Public Trustee v Jones - [2007] SASC 390

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PUBLIC TRUSTEE v JONES & ANOR
[2007] SASC 390
Judgment of The Honourable Justice Layton
9 November 2007
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - JURISDICTION AND GENERALLY
Application by second defendant that action be struck out as an abuse of process - consideration of the principles regarding abuse of process.
Held: there was an arguable case to be tried - no abuse of process demonstrated - application refused.

CONVEYANCING - LAND TITLES UNDER THE TORRENS SYSTEM - TRUSTS, EQUITIES AND UNREGISTERED INSTRUMENTS AND INTERESTS - UNREGISTERED VOLUNTARY TRANSFERS, TRUSTS AND INTERESTS
Application by the Public Trustee for determination of a question arising in the administration of an estate pursuant to s 69 of the Administration and Probate Act 1919 (SA) - dispute between two defendants, sons of the deceased - deceased executed transfer of title in favour of second defendant ("donee") - transfer was never registered - donee became executor of the estate - no Grant of Probate - Public Trustee became Administrator of estate - whether property formed part of estate or donee had equitable interest in property - whether deceased made a complete gift to donee - whether valid declaration of trust - whether rule in Strong v Bird (1874) LR 18 Eq 315 applied.
Held: property formed part of estate and donee had no equitable interest in property - the gift of the property was incomplete - the transfer was not delivered to the donee - the deceased's intention was that the gift would only be effective upon registration of the transfer - equity will not assist donee to complete an imperfect gift - no evidence of a valid written declaration of trust - rule in Strong v Bird (1874) LR 18 Eq 315 did not apply - deceased did not make an immediate gift of property to donee - declaration made that property is an asset of estate.
Administration and Probate Act 1919 (SA) s 69; Evidence Act 1929 (SA) s 45A; Inheritance (Family Provision) Act 1972 (SA); Law of Property Act 1936 (SA) s 29(1)(b); Supreme Court (Civil) Rules 2006 r 193, r 206, referred to.
Brunker v Perpetual Trustee Co (1937) 57 CLR 555; Cope v Keene (1968) 118 CLR 1; Corin v Patton (1990) 169 CLR 540; Jago v District Court (NSW) (1989) 168 CLR 23; Milroy v Lord (1862) 4 De GF & J 264; Rajski v Bainton (1990) 22 NSWLR 125; Williams & Ors v Spautz (1992) 174 CLR 509, applied.
Strong v Bird (1874) LR 18 Eq 315, distinguished.
Blackett v Darcy (2006) 62 NSWLR 392; Heartley v Nicholson (1875) LR 19 Eq 233; Marchesi v Apostolou [2007] FCA 96, discussed.
Benjamin v Leicher (1998) 45 NSWLR 389; Braskvar v Wall (1971) 126 CLR 376; Frazer v Walker [1967] 1 AC 569; General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; In re Hince (1946) SASR 323; In re Weaver [1916] SALR 167; National Mutual Life Association of Australia Ltd v Coffey [1991] 2 Qd R 401; Re Freeland [1952] Ch 110, considered.

PUBLIC TRUSTEE v JONES & ANOR
[2007] SASC 390
LAYTON J:
Introduction

This is an application by the Public Trustee pursuant to Rule 206 of the Supreme Court (Civil) Rules 2006 and s 69 of the Administration and Probate Act 1919 (SA), seeking determination of a question arising in the estate of the late Valda Ellen Elvina McGrath (“the deceased”). The question for determination is whether the land comprised and described in Certificate of Title Register Book Volume 5059 Folio 198 (“the land”) is an asset of the deceased’s estate or an asset of the second defendant, Mr Neil Trevor Jones.
The Public Trustee is the Administrator of the deceased’s estate. There are two defendants, Mr Ian Marshall Jones (“Ian Jones”) and Mr Neil Trevor Jones (“Neil Jones”), who are brothers and sons of the deceased. The Public Trustee’s position in this action is neutral, with the dispute over the status of the land being between the two defendants.
In addition to the Public Trustee’s application, Ian Jones brought a counterclaim seeking amongst other things, the benefit of the Inheritance (Family Provision) Act 1972 (SA). In relation to the counterclaim, the pleadings alleging undue influence against Neil Jones are abandoned, and for the purposes of this proceeding, the only remedy I am required to consider is whether a declaration should be made that the land is property of the estate.
The Trial Process
The Public Trustee was represented by Ms Detmold. Ian Jones was represented by Mr Roder and Neil Jones represented himself. After making brief submissions and tendering an affirmation and the Certificate of Title, I granted the Public Trustee leave to withdraw from being present at the hearing.
Ian Jones did not adduce any oral evidence. Instead, he relied on documentary evidence and the affirmation tendered by the Public Trustee.
Neil Jones tendered a bundle of documents containing various pleadings, correspondence and other material related to this action. In addition, he gave oral evidence and was cross-examined by Mr Roder.
In giving evidence, Neil Jones appeared to be somewhat nervous, stressed and defensive. At times he did not listen properly to questions and made speeches on topics which were largely irrelevant to the determination of the particular issues before me. This is understandable given that he was unrepresented. Nontheless, he appeared to be doing his best to give accurate answers and his credibility was not undermined by cross-examination.
Abuse of process?
At the commencement of the trial, Neil Jones made an application for the action to be struck out on the ground that it is an abuse of process. After hearing his application, I indicated that I would reserve my decision until after hearing the evidence and submissions. I will therefore address abuse of process first, as it was a preliminary issue.
In support of this application, Neil Jones directed my attention to his Defence filed 2 July 2007, which referred to factors which he later elaborated on in argument. He submitted that the following factors disclosed an abuse of process:
·the process was initiated at a very traumatic time, namely two days after his mother’s funeral;
·the action has been on foot for “approximately four and a half years”;
·the subject of this litigation concerns a small unit in a group of three units, which is not of great value;
·the court proceedings have put him under considerable pressure and have caused great stress, including high blood pressure; and
·if he is unsuccessful he will be a homeless person, and if he is subject to a costs order he will have no option but declare himself bankrupt.
Rule 193 of the Supreme Court (Civil) Rules 2006 provides as follows:
The Court may dismiss proceedings if—
….
(b) the proceedings are frivolous, vexatious or an abuse of the process of the Court.
In addition, the court has an inherent jurisdiction to strike out proceedings which are an abuse of process.[1]
[1] Williams & Ors v Spautz (1992) 174 CLR 509, 518.
In Jago v District Court (NSW)[2] Brennan J defined abuse of process as follows:
An abuse of process occurs when the process of the court is put in motion for a purpose which, in the eye of the law, it is not intended to serve or when the process is incapable of serving the purpose it is intended to serve.
[2] (1989) 168 CLR 23, 47.
In Rajski v Bainton,[3] the New South Wales Court of Appeal indicated that abuse of process may take many forms. They stated that:[4]
A party to litigation may abuse or seek to abuse the process of the court in many ways. Decided cases illustrate the many and varied forms which abuse of a court's process may take.
[3] (1990) 22 NSWLR 125, per Samuels and Handley JJA.
[4] Ibid 128.
The existence of an ulterior or improper motive for bringing the proceedings does not, without more, establish a sufficient basis for abuse of process. As the majority in Rajiski v Bainton articulated:[5]
…in general the common law takes no account of the motives or purposes for which legal rights are exercised or enforced. As Lord Watson said in Allen v Flood (at 92): "... the existence of a bad motive, in the case of an act which is not in itself illegal, will not convert that act into a civil wrong."
[5] Ibid 133.
Proceedings can be dismissed for an abuse of process where there is no arguable case in fact or law, but the court’s power to dismiss proceedings should be exercised with great caution and only in clear and obvious cases.[6] An action should not be struck out if there is a real question of fact or law to be determined.[7]
[6] General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125.
[7] National Mutual Life Association of Australia Ltd v Coffey [1991] 2 Qd R 401.
Applying these principles to the present case, in my view, Ian Jones has an arguable case that the land is an asset of the estate. There is no misuse of the court’s process to have this issue determined. Indeed, the Public Trustee has sought determination of that issue.
Whilst I understand Neil Jones’ distress about what he perceives as the insensitivity of his brother initiating actions so soon after his mother’s death and the time taken for this matter to reach trial with the resultant stress it has caused, these factors do not amount to an abuse of the court’s processes. His brother’s early actions could not be characterised as an abuse of the Court’s process. Similarly, time taken for court processes without some further features, does not amount to abuse of process. There had been other litigation between the brothers in relation to the estate of the deceased. This action commenced in September 2005, some two years after his mother’s death.
Accordingly, Neil Jones’ application for the action to be struck out as an abuse of process is refused.
Summary of the parties’ contentions
Counsel for Ian Jones, Mr Roder, submits that Neil Jones does not have an equitable interest in the land, and therefore the land remains prima facie an asset of the estate for the following reasons:
1.The deceased did not make a complete gift of the land to Neil Jones because:
(a)the deceased (the donor) did not deliver the transfer to Neil Jones (the donee); and
(b)it was the deceased’s intention that the gift would not be effective until registration of the Transfer, and this was never done;
2.There is no trust as there is no evidence of a valid written declaration of trust as required by s 29(1)(b) of the Law of Property Act 1936 (SA); and
3.A principle known as the rule in Strong v Bird does not apply because the deceased did not make an immediate gift of the land to Neil Jones.
Neil Jones contends that he has an equitable interest in the land because registration of the Transfer was not required for the gift to be completed by reason of his known inability to afford the stamp duty for registration. He said that he was unable to afford it because he was caring for his mother and was unemployed. Moreover, he submits that his care for his mother, combined with Ian Jones’ lack of concern and financial contribution to his mother, the relatively low value of the property, and the detrimental effects on his health and well-being if he were to lose this action, are bases for refusing to grant the relief sought.
I will discuss these arguments in more detail later.
Facts not in dispute
I find the following facts proved on the balance of probabilities.
On 26 June 1997, the deceased executed a will (“the Will”). The Will appointed Neil Jones and the deceased’s then solicitor, Mr Frank Condon, as executors of her estate. The Will also provided that Neil Jones would hold the nett estate, and Ian Jones would only hold the nett estate if Neil Jones did not survive the deceased.
On 23 July 2002, the deceased created a Codicil to her Will, in which she did not create any further rights under her will, but explained why Ian Jones was only a conditional beneficiary in her Will. She declared that Ian Jones had abandoned any relationship with her approximately 30 years before and that Neil Jones was therefore to be the sole beneficiary of her estate.
On 4 October 2002, the deceased executed a Memorandum of Transfer (“the Transfer”) of the land in favour of Neil Jones. The consideration for the Transfer was stated to be:
In consideration of the natural love and affection borne by the Transferor for the Transferee.
The deceased died on 17 April 2003. The deceased’s firm of solicitors, Andersons, prepared the Transfer. The Transfer was never presented for assessment of stamp duty or registered under Neil Jones. The deceased’s name still appears on the Certificate of Title as the registered proprietor of the land.
A letter from Andersons to Ian Jones’ solicitor, PJ Kerr & Co, dated 26 September 2003, discloses that the reason for not registering the Transfer was that Neil Jones did not have sufficient funds to pay the stamp duty. This letter also stated that apart from the land, “[t]here are no other assets of significance in the estate”.
On 29 April 2004, Ian Jones issued a citation upon Neil Jones and Mr Condon, as the executors of the estate. This required them to take a Grant of Probate of the Will and Codicil.
On 8 June 2004, Neil Jones and Mr Condon filed an appearance to the citation, opposing the citation on two grounds: First, that they had not intermeddled in the deceased’s estate as alleged, and second, that there were no assets in the deceased’s estate requiring a Grant of Probate to be made. Thereafter, neither Mr Condon nor Neil Jones made an application for a Grant of Probate of the Will and Codicil.
On 9 September 2005, Ian Jones filed a summons in this Court against Neil Jones, seeking an order granting Letters of Administration in relation to the Will and Codicil to the Public Trustee. Neither Mr Condon nor Neil Jones filed and served an appearance to this summons.
On 4 August 2006, a Judge of this Court granted Letters of Administration to the Public Trustee.
Facts in dispute
On or about 18 September 2006, the Public Trustee obtained the Certificate of Title for the land from Andersons Solicitors.
Three contentious topics emerged in the course of evidence, which I will discuss before turning to the specific issues to be determined.
The three topics are:
1.Why was the Transfer executed?
2.Why was the Transfer not registered?
3.For whom were Andersons acting?
Why was the Transfer executed?
Mr Roder sought to adduce evidence on the topic of why the Transfer was executed by the deceased in favour of Neil Jones. He pursued this in two ways: First by seeking to tender a file note from the Andersons file; and second, by cross-examining Neil Jones.
Mr Roder sought to tender a document, identified as a “costs entry” dated 19 November 2002 contained on the Andersons file, as a business record pursuant to s 45A of the Evidence Act 1929 (SA).
This document purported to be a record of a telephone call from Neil Jones to Mr Condon concerning the deceased and contained the following:
She is slipping very fast and now could not sign anymore documents. She is on heavy doses of morphine. FRC thinks that it is very likely she may last only a few more days. There is no prospect of getting the transfer registered now, prior to her death and we resolved that we would leave it in reserve and see if the brother makes any claim against the estate.
This document contained hearsay material as to the deceased’s medical treatment, state of health as well as matters concerning the registration of the Transfer. Mr Roder submitted that he was only relying on the document to prove the very last part of it, namely “we would leave it in reserve and see if the brother makes any claim against the estate” and not the matters relating to the deceased’s health. Mr Roder submitted that it was necessary to tender the document as a business record because, as he stated from the bar table, Mr Condon could not be called as a witness as he could not be located. In any event, Mr Roder further submitted that Mr Condon would not be able to recall the conversation as it occurred nearly five years ago.
At this point, I note that during cross-examination Neil Jones admitted that he contacted Mr Condon when his mother was in the Repatriation General Hospital. However, he denied that he told Mr Condon the matters recorded in the costs entry, namely that his mother was on heavy doses of morphine and that “she was slipping very fast”. Rather, Neil Jones’ evidence was that he called Mr Condon to tell him that his mother’s condition had deteriorated and that she had been re-admitted to the hospital because she had contracted shingles. He said that it was Mr Condon who told him that “it will be very quick” when in fact she continued to live for months.
After hearing Mr Roder’s submissions, I exercised my discretion to refuse the tender of the document as a business record by reason of the matters in s 45A(2)(a) and (c) of the Evidence Act 1929 (SA). However, I admitted it as evidence of the record at common law, namely that Mr Condon recorded a note in the course of his legal practice of a telephone conversation, with Neil Jones.
As indicated, Mr Roder sought to use the content of the document to support the contention that Neil Jones and the deceased executed the Transfer of the land in order to prevent Ian Jones from making a claim against it. In cross-examination, Neil Jones initially denied that this was the reason for the Transfer of the land into his name. However, he later admitted that around the time when he signed the Transfer, Mr Condon urged him to “get on with it” before his brother interfered. I note that Neil Jones could not specifically remember signing the Transfer.
In the present case, I do not consider that it is necessary to make a finding as to why the Transfer was executed and whether it was to prevent Ian Jones from making a claim in respect of the land. Whilst Neil Jones’ motives behind executing the Transfer may possibly be relevant to a claim under the Inheritance (Family Provision) Act 1972 (SA), I do not consider that they are relevant to the ultimate issues for determination in this matter.
Why was the Transfer not registered?
Neil Jones gave evidence that the reason why the Transfer was not registered was purely financial. He said that he could not afford the stamp duty and legal fees which amounted to approximately $5000 because he was unemployed and was caring for the deceased. He gave evidence that his only means of coming up with the money prior to the deceased’s death would have been to place the deceased into a palliative care hospital, which would have been against her wishes. He said that the reason why the Transfer was not registered after his mother’s death was because soon after her death he had debt collectors approaching him for the costs of the funeral, which were over $4000. He said that he paid all of these costs himself without assistance from any other family member.
In cross-examination, Neil Jones said that he signed the Transfer in preparation for its registration, but this was never carried out because Mr Condon got disbarred, and he “couldn’t come up with the money.” He also admitted that he spoke to Mr Condon, who was then at Andersons, and agreed that it was not going to be possible to register the Transfer until after his mother’s death because of his precarious financial position.
Neil Jones agreed to the proposition that after he and Mr Condon resolved not to register the Transfer, he agreed to wait and see what happened, including whether Ian Jones would make a claim. He also said that Mr Condon advised him that Ian Jones would probably make a claim against the estate and advised him to transfer the Title “in case [his] brother gets involved in it”.

In giving evidence, Neil Jones strongly denied that Mr Condon told him that there was no prospect of getting the Transfer registered prior to the deceased’s death because of her physical condition.
I accept Neil Jones’ evidence that the reason why he was unable to register the Transfer before his mother’s death was primarily due to his inability to afford the stamp duty. This evidence is supported by the letter from Andersons to Ian Jones’ solicitor dated 26 September 2003. Another factor was probably Mr Condon’s concern about the mother’s health, but the overriding difficulty was insufficiency of funds.
I also accept that following his mother’s death Neil Jones was still unable to pay the costs of registration because of his debts, including funeral costs.
For whom were Andersons acting?
Whilst perusing the Andersons file, I was alerted to a potential “blurring of the lines”, namely whether Mr Condon was acting solely for the deceased, or whether he was also acting for Neil Jones. While Mr Roder conceded that it may appear from the file that there is a blurring of the lines, he submitted that this is explicable given the fact that Neil Jones was living and caring for the deceased. He submitted that the overall impression to be gained from the Andersons file was that Mr Condon was acting for the deceased up to her death, and thereafter he was acting for both himself and Neil Jones. During the course of his closing address, Neil Jones submitted that Mr Condon was only acting for the deceased, and was acting entirely in her best interests.
Bearing in mind all evidence and submissions, I consider that there is insufficient evidence to support a finding that Andersons solicitors, in particular Mr Condon, were acting for both the deceased and Neil Jones. As a consequence, it is unnecessary for me to decide what the situation had been if Mr Condon was the solicitor for both the donor and the donee.[8] However, I note Mr Roder’s submission that even if there was a “blurring of the lines”, the relevant principle is that a donor must deliver the Transfer to the donee, which was not done in this case. In support of this proposition, Mr Roder directed my attention to the following comments of Jessup J in Marchesi v Apostolou:[9]
Where the same solicitor acts for donor and donee, and has possession of the executed transfer, the question will be whether the point has arrived at which the solicitor now holds the transfer as agent of the donee rather than of the donor. Absent an artificial ceremony of some kind, the delivery of the transfer from the solicitor acting for the donor to the same person acting for the donee will inevitably be notional rather than actual. The timing of this notional event will not be a matter for the solicitor’s own choice. The event cannot be assumed to have occurred, it seems to me, until at least he or she has the donor’s authority to treat the transfer as the property of the donee, and as being held on behalf of the donee. When that authority arises will, almost inevitably, be a matter of inference from all the circumstances, but I do not think it should be taken as having arisen while the donor still intends to do something apropos the transfer or its registration which requires physical possession of the instrument. To take a clear case, if the donor proposes to pay the stamp duty required on the transfer, and this is clear to the solicitor, the solicitor should be regarded as holding the transfer on behalf of the donor at least until the duty is paid and the transfer is stamped. Not before then at the earliest might it be possible to infer that the notional delivery of the transfer to the donee has occurred. [Emphasis added]
[8] For discussion of this point see Marchesi v Apostolou [2007] FCA 986 [62].
[9] [2007] FCA 96, [62].
Mr Roder submitted that there is no evidence that Mr Condon held the Transfer for Neil Jones, or that the deceased gave Mr Condon the authority to hold the Transfer as the property of Neil Jones. He submitted that the evidence shows that up until a time Neil Jones paid the stamp duty and the Transfer was stamped and registered, Mr Condon was holding the Transfer on behalf of the deceased. As a consequence, Mr Roder submitted that even if Mr Condon was acting for both the deceased and Neil Jones, there is no evidence from which it is possible to infer that Mr Condon held the Transfer on behalf of Neil Jones. I will return to this topic again when considering the legal issues.
Legal issues for determination
1. Was the gift of the land completed?
The law
Under the Real Property Act 1886 (SA) upon registration of an instrument of transfer at the Lands Titles Office a person receives an indefeasible title to the land.[10]
[10] Frazer v Walker [1967] 1 AC 569; followed in Braskvar v Wall (1971) 126 CLR 376 (Barwick CJ and Menzies J).
It is a well-recognised principle that equity will recognise a gift of land if the donor has done everything which is necessary for them to have done to effect a transfer of the legal title of the land under the provisions of the Real Property Act,[11] that is, to complete the gift. There are two requirements for a gift to be completed:
1.The donor (or their agent) must deliver the Transfer of title to the donee (or their agent), and
2.The delivery of the Transfer to the donee must be done with the intention of “there and then parting with it”.[12]
[11] Milroy v Lord (1862) 4 De G F & J 264, stated in the High Court in Corin v Patton (1990) 169 CLR 540, 559 per Mason CJ and McHugh.
[12] Cope v Keene (1968) 118 CLR 1, 6-7, citing Brunker v Perpetual Trustee Co (1937) 57 CLR 555, 599-605.
To “part” with the Title is to give the donee control of the legal title and with the property in it, so that the donor does not need to take any further action for the Transfer to be registered, [13] or as Deane J said in Corin v Patton,[14] “…to place the vesting of legal title…beyond the recall or intervention of the donor”.[15]
[13] Corin v Patton (1990) 169 CLR 540, 559.
[14] Ibid 582.
[15] Ibid 582.
If these two requirements have been met, then equity will recognise the donee as the beneficial owner of the land, with the donor holding the property as trustee for the donee pending the registration of the Transfer. However, if they are not satisfied, then equity will not recognise or complete the gift because “…a donor should not be compelled to make a gift, the decision to give being a personal one for the donor to make”.[16] This principle gives effect to the maxims that “equity will not assist a volunteer” and “equity will not perfect an imperfect gift”.
The arguments
[16] Corin v Patton (1990) 169 CLR 540, 558.
Mr Roder submitted that neither of the two requirements for the gift of the land to be completed were met in this case. In support of this submission, Mr Roder pointed to the following: First, the deceased was the registered proprietor of the land at the date of her death. Second, the Transfer was never delivered to Neil Jones, and remained the possession of Andersons who, at least until her death, were solely acting for the deceased. Third, the Title has been transmitted to the Public Trustee, who is the Administrator of the deceased’s estate. Fourth, although the deceased executed the Transfer in favour of Neil Jones, the deceased intended that the gift would only be effective upon its registration, which never occurred. Finally, the Transfer was never stamped, lodged for registration, or registered.
Neil Jones made submissions to the following effect: First, the Transfer was not registered by reason of his lack of funds as he was caring for his ailing mother and was also paying her debts. Second, it was the deceased’s clear intendment that he should receive the property and not his brother, Ian Jones. Third, his brother had not given any assistance to his mother and did not even help to pay for the funeral. Fourth, that the property was not worth a lot of money.
It is apparent from Mr Jones’ submissions, and indeed his evidence, that they did not directly address the legal issues which required consideration. Rather, they concerned matters which may be relevant to the merits of Ian Jones’ application for relief under the Inheritance (Family Provision) Act 1972 (SA).
I accept Mr Roder’s submissions that the evidence does not support a finding that the deceased completed the gift of the land to Neil Jones. The unregistered Transfer remained in the possession of the deceased’s solicitors, Andersons, and was not held for, nor delivered to Neil Jones. The documentary evidence, specifically the correspondence from Andersons to Neil Jones, shows that delivery of the Transfer to Neil Jones would not occur until he had sufficient funds to pay the stamp duty for registration. On Neil Jones’ own evidence, he could never afford the stamp duty, and for that reason the Transfer was never delivered to him. Given this evidence, I am not satisfied that the first requirement for completing the gift, namely delivery of the Transfer was met in this case.
Even if there was delivery of the Transfer to Neil Jones, I accept Mr Roder’s submission that the second requirement, namely the deceased’s requisite intention to part with the land has not been met. Both the documentary evidence and Neil Jones’ oral evidence demonstrates that it was the deceased’s intention that Neil Jones would not acquire the land until the stamp duty had been paid and the Transfer registered. Neither of these things were done, and as a consequence I am unable to find that the deceased intended to part with the land “there and then” when she handed the unregistered Transfer to Andersons solicitors. In making this finding I rely on the following comments by Jessup J in Marchesi v Apostolou:[17]
Where the donor has every intention of making a gift, but the only act which he or she has done is to deliver an executed transfer to his or her own solicitor, agent or bailee, he or she will not be regarded as having done everything necessary on his or her part to vest the legal estate in the donee…So long as the donor’s own agent holds the transfer, more is required to be done by the donor.
[17] [2007] FCA 986:[17]
I therefore conclude that there was no complete gift of the land to Neil Jones.
Is there a trust?
The law
Another way in which a person may make a gift of land is through the execution of a valid declaration of a trust. Section 29(1)(b) of the Law of Property Act 1936 (SA) provides as follows:
(b)a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.
As Sir James Bacon CV said in Heartley v Nicholson:[18]
It is not necessary that the declaration of a trust should be in terms explicit. But what I take the law to require is, that the donor should have evinced by acts which admits of no other interpretation, that [they] had ceased to be, and that some other person had become, the beneficial owner of the subject of the gift or transfer, and that such legal right to it, if any, as [they] retained was held by [them] in trust for the donee.
[18] (1875) LR 19 Eq 233, 242, cited in In re Hince (1946) SASR 323, 329.
As Murray CJ stated in In re Weaver if this formality is complied with, then the legal owner: [19]
…may constitute himself a trustee, and, without an actual transfer of the legal title, may so deal with the property as to deprive himself of its beneficial ownership, and declare that he will hold it from that time forward on trust for the other person.
[19] [1916] SALR 167, 171.
As to the possibility that the deceased was holding the land on trust for Neil Jones, Mr Roder submitted that that did not happen as a matter fact, and in any event as a matter of law, because there was no declaration of trust evidenced in writing.
I agree with Mr Roder’s submission that there is no evidence from which it could be inferred that the deceased intended to hold the land on trust for Neil Jones, perform the duties of a trustee, or divest herself immediately of her beneficial ownership of the land. Moreover, there is no evidence of a declaration of trust in writing as required by s 29(1)(b) of the Law of Property Act 1936 (SA). As I found earlier, the deceased intended to transfer her property to Neil Jones by divesting herself of the legal ownership upon registration of the Transfer - this mode of transfer was incomplete. Accordingly, I respectfully adopt the following words of Turner LJ in Milroy v Lord, where His Lordship said: [20]
…[I]f the settlement is intended to be effectuated by one of the modes…the Court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the Court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust.
[20] (1862) 4 DF & J 264, 274.
I therefore conclude that there was no declaration of trust.
Does the rule in Strong v Bird apply?
The law
Mr Roder raised a potential argument that Neil Jones acquired an equitable interest in the land through the operation of a principle known as the rule in Strong v Bird.[21] As Young CJ in Equity stated in Blackett v Darcy:[22]
To state it in an oversimplified form, the rule in Strong v Bird is that if a testator intends to make a gift but does not make a complete gift before his or her death and still has the intention of making the gift at the time of death and appoints the donee his executor, then equity will assist the donee.
[21] (1874) LR 18 Eq 315.
[22] (2005) 62 NSWLR 392, 397.
In Cope v Keene, Kitto J helpfully set out the four main conditions for the application of this rule:[23]
(1) that at some time in his lifetime the testator made a purported immediate gift of specific property to another person (or in the case of a debt a purported immediately operative voluntary release of it);
(2) that though the testator's intention at the time was that what he did should take effect by way of present gift, it failed to do so for want of compliance with the legal requisites for a complete divesting of the title from the intending donor in favour of the intended donee;
(3) that the testator still had when he died the intention that the property should be treated as having been effectually given to the intended donee;
(4) that the testator left a will appointing the intended donee as the executor or one of the executors of the testator. Where these conditions are satisfied the purported donee takes the property free from the dispositions of the will, as the testator intended it to be, and therefore holds it (as against the beneficiaries under the will) for his own benefit.
[23] Cope v Keene (1968) 118 CLR 1, 8.
The ambit of this rule has been the subject of judicial and academic debate. There is doubt as to whether this principle applies to a gift of land, particularly under the Real Property Act.[24]Further, even if it were to apply there is a question as to whether the donee’s equitable claim against the estate might be defeated by a claim under the Inheritance (Family Provision) Act 1972 (SA).[25]This Court has also stated that the grant of probate to the donee/executor is part of the requirements of the rule.[26] In the present case, probate was not granted and the Public Trustee became the Administrator of the estate.
[24] See eg Cope v Keene (1968) 118 CLR 1, 8; Blackett v Darcy (2005) 62 NSWLR 392, 398 cf Benjamin v Leicher (1998) 45 NSWLR 389, 402.
[25] See Cope v Keene (1968) 118 CLR 1, 9; Blackett v Darcy (2005) 62 NSWLR 392, 398.
[26] In re Hince (1946) SASR 323, 331; In re Weaver (1916) SALR 167.
Mr Roder submitted that this rule does not apply in this case for two main reasons. His first and primary submission was that as a matter of fact, the first condition of the rule has not been satisfied because the deceased did not make an immediate gift of the land to Neil Jones, but rather the gift was to be effective in the future, that is, upon registration of the Transfer.[27] His second submission was that if the rule does apply, then the “technical” aspects of the rule have not been met because the property in question is land, probate was not granted, and in any event Neil Jones’ equitable claim would arguably be defeated by the claim under the Inheritance (Family Provision) Act 1972 (SA).[28]
[27] Re Freeland [1952] Ch 110; Cope v Keene (1968) 118 CLR 1, 7-8, 13.
[28] See Cope v Keene (1968) 118 CLR 1, 9; Blackett v Darcy (2005) 62 NSWLR 392, 398.
In my view, Mr Roder’s primary submission, namely that the rule in Strong v Bird does not apply in this case is correct. As I found earlier, in signing and handing over the Transfer to her solicitor, the deceased did not intend that this would operate immediately as a gift. To use the words of Kitto J in Cope v Keene:[29]
[Her] only intention, from the time [she] instructed [her] solicitor to prepare the transfer until the time of [her] death was to pursue a course the completion of which would constitute the making of a gift; and Strong v Bird has nothing to say in regard to an intention which remains until the death a mere proposal to make a gift by a future act. [Footnotes omitted]
[29] (1968) 118 CLR 1, 8.
As a consequence, it is unnecessary for me to decide the “technical” questions, namely if the rule in Strong v Bird applied, whether the principle extends to land, whether the grant of probate is a necessary condition, and whether the equitable claim could be defeated by a successful claim under the Inheritance (Family Provision) Act 1972 (SA).[30]
[30] See Cope v Keene (1968) 118 CLR 1, 9; Blackett v Darcy (2005) 62 NSWLR 392, 398.
I therefore consider that the rule in Strong v Bird does not apply and that Neil Jones did not acquire an equitable interest in the land by operation of the rule.
Returning to the submissions made by Neil Jones, none of his submissions alter my conclusion that the application of the legal principles lead to the result that the land is an asset of the deceased’s estate. However, his arguments may be relevant to Ian Jones’ claim under the Inheritance (Family Provision) Act 1972 (SA).
Orders
For these reasons, I am satisfied that the land is an asset of the deceased’s estate and therefore I make the following declaration:
Pursuant to Rule 206 of the Supreme Court (Civil) Rules 2006 and s 69 of the Administration and Probate Act 1919 (SA) I declare that the property comprised and described in Certificate of Title Register Book Volume 5059 Folio 198 is an asset of the estate of the late Valda Ellen Elvina McGrath.
I will hear the parties as to any consequential orders, including costs.