Cope v Keene

[1968] HCA 53

HIGH COURT OF AUSTRALIA

McTiernan, Kitto and Taylor JJ.

COPE v. KEENE

(1968) 118 CLR 1

23 August 1968

Gift—Testator's Family Maintenance

Gift—Intention—Land—Transfer of fee simple in remainder expectant on death of donor—Registration to be effected by donor's solicitor—Death of donor before lodgment of transfer for registration—Imperfect gift—Whether perfected by appointment of donees as executrices of donor's will—Whether property may be subject of testator's family maintenance order—Testator's Family Maintenance and Guardianship of Infants Act, 1916-1954 (N.S.W.)—Wills, Probate and Administration Act, 1898-1954 (N.S.W.), ss. 44, 46. Testator's Family Maintenance—Property in respect of &hich order may be made—Property subject of imperfect gift by testator in lifetime—Voluntary transfer of Torrens land—Unregistered at death—Registration entrusted to testator's solicitor—Appointment of donees as executrices of testator's will—Whether gift perfected—Testator's Family Maintenance and Guardianship of Infants Act, 1916-1954 (N.S.W.)—Wills, Probate and Administration Act, 1898-1954 (N.S.W.), ss. 44, 46.

Decisions

August 23.
The following written judgments were delivered:- McTIERNAN J. I agree in the judgment of my brother Kitto. (at p5)

KITTO J. This is an appeal from an order of the Supreme Court of New South Wales (Hardie J.) in its equitable jurisdiction declaring that certain items of property are assets of the estate of a testator, one Leonard James Keene deceased, which can be dealt with by an order under the Testator's Family Maintenance and Guardianship of Infants Act, 1916-1954 (N.S.W.), and ordering that the appellants as executrices of the will of the testator set aside out of his estate a sum of $6,000 for each of the respondents, who are respectively the widow and a daughter of the testator. The appellants are daughters of the testator by a former wife who predeceased him, and they are the universal devisees and legatees under the testator's last will. (at p5)

2. The grounds of appeal challenge only so much of the order as includes in the estate of the testator which may be dealt with under the Act a certain house property, known as No. 10 Highclere Avenue, Rockdale, in which the testator was at his death the registered proprietor of an estate in fee simple under the provisions of the Real Property Act, 1900 (N.S.W.). The order appealed against sets out in a schedule the items of property which it declares to be assets capable of being dealth with under the Act. The schedule is a copy of the schedule to the executrices' probate affidavit for death duty purposes, and the house property is included in it under the general heading "Notional Estate" and the sub-heading "Voluntary Dispositions", with the statement: "On 11th February 1966 the deceased executed a transfer of an interest in fee simple in remainder expectant on his own death in property known as 10 Highclere Avenue, Rockdale, in favour of (the appellants) as joint tenants." The decision of the learned judge, however, is not well reflected by this means. What his Honour held was that the testator did not make an effectual disposition of any interest in the property in his lifetime, and that even if, upon the principle of Strong v. Bird (1874) LR 18 Eq 315 , an imperfect disposition of it had become perfected by the appointment of the appellants as executrices of the will, the property was nevertheless part of that to which the Testator's Family Maintenance and Guardianship of Infants Act refers in the provision in s. 3 (i) authorizing an order for the making of provision out of "the estate of the testator". (at p6)

3. The decision that the testator did not make a completed gift in his lifetime has been challenged in argument but it is plainly right. The evidence shows that on the advice of his solicitor the testator determined to make a gift to the appellants of an estate in fee simple in remainder expectant upon his own death, and that he executed a memorandum of transfer in a form appropriate for that purpose. To complete the gift the testator had to do all that, according to the nature of the property as land under the provisions of the Real Property Act, was necessary to be done by him in order to transfer the property: Anning v. Anning (1907) 4 CLR 1049 . What this involved is shown by the judgment of Dixon J. in Brunker v. Perpetual Trustee Co. (Ltd.) (1937) 57 CLR 555, at pp 599-605 . It involved at least that the memorandum of transfer should be delivered to the appellants by or on behalf of the testator with the intention on his part of there and then parting with it and with the property in it so that the appellants should be entitled as against him to cause the instrument to be registered. It probably involved also that the appellants should be enabled to produce or require the production of the certificate of title to the Registrar-General to have a memorial of the transfer entered upon it. (at p7)

4. The necessary delivery of the memorandum of transfer was not in fact made. The instrument was indeed handed to one of the appellants at a certain stage, but solely in order that, having signed it herself in the space provided for an acceptance of the transfer and certification of the correctness of the instrument for the purposes of the Real Property Act, she might get the other also to sign it in that space and then return it to the testator's solicitor. These things she did. It is admitted by the appellants, and indeed it is clear on the evidence, that the solicitor was acting throughout for the testator and not at any relevant time for either of the appellants. The solicitor's purpose in taking the instrument back when the acceptance had been signed by the appellants was solely that he might proceed to register it on behalf of the testator and by so doing effectuate the gift the testator desired to make. The instrument as a piece of paper remained throughout the property of the testator. The fact is quite plain on the evidence that his intention to make a gift to the appellants of the remainder expectant upon his own death was from beginning to end an intention to do so, not by delivering the memorandum of transfer, but only by causing the instrument to be registered on his behalf. The certificate of title was never delivered or made available to the appellants, and this too was because the testator intended no gift save by his own act of procuring registration of the transfer. (at p7)

5. Anticipating that this view might prevail against them, the appellants put two arguments based upon their appointment as executrices of the testator's will. One contention was that as executrices they acquired the legal ownership of the memorandum of transfer and the certificate of title and thus became entitled to register the transfer and so effectuate the testator's general intention that the property should become theirs after his death. I should have thought that on the testator's death the memorandum of transfer ceased to be a registrable instrument, being no longer the instrument of a (living) registered proprietor, and that the appellants were not enabled by that Act to deal with the land without first obtaining transmission under s. 94. But the more fundamental answer to the contention, in my opinion, is that on the grant of probate the land, and the instruments too for that matter, became vested in the appellants as assets for the payment of all duties and fees and of the testator's debts in the ordinary course of administration: Wills, Probate and Administration Act, 1898 (N.S.W.), ss. 44, 46, and subject to that (unless the principle of Strong v. Bird (1874) LR 18 Eq 315 gave them a beneficial interest) for the purposes of the will. They had no power to do anything to defeat the rights of the Crown, the creditors or the beneficiaries. (at p8)

6. The other contention was that the case falls within the principle of Strong v. Bird (1874) LR 18 Eq 315 . The conditions for the application of the principle are (1) that at some time in his lifetime the testator made a purported immediate gift of specific property to another person (or in the case of a debt a purported immediately operative voluntary release of it); (2) that though the testator's intention at the time was that what he did should take effect by way of present gift, it failed to do so for want of compliance with the legal requisites for a complete divesting of the title from the intending donor in favour of the intended donee; (3) that the testator still had when he died the intention that the property should be treated as having been effectually given to the intended donee; (4) that the testator left a will appointing the intended donee as the executor or one of the executors of the testator. Where these conditions are satisfied the purported donee takes the property free from the dispositions of the will, as the testator intended it to be, and therefore holds it (as against the beneficiaries under the will) for his own benefit. In Matthews v. Matthews (1913) 17 CLR 8, at pp 31, 32 the question was raised whether the principle applies in respect of land (see also In re Mulholland (1916) 33 WN (NSW) 89 ; Re Comberbach; Saunderson v. Jackson (1929) 73 Sol J 403 , and In re James; James v. James (1935) Ch 449, at p 451 ), and in particular in respect of land under the Torrens System of registered titles; but I need not consider that question here. The principle cannot apply in this case because nothing that the testator did was intended by him to operate immediately as a gift, and he formed no intention at any time that the subject-matter, the remainder in the property expectant upon his death, should be treated as having been effectually given. His only intention, from the time he instructed his solicitor to prepare the transfer until the time of his death was to pursue a course the completion of which would constitute the making of a gift; and Strong v. Bird (1874) LR 18 Eq 315 has nothing to say in regard to an intention which remains until the death a mere proposal to make a gift a future act: see Matthews v. Matthews (1913) 17 CLR 8 ; In re Freeland; Jackson v. Rodgers (1952) Ch 110 and cases there cited. (at p8)

7. It thus becomes unnecessary for me to decide what the position would have been if Strong v. Bird (1874) LR 18 Eq 315 had applied to the case; but I am prepared to say that as at present advised I should agree with Hardie J. in thinking that the Rockdale property would have formed part of the testamentary estate capable of being disposed of by an order under the Testator's Family Maintenance and Guardianship of Infants Act. (at p9)

8. In my opinion the appeal should be dismissed. (at p9)

TAYLOR J. The appellants are the daughters and also the executrices of Leonard James Keene who died on 9th March 1966 and the respondents are, respectively, his widow and daughter who, after his death, claimed in applications made pursuant to the Testator's Family Maintenance and Guardianship of Infants Act, 1916-1954 that they had been left without adequate provision for their proper maintenance, education and advancement. Indeed, they were left without any such provision for by his last will, executed on 20th May 1965, the deceased left the whole of his estate to his two daughters in equal shares. (at p9)

2. At the time of his death the deceased was the registered proprietor of the land upon which was erected the dwelling in which he lived but there is a dispute as to whether this formed part of his estate. Apart from the dwelling, which is valued at $11,700, the assets in the estate were of a value of approximately $5,000. Upon the hearing of these applications - which were heard together - the learned judge of first instance resolved the disputed question and having declared that the fee simple in the land upon which the dwelling was erected formed part of the deceased's estate, he directed the appellants to set aside out of the estate the sum of $12,000 and to pay thereout the sum of $6,000 to the first-named respondent and the sum of $6,000 to the Public Trustee pursuant to s. 47 of the Trustee Act, 1925-1942 on behalf of the second-named respondent. In each case he directed that interest was to be payable at the rate of four per cent. per annum from 1st November 1967 to the date of payment. (at p9)

3. The matter now comes before us on appeal from that order but the grounds of appeal require us to consider only the validity of the declaration which his Honour made. Should we be of the opinion that he erred in making it the appellants ask us to remit the matter for reconsideration on the basis that the estate of the deceased was worth only $5,000 approximately. (at p9)

4. Before proceeding to consider the evidence in the case it should be observed that the question which is raised is not an appropriate one to be decided in proceedings of this character. But, in spite of the fact that the evidence is somewhat scanty, counsel for the appellants has asked us to resolve it. When the matter was raised by the Court on the hearing of the appeal he took time to consider the problem, and, thereupon, pressed us to resolve it pointing out that the estate was small, that all parties affected by the declaration were before the Court, that he had consulted with the appellants and that they were satisfied that their interests could not be advanced by a more extensive examination of the relevant circumstances. (at p10)

5. As already mentioned the deceased died on 9th March 1966. He had been married to the first-named respondent for some four years, that is to say, since 15th March 1962. Their child, the secondnamed respondent was born on 25th December 1962. There seem to have been disagreements extending from the early days of their married life and, finally, in November 1965 the first-named respondent left her husband and took the child with her. Shortly after this event proceedings in the Children's Court resulted in an order for maintenance for the two respondents. (at p10)

6. As early as October 1963 the deceased had seen his solicitor and told him that he wished to make a gift of his home to his two daughters. Then early in 1965, after the happening of some events which had delayed the deceased in carrying his proposal into effect but need not be related, his solicitor, in accordance with the instructions of the deceased, ascertained the amount of stamp duty and gift duty which would be attracted by such a transaction. But when the deceased was advised of the liability that would be incurred on this account he was concerned that he might not be able to discharge it. The solicitor thereupon suggested that the deceased might sell the home to his daughters and take a mortgage back to secure payment of the purchase money. If he adopted this course, it was said, he could make successive gifts to them of instalments payable under the mortgage and so avoid the payment of gift duty. The deceased left his solicitor saying that he would like to think about the proposition. After two or three discussions between them the deceased saw his solicitor in December 1965 and said that he had decided to adopt the course suggested. But in the course of conversation he mentioned that as he had just attained sixty-five years of age he intended to apply for the old age pension. Upon being informed of this the solicitor said that he thought that if the course proposed was adopted the deceased would, in effect, disqualify himself for the whole or some part of the pension. "If you like", he added, "I will check with the Commonwealth Department of Social Services to ascertain the precise position and let you know. It is my impression that if you transfer to your daughters an estate in fee simple in remainder expectant upon your own death, and continue to reside in the premises, then your pension will not be affected." The interview then ended. Then on 21st December 1965 the solicitor informed the deceased by telephone that he had made inquiries at the Department of Social Services and had ascertained that if the final suggestion were adopted his pension rights would not be affected. Thereupon, the deceased gave instructions for the preparation of a transfer to his daughters and he asked his solicitor to obtain a certificate of valuation and take the matter through to its conclusion and "take all necessary steps to register the transfer". (at p11)

7. A memorandum of transfer was duly prepared and on 11th February 1966 the deceased attended his solicitor and executed it. When this had been done the solicitor asked the deceased to arrange for the appellants to attend at his office for the purpose of accepting the transfer personally. Further the deceased was told that it would be necessary for him to provide a sum of money on account of gift duty, stamp duty and legal costs in connexion with the transfer and in connexion with the proceedings in the Children's Court. The deceased said that he would arrange for this to be done. A week later the first-named appellant attended at the solicitor's office for the purpose of accepting the transfer. Having signed the transfer she said that her sister, the second-named appellant, was expecting a child and asked if she could take the transfer with her and have it signed at her home, whereupon she would bring it back. A few days later she attended at the solicitor's office and returned the transfer. In the result, the transfer was not lodged for registration before the death of the deceased and there is now a caveat on the title. (at p11)

8. It is contended by the appellants, first, that these facts justify the conclusion that the deceased, during his life, made a gift of the house to his two daughters. It is, of course, not contended that the form which the suggested gift took resulted in a transfer of the deceased's legal estate; what is suggested is that there was a voluntary settlement in his lifetime which was valid and effectual according to the principle enunciated in Milroy v. Lord (1862) 4 De GF &J 264 (45 ER 1185) . Secondly, it is contended in the alternative that if there was an incomplete gift in the lifetime of the deceased it was perfected by the appointment of his two daughters as his executrices: Strong v. Bird (1874) LR 18 Eq 315 . It may be said that the respondents question whether the principle upon which the last-mentioned case proceeded is applicable in this State because of the provisions of ss. 44, 45, and 47 of the Wills, Probate and Administration Act, 1898-1954, but the conclusion which I have reached makes it unnecessary to embark on this inquiry. (at p12)

9. The principle applied in Milroy v. Lord (1862) 4 De GF &J 264 (45 ER 1185) has been the subject of examination and application on numerous occasions since that case was decided. But it is unnecessary for the purposes of this case to make an exhaustive examination of these cases. It is sufficient to say that what must be established is that the donor intended to make an immediate gift and that he has "done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him". It has been pointed out by Dixon J., as he then was, in Brunker v. Perpetual Trustee Co. (Ltd.) (1937) 57 CLR 555, at p 602 , that, in applying that test to a case such as the present, care must be taken to keep in mind precisely what the relevant question is. "It is not" he said, "whether the intending donor has divested himself of his estate or interest in the land, or has done all that lies in his legal power to do so." "For obviously" as his Honour remarked, "it was within his legal power . . . to cause the immediate registration of the transfer. The question is whether by his acts he has placed the intended donee in such a position that under the statute the latter has a right to have the transfer registered, a right which the donor, or his executors, cannot defeat or impair. That delivery of the transfer to the donee or the donee's agents is a condition which must be fulfilled before such a right will arise appears to me to be clear. It is only by the control or possession of the instrument that the transferee could effect registration without any liability to interference or restraint on the part of the transferor. Further, I think that the donee must obtain property in the piece of paper itself and property in the paper could pass only by delivery (Cochrane v. Moore (1890) 25 QBD 57 ). If property in the transfer remained in the transferor, his power of recalling it must also remain. For he would be entitled to possession of the paper, he could refuse to present it for registration and he could destroy it" (1937) 57 CLR, at pp 602, 603 . See also Norman v. Federal Commissioner of Taxation (1963) 109 CLR 9 . (at p13)

10. In my view the evidence in the case fails, signally, to establish that the memorandum of transfer was delivered by or on behalf of the deceased to the appellants; indeed it is not, I think, capable of supporting that conclusion. It is true that the memorandum was, handed to one of the appellants for a limited purpose, that was, of obtaining her sister's signature to it as a transferee, whereupon it was returned to the deceased's solicitor so that he might carry the deceased's intentions into effect. I should add also that there is nothing in the evidence to support the suggestion that the deceased's solicitor was at any time acting for or on behalf of the appellants. (at p13)

11. Further, in my view, the evidence is not capable of supporting a finding that there was an intention on the part of the deceased to make a gift to his daughters other than a gift of the legal estate which would pass upon the registration of the transfer. In other words it was his intention to make a gift to his daughters by the execution and subsequent registration of a memorandum of transfer and it was this intention that was frustrated by his death; there was no intention on his part to complete a disposition of the property by way of gift by virtue of some act of his performed before registration. This being so, the principle of Milroy v. Lord (1862) 4 De GF &J 264 (45 ER 1185) has no application and this contention must fail. (at p13)

12. It was also contended by the respondents that in order to satisfy the test laid down in Milroy v. Lord (3) it was necessary also that the relevant certificate of title should have been delivered to the appellants. It may be observed that in New Zealand such a condition is essential to the application of the principle in relation to land the title to which is under the Land Transfer Act, 1915. But whether the provisions of the Real Property Act, 1900 are such that this is an essential condition in New South Wales was left open in Brunker's Case (1937) 57 CLR 555 and it is not a question which it is necessary to decide in this case. (at p13)

13. The second ground upon which I think the argument based on Milroy v. Lord (3) should be rejected also affords a clear ground for denying that the principle of Strong v. Bird (1874) LR 18 Eq 315 has any application in the circumstances of the case. That principle, plainly enough, applies "only to an actual attempted gift which is as a matter of law imperfect" and not where it appears, merely, that the donor intended to make a gift at some future time and failed to do so (In re Innes; Innes v. Innes (1910) 1 Ch 188, at p 193 ; In re Pink; Pink v. Pink (1912) 2 Ch 528, at pp 536, 538 ; and In re Freeland; Jackson v. Rodgers (1952) 1 Ch 110, at pp 115, 118 ). In my opinion the appeal should be dismissed. (at p14)

Orders

Appeal dismissed with costs.

Solicitors for the appellants, McDonell &Moffitt.

Solicitors for both respondents, Morgan Ryan &Brock.

R. A. H.