permanently disabled. As we know, Ms Whitty sought a further explanation but there is no evidence as to whether that was done, or what might have been said. It is pointless to speculate, and it was not suggested that any inference should be drawn from the fact that Ms Whitty did not give evidence.
In our opinion, these events none the less reveal a clear intention on the part of Mr Caruso and Ms Whitty to enable the executor of Mr Caruso to exercise the power conferred by the deed, to sell the Nicholson Street property subject only to Ms Whitty's right of first refusal, after the death of Mr Caruso. Their purpose in doing so was to give the siblings sufficient comfort that they were prepared to advance the loan to enable settlement to take place.
That purpose would be achieved as long as Mr Caruso and Ms Whitty signed the deed in its final form, irrespective of its actual effect, because it was the siblings themselves who proposed the final wording through their solicitor. In that sense, it does not matter whether the deed actually had the legal operation the siblings intended. But in another sense, that is critical, as explained below.
Beyond the mere signing of the deed, it is clear, in our view, that Mr Caruso and Ms Whitty intended Mr Caruso's right to compel a sale to pass to his estate upon his death. They had already agreed that this right would exist during his lifetime, so that he could put himself in a position to repay the siblings' loan if he wished. The siblings had wanted some comfort as to their position if Mr Caruso were to die with the loan outstanding. The solution was to extend the existing arrangement enabling him to sell the property so that it continued after his death, and to make the loan repayable at that point. Mr Caruso and Ms Whitty had been told by their solicitor that the amendments would enable the right to sell the property to be enforced if Mr Caruso should die or become totally and permanently disabled, and there is no reason to doubt that, in signing the deed, that was their intention.
The right conferred on Mr Caruso by the deed was contractual rather than proprietary in nature. We do not accept, as was argued by the respondents and also formed the basis of their notice of contention, that it constituted part of the 'bundle' of rights making up ownership of the Nicholson Street property.[35] In essence, Mr Caruso was simply appointed as attorney to sell the property on behalf of its owners. But that is not decisive. The question is instead what the extension of the arrangement beyond Mr Caruso's death reveals about the intentions of Mr Caruso and Ms Whitty with respect to the joint tenancy. In this context, 'intention' is objectively ascertained. It is not relevant that the parties (or one of them) might, as a matter of fact, have had a different subjective intention, or no intention on the point at all (as to which nothing is known, in any event).
There are only two options. Either the joint tenancy was intended to be preserved, so that the power to sell, if exercised after Mr Caruso's death, would be exercised on behalf of Ms Whitty alone, or the tenancy was intended to be severed so that it would be exercised on behalf of the parties as tenants in common. Only the latter understanding would be of any commercial utility. The former intention would be perverse, because the insertion of cl 6 into the deed (and associated amendments) would have been an exercise in futility. It would have enabled the executor to sell the property but Ms Whitty, not the estate, would receive the proceeds and the siblings would be no better off than if the property remained unsold. The position would be even more absurd if, as was likely, the executor was Ms Whitty herself.
In contrast, the latter intention would be consistent with the preparedness of Mr Caruso and Ms Whitty to accept that during Mr Caruso's lifetime, he could sell the property in order to repay the loan if he so wished. They would be extending that arrangement so that the same power would be held by his executor (whoever that might be). This was how their solicitor explained the final amendments to them in the emails that were in evidence. Whatever wishes Ms Whitty (and Mr Caruso) had to that point expressed as to the tenancy being joint, their subsequent execution of the deed can safely be inferred to have been intended to achieve the effect explained by their solicitor.
In other words, the circumstances point clearly to Mr Caruso and Ms Whitty having decided, in order to complete the purchase, that they would agree to an arrangement whereby the property could be sold upon the death of Mr Caruso at the behest of his executor. Exercise of the power of sale would put the estate in funds to repay the siblings out of Mr Caruso's share of the proceeds. That arrangement could only be meaningful if the property did not vest solely in Ms Whitty by virtue of a right of survivorship upon his death. Their intention could not be effected if the property was held on a joint tenancy, and they must therefore be regarded as having intended to hold the property as tenants in common.
For that reason, in our view the conclusion of the trial judge was correct. We are reinforced in that conclusion by the fact that, if the property was held as a joint tenancy, the right of first refusal which the parties intended Ms Whitty to enjoy would operate perversely after Mr Caruso's death by giving her a right to purchase a property she already owned.
We would grant leave to appeal, but dismiss the appeal.

NATALIE TALIA (in her capacity as administrator ad litem of the estate of Mario Caruso deceased, pursuant to the order of the Honourable Justice McMillan made 28 July 2021)

[1] Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375 [61] (Ashley, Priest and Santamaria JJA) ('Mischel'), citing Sacks v Klein [2011] VSC 451 [25] (Hargrave J).

[2] Wright v Gibbons [1949] HCA 3; (1949) 78 CLR 313, 323 (Latham CJ); Mischel [2013] VSCA 375 [56] (Ashley, Priest and Santamaria JJA).

[3] Mischel [2013] VSCA 375 [58] (Ashley, Priest and Santamaria JJA).

[5] (1990) 169 CLR 540 ('Corin').

[8] See Public Trustee v Pfeiffle [1991] VicRp 3; [1991] 1 VR 19, 29-30 (McGarvie J), 35 (Ormiston J) ('Pfieffle'); Abela v Public Trustee [1983] 1 NSWLR 308, 315 (Rath J) ('Abela'); Calabrese v Miuccio (No 2) [1985] 1 Qd R 17, 27 (Derrington J) ('Calabrese'), citing Burgess v Rawnsley [1975] 1 Ch 429, 446 (Sir John Pennycuick).

[9] Mischel [2013] VSCA 375 [64] (Ashley, Priest and Santamaria JJA), citing Saleeba v Wilke [2007] QSC 298 [38] (Chesterman J) ('Saleeba').

[10] Mischel [2013] VSCA 375 [70] (Ashley, Priest and Santamaria JJA), citing Saleeba [2007] QSC 298 [25] (Chesterman J).

[11] Mischel [2013] VSCA 375 [60] (Ashley, Priest and Santamaria JJA), citing Roderick Meagher, Dyson Heydon and Mark Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (Butterworths Lexis Nexis, 4th ed, 2002) [3-150].

[12] Mischel [2013] VSCA 375 [59] (Ashley, Priest and Santamaria JJA), citing York v Stone (1709) 1 Salkeld 158 (Lord Cowper LC); [1795] EngR 3881; 91 ER 146. See also Gould v Kemp (1834) My & K 304, 309 (Lord Brougham LC); [1834] EngR 656; 39 ER 959, 961.

[13] Corin (1990) 169 CLR 540, 573. A 'tontine' is an annuity shared by subscribers to a common fund, the shares increasing as subscribers die until the last survivor enjoys the whole income.

[14] Delehunt v Carmody [1986] HCA 67; (1986) 161 CLR 464, 473 (Gibbs CJ); Mischel [2013] VSCA 375 [60], [65] (Ashley, Priest and Santamaria JJA).

[15] Corin (1990) 169 CLR 540, 573. The other aspect was the equality of the interests of joint tenants, regardless of intention or contribution, in the undivided rights constituting ownership of the subject property. See also The Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278, 299 [60], 303 [72] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ) ('Cummins').

[16] Mischel [2013] VSCA 375 [66] (Ashley, Priest and Santamaria JJA), citing Robertson v Fraser [1871] UKLawRpCh 93; (1871) LR 6 Ch App 696, 699 (Lord Hatherley LC).

[17] Mischel [2013] VSCA 375 [67] (Ashley, Priest and Santamaria JJA), referring by way of analogy to Damberg v Damberg [2001] NSWCA 87 [44] (Heydon JA).

[18] Mischel [2013] VSCA 375 [63] (Ashley, Priest and Santamaria JJA).

[19] Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, 259 (Mason and Brennan JJ); Cummins (2006) 227 CLR 278, 301-2 [68], 303 [72] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).

[20] Re Caruso [2022] VSC 242 [4] (Gorton J) ('Reasons').

[22] Ibid (citation omitted, emphasis added).

[23] Ibid [6]-[9] (citation omitted).

[25] [1861] EngR 701; (1861) 1 J & H 546, 557 (Page Wood V-C); [1861] EngR 701; 70 ER 862, 867. The trial judge also referred to Corin (1990) 169 CLR 540, 547 (Mason CJ and McHugh J), Mischel [2013] VSCA 375 [98] (Ashley, Priest and Santamaria JJA) and Abela [1983] 1 NSWLR 308, 314-15 (Rath J).

[26] Reasons [4], citing Cummins (2006) 227 CLR 278, 301-3 [68]-[72] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).

[27] Abela [1983] 1 NSWLR 308, 315 (Rath J).

[28] Mischel [2013] VSCA 375 [63] (Ashley, Priest and Santamaria JJA).

[30] Mischel [2013] VSCA 375 [68]-[70] (Ashley, Priest and Santamaria JJA).

[31] The respondents cited Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351 [25] (Gleeson CJ, Gaudron, Kirby and Hayne JJ).

[32] Pfeiffle [1991] VicRp 3; [1991] 1 VR 19, 22 (Kaye J).

[33] Calabrese [1985] 1 Qd R 17, 26 (Derrington J); Mischel [2013] VSCA 375 [68] (Ashley, Priest and Santamaria JJA).

[35] Nor did the fact that Mr Caruso enjoyed a right 'with regard to' the Nicholson Street property, which Ms Whitty did not enjoy, mean that they lacked a unity of interest. It meant only that they had made a contractual arrangement by which that interest may be disposed of on their behalf.

Whitty v Talia [2023] VSCA 246 (19 October 2023)

Williams v Hensman [1861] EngR 701; (1861) 1 J&H 546; 70 ER 862, applied - Mischel Holdings Pty Ltd (in liq) v Mischel [2013] VSCA 375; Corin v Patton (1990) 169 CLR 540, discussed.

Whitty v Talia [2023] VSCA 246

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Judgment (34 paragraphs)

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Cases Cited (9)

Whitty v Talia [2023] VSCA 246 (19 October 2023)