Delehunt v Carmody

[1986] HCA 67

HIGH COURT OF AUSTRALIA

DELEHUNT v. CARMODY

(1986) 161 CLR 464

25 November 1986

Real Property—Trusts

Real Property—Co-ownership—Purchase—Equal contribution to price by Man and woman—Registration of title in sole name of man—Resulting trust—Whether equitable joint tenancy or tenancy in common—Conveyancing Act 1919 (N.S.W.), s. 26. Trusts—Resulting trust—Purchase of land—Equal contribution to price by man and woman—Registration of title in sole name of man—Whether resulting trust—Conveyancing Act 1919 (N.S.W.), s. 26.

Decisions

GIBBS C.J.: These proceedings were commenced in the Supreme Court of New South Wales between the present respondent, Mrs Carmody, and Miss Delehunt, each of whom claimed to be beneficially entitled to land at 49 Trafalgar Street, Enmore, together with the house and other improvements thereon. One Francis Patrick Carmody had been registered as the proprietor of the land and after his death on 26 June 1980 the respondent, his wife, obtained letters of administration of his estate and the property was transmitted to her as registered proprietor. Wootten J., at first instance, held that the respondent held the land upon trust for Miss Delehunt, but on appeal it was held by the Court of Appeal that Mr Carmody, prior to his death, had held the land on trust for himself and Miss Delehunt in equal shares as tenants in common. Miss Delehunt, who contended that the land had been held beneficially for herself and Mr Carmody as joint tenants and that she was accordingly beneficially entitled to the land by survivorship, sought and obtained special leave to appeal to this Court. Since that time she has died and the appeal has been carried on by the administrator of her estate.

2. Miss Delehunt and Mr Carmody had lived together in the house at 49 Trafalgar Street as man and wife from 1949 until Mr Carmody's death. Mr Carmody, who had married the respondent in 1935, had separated from her in 1939 and did not live with her again thereafter. There were also living in the house Miss Delehunt's mother (until her death in 1962) and two young men, one the child of Mr Carmody's marriage and one the son of Miss Delehunt. The house was rented, but in 1956 Mr Carmody entered into a contract to purchase it on terms and, after the instalments under the contract had been paid, the land was transferred to him as registered proprietor on 26 March 1963. Wootten J. found, and it is not now disputed, that Mr Carmody and Miss Delehunt contributed equally to the payment of the deposit and the instalments, on the basis of an express oral agreement that they would own the property in equal shares and that it would in due course be put in the names of both. Wootten J. found that in these circumstances Mr Carmody held the property on an express trust for himself and Miss Delehunt in equal shares, but that the question whether there was to be a right of survivorship, that is whether the property was to be held for them as joint tenants or as tenants in common, was never discussed. However he held that it was reasonable to impute to the parties to the transaction the intention that they would hold the land as joint tenants and that if it were necessary to resort to a presumption they would be presumed to be joint tenants in equity.

3. The Court of Appeal held that in the circumstances there was neither an enforceable contract between the parties nor an express trust. Their Honours held that an essential part of any enforceable contract relating to co-ownership must be a term dealing with the question of survivorship or no survivorship, and that without such a term, express or implied, there would be no concluded contract. There was, of course, no such express term and it was held that no term could be implied because one of the conditions necessary to ground an implication, namely that the term was so obvious that "it goes without saying", was not satisfied. By a similar process of reasoning it was held that there was no express trust: it was not possible to impute to the parties a constructive common intention to hold the land either as joint tenants or as tenants in common and it was therefore not possible to identify a material term of the trust. Their Honours went on to say that there was undoubtedly a resulting trust, but held that it was a trust for the parties in equal shares as tenants in common. The reason for this conclusion, stated very shortly, was that the provisions of s.26 of the Conveyancing Act 1919 (N.S.W.), as amended, have removed the basis for the presumption formerly made in equity that if two people advance the purchase money in equal shares they intend to be joint tenants of the land purchased.

4. Section 26 of the Conveyancing Act is in the following terms:

"(1) In the construction of any instrument

coming into operation after the commencement of this Act a disposition of the beneficial interest in any property whether with or without the legal estate to or for two or more persons together beneficially shall be deemed to be made to or for them as tenants in common, and not as joint tenants.

(2) This section does not apply to persons who

by the terms or by the tenor of the instrument are executors, administrators, trustees, or mortgagees, nor in any case where the instrument expressly provides that persons are to take as joint tenants or tenant by entireties."

5. The order granting special leave to appeal to this Court limited the appeal to the ground "that the Court of Appeal erred in holding that s.26 of the Conveyancing Act 1919, as amended (N.S.W.) displaced the equitable presumption that where two persons advance equally the purchase moneys for a property they hold as equitable joint tenants". The reason for limiting the appeal in that way was no doubt to prevent the parties from canvassing a question of estoppel which had been raised in the Supreme Court. However counsel for both parties had not unnaturally regarded this order as precluding the argument that there was an express trust. I must say immediately, with the greatest respect to the learned members of the Court of Appeal, that I cannot agree that they were right in holding that there was no concluded contract and no express trust. Let it be assumed that it was correct to hold that no implication could be made, either in the contract or in the trust, of a term either that the co-ownership be by way of joint tenancy or that it be by way of tenancy in common. It would not, in those circumstances, follow that there was no valid contract and no binding trust. A contract to convey land to A and B, or a trust for A and B, may be perfectly valid, notwithstanding that nothing is said as to the form of co-ownership which A and B are to take; it then becomes necessary to consider the legal effect of a contract or a trust in that form. If the trust is created by an instrument, the effect of s.26 will be that in New South Wales the beneficial interest will be deemed to be held by the beneficiaries as tenants in common. In the present case there was, however, no instrument which disposed of the beneficial interest in the land to Miss Delehunt and Mr Carmody.

6. It does not matter whether the trust in the present case be regarded as an express trust (not created by an instrument) or a resulting trust, for, as will be seen, the result will be the same in either case. Mr Hodgekiss, who appeared for the respondent, challenged the correctness of the assumption made by this Court in framing its order in granting special leave to appeal; he submitted that there was no presumption in equity that where two persons advance equally the purchase money for a property the property is held for them beneficially as joint tenants; in such a case, he said, equity follows the law, with the consequence that in New South Wales before the enactment of s.26 of the Conveyancing Act the purchasers would have taken as joint tenants, whereas after that enactment they would take as tenants in common. At common law in England before the reform of the law of property in 1926, if land was conveyed to two or more persons a joint tenancy of the legal estate was created, unless either one of the four unities (of estate, time, possession and interest) was absent, or words of severance were employed: see Megarry and Wade, The Law of Real Property, 5th ed. (1984), at pp.424-425, where it is explained that the presumption at law in favour of a joint tenancy had its origins in the fact that in earlier times a joint tenancy was preferable to a tenancy in common, both to feudal lords and feudal tenants and to conveyancers. In this respect equity did not follow the law - in general, equity preferred tenancies in common, probably to give effect to the maxim "equity is equality". Where land was conveyed to two or more purchasers, all of whom had provided some of the purchase money, equity drew a distinction: if the purchase money had been provided in equal shares, the purchasers took beneficial interests as joint tenants, but if the money had been provided in unequal shares, they took as tenants in common. For completeness it should be added that even if the contributions are equal, equity will hold that there is a tenancy in common where two or more persons advance money and a mortgage is made to them jointly, or where the persons to whom the property is conveyed acquire it as partners or as participants in a joint undertaking; these are not rigid categories: Malayan Credit Ltd. v. Jack Chia-MPH Ltd. (1986) 2 WLR 590, at pp 595-596. The decisions usually cited as authority for the proposition that purchasers who have contributed equally to the purchase price hold the equitable as well as the legal estate as joint tenants were all cases in which the legal estate was conveyed to the purchasers: see Lake v. Gibson (1729) 1 Eq.Ca.Abr. 290 (21 ER 1052); affirmed sub. nom. Lake v. Craddock (1733) 3 PWms. 158 (24 ER 1011); Aveling v. Knipe (1815) 19 VesJun. 441 (34 ER 580); Robinson v. Preston (1858) 4 K.&. 505 (70 ER 211); Palmer v. Rich (1897) 1 Ch 134. Writers of high authority have explained this result by saying that where the purchasers had contributed equally there was no reason why equity should not follow the law. Thus in Maitland on Equity, revised by Brunyate, (1936), at p.79, it is said that:

"in general if two men pay the purchase money in equal shares there is no presumption that they intend to be other than what the conveyance will make them, namely joint tenants."

Similarly, Story's Equity Jurisprudence, 3rd English ed. (1920) says, at p.509:

"In the case of joint purchases made by two

persons, who advance and pay the purchase-money in equal proportions and take a conveyance to them and their heirs, it constitutes a joint tenancy, that is, a purchase by them jointly of the chance of survivorship; and of course the survivor will take the whole estate. This is the rule at law; and it prevails also in equity under the same circumstances; for unless there are controlling circumstances, equity follows the law."

Lewin on Trusts, 16th ed. (1964), at p.131 gives the same explanation:

"If two persons, joining in a purchase, take

the conveyance, not in the name of a stranger or of one of themselves, but in the names of both as joint tenants, then the presumption to be applied depends on whether they made an equal or unequal contribution to the purchase money.

If the joint purchasers made equal

contributions to the purchase money, equity considers that there is nothing on which to ground the presumption of a resulting trust, for persons making equal advances might very consistently take an estate in joint tenancy, as each has it in his power to compel a partition, or by executing a conveyance to pass a moiety of the estate, and in the meantime each runs his own life against that of the other."

Some remarks in the early case of Jeffereys v. Small (1683) 1 Vern 217 (23 ER 424) support this view. The explanation given by Maitland, Story and Lewin seems to be the probable, and indeed the only rational, one and I accept it. Unless there is something to indicate a different intention, equity will, in the circumstances mentioned, follow the law with the result that, before the position was changed by statute, the purchasers would have held as joint tenants.

7. However, since s.26 of the Conveyancing Act, in New South Wales the effect at law of a disposition in favour of A and B is that they will take as tenants in common. In New South Wales a conveyance to two purchasers who have contributed equally to the purchase price of the property will now give the purchasers a beneficial interest as tenants in common.

8. Of course in the present case the property was not conveyed to the two persons who had contributed to the purchase price, but to only one of them. When a purchase is made in the name of one of two or more persons who contributed to the purchase price, and the relationship between the parties does not give rise to a presumption of advancement, the property will be held on a resulting trust for the persons who paid the price. Quite clearly, where the contributions to the purchase price have been made in unequal shares the property will be held on a resulting trust for the contributors as tenants in common in proportion to the amounts which each contributed: Calverley v. Green (1984) 155 CLR 242, at pp 246-247, 258. There seems to be no authority which decides the precise question whether, when a resulting trust was raised in favour of purchasers who had contributed to the price in equal shares, the beneficial interest of the purchasers would have been that of joint tenants or of tenants in common. However, it would seem to follow, by analogy with the case where a conveyance is made to all the contributors, that (apart from the effect of s.26 of the Conveyancing Act) they would be equitable joint tenants, and this conclusion is accepted as correct in Hanbury and Maudsley, Modern Equity, 12th ed. (1985), at p.254 and Ford and Lee, Principles of the Law of Trusts (1983), at p.966. It would further seem to accord with principle that if there were an express trust in favour of A and B who had contributed equally to the purchase price of the property the subject of the trust, equity, again following the law, would have held (before the amendment effected by s.26) that A and B took beneficially as joint tenants. In either case slight circumstances would have been enough to indicate that it was intended that there should not be a joint tenancy. Equity had a dislike for joint tenancies, because their effect was to make the ultimate ownership of the property depend on the chance of survivorship, and, in the words of Snell's Principles of Equity, 28th ed. (1982), at p.37: "There is here no equality except, perhaps, an equality of chance."

9. It would be indeed surprising if the rules of equity required the courts to follow a rule of the common law that no longer existed and in doing so to reach a result which equity generally tried to avoid. However the doctrines of equity are not so inflexible. If equity follows the law, it will follow the rules of law in their current state. Where, as a result of following the law, a beneficial joint tenancy would formerly have been created, now a beneficial tenancy in common will (in New South Wales) come into existence. In other words, although s.26 of the Conveyancing Act has no direct application to the present case, its indirect effect is to require it to be held that there was a resulting trust for the purchasers in an interest of the same kind as that which would have resulted if the land had been conveyed to them at law, i.e. as tenants in common. Of course if these views are wrong, and if it was only when there was a conveyance to purchasers who had contributed in equal shares that equity presumed that there was a joint tenancy, the result would be the same, for equity would then favour a tenancy in common and the beneficiaries would hold as tenants in common accordingly.

10. For these reasons, I agree with the conclusion reached by the Court of Appeal that the land was held for Miss Delehunt and Mr Carmody beneficially as tenants in common. I would dismiss the appeal.

WILSON J.: I agree with the Chief Justice.

BRENNAN J.: I would dismiss the appeal for the reasons stated by the Chief Justice.

DEANE J.: I agree with the judgment of the Chief Justice.

DAWSON J.: I concur in the judgment of the Chief Justice.

Orders

Appeal dismissed with costs.