ON APPEAL FROM THE SUPREME COURT Lunacy-Insanity-Test of mental capacity for the validity of transactions-Effect
of incapacity on conveyances, powers of attorney and contracts-Void or voidable- Who may elect to avoid a voidable transaction.
The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires in respect of every transaction a capacity in each party to understand the general nature of what he is doing by participating in that transaction. The requirement is satisfied, where a transaction is contained in a written instrument, if each party is capable of understanding the general purport of the instrument when it is explained to
A power of attorney given by a person incapable of understanding the nature of the authority it purports to confer is void, and SO is an instrument bearing the signature of a party who, when he affixed his signature to it, was incapable of understanding that he was making a signature; but an instrument other than a power of attorney, signed by a party as to whom it is proved only that he was incapable of understanding the general purport of the instrument, is not void but is at most voidable.
If an instrument is voidable by reason of the mental incapacity of a party, unless and until an election to avoid it is made by that party or his represen- tatives it is valid and cannot be treated as void at the instance of other persons.
McLaughlin v. Daily Telegraph Newspaper Co. Ltd. (1904) 1 C.L.R. 243, Decision of the Supreme Court of Tasmania (Full Court) affirmed.
In an action brought by Bessie Melba Gibbons in the Supreme Court of Tasmania by way of writ of summons dated 23rd April 1947, the statement of claim was substantially as follows
1. The plaintiff was the widow of Gustav Gibbons who died at Launceston, Tasmania, on 4th April 1943.
2. The defendant Reginald Charles Wright was the executor of the will of Olinda Gibbons, who died at Hobart, Tasmania, on 30th November 1946, and executor of the will of Ethel Rose Gibbons, who died at Hobart, on 20th January 1946. Wright was sued as executor in each case.
3. The defendant Leonard Charles Pitfield was, and was sued as, the Recorder of Titles of the State of Tasmania.
4. Immediately before the death of Gustav Gibbons he, Ethel Rose Gibbons and Olinda Gibbons were seised of an estate in fee simple as joint tenants in certain lands situate at and known as Nos. 5 and 7 Liverpool Street, Hobart (being land held under the provisions of the general law) and certain lands situate at and known as Nos. 1 and 3 Liverpool Street, and Nos. 42, 44, 46 and 48 Park Street, Hobart (being lands held under the provisions of the Real Property Acts and comprised in certificate of title regis- tered vol. 328, fol. 93).
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Gibbons v Wright [1954] HCA 17
Case
[1954] HCA 17
Decision Date
CaseChat Overview and Summary
The plaintiff, Bessie Melba Gibbons, brought an action in the Supreme Court of Tasmania against Reginald Charles Wright, as executor of the wills of Olinda Gibbons and Ethel Rose Gibbons, and Leonard Charles Pitfield, as Recorder of Titles. The dispute concerned the ownership of certain land in Hobart. The plaintiff claimed to be the sole surviving joint tenant of the land, having acquired her interest alongside Olinda and Ethel Rose Gibbons. The defendant Wright, however, contended that the joint tenancy had been severed prior to the deaths of the sisters, leaving the plaintiff with only a one-third undivided share as a tenant in common.
The central legal issues before the court were: firstly, the test for mental capacity required for the validity of transactions, and secondly, the effect of such incapacity on conveyances, powers of attorney, and contracts, specifically whether they are void or merely voidable, and who has the right to elect to avoid a voidable transaction. The plaintiff sought declarations that a purported transfer severing the joint tenancy was ineffective and that she was the sole owner of the land by survivorship. The defendant sought to uphold the severance of the joint tenancy.
The court reasoned that the law does not prescribe a fixed standard of sanity for all transactions. Instead, it requires that each party possess the capacity to understand the general nature of what they are doing. For written instruments, this means being capable of understanding the general purport of the document when explained. A power of attorney given by an incapable person is void, as is an instrument signed by someone incapable of understanding they were making a signature. However, other instruments signed by a party incapable of understanding their general purport are at most voidable, not void. If an instrument is voidable due to mental incapacity, it remains valid unless and until an election to avoid it is made by the party or their representatives.
Following a jury finding that neither Ethel Rose Gibbons nor Olinda Gibbons was capable of understanding the nature and effect of the mortgages and the memorandum of transfer executed on 11th October 1944 and 6th December 1945 respectively, the trial judge declared these instruments to be nullities. However, the Full Court of the Supreme Court of Tasmania set aside this judgment, holding that dispositions for valuable consideration by an incapable person are voidable only if the disponee knew of the incapacity. As the plaintiff declined to amend her pleadings to allege such knowledge, the Full Court allowed the appeal. The High Court ultimately found that the instruments were voidable, not void, and as neither sister had elected to avoid them during their lifetimes, and the executor affirmed their validity, the plaintiff's claim failed.