Public Trustee of the Australian Capital Territory v Colin Geoffrey Hall

[2003] ACTCA 27

Public Trustee of the Australian Capital Territory v Colin Geoffrey Hall [2003] ACTCA 27 (23 December 2003)

REAL PROPERTY – Joint tenancy – Unilateral severance by one owner – No notice to co-owner – Whether prior notice essential to valid severance – Whether joint tenants are under mutual fiduciary obligations – Whether severance constituted breach of fiduciary duty.

Family Law Act 1975 (Cth), s 79(8)

Transfer of Land Act 1958 (Cth), s 104, s 30(2)

Conveyancing Act 1919 (NSW), s 96(2)

Perks v Perks [1950] 2 WWR 189 at 192

Lamanna and Lamanna (1983) 145 DLR (3d) 117

Horne and Evans (1987) 39 DLR (4^th) 416

Costin v Costin (1994) NSW ConvR 55-715

Mitrovic v Koren [1971] VR 479

Corin v Patton (1990) 169 CLR 540

Vassos v State Bank of South Australia [1993] 2 VR 316

Thames Guaranty

Mercantile Mutual

Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41

Kennedy v De Trafford [1897] AC 180

Wright v Gibbons (1949) 78 CLR 313

Freed v Taffel [1984] 2 NSWLR 322

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

ACTCA No. 16 - 2003
No. SC 564 of 2002

Coram:  Higgins CJ, Connolly and Wilcox JJ
Supreme Court of the ACT
Date:  23 December 2003

IN THE SUPREME COURT OF THE  )
  )  ACTCA 16 - 2003
AUSTRALIAN CAPITAL TERRITORY  )  No. SC 564 of 2002

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN:PUBLIC TRUSTEE OF THE AUSTRALIAN CAPITAL TERRITORY

Appellant

AND:COLIN GEOFFREY HALL

Respondent

ORDER

Coram:  Higgins CJ, Connolly and Wilcox JJ
Date:  23 December 2003
Place:  Canberra

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The declarations and orders made on 6 June 2003 be set aside and, in lieu thereof, the proceeding be dismissed with costs.

3. The respondent, Colin Geoffrey Hall, pay the costs of the appeal incurred by the appellant, Public Trustee of the Australian Capital Territory.

THE COURT:

1. This appeal, by the Public Trustee of the Australian Capital Territory (‘the Public Trustee’), as administrator of the estate of the late Christine Mary Hall, raises questions as to the effectiveness of actions taken by Mrs Hall to sever a joint tenancy with her husband, the respondent, Colin Geoffrey Hall, over their former matrimonial home.

The facts

1. Mr and Mrs Hall (‘the spouses’) were married in 1979.  In 1985 they purchased land in the suburb of Gilmore, in the Australian Capital Territory (‘the property’).  They took title as joint tenants.  Thereafter, the spouses constructed a house upon the land.

1. On 2 March 1994, the spouses mortgaged the property to St George Bank Limited (‘the bank’).  The bank took custody of the certificate of title to the property.

1. On or about 14 August 1997, the spouses separated.  Mr Hall left the property; Mrs Hall remained resident there.  No action was taken to sever the joint tenancy over the property.  Mr Hall continued for some time to make half the mortgage payments due to the bank, and also to pay one-half of the land and water rates and insurance.

1. In about September 2001, Mrs Hall was diagnosed with cancer.  Although Mr Hall knew she was unwell, the trial judge found he was unaware that her illness was likely to prove fatal until after her death.

1. On 9 January 2002, the Family Court of Australia issued a decree nisi for the dissolution of the marriage between the spouses.  So far as appears, no property orders were made.  No action was taken at that time in relation to the joint tenancy.

1. On 6 February 2002, Mrs Hall made a will in which she left the whole of her estate to her brother and sister.  She also signed a transfer, in registrable form, of her interest as joint tenant in the property to herself, to be held with Mr Hall, as ‘tenants in common in equal shares’.  Stamp duty was assessed and paid.  At the request of Mrs Hall’s solicitors, the bank produced the certificate of title to the Land Titles Office and the transfer was registered.

1. In accordance with a Land Titles Office requirement, on 8 February 2003, the solicitors for Mrs Hall wrote to Mr Hall informing him of the severance of the joint tenancy in the property.  The letter did not reach Mr Hall until 18 February 2002, three days after Mrs Hall had died.

The proceeding at first instance

1. On 13 September 2002, Mr Hall filed in this Court an Originating Application in which he claimed the following relief:

(a)An order that the Register be rectified so as to restore the title to the joint names of the plaintiff and the deceased.

(b)A declaration that the plaintiff is entitled on a lodgement of a duly registrable Notice of Death to have the title transmitted to him as the surviving joint tenant.

(c)Alternatively, an order that the defendants or each of them pay damages to the plaintiff.

(d)An order that the defendants or each of them pay interest on damages awarded against them pursuant to s.69 of the Australian Capital Territory Supreme Court Act.

(e)Costs.

1. The proceeding was heard by Crispin J on 9 May 2003.  By that time, the property had been sold for a price which yielded a net return, for a one-half interest in the property, of $96,476.77.  At the time of the hearing, that sum was being held by the Public Trustee pending determination of the proceeding.

1. On 16 May 2003, Crispin J delivered a judgment in which he found in favour of Mr Hall.  Formal judgment was entered on 6 June 2003.  It comprised a series of declarations and an order that the Public Trustee pay to Mr Hall the sum of $96,476.77, together with interest thereon.  The Public Trustee was ordered to pay Mr Hall’s costs.

1. The most convenient way of explaining the issues before Crispin J, and his Honour’s reaction to them, is to set out paras 11 to 16 of his reasons:

As the early case of Williams v Hensman (1861) 1 John and H 546; 70 ER 862 establishes, a joint tenancy may be severed in three ways: unilaterally; by mutual agreement; or by a course of dealing sufficient to make it clear that the interest of all parties were mutually treated as constituting a tenancy in common. See also Hulme v Schaecken (unreported) NSWSC 1291 (17 December 1999) per Austin J.  In Burgess v Rawnsley [1975] Ch 429 at 439 Lord Denning MR expressed the opinion that a unilateral severance could be effected by one party making it clear to the other that he or she desired that their shares be no longer be (sic) held jointly but in common.  However, this proposition was rejected by the High Court of Australia in Corin v Patton (1990) 169 CLR 540. In that case Mason and McHugh JJ said, at 548, that unilateral action could destroy the unity of title only if the title of the party seeking unilateral severance were transferred or otherwise dealt with or affected in a way which resulted in a change in the legal and equitable estate in the property. A statement of intention, without more, is insufficient. See also the judgments of Brennan J at 565, Deane J at 574 and Toohey J at 587.

In the present case, of course, the transfer was registered.  Mr Constance, who appeared for the first defendant, submitted that, as a consequence, severance of both the legal and equitable interests had been validly effected and that the absence of any prior notice to the plaintiff was legally irrelevant.

Mr Meagher, who appeared on behalf of the plaintiff, conceded that the legal estate had been effectively severed upon registration of the transfer but maintained that the plaintiff retained a co-extensive equitable interest in the property.  He argued that, in equity at least, one person could not effectively diminish or change the property interests of another without that other person’s knowledge.  Whilst holding that notice was not sufficient, the High Court in Corin v Paton did not address the issue of whether it was required and neither counsel were able to direct me to any authority directly on this point.  Having considered the competing submissions, I am inclined to accept Mr Meagher’s contention that an equitable interest would arise, if only because the covert nature of the transaction would almost inevitably involve a breach of an obligation of fiduciary obligation. 

enforceable under the general law.  In that case, such an enforceable personal equity was held to have arisen when a mortgagee had produced a Certificate of Title without the authority of a registered proprietor and in breach of its obligations in relation to its possession and custody.  As Mahoney J observed, at 49, the company entrusted with the Certificate of Title had held it for the purposes only of the mortgage and subject to the obligation not to permit it to be used for any other purpose. 

In the present case the second defendant acknowledged that it produced a Certificate of Title without reference to the plaintiff.  Its solicitor sought to justify this conduct, asserting that the change in joint ownership “does not effect the obligations of the mortgagors to the bank and thus there was no reason to seek (the plaintiff’s) consent to the production of the Certificate of Title”.  The solicitor added “we can see no obligation on a mortgagee to advise the co-owner of those actions”.  I am unable to agree that a financial institution which holds a certificate of title as security may ignore their fiduciary obligations on the basis suggested.  It was, in my opinion, a breach of the trust which the second defendant owed to the plaintiff for it to have produced the Certificate of Title without his knowledge or consent. 

That breach was procured by the deceased in breach of her own duty to the plaintiff.  Furthermore, it was procured for the purpose of using the certificate of title to effect a transaction that would be of benefit to her estate and of corresponding detriment to his interests.  In these circumstances, I accept Mr Meagher’s submission that a personal equity arose in favour of the plaintiff sufficient to impugn the disputed transaction in equity even if effective at law. 

The arguments on appeal

1. Issues

1. On the hearing of the appeal, both parties were represented by new counsel:  the Public Trustee by Mr Chris Whitelaw and Mr Hall by Mr C S Ward.  At an early stage of his argument, Mr Whitelaw accepted a suggestion from the Bench that the appeal turned on two issues:

(i)         whether severance of a joint tenancy may be effected by one party acting unilaterally and without prior notice to the other; and, if so,

(ii)        whether a party who effects an unnotified, unilateral severance of a joint tenancy acts in breach of trust, or breach of a fiduciary obligation, so as to create a personal equity in favour of the other party sufficient to impugn the transaction.

1. However, when Mr Ward addressed the Court, the first of these issues disappeared from the case.  Mr Ward conceded that a joint tenant may terminate the tenancy without prior notice to the other joint tenant or tenants.  There is Canadian authority to that effect: see Perks v Perks [1950] 2 WWR 189 at 192 (Manson J of the Supreme Court of British Columbia); Re Lamanna and Lamanna (1983) 145 DLR (3d) 117 at 121 (Walsh J of the Ontario High Court of Justice); Re Horne and Evans (1987) 39 DLR (4^th) 416 at 423 (Robins JA of the Ontario Court of Appeal), noting the finding at 417 that the husband executed the deed of severance without his wife’s knowledge or consent. Mr Whitelaw pointed out that no legislation in force in the Australian Capital Territory requires a joint tenant alienating his or her interest to notify, or obtain the consent of, the other joint tenant or tenants.

1. The appellant

1. In relation to the second issue, Mr Whitelaw submitted there is no fiduciary relationship between joint tenants that impedes the entitlement of any one of them to sever the joint tenancy.  He submitted that the right of unilateral severance is an incident of a joint tenancy over property; each joint tenant is entitled to exercise that right in his or her own interests at any time.  Mr Whitelaw contended that equitable principles support, rather than impede, the exercise of this right; for example, by empowering a court to compel the other joint tenant to produce the relevant certificate of title, in order to enable registration of a transfer severing the joint tenancy.  Mr Whitelaw referred to Costin v Costin (1994) NSW ConvR 55-715 at 60,101 where Santow J said:

Based on the principles accepted by the High Court in Corin, the jointure would be severed upon the joint tenant assigning in equity his interest in the property jointly owned.  He has done that, if one treats the authority and direction as all that was necessary to effectuate his gift, on his part, being all that was in his power alone to do.  Armed with that authority and direction, the Plaintiff, as donee, could expect that a court would compel the solicitors concerned to produce the certificate of title, notwithstanding the objection of the other joint tenant.  It is also not unreasonable to expect that the Registrar General would favourably exercise any discretion either to dispense with production or issue a duplicate certificate of title.

1. See also per Gowans J in Mitrovic v Koren [1971] VR 479 at 482 and per Toohey J in Corin v Patton (1990) 169 CLR 540 at 590.

1. Mr Whitelaw accepted that personal equities may arise where there are unconscionable circumstances; however, he said the bare fact that a party was not notified of the transaction does not give rise to a personal equity or right in personam to have the transaction reversed.  In that respect, he relied particularly on the judgment of Hayne J in Vassos v State Bank of South Australia [1993] 2 VR 316.

1. Mr Whitelaw submitted that both Thames Guaranty and Mercantile Mutual , cited by Crispin J in para 14 of his reasons, were distinguishable from this case.  He summarised his argument in a series of propositions:

(a)        Mrs Hall had a right to sever the joint tenancy by unilateral alienation, such as transferring all her estate and interest in the property to herself as tenant in common;

(b)        she was entitled to do this at any time during her life and without reference to Mr Hall;

(c)        such alienation was complete, and the joint tenancy severed, upon registration of the transfer by the Registrar General;

(d)        registration did not deprive Mr Hall of his interest in the property; it merely changed his interest from a joint tenancy to a tenancy in common, without the right of survivorship;

(e)        upon registration, the title acquired by Mrs Hall was indefeasible, liable to be reversed only for reasons of fraud or dishonesty by herself, or others at her direction, or some ‘personal equity’ residing in Mr Hall;

(f)         there was no act of fraud or dishonesty by Mrs Hall or any agent; and

(g)        no ‘personal equity’ resided in Mr Hall.

1. Mr Whitelaw responded to the argument that Mrs Hall acted wrongly in having the bank produce the certificate of title to the Land Titles Office, without first obtaining the concurrence of her husband, by referring to the authorities mentioned at paras 15 and 16 above.  He said that Mrs Hall had an enforceable right to compel production of the certificate of title.

1. The respondent

1. Mr Ward supported the reasoning of Crispin J.  He accepted that a joint tenancy may be severed by a unilateral act of severance but he contended that severance ‘does not affect any underlying equitable estates’.  Mr Ward said that a ‘fiduciary relationship of trust and confidence exist[s] between joint tenants’.  He cited a passage in the judgment of Gibbs CJ in Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 68 (‘Hospital Products’), in which his Honour set out a list of classes of persons ‘who normally stand in a fiduciary relationship to one another’.  The list comprised partners, principal and agent, director and company, master and servant, solicitor and client, tenant-for-life and remainderman.  Mr Ward submitted, on the basis of this list, that a married couple was an a fortiori example of a fiduciary relationship.  He also said the ‘relationship between joint tenants is analogous to that of partnership’.

1. Basing his argument on the premise of a fiduciary relationship between Mr and Mrs Hall, an element of which was that each would be entitled to use the certificate of title only in their joint interests, Mr Ward contended that the actions of Mrs Hall on 6 February 2002 gave rise to a personal equity in Mr Hall overriding the indefeasible title that would otherwise have been obtained by his wife on the registration of the transfer.

1. Mr Ward drew attention to the position in which Mr Hall had been placed by the fact that he did not learn of Mrs Hall’s actions until after her death. It was then too late for Mr Hall to apply for orders in relation to the property in the Family Court of Australia, as he could have done if he had known the situation before Mrs Hall’s death. Had Mr Hall made an application before the death of Mrs Hall, that application could have been continued thereafter: see s 79(8) of the Family Law Act 1975 (Cth).

Conclusions

1. The first question that must be addressed, in considering counsels’ submissions, is whether or not it is correct to say that fiduciary duties are owed between members of a married couple and/or joint tenants.  Neither of these relationships was mentioned by Gibbs CJ in Hospital Products, although it is fair to point out that his Honour said the list of categories might not be closed.

1. In Hospital Products, Mason J also offered a description of fiduciary relationships. He said at 96-97:

The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations … viz trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners.  The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense.  The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position.  The expressions “for”, “on behalf of”, and “in the interests of” signify that the fiduciary acts in a “representative” character in the exercise of his responsibility, to adopt an expression used by the Court of Appeal.

1. Commenting on this statement, the learned authors of the fourth edition of Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (2002), said at 5.005:

The distinguishing characteristic of a fiduciary relationship is that its essence, or purpose, is to serve exclusively the interests of a person or group of persons; or, to put it negatively, it is a relationship in which the parties are not each free to pursue their separate interests.  Thus, the essence of a trust is that a trustee holds and deals with property in the interest of beneficiaries; the purpose of partnership is to conduct a business in the joint interest of the partners; the agent acts for (in the interests of) the principal.  (Footnotes omitted)

1. Mason J’s description in Hospital Products brings out a point that was also made by Gibbs CJ: whether a fiduciary duty exists in a particular case will depend, not only upon the relationship between the parties, but also upon the nature and circumstances of the action under consideration.  Notwithstanding the existence of a fiduciary relationship with the client, a solicitor is entitled to act in his or her own interests by charging the client reasonable fees and deducting those fees from moneys held on behalf of the client.  Notwithstanding the existence of a fiduciary relationship between employer and employee, both of them are free to act in their own interests in seeking changes to the conditions of an employee’s employment.  The reason is obvious; in these examples, the person is not acting ‘for’, ‘on behalf of’ or ‘in the interest of’ the other.  That statement is consistent with an observation of the New South Wales Court of Appeal in Hospital Products (cited by Gibbs CJ at 68-69 and endorsed at 72), that the relevant principle is that ‘a fiduciary relationship exists where the facts of the case in hand establish that in a particular matter a person has undertaken to act in the interests of another and not in his own’.

1. No doubt there are cases in which the fact that two people have a marital relationship will combine with other circumstances to give rise to fiduciary obligations.  However, we see no basis, in either principle or authority, for holding that the bare fact they together hold real estate, as joint tenants, is such a circumstance.  There seems to be no reason for distinguishing between joint tenants who comprise a married couple, on the one hand, and joint tenants who do not.  Whatever view one may take about their moral and social obligations, married people are free, at law, to pursue their own economic and property interests, without regard to the wishes of their partners.  There is no rule of law or equity that qualifies, for married couples, the right of unilateral severance that attaches to a joint tenancy.

1. It follows that the question whether there was a relevant fiduciary relationship between Mr and Mrs Hall must be addressed on a wider basis.  Is the relationship between joint tenants – any joint tenants – such as to give rise to a mutual fiduciary obligation not to sever the joint tenancy without notice to the other?

1. We know of no authority requiring an affirmative answer to that question.  There is authority to the contrary.  In Kennedy v De Trafford [1897] AC 180 at 189, Lord Herschell, with the concurrence of all other law Lords hearing the matter, stated:

‘But then it is said the mere fact that Kennedy was co-owner with Dodson of this property creates such a relationship between them that the one co-owner could not take this property and hold it for himself, but that the other co-owner is entitled on equitable grounds to have it declared that the benefit of one half of that purchase should be his.  My Lords, no authority has been cited in support of such a proposition.’

The purchase in question was that of one co-owner of the share of the other, a bankrupt, from mortgagees of that other.  The bankrupt’s representative contended that the co-owner had, in purchasing the share covertly (so far as the bankrupt was concerned), breached a fiduciary duty towards him.

1. Nor is there any fetter on the freedom of joint tenants, without the knowledge or consent of another, to so deal with their interests as to effect a severance.  In Wright v Gibbons (1949) 78 CLR 313, two of three joint tenants conveyed their interests to each other without the knowledge or consent of the third co-owner. Their transfers were registered upon the certificate of title. The third tenant survived the other two. Having found the transfers had been registered, she sought a declaration that the entire estate was hers by survivorship. She failed. It was held that the transfers had converted the tenancy into a tenancy in common.

1. As Mr Ward argued, it may be fair, for some purposes, to draw an analogy between joint tenants and partners.  However, partners are entitled to act in their own interests in some respects; for example, in taking action to terminate the partnership relationship.  Given that a fundamental characteristic of the relationship between joint tenants is the entitlement of any party to terminate that relationship, unilaterally and at will, it is difficult to see why a party is under a fiduciary duty not to do so without giving notice to the other.  And, if that is so, it is also difficult to see why the person commits any breach of trust in arranging something which he or she would anyway be entitled to procure through the courts: production of the certificate of title to the Land Titles Office to enable registration of the transfer effecting the severance.

1. In our respectful opinion, the learned trial judge erred in holding that it was a breach of trust for Mrs Hall to procure production of the certificate of title to enable registration of the transfer.  There was no breach of trust or fiduciary duty by her.  She simply exercised a right inherent in her status as a joint tenant of the property.  No personal equity vested in Mr Hall entitling him to an order overriding the effect of the registered transfer.

1. In coming to this conclusion, we do not overlook the two authorities mentioned by Crispin J in para 14 of his reasons.  But we respectfully feel that they are of little assistance in this case.

1. Thames Guaranty (supra) was a case in which a husband deposited with a bank the title deeds of a property he held as joint tenant with his wife.  He did so, without her knowledge, in order to secure an overdraft facility in his favour.  Mann J held the deposit of the title deeds did not operate as an equitable charge over the property; the deposit was ineffective because it occurred without the consent of the other joint tenant.  At 222 his Lordship said:

Joint owners of a legal estate are jointly entitled to the custody of the title deeds relating to that estate: see Halsbury’s Laws of England, 4^th ed., vol. 39 (1982), para. 388.  The two are trustees of the deeds no less than they are of the legal estate.  Trustees can act only with unanimity.  One cannot part with custody of the deeds without consent of the other.  That custody is not a thing which either can by himself effectively surrender for the purpose of dealing with his own beneficial interest.  Mrs. Campbell has, in my view, at all times been entitled to request the return of documents of title to the joint custody of herself and the first defendant.  There was thus no effective deposit.

1. The Court of Appeal affirmed the orders made by Mann J.  However, it is important to note a point made by Slade LJ, delivering judgment for the Court of Appeal, at 234.  He said:

If, therefore, Mr. Campbell had been the sole proprietor of the land at the time when the title deeds were sent to them on 1 June 1973, we could have seen no possible answer to a claim by the plaintiffs that, at least as from that date, an effective equitable charge on the freehold title was created in their favour.

On 1 June 1973, however, Mr. Campbell, who had misled the plaintiffs as to his entitlement, had not obtained the consent of his co-proprietor to the creation of any charge.  There is, therefore, no possibility that the facility letter of 24 May 1973 gave rise to an equitable charge on the freehold title, even after the deposit of the land certificate had been made.

Nevertheless, as at May 1973, Mr. Campbell did have the power, without his wife’s concurrence, to sever the beneficial joint tenancy in the property (which for present purposes we assume existed on that date) and to dispose of his severed beneficial interest in such manner as he thought fit.  If, on 24 May 1973, he had signed a written assignment of his beneficial interest in the property in favour of the plaintiffs to secure the proposed advances, this would, in our opinion, unquestionably have amounted to a course of dealing sufficient to sever the beneficial joint tenancy and to create a charge on such beneficial interest – not a mere agreement to charge.

1. It seems that, in the hypothetical case postulated by Slade LJ, Mr Campbell was making a written assignment of his beneficial interest in the joint tenancy without reference to his wife.

1. Mercantile Mutual (supra) was also a case in which a husband acted unilaterally to burden the interest in land of his wife.  In this case, the wife was sole proprietor of the land.  The land was held under Torrens title.  The husband forged her signature on a variation of mortgage that increased the amount of the charge secured by the mortgage.  The issue that split the New South Wales Court of Appeal was whether the appellant mortgagee, which was unaware of the forgery, obtained an indefeasible title to the increased charge on registration of the variation of mortgage.  Crispin J was correct to say that Mahoney JA observed, at 49, that the mortgagee held the certificate of title for the purposes only of the mortgage and subject to the obligation not to permit it to be used for any other purposes.  However, this observation must be evaluated in the context of a claim of indefeasibility of title by the mortgagee arising out of the act of registration which its breach of duty had allowed.  The full statement by Mahoney JA at 49 is as follows:

In my opinion where the registration of a forged instrument has been produced by such a breach by the new owner, that is sufficient to create, in the relevant sense, a “personal equity” against the new owner.  The existence of such an equity does not depend upon any intention on the part of the new owner to contravene the rights of the previous owner.  But the obligations of a mortgagee, whether strictly fiduciary or not, are in my opinion such that the mortgagee should not be allowed to retain a benefit procured by an act which constitutes a breach of such obligations.  For this reason I am satisfied that the forged variation of mortgage should be set aside.

1. Mr Ward also sought to advance an argument that, even if Mrs Hall owed no duty to Mr Hall not to sever the joint tenancy without notice it was, nevertheless, unconscionable for her to request the bank to part with possession of the certificate of title, so as to enable the transfer severing the joint tenancy to be registered, without the bank seeking permission to do so, or, at least, giving notice of the request to the other joint tenant.

1. The bank, it was contended, held the certificate of title on behalf of both the joint owners, and therefore breached the terms upon which the certificate of title was held by it.  The bank’s answer to this, when asked by Mr Hall’s solicitors after the event, was that the production of the certificate of title did not adversely affect the interests of the parties to the mortgage with respect to that mortgage.

1. We are not concerned in this appeal with any issue between Mr Hall and the bank.  The bank has never been a party to this proceeding.  Whatever might have been the contractual position, as between Mr Hall and the bank, we think it is clear that Mrs Hall had a right to have the certificate of title produced by the bank to the Land Titles Office in order to facilitate registration of her transfer.

1. In Mitrovic v Koren [1971] VR 479 one of two joint tenants suffered judgment for debt. The judgment creditor sought to levy execution on the debtor’s interest in the land. The creditor lodged a memorandum of transfer for registration upon the certificate of title. The debtor and his co-tenant refused to deliver up the duplicate certificate of title and, instead, sought to have registered a transfer from the debtor to the co-tenant and a third partly jointly. Section 104 of the Transfer of Land Act 1958 (ACT equivalent: s 50 Land Titles Act 1925) allowed the Registrar to register a dealing and dispense with production of the duplicate certificate of title.  The Registrar might also refuse to register the dealing.  There was no provision enabling the Registrar to enforce a request for production from the holder of the duplicate certificate of title.  It was also open to co-owners, pursuant to s 30(2), to seek to have a separate duplicate certificate of title so that each could hold one (ACT equivalent: s 54 Land Titles Act 1925).

1. Gowans J held, at 481, that the person holding the certificate of title:

‘… should be regarded as having a proprietary interest or right in the duplicate certificate and a right to its production, subject, of course, to the statutory powers vested in the Registrar to require its production for the purposes of the Act.’

1. Of course, the judgment creditor did not gain the sole right to possession and/or production of the duplicate certificate of title.  He shared those rights with the co-owner.  Nevertheless, his Honour held, at 482:

‘I can see no reason why he [co-owner] should not be ordered to produce the title in order to perfect the rights of the co-owner in the property, so long as that is not inconsistent with his own rights as co-owner … If one tenant in common requires the production of the title held by the other tenant in common, on (sic “in”) order to procure the issue of a separate title for the former, I see no reason why production should not be enforced by injunction.  It is one step further to say if a person is entitled to the beneficial interest in an undivided share in the property, albeit not a legal interest, and he is entitled to turn his beneficial interest into a legal interest by registration, but requires production of the title from the possession of his co-owner to do so, he is entitled to the assistance of the equitable relief of injunction to bring that about.’

1. Of course, the judgment debtor was not a volunteer and by levy of execution obtained beneficial ownership of the debtor’s interests which included the right to enforce production of the certificate of title to perfect his interest.  A voluntary transfer will be regarded as a gift, effective only if the donor has done all that can be done to transfer the relevant interest.

1. The principle applied in Mitrovic v Koren was held to apply to a transfer by one joint tenant to himself in order to sever a joint tenancy:  see Freed v Taffel [1984] 2 NSWLR 322. That the transfer would have that effect if registered was not in doubt. Nor was it disputed that one joint tenant could do so without the knowledge or concurrence of the remaining joint tenant. The mere act of executing and lodging a transfer without procuring production of the duplicate certificate of title, it was held, had been “ineffectual” to procure severance. It was, however, noted that s 96(2) of the Conveyancing Act 1919 (NSW) enabled a mortgagor to require production to the Registrar General of a certificate of title held by a mortgagee.

1. The position was further clarified in Corin v Patton (1990) 169 CLR 540. A joint tenant desirous of severing a joint interest executed a transfer of her interest to a trustee in trust for herself. This was intended to sever the joint interest and retain beneficial ownership of the half-share. However, the co-tenant died before this transfer could be registered. A mortagee had possession of the duplicate certificate of title.

1. Mason CJ and McHugh J explained that to effect a severance of a joint interest the joint tenant desirous of so doing needed at least to alienate his/her joint interest in equity.  The attempt in that case was a voluntary attempt at alienation.  The deceased donor had not done all that was necessary to enable her trustee to effect registration.  An omission was that the mortgagee had not been required, as might have been done, to produce the duplicate certificate of title to the Registrar-General nor had the transferring co-tenant lodged the memorandum of transfer for registration.

1. Brennan J agreed, pointing out that the donor could have lodged the transfer and requested the Registrar-General to dispense with production of the duplicate certificate of title.  At 566, his Honour stated:

She took no step to secure the production of the relevant certificate of title either by requesting the bank to produce the certificate of title or by authorizing Mr Corin [donee/trustee] to apply to the bank to produce it.

1. Whilst that latter comment would seem to assume that a request to produce the duplicate or, presumably, to dispense with production, would perfect the transfer in equity, Deane J considered that, short of actual registration, no enforceable right to registration would arise unless the transferee was in a position to require production of the duplicate certificate of title.

1. In the present case, these issues do not arise.  The deceased’s transfer to herself was registered.  The only issue is whether the circumstances give rise to a right in the respondent, in equity, to have the transfer set aside.

1. There is no equity arising to enable that result to occur. The deceased had every right, with or without notice to the respondent, to effect a severance of their joint tenancy. To perfect that end, it being a voluntary transaction, she needed to do everything necessary for the transfer to be registered. In this case, she had required the bank to produce the duplicate certificate. This was her right (see s 96 Conveyancing Act).  Had the bank refused to produce the certificate she could have compelled its production.  She had no equitable obligation to the respondent to put him on notice of her intentions.  There is no ground to impose any duty on the bank either to refuse production of the certificate of title or to seek the co-owner’s permission to do so.

1. In our view, Mr Hall had no right, in law or equity, to have prevented production of the duplicate certificate or to have prevented the Registrar, if it had become necessary, from dispensing with its production.

1. We appreciate the point made by Mr Ward about the circumstances under which Mrs Hall terminated the joint tenancy with her husband.  We can understand Mr Hall’s disappointment about that.  However, the particular circumstances of severance cannot affect resolution of the legal issues concerning Mrs Hall’s right to take that course.

Disposition

1. It follows from our conclusions that the appeal should be allowed.  The declarations and orders made on 6 June 2003 should be set aside and, in lieu thereof, it should be ordered that the proceeding be dismissed with costs.  Mr Hall must pay the Public Trustee’s costs of the appeal.

I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Associate:

Date: 23 December 2003

Counsel for the Appellant:  Mr C Whitelaw

Solicitor for the Appellant:  Snedden Hall & Gallop

Counsel for the Respondent:  Mr C S Ward

Solicitor for the Respondent:  Tetlow Jansen & Doyle

Date of hearing:  12 November 2003

Date of judgment:  23 December 2003