Hobbes v NSW Trustee and Guardian
[2014] NSWSC 570
•14 May 2014
Supreme Court
New South Wales
Medium Neutral Citation: Hobbes v NSW Trustee & Guardian [2014] NSWSC 570 Hearing dates: 20 August 2013 Decision date: 14 May 2014 Jurisdiction: Equity Division Before: White J Decision: Refer to para [66] of judgment.
Catchwords: EQUITY - gifts - donatio mortis causa - whether deceased's actions constituted a valid donatio mortis causa - whether delivery of documents for a bank account and fixed term deposit to the plaintiff was of the means or part of the means of getting at the property, or, the essential indicia of title - whether land can be the subject of a gift mortis causa - whether delivery of house keys and council rate notice sufficient to effectuate gift mortis causa Legislation Cited: Real Property Act 1900 (NSW)
Conveyancing Act 1919 (NSW)Cases Cited: Dufficy v Mollica [1968] 3 NSWR 751
Cosnahan v Grice (1862) 15 Moo PC 215; 15 ER 476
Public Trustee v Bussell (1993) 30 NSWLR 111
Harneiss v Public Trustee (1940) 40 SR(NSW) 414
Ward v Turner (1752) 2 Ves. Sen. 431; 28 ER 275
Duffield v Elwes (1827) 1 Bligh NS 497; 4 ER 959
Moore v Darton (1851) 4 De G & Sm 517; 64 ER 938
Cassidy v The Belfast Banking Co. (1887) 22 LR Ir 68
Re Dillon; Duffin v Duffin; Cartledge v Heals (1898) 24 VLR 576
Porter v Walsh (1895) 1 IR 284; (1896) 1 IR 148
Amis v Witt (1863) 33 Beav. 619; 55 ER 509
Witt v Amiss (1861) 1 B & S 109; 121 ER 655 Moore v Moore (1874) LR 18 Eq 474
Cormack v Permanent Trustee Co. of NSW Limited (1903) 4 SR (NSW) 17
Hudson v Spencer [1910] 2 Ch 285
Public Trustee v Young (1940) 40 SR (NSW) 233
In Re Weston; Bartholomew v Menzies [1902] 1 Ch 680
M'Gonnell v Murray (1869) IRR 3 Eq 460
Re Andrews [1902] 2 Ch 394
Delgoffe v Fader [1939] Ch 922; 3 All ER 682
Birch v Treasury Solicitor [1951] Ch 298; [1950] 2 All ER 1198
Tawill v Public Trustee of NSW, Estate of Birukoff [2009] NSWSC 256
Watts v Public Trustee (1949) 50 SR (NSW) 130
Bayliss v Public Trustee (1988) 12 NSWLR 540
Richards v Symes (1740) Barn Ch 90; 27 ER 567
Sen v Headley [1991] Ch 425; [1991] 2 All ER 636
Dillwyn & Llewellyn (1862) 4 De GF & J 517 Gissing v Gissing [1971] AC 886
Woodard v Woodard [1995] 3 All ER 980Texts Cited: "Donationes Mortis Causa of Bank Credits" (1943) 17 ALJ 167
"Donatio Mortis Causa" (1993) 67 ALJ 553
Young, Croft and Smith on Equity (Lawbook Company 2009)
R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 2002, 4th ed LexisNexis ButterworthsCategory: Principal judgment Parties: Michelle Hobbes (Plaintiff)
NSW Trustee & Guardian (Defendant)Representation: Counsel:
M Gorrick (Plaintiff)
M Lawson (Defendant)
Solicitors:
Rossana Court, Solicitor
Ruth Pollard, Solicitor
File Number(s): 2012/219634
Judgment
HIS HONOUR: This case concerns the principles on which otherwise imperfect gifts will be effective if the gifts were made in contemplation of death. The legal doctrine is known as donationes mortis causae.
George Gibson died on 9 January 2011. He did not leave a will. He had no close relatives and it does not appear that he had any friends in Australia until the plaintiff, Ms Hobbes, took him in hand. She became acquainted with the deceased when she was visiting her father in hospital in February 2010. As set out below, she did a great deal for him in the 11 months or so before his death. The plaintiff contends that shortly before his death Mr Gibson made gifts to her which became effective on his death of a credit balance in a bank account with the St. George Bank Ltd, a fixed term deposit with St. George Bank, and his real estate consisting of a unit in Bayley Street, Dulwich Hill.
The issues are:
1. Whether the plaintiff has established that the alleged gifts were made;
2. Whether the alleged gifts were conditional upon their taking effect on the death of the donor, being revocable until that event occurred;
3. In the case of the bank account and the fixed term deposit, whether the documents delivered by the deceased to the plaintiff were a sufficient delivery of the "subject matter of the gift", or the "means or part of the means of getting at the property", or "the essential indicia of title";
4. Whether land in New South Wales held under the provisions of the Real Property Act 1900 (NSW) can be the subject of a gift mortis causa; and
5. If so, whether delivery of the keys to the unit and a council rate notice were sufficient to effectuate a gift mortis causa of the Dulwich Hill unit.
I have concluded that there was an effective gift mortis causa of the credit balance of the bank account and of the fixed term deposit and interest accruing thereon, but not of the Dulwich Hill unit.
Background facts
In February 2010 Mr Gibson shared a ward with the plaintiff's father in the Balmain Hospital. Mr Gibson suffered from throat cancer and had undergone a laryngectomy. Ms Hobbes deposed that:
"George and I tried to communicate with each other. I observed that he could not speak properly. He would either sound out words in a sort of whisper or mouth out words slowly. He would also make gestures with his hands and arms and nod or shake his head to get his messages across. If anyone could not understand him he would write messages on a piece of paper."
Ms Hobbes visited her father in the Balmain Hospital daily for about two months. Over that time she developed a friendship with Mr Gibson and frequently ran small errands for him. Her father was discharged on 23 April 2010. Mr Gibson was discharged a few days later. Ms Hobbes visited Mr Gibson in hospital after her father was discharged until Mr Gibson was discharged.
Mr Gibson asked the plaintiff to visit him at his home in Dulwich Hill after he had been discharged, and she did so. Mr Gibson's apartment was in a poor state of repair. Ms Hobbes and her partner, Mr Daniele Spadotto, did a great deal of work in cleaning, repainting and recarpeting Mr Gibson's apartment. Ms Hobbes took Mr Gibson to doctors' appointments and shopping when required. Effectively she adopted him as someone in need of her care and attention. By about September 2010, Mr Gibson could no longer leave his apartment. Ms Hobbes continued to shop for him. As his health deteriorated she did his laundry and some cooking for him.
The plaintiff deposed that in about September 2010 Mr Gibson said to her words to the effect, "When I go, you live here", and then wrote on a piece of paper, "When I don't live here, you live here". He gave Ms Hobbes a set of keys to his apartment saying, "Here. Take. Come and go." Ms Hobbes attempted to give the keys back to Mr Gibson, but he refused. The next day she made a copy of the front door key and returned the original set of keys by hanging them on a hook in his apartment. Mr Gibson accepted this.
Sometime later, probably still in September 2010, Mr Gibson gestured around the living room in which he and Ms Hobbes were sitting and said to her words to the effect, "You live here when I go". He gave Ms Hobbes a council rate notice and said, "You live here". He gestured to indicate the lounge room and mouthed the word, "Mine", then pointed at Ms Hobbes and said, "Now yours".
On 26 December 2010 Ms Hobbes and Mr Spadotto visited Mr Gibson. Ms Hobbes thought Mr Gibson looked particularly unwell. She called an ambulance to take him to hospital. While they were waiting for the ambulance to arrive, Mr Gibson gave Ms Hobbes two bank documents from St. George Bank Ltd. One was a passbook for Mr Gibson's passbook account. The other was a card containing details and terms and conditions of a fixed investment term account. The plaintiff deposed that Mr Gibson said to her words to the effect, "Take these. I don't need anymore", and then said, "Plenty there for you. Look after you".
Mr Gibson had a pet bird called "Shorty". After the paramedics arrived he handed Ms Hobbes the keys to his apartment and said, "All yours now. Not coming back. Look after Shorty". He was taken to Concord Hospital.
On one occasion when Ms Hobbes visited Mr Gibson in hospital, she asked him, "What do you want me to do about the unit and the bank accounts?" He replied, "You have my keys. All yours. Thank you for looking after me." She said, "Things don't work like that". He replied, "Don't worry about it. It will be fine. Everything is yours."
On a later occasion Mr Gibson said to the plaintiff, "Cremate me. Look after Shorty. Live at my house." She agreed to do that. Mr Gibson said, "Plenty of money for you. You okay".
Mr Gibson died on 9 January 2011. Letters of administration were granted to the NSW Trustee and Guardian on 13 February 2013. Mr Gibson had no significant assets, other than the Dulwich Hill unit, his fixed term deposit with St George Bank Ltd and the bank account with St George Bank. Mr Gibson had relatives living in the United Kingdom who are entitled to his intestate estate.
Counsel for the NSW Trustee and Guardian rightly submitted that Ms Hobbes' evidence about the words of gift allegedly spoken by Mr Gibson should be scrutinised with great care. In Dufficy v Mollica [1968] 3 NSWR 751 at 753-754, Sugerman JA referred with approval to the words of Lord Chelmsford LC in Cosnahan v Grice (1862) 15 Moo PC 215; 15 ER 476 where his Lordship, delivering the advice of the Privy Council, said (at 223, 479):
"Cases of this kind demand the strictest scrutiny. So many opportunities, and such strong temptations, present themselves to unscrupulous persons to pretend these deathbed donations, that there is always danger of having an entirely fabricated case set up. And, without any imputation of fraudulent contrivance, it is so easy to mistake the meaning of persons languishing in a mortal illness, and by a slight change of words, to convert their expressions of intended benefit into an actual gift of property, that no case of this description ought to prevail, unless it is supported by evidence of the clearest and most unequivocal character."
Ms Hobbes' evidence is partly corroborated by her partner Mr Spadotto, but he is in her "camp". Mr Spadotto did not corroborate Ms Hobbes' evidence of Mr Gibson's having given her the two bank documents and saying the words at para [10] above. Mr Spadotto said:
"I did not hear or see any exchange between Michelle and George regarding the bank books but there was a lot happening that morning with getting George to hospital. I had to deal with the ambulance officers when they arrived and I did a turn of the unit to make sure that all the lights were off and the balcony door closed; things like that."
He did corroborate her evidence of Mr Gibson handing her the keys to the apartment. He said that Mr Gibson told her, "These are for you", and then, "This is yours", gesturing with his arms around the apartment.
I have considered the evidence of Ms Hobbes and Mr Spadotto carefully, bearing in mind the caution to be exercised in considering their evidence and the absence of corroboration of part of Ms Hobbes' case. I consider both to be reliable witnesses. The differences in their evidence are immaterial and do not adversely reflect on their credibility. The differences are consistent with each witness independently attempting to recall truthfully past events.
The principal attack on the evidence of Ms Hobbes and Mr Spadotto concern their ability to understand what Mr Gibson was saying. Because of his laryngectomy it was hard for Mr Gibson to communicate otherwise than in an hoarse whisper. But Ms Hobbes and Mr Spadotto had become well acquainted with Mr Gibson. They were generally able to understand what he was saying in an hoarse whisper. If he were unable to make himself understood, he either used gestures or wrote down what he was attempting to communicate. I am satisfied that their evidence as to his statements should be accepted.
Two other attacks were made on Ms Hobbes' credit. She admitted that she did not tell Mr Gibson the truth when she told Mr Gibson that she would return to his house to look after the bird, Shorty. Instead, she had taken Shorty to her house. Her statement to Mr Gibson that she would go to his house to look after Shorty was made to keep him happy and does not reflect adversely on her credit.
Ms Hobbes' evidence was also criticised for not annexing to her affidavit documents that would corroborate that she made various purchases for Mr Gibson's benefit. There was no substance to this attack on her credit. The expenses that she claimed were not in issue. She has not made any claim on the estate for reimbursement of the expenses. The issue of expenses was so peripheral to the case that no adverse inference is to be drawn from Ms Hobbes' failure to provide documentary support for them.
I accept the plaintiff's evidence as to the statements made to her by Mr Gibson and referred to above, and I accept her evidence as to his giving her the passbook, the card for the fixed term investment account, the council rates notice and the keys to the apartment in the circumstances set out above.
Doctrine of donationes mortis causae
There are three essential elements of a donatio mortis causa. In Public Trustee v Bussell (1993) 30 NSWLR 111 Cohen J said (at 115) that they were:
"(1) the gift must be made in contemplation of the donor's death, although not necessarily in expectation of death; (2) there must be delivery of the subject matter of the gift to the donee or a transfer of the means or part of the means of getting at the property, or, as has been said, the essential indicia of title; and (3) the gift must be conditional upon it taking effect on the death of the donor, being revocable until that event occurs: Harneiss v Public Trustee (1940) 40 SR(NSW) 414 at 416-417; 57 WN(NSW) 157 at 157-158; Dufficy v Mollica [1968] 3 NSWR 751 at 758; Sen v Headley [1991] Ch 425 at 431."
The first and the third of these requirements is satisfied in relation to each of the gifts.
Mr Gibson gave Ms Hobbes the passbook and the card for the fixed term investment account on 26 December 2010 when he was waiting for the ambulance to arrive to take him to hospital. He gave the passbook and the card to Ms Hobbes saying, "Take these. I don't need anymore", and "Plenty there for you. Look after you." It is clear that he intended that Ms Hobbes should have the money in the accounts to which the documents related. Mr Gibson was terminally ill. When he said, "I don't need anymore", Mr Gibson was acknowledging that he would no longer need the money in the accounts. These statements were made in contemplation of his impending death. The gift was conditional on his death because it would be on his death that he would no longer have use for the money. Had he recovered and had need of the money in the accounts, then the reason behind the gift would have been negatived and he could use the money in the bank accounts. But he did not expect that to happen.
The first delivery of the keys by Mr Gibson to Ms Hobbes was not a gift donatio mortis causa because she returned the keys to him and he resumed dominion over them (Harneiss v Public Trustee (1940) 40 SR(NSW) 414 at 418-419).
The next transaction was delivery of the council rates notice to Ms Hobbes in September 2010. He gave her the rates notice and said, "You live here when I go", and said to her that the unit was "now yours". He also said, "You live here when I go". I consider that these words of gift were also intended to be conditional on his death which he contemplated would occur in the near future.
The third transaction was the delivery of the keys to Ms Hobbes on 26 December 2010 when Mr Gibson was leaving his unit with the paramedics. At that time he said, "All yours now. Not coming back. Look after Shorty". These words showed that Mr Gibson was contemplating his death. He wanted Ms Hobbes to look after his pet bird. I infer that the intended gift of the unit was conditional on his death and revocable until that point as the gift was made on the presumption that his death was imminent.
Accordingly, in respect of each of the three gifts, the first and third requirements of a valid donatio mortis causa are satisfied.
The difficult questions in this case relate to the second requirement and to the question whether there can be a valid gift mortis causa of land in New South Wales held under the Real Property Act. I will deal first with passbook account and the term deposit.
The passbook account
The passbook given by Mr Gibson to Ms Hobbes on 26 December 2010 appears to have been issued by the St. George Bank on 16 June 2009. It stated the account name, namely the name of Mr Gibson, and an account number. The opening entry was the bringing forward of a credit balance on 14 May 2009 of $148,762.94. Included in the passbook were entries for the crediting of interest from a term deposit, the crediting of Centrelink pension payments and occasional cash withdrawals of $1,000 or $2,000. The passbook included the following printed information:
"Notify St. George immediately if you lose or misplace your passbook.
...
Passbooks should be presented for each transaction. With a St. George 'blacklight' signature, you can withdraw at any St. George branch.
Conditions of use for your account are available at all St. George branches."
At the foot of each page there was a statement "Please check money received at entries in your book before leaving the office", and, "Please retain this passbook for taxation purposes".
The term deposit
The document given by Mr Gibson to Ms Hobbes on 26 December 2010 relating to the term deposit was issued by St. George Building Society in a booklet called "Fixed Term Investment". The booklet described a fixed term investment with a particular nine-digit account number that is a different account number from term deposit for which interest was credited to the passbook account. It appears from the affidavit of the branch manager of the NSW Trustee and Guardian administering Mr Gibson's estate that the deceased had an account with St. George Bank in a single amount of $100,000 referable to a particular account number that corresponds with the number of the term deposit on which interest was credited to the passbook account. This is different from the account number shown on the document given to Ms Hobbes. No submissions were made about the significance, if any, of the different account number. I understood it to be common ground that the $100,000 term deposit shown in the affidavit of the officer of the NSW Trustee as an asset of Mr Gibson is the same term deposit as was referred to in the document entitled "Fixed Term Investment" given by Mr Gibson to Ms Hobbes. The NSW Trustee and Guardian adduced no evidence of his having any other document recording the term deposit.
The document given to Ms Hobbes related to an investment having an inception date of 27 February 1990 that was to mature on 27 February 1991. The interest rate was 14 per cent per annum for the complete term of the investment. The document stated that interest would be paid monthly to an associated numbered account. The document stated that maturity of the investment would renew. Two transactions were referred to on the document: one dated 27 February 1990 against the notation "DEP" in the sum of $27,126.02 and the other also dated 27 February 1990 against the notation "CQN" in the sum of $72,873.98 for a total of $100,000. The back of the card was headed, "TERMS AND CONDITIONS" and included the following:
"AMOUNT: The minimum investment amount may vary from time to time and is quoted on the Application form.
TERM: The investment is fixed until the expiry date shown on the application and is not available for withdrawal prior to that date (EXCEPTIONS see WITHDRAWALS).
INTEREST RATE: The interest rate payable will be a 'FIXED RATE' for the period of your current term investment.
METHOD OF INTEREST CALCULATION: Interest will be calculated on a DAILY rate for the number of days that the investment is held by the Society. In calculating the number of days, the day of the lodgement will be included, but the day of withdrawal will be excluded.
WITHDRAWALS: A request for closure prior to the expiration of the term of the investment will require ONE (1) DAY's notice and upon such request being accepted, interest will be calculated at a lesser rate.
All withdrawals of term investments will be made by cheque or by transfer to a 'NO FIXED TERM' account upon written request signed by the person/s authorised to operate on the account.
NO NOTICE is normally required if a withdrawal request is made at a Society Office on the expiry date.
Note: The St. George (A.C.T.) Society accepts money on terms that under certain circumstances, not less than one month's notice may be required by the Board before repayment."
The question is whether delivery of the passbook and the card satisfied the second requirement for a donatio mortis causa, namely that there be "delivery of the subject matter of the gift to the donee or a transfer of the means or part of the means of getting at the property, or, as has been said, the essential indicia of title".
In Ward v Turner (1752) 2 Ves. Sen. 431; 28 ER 275, Lord Hardwicke LC held that delivery was necessary to make a good donatio mortis causa and that symbolic delivery was insufficient. There, delivery of receipts given on the purchase of annuities was insufficient. Delivery of a broker's note recording purchase of the annuities would also have been insufficient (at 443, 282). His Lordship opined that a donatio mortis causa of stock or annuities, which in their nature were not capable of actual delivery, could not be the subject of a donatio mortis causa without a transfer "or something amounting to that" (at 444, 283).
In Duffield v Elwes (1827) 1 Bligh NS 497; 4 ER 959, Lord Eldon LC held that there was a valid gift mortis causa of mortgage debts by delivery of the deeds of mortgage and bond.
In Moore v Darton (1851) 4 De G & Sm 517; 64 ER 938, a borrower provided his lender with a receipt of the moneys borrowed which stated that the loan was to bear interest at four per cent per annum and was not to be withdrawn at less than six months' notice. The lender, wishing to forgive the debt on her deathbed, provided the receipt to her maid to be delivered to the borrower after her death so that the debt would be cancelled. Sir James Knight Bruce (then Vice Chancellor) held that this was a good donatio mortis causa of the debt. He said (at 520-521, 939):
"The delivery of an instrument creating a specialty debt, without which it would not be a specialty debt, as in the case of the bond, would be sufficient for the purpose of a donatio mortis causa; and so Lord Eldon decided as to a mortgage. That, however, I agree does not go to the length of deciding that the delivery of the mere evidence of a debt would be sufficient. In this case there was something more. The document has been called a receipt, and is a receipt in a sense, but it is not a receipt in the ordinary acceptation of that term. It was a document contemporaneous, I take it, with the creation of the debt. ... A mere debt of ₤500 would have arisen from a loan without any writing. But it would not have been a debt carrying interest, without a contract to that effect beyond the advance. That particular contract, I agree, might have been entered into without writing; but as it was created by writing, proof of the writing, if possible, was essential to recovery upon the contract. This writing was therefore in a sense essential to the proof of the contract; and it is this writing which was in substance delivered mortis causa to the person owing the money. ... This was a sufficient delivery to constitute a donatio mortis causa ... "
Hence, delivery of the receipt which contained the terms of the loan was sufficient delivery because proof of the writing "if possible" and "in a sense" was essential to recovery on the contract. This did not mean that the loan could not have been sued for if the receipt were missing. In such a case the loan could be proved by parol evidence if it was in dispute. But if the writing were available it would need to be tendered to recover on the contract. This distinguished it from the receipts of the annuities in Ward v Turner, where it can be inferred there were more formal documents containing the terms of the annuities.
In a number of cases the delivery of a deposit receipt issued by a bank when the deposit was made, was held to be sufficient to effectuate a gift mortis causa of the debt the subject of the receipt. In some cases the deposit receipt included a term that it must be presented to the bank to redeem the deposit (Cassidy v The Belfast Banking Co. (1887) 22 LR Ir 68; Re Dillon; Duffin v Duffin; Cartledge v Heals (1898) 24 VLR 576), or such a requirement could be inferred (Porter v Walsh (1895) 1 IR 284; (1896) 1 IR 148). In some cases the report is silent as to whether the deposit receipts contained such a requirement. It can be inferred that if the deposit receipt did contain such a term it was not considered to be material (Amis v Witt (1863) 33 Beav. 619; 55 ER 509 (the terms of the note are briefly described in Witt v Amiss (1861) 1 B & S 109; 121 ER 655); Moore v Moore (1874) LR 18 Eq 474; Cormack v Permanent Trustee Co. of NSW Limited (1903) 4 SR (NSW) 17; Hudson v Spencer [1910] 2 Ch 285); Public Trustee v Young (1940) 40 SR (NSW) 233).
In In Re Weston; Bartholomew v Menzies [1902] 1 Ch 680 Byrne J held that a gift of shares in a building society was not an effective gift mortis causa by delivery of the share certificates, but that delivery of a Post Office Savings Bank passbook was an effective gift mortis causa of the moneys standing to the credit of the deceased's account with the Post Office Savings Bank. Byrne J followed Re Dillon and Moore v Darton. An Irish case of M'Gonnell v Murray (1869) IRR 3 Eq 460 was distinguished on the ground that in that case it was not part of the contract that the book must be produced whenever any money was deposited or withdrawn, nor that every deposit must be immediately entered in the book, whereas those were the terms of the contract in In Re Weston. Byrne J held that the passbook was more than evidence of, or a voucher for, the debt (at 687). Byrne J said that the "test appears to be whether or not the document, besides acknowledging the receipt of the money, expresses the terms on which it is held, and shows what the contract between the parties is. See Moore v Darton and the judgment of Cotton LJ in Re Dillon." That test was satisfied.
In Re Andrews [1902] 2 Ch 394 Kekewich J held that whilst delivery of a Post Office Savings Bank passbook was a good gift mortis causa of the balance standing to the credit of the account, the delivery of the book and an investment certificate issued to the deceased by the Post Office Savings Bank recording an investment made by the Post Office on her behalf of government loan stock was not a good gift mortis causa of the investment. The reason was that this would be an extension of the existing authorities which should not be undertaken by a primary judge (at 398).
In Cormack v Permanent Trustee Co of NSW Limited, there was a gift mortis causa of a sum deposited in a building society and sums deposited to savings banks. The building society issued a "deposit receipt" that acknowledged receipt of the deposit "as per arrangement of December 9th 1898" and set out the terms on which interest was payable. The reference to the arrangement of 9 December 1898 was to an arrangement approved by the Court under the Joint Stock Companies Act. It was the custom of the building society to require production of the receipt before paying instalments of the deposit. There was no dispute that the gift of the money in the savings banks was valid. AH Simpson CJ in Eq applied what was said by Byrne J in Re Weston; Bartholomew v Menzies in dealing with a Post-Office Savings Bank deposit book that the test was whether or not the document, besides acknowledging the receipt of money, expressed the terms on which it was held and showed what the contract between the parties was. His Honour considered that the deposit receipt satisfied that test by saying that the money was held on the terms contained in the arrangement of 9 December 1898 and specifying the rate at which interest would be paid and the times at which interest would be paid.
In Delgoffe v Fader [1939] Ch 922; 3 All ER 682, a woman in expectation of death delivered a bag to her friend stating that she wished her friend to have everything in the bag including the contents of an envelope within the bag. In the envelope was a deposit book with the Midland Bank showing a credit balance on an account owed to the donor. Luxmore J held that the gift, which was otherwise effective to pass title to the contents of the bag, was ineffective to the moneys in the account because the passbook did not contain the terms of the contract between the bank and the donor and the evidence of the bank manager was that moneys could be withdrawn from the account on written instructions of the customer without its being necessary to produce the passbook. Luxmore J said (at 927-928):
"... there are to be found in the books many cases dealing with the subject-matter of donatio mortis causa-three essentials to constitute such a gift-namely (i) the gift must be made in contemplation of the death of the donor, although not necessarily in expectation of death; (ii) there must be delivery of the subject-matter of the gift to the donee, or, I think, a transfer of the means of, or part of the means of, getting at the property; and (iii) the circumstances must be such as to establish that the gift is to take effect only on the death of the donor. It follows that the title of the donee is not complete until the donor is dead. If the subject-matter of the gift is not completely vested, the question arises whether or not the donee can call upon the legal personal representative of the donor to complete the title. Where there is a donatio mortis causa of a subject-matter which is not completely vested, I think that the true legal aspect is that a trust has been raised under which the donee can call on the legal personal representative of the donor to complete the gift. I think that that aspect of the case was settled in Duffield v Elwes, and has been recognised for years. Of course, in the case of a chose in action, physical delivery is impossible, but it has been held that in such cases the delivery of a document essential to its recovery may be sufficient. The test of whether the delivery of the document constitutes a good donatio mortis causa of a chose in action depends on the answer to the question whether the document expresses the terms on which the subject-matter of the chose in action is held by the donor, or the terms under which the chose in action came into existence."
In Public Trustee v Young the deceased intended to make a gift to be effective on his death of amounts standing to his credit in an account with the Commonwealth Savings Bank and a sum on fixed deposit with the bank. The bank had issued a deposit receipt in relation to the fixed deposit that specified the terms of the deposit and set out the whole of the terms of the contract between the parties. Williams AJ held that because the document set out all of the terms of the contract between the parties, there was a good donatio mortis causa of the fixed deposit. The passbook for the savings account included a term that the passbook must be presented at the bank whenever it was desired to pay money into the account or to withdraw it. Williams AJ held that the passbook was similar to the passbooks considered in In Re Weston and In Re Andrews and in Cormack v Permanent Trustee Co of NSW Limited and that it was effective. He distinguished Delgoffe v Fader by saying that the passbook in that case was similar to an ordinary passbook of a current account (at 239).
In an article entitled "Donationes Mortis Causa of Bank Credits" (1943) 17 ALJ 167, Mr R. Else Mitchell (as his Honour then was) queried the line of authority concerning savings bank accounts and suggested that the doctrine of donationes mortis causa should not be extended to choses in action generally. He did not query the authorities to the effect that fixed deposit receipts handed to the donee in contemplation of death could be the subject of valid gifts mortis causa where the receipts contain the full terms of the contract between the bank and the depositor and their production was necessary for the withdrawal of the deposit. He said that in such a case the receipts could be regarded as documents of title to the moneys deposited. He argued that nonetheless in the case of an ordinary account with a savings bank different considerations should apply because a passbook is not contemporaneous with the deposit, because a deposit may be reduced or drawn out at will, and because means are almost invariably provided for issuing a new book to replace one which is lost (at 168). In other words, he considered that the extension of the cases concerning receipts issued for fixed term deposits to credit accounts in savings banks was unwarranted.
The question as to whether delivery of bank passbooks or deposit books could be an effective gift mortis causa of moneys standing to the credit of the accounts was again considered by the Court of Appeal in England in Birch v Treasury Solicitor [1951] Ch 298; [1950] 2 All ER 1198. In issue was whether delivery of certain savings bank passbooks (other than a Post Office Savings Bank book which was admitted to be governed by the decision in Re Weston) could satisfy the second requirement for a valid gift mortis causa. It was argued (at 306) in reliance on Delgoffe v Fader that delivery of the bank passbooks was not an effective gift of the credit balances in the accounts to which they related because the books did not contain all of the terms of the contract between the customer and the bank and because it was not essential for the books to be produced to effect withdrawals.
The Court of Appeal said (at 308) that:
"As a matter of principle the indicia of title, as distinct from mere evidence of title, the document or thing that possession or production of which entitles the possessor to the money or property purported to be given, should satisfy Lord Hardwicke's condition",
viz, Lord Hardwicke's condition in Ward v Turner that there be a "transfer or something amounting to that".
The Court of Appeal held that it was not necessary that the document record all of the essential terms of the contract (at 309, 311). The real test was "whether the instrument 'amounts to a transfer' as being the essential indicia or evidence of title, possession or production of which entitles the possessor to the money or property purported to be given" (at 311). The essential matter was whether production of the books was necessary to effect withdrawals (at 312). The books stated that their production was required to effect withdrawals, but this term was not always insisted on by the banks. One bank officer said, "We always insist on the production of the passbook except in exceptional circumstances where hardship may be caused - for instance with a lost passbook". An officer of another bank gave evidence that, "The rule is that the book must be produced ... but ... the bank is a little easy about the rule and is prepared to relax it from time to time". The Court of Appeal held that such practices did not mean that the contractual term as to production of the book had ceased to be operative or had become a dead letter (at 313) and therefore the passbooks were the essential indicia of title and that delivery of the book "amounted to transfer" of the chose in action to which the book related (at 313).
In Public Trustee v Bussell Cohen J held that delivery of a share certificate could be an effective gift mortis causa as a share certificate constituted the indication of title issued by the company which was an essential document for the purposes of the shares being transferred, and not merely evidence of title in the way in which the phrase was used in Birch v Treasury Solicitor (at 119). His Honour said (at 118):
"It seems to me that on principle there is no distinction between the delivery of a bank passbook, where it is necessary to have a signed withdrawal slip in order to obtain the money in the account, and the delivery of a share certificate where it is necessary to have a signed transfer in order to have the shares put in the name of the donee. In each case there has not been an immediate gift but a necessary means of obtaining the property has been delivered on a conditional basis."
In Tawill v Public Trustee of NSW, Estate of Birukoff [2009] NSWSC 256 Brereton J held (at [20]) that it was too late to consider that the passbook of a savings account could not be the subject of a valid donatio mortis causa due to the number and antiquity of the authorities. In that case it was held both by Hodgson CJ in Eq (as his Honour then was) in 1998 and by Brereton J in 2009 that delivery of bank statements did not satisfy the requirement for delivery of indicia of title. The same conclusion was reached in respect of a document entitled a "certificate of deposit". Brereton J explained (at [26]) that the certificate was not a certificate of deposit properly so called. It was not issued as a receipt or a record of contractual terms contemporaneous with the relevant deposit being made. Rather, it was a statement of an account which stated an opening balance, a closing balance and interest accrued during the interval and the interest rate. Brereton J said (at [26]):
"It could not be suggested that the presentation of either of these documents was essential to allow withdrawal of the funds in question. If anything was required for that purpose, it would have been the original certificate issued at the time of the deposit being made. I do not think either of these documents can conceivably be regarded as indicia of title in the sense which that term is used in the context of donatio mortis causa."
Applying these authorities it seems clear that the delivery of the bank passbook was delivery of an essential indicium of title to the money in the bank account to which the passbook related within these principles. The passbook contained a stipulation that it be presented for each transaction even if the bank might have waived that requirement, the document is on all fours with the passbooks considered in Birch v Treasury Solicitor. The passbook was an essential indicium of title to the account so that delivery of the book "amounted to transfer" of the chose in action to which the book related, even though there was no effective inter vivos gift because Mr Gibson did not do all that was necessary to be done on his part to transfer the moneys in the account to Ms Hobbes which would have required in addition to the delivery of the passbook the signing of a withdrawal form.
The position of the $100,000 term deposit is more difficult. There was no term or condition stated on the card that the presentation of the card was necessary in order to withdraw the deposit. There was no evidence from the St. George Bank (as the St. George Building Society had become) that there was any need to present the card to make a withdrawal, or otherwise deal with the account. Hence, counsel for the defendant submitted that applying Birch v Treasury Solicitor, it could not be concluded that the card was an essential indicium of title to the deposit. It was not shown that the card was part of the means that would be needed to obtain the deposit. Although the card contained what appeared to be the essential terms of the contract at the time the deposit was originally made, in Birch v Treasury Solicitor the Court of Appeal held that that was not the relevant criterion.
I acknowledge the force of this submission. The real difficulty lies in distinguishing between the "essential indicia of title" as distinct from "mere evidence of title" in relation to a chose in action that is not required to be evidenced in writing, and for which the writing could therefore not be truly essential to recovery of the debt. In all of the cases concerning deposit receipts and passbooks it is highly unlikely that the deposit receipt or the passbook was in truth a document without which the accountholder could not obtain repayment of the debt owed by the bank. It is hard to believe that any bank would say:
"We acknowledge you deposited this money with us on terms that it would be repaid by now, but it was a term of our contract that the passbook or the certificate of the deposit be produced to obtain repayment. As you cannot produce that document we do not have to repay the money you deposited with us."
The evidence in Birch v Treasury Solicitor showed that the banks did not insist upon such a term. A term requiring the passbook or the certificate of deposit to be produced to claim repayment would almost certainly be qualified by an implication that it be still within the power of the depositor to produce the document.
In Moore v Darton, Sir James Knight-Bruce said of the writing that was the essential indicium of title in that case that "proof of the writing, if possible, was essential to recover upon the contract." (my emphasis). If the writing were available and the lender were put to proof, the lender would need to tender the writing to prove the terms of the contract. That would be so notwithstanding the absence of any express term that the writing had to be produced to obtain repayment. But that would not preclude proof of the loan by other evidence (e.g. the borrower's own books) if the writing could not be produced.
In this case I infer that the card was created contemporaneously with the deposit. It was the proof given by the Building Society to Mr Gibson of the deposit. In all likelihood he would not have needed to produce the card in order to redeem the deposit, provided he produced satisfactory proof of identity. The St. George Building Society would have had its own record of the deposit. However, if it were necessary for Mr Gibson to sue to recover the debt, then production of the card to prove the fact of the deposit, to prove that the deposit was made by him, and the terms on which the deposit was made, would be as essential as would have been proof of the form of receipt provided to the lender in Moore v Darton. In my view, notwithstanding the absence of any statement on the document that it needed to be presented to effect a withdrawal of the deposit, the document was the indicium of title, delivery of which made the gift of the deposit moneys effective.
Gift of the unit
In Watts v Public Trustee (1949) 50 SR (NSW) 130 Roper CJ in Eq held that the doctrine of donatio mortis causa applied only to personal property and not to land. His decision was followed by Needham J in Bayliss v Public Trustee (1988) 12 NSWLR 540 who in turn referred to Canadian and American authority to the same effect. In Richards v Symes (1740) Barn Ch 90; 27 ER 567 Lord Hardwicke said (at 92-93; 568):
"But in all these cases there is a difference, both in law and equity, between absolute estates in fee or for a term of years, and conditional estates for securing the payment of a sum of money. In the case of absolute estates it cannot be admitted of, that parol evidence of the gift of deeds shall convey the land itself. But where a mortgage is made of an estate, that is only considered as a security for money due, the land is the accident attending upon the other; and when the debt is discharged, the interest in the land follows of course."
(The case is also reported but less fully in 2 Atk 318; 26 ER 594 and 2 Eq Ca Abr 617; 22 ER 517.)
Richards v Syms concerned the forgiveness by a mortgagee of a mortgage debt owed by the mortgagor. The forgiveness of the debt had the same effect as if the debt had been repaid. The mortgagee then holds the legal title to the land on constructive trust for the mortgagor which is within the exception of the Statute of Frauds. The principle was applied by Lord Eldon in Duffield v Elwes to a donatio mortis causa of mortgage debts. The deceased had made two loans of ₤2,927 and ₤30,000 secured by a conveyance of land to secure repayment of the loan and a bond executed for the same purpose and a judgment recovered on the bond. On his deathbed the donor indicated that he wished to make a gift to his daughter of the moneys secured by the two mortgages. Being advised that delivery of the thing proposed to be given was necessary to the completion of the gift, the deeds of mortgage and bond were obtained from his solicitor and were handed to his daughter with the donor's assent.
In overruling the Vice Chancellor, Lord Eldon held that the subject matter of the gift was the debt secured by mortgage and on assignment of the debt the mortgagee, being the legal owner of the land that was security for the debt, would hold the land, by operation of law, as trustee for the person entitled to the money (at 542, 975). This is a constructive trust arising by operation of law and outside the operation of the Statute of Frauds. That is to say, Lord Eldon extended the principle enunciated in Richards v Syms to hold that where the mortgage debt was given to a third party, rather than to the mortgagor, that is, where the debt was given rather than forgiven, then the mortgagee held the land on trust for the donee of the debt as the land was only ancillary to the debt. His Lordship said (at 542, 543; 975, 976):
"... provided you lay the foundation in the intent of the gift, that the debt is given or well forgiven; and then, as the result of that interest so given, you say that the party who has the land becomes in equity a trustee for the person entitled to the money and to the personal estate.
...
In the one case, the bond and mortgage are delivered; in the other the judgment which is to be considered on the same ground as the specialty, is delivered - with that, the evidences of the debts are all delivered. The instrument containing the covenant to pay is delivered. They are all delivered in such a way that the donor could never have got the deeds back again. Then the question is, whether, regard being had to what is the nature of a mortgage, contra distinguishing it from an estate in land, those circumstances do not as effectually give the property in the debt as if the debt was secured by a bond only?
The opinion which I have formed is that this is a good donatio mortis causa, raising by operation of law or trust; a trust which being raised by operation of law, is not within the statute of frauds, but a trust which a Court of Equity will execute; and therefore, in my humble judgment, this declaration must be authored by stating that this lady, the daughter, is entitled to the benefit of the securities ..." (my emphasis)
Duffield v Elwes was not really a case of a donatio mortis causa of land. It was a case of a donatio mortis causa of debts secured by a mortgages where the mortgages were held to follow the debts in equity. This was not contrary to the Statute of Frauds because the trust arose by operation of law. In reasoning that there could be a gift of the mortgage security because the security followed the debt and the debt could be the subject of a donatio mortis causa, Lord Eldon appeared to accept that the land itself could otherwise not be the subject of a donatio mortis causa by delivery of the title deeds. That would be consistent with Lord Hardwicke had said in Richards v Syms that "in the case of absolute estates, it cannot be admitted that parol proof of the gift of deeds shall convey the land itself."
This was the established law in England until the decision of the Court of Appeal in Sen v Headley [1991] Ch 425; [1991] 2 All ER 636. The Court of Appeal there held that land could be the subject of a gift mortis causa. The Court accepted that in Duffield v Elwes it had been assumed that an absolute gift of land could not be the subject of a donatio mortis causa, that Duffield v Elwes proceeded on the basis that a gift of money secured by a mortgage could be made mortis causa and that the land that was security for the debt should follow the gift of the debt. The Court of Appeal held that there had been developments in the law relating to constructive trusts evidenced by developments in the doctrine of proprietary estoppel from Dillwyn & Llewellyn (1862) 4 De GF & J 517 and the doctrine of common intention constructive trusts in Gissing v Gissing [1971] AC 886. This was irrelevant. If an owner of land makes an inter vivos gift of the land effective in equity, but retains the legal ownership, he or she will hold the land on constructive trust for the donee. If land can be the subject of a donatio mortis causa and if the requirements of the doctrine are satisfied, then the gift would be effective on the death of the donor, and a legal personal representative would hold the land on a constructive trust for the donee in the same way as the donor would have held the land on a constructive trust for the donee if the gift were effective as an inter vivos gift.
The question of whether an absolute interest in land can be the subject of a donatio mortis causa is not determined by the Statute of Frauds (s 23C(2) of the Conveyancing Act 1919 (NSW)). If an absolute interest in land can be the subject of a gift mortis causa, then a constructive trust will arise on the gift becoming effective without any requirement for writing. The same constructive trust will create a personal equity binding on the legal representative of the donor that will be enforceable notwithstanding s 42 of the Real Property Act (Public Trustee v Bussell at 118).
The question, which is rather one of policy and authority, is whether the admittedly anomalous doctrine of donatio mortis causa is applicable to land. In Sen v Headley the Court said (at 440):
"Let it be agreed that the doctrine is anomalous. Anomalies do not justify anomalous exceptions. If due account is taken of the present state of the law in regard to mortgages and choses in action, it is apparent that to make a distinction in the case of land would be to make just such an exception. A donatio mortis causa of land is neither more nor less anomalous than any other. Every such gift is a circumvention of the Wills Act 1837."
Whilst the doctrine of donatio mortis causa has been extended to land in England, there has not to date been any such extension in Australia. The decisions of Roper CJ in Eq in Watts v Public Trustee and of Needham J in Bayliss v Public Trustee stand against such an extension, albeit that those decisions predated Sen v Headley. In a note on Sen v Headley, "Donatio Mortis Causa" (1993) 67 ALJ 553, Young J (as his Honour then was) said:
"The indications are that both in Australia and England in the near future it will be recognised that both the decision in Sen's case and the decision in Bussell's case correctly represent the modern law."
However, in Young, Croft and Smith on Equity (Lawbook Company 2009) [13.300] the learned authors said that the New South Wales decision in Watts v Public Trustee and Bayliss v Public Trustee correctly stated the law for all jurisdictions except England. In R P Meagher, J D Heydon & M J Leeming, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies, 4th ed LexisNexis Butterworths at [30-050], the learned authors say that "the better view is that there cannot be donationes mortis causae of realty."
Were it necessary to decide the question, I would incline to the view that as a single judge I should follow the decision in Watts v Public Trustee and Bayliss v Public Trustee, and that the decision as to whether Sen v Headley should be followed should be left to the Court of Appeal.
In fact it is not necessary to reach a concluded view on that question because the delivery of the keys and a council rate notice was not a delivery of the means or part of the means of getting at the property. It was not the delivery of the essential indicia of title. The question whether the doctrine of donatio mortis causa can apply to land in New South Wales following Sen v Headley would only have arisen had Mr Gibson delivered the certificate of title to Ms Hobbes without an executed transfer. The delivery of the certificate of title would have been a delivery of the essential indicium of title. But delivery of the keys was not. The keys only gave possession of the property, not dominion over it. The council rate notice was some evidence of Mr Gibson's title to the property, but was not an essential indicium of title. The requirement for delivering the means or part of the means of getting at the property does not refer to getting at the physical property itself, but the means of getting at the ownership of and legal title to the property. Hence, delivery of a key to a motor vehicle may be sufficient delivery for there to be a valid donatio mortis causa of the vehicle (Woodard v Woodard [1995] 3 All ER 980). But physical access to real property is not necessary to effect a transfer of real property. Delivery of the keys and the council rate notice had nothing to do with the transferring of the legal title to the land. At most, it was a symbolic delivery, but in Ward v Turner, Lord Hardwicke said that symbolic delivery is insufficient. Accordingly, even if land could be a valid subject of a donatio mortis causa, there was not a valid gift of the land mortis causa in this case.
Conclusions and orders
For these reasons I have concluded that there was a valid donatio mortis causa of the passbook account and the fixed term investment account, but not of the land.
I make the following declaration and order:
1. Declare that the defendant holds so much of the moneys held for the estate of the late George Gibson as represents the deceased's passbook account and fixed term investment, and interest accumulated, thereon on trust for the plaintiff.
2. Order that within 28 days the defendant pay to the plaintiff the amount held on trust for her pursuant to the declaration in order 1.
3. Order that the plaintiff's summons be otherwise dismissed save as to costs.
I will hear the parties on costs.
Decision last updated: 14 May 2014
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