Re Gillie, Reginald Ernest & Ors Ex Parte Cornell, Andrew M v Gillie, Melissa G

[1996] FCA 974

CATCHWORDS

TORT - Detinue - claim that 250 cattle in herd held jointly - chattel mortgage over herd given by one co-owner - default on mortgage - trustee took possession of herd - 125 cattle removed from possession of trustee by one co-owner and hidden - unilateral partition - whether cattle of indistinguishable quality so as to allow unilateral partition - analogue with case law on spring lambs - whether co-owner of chattels in undivided shares liable in conversion as against another co-owner - order for delivery up of removed cattle.

Baker v Barclays Bank Ltd [1955] 1 WLR 822 at 827

Chilton v Carrington (1855) 24 LJCP 78

Deutscher v Broadhurst 12 NW 2d 807 (1944)

Howard E Perry & Co Ltd v British Railways Board [1980] 1 WLR 1375

Kelly v Lang 62 NW 2d 770 (1954)

Kitano v The Commonwealth (1974) 129 CLR 151

Nash v Barnes [1922] NZLR 303

Wenham Builders Pty Ltd [1965] NSWR 581

JURISDICTION - Bankruptcy Jurisdiction - application for order of delivery up of chattels to trustee - possessory torts - detinue - conversion - reliance on cross vested jurisdiction - power to order delivery up in detinue action in Victoria - appropriateness of proceeding in Federal Court.

Bankruptcy Act 1966 (Cth)

Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth)

RE:  R E GILLIE;  EX PARTE: CORNELL
M GILLIE (Respondent)
Nos VX72 of 1995, VX104 of 1995, VX105 of 1995, VX106 of 1995 and VX107 of 1995

FINN J
MELBOURNE
13 NOVEMBER 1996

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION                 )
BANKRUPTCY DISTRICT OF           )
THE STATE OF VICTORIA            )

No VX  72 of 1995
   VX 104 of 1995
   VX 105 of 1995
   VX 106 of 1995
   VX 107 of 1995

RE:      REGINALD ERNEST GILLIE,   ALMA JOYCE GILLIE, GLEN   ANTHONY GILLIE, DALE BRYCE   GILLIE AND ROHAN CRAIG   GILLIE
  Debtors

EX PARTE: ANDREW M CORNELL
Applicant

AND:     MELISSA G GILLIE
     Respondent

FINN J
MELBOURNE
13 NOVEMBER 1996

MINUTES OF ORDERS

THE COURT ORDERS THAT:

the respondent deliver to the applicant so many as now survive of the 125 cows and 35 yearling calves removed by and on behalf of the respondent from the dairy farm at Matheson Road, Tongala during the Easter weekend 1996, all such offspring thereof as have not been disposed of prior to the date of the making of this order.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION                 )
BANKRUPTCY DISTRICT OF           )
THE STATE OF VICTORIA            )

No VX  72 of 1995
   VX 104 of 1995
   VX 105 of 1995
   VX 106 of 1995
   VX 107 of 1995

RE:      REGINALD ERNEST GILLIE,   ALMA JOYCE GILLIE, GLEN   ANTHONY GILLIE, DALE BRYCE   GILLIE AND ROHAN CRAIG   GILLIE
  Debtors

EX PARTE: ANDREW M CORNELL
Applicant

AND:     MELISSA G GILLIE
     Respondent

FINN J

MELBOURNE

13 NOVEMBER 1996

REASONS FOR JUDGMENT

This is an unfortunate and inappropriately cast proceeding.  Mr Cornell, the trustee of deeds of assignment and arrangement under Part X of the Bankruptcy Act 1966 (Cth), has made an application in the bankruptcy jurisdiction of this Court which, as amended, seeks an order for the delivery up to him of so many as now survive of 125 cows and 35 yearling calves and their offspring as were removed by or on behalf of
the respondent, Melissa Gillie, from the lawful possession of the trustee.

While refusing to concede that the application was inappropriately commenced as a bankruptcy matter, counsel for the trustee now apparently accepts that the application should properly be regarded as, in effect, an action in detinue which this Court has jurisdiction to entertain by virtue of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth).  This metamorphosis in the application has quite unsatisfactory features.  I am being asked to entertain jurisdiction in a common law matter involving a possessory action without the benefit of pleadings of any kind.  The respondent has not made a cross claim of any variety.  Yet the nature of her defence to the very particular order sought, as opposed to her more general complaints and assertions against the trustee,  lacks any foundation in law.

While I considered it appropriate to allow the hearing of this matter to be prosecuted to its conclusion after its true character finally emerged - considerations of time and cost weighed heavily in this - my judgment cannot and will not resolve the matters in dispute between the parties concerning the respective entitlements they had to interests in the herd of cows to which the particular animals the subject of this application belonged.

In these reasons I will refer to the members of the Gillie family by their christian names.  I mean no disrespect in this.  I simply follow the convenient course that was taken by the parties themselves at the hearing.

Melissa Gillie’s Claim

The respondent, whose husband (Rohan) has executed a deed of arrangement and chattel mortgage in favour of the trustee, claims to be co-owner with her husband of (at least) 250 cows and 70 yearlings being part of a larger herd of over 900 dairy cattle which came into the possession of the trustee in consequence of the execution by Rohan and four other members of his family (who together constituted the R & A Gillie & Sons partnership) of, variously, deeds of assignment, deeds of arrangement and a chattel mortgage.

During the Easter weekend of 1996 Melissa and Rohan removed 125 cows and 35 yearlings from the herd, Melissa’s claim being that she was entitled to them as representing her half of the cows and yearlings said to be co-owned by her.  I should add that Melissa has not entered into any Part X arrangement under which the trustee could make any claim against her in respect of her own property.  I should also emphasise that Melissa has not asserted in these proceedings that the trustee’s possession of the cattle said to be co-owned was unlawful.  And she could not.  Rohan had assigned his interest in the cattle to the trustee under the chattel mortgage given on 3 August 1995.

Even if I were to assume that (i) Melissa had a joint interest in the 250 cows and 70 yearlings as claimed;  and (ii) contrary to the uncontroverted evidence, that all of the 125 cows and 35 yearlings she removed came only from the jointly owned cows and yearlings, she still would not have any basis for resisting the order sought by the trustee.

The parties have rightly accepted that, whatever may have been the situation prior to the giving of the chattel mortgage, if Rohan and Melissa were co-owners at the time, her rights as a co-owner thereafter were those of a tenant in common:  the mortgage would have severed any joint tenancy.  That tenancy in common would have given Melissa an undivided half-share in the cows and yearlings co-owned.  She has purported to realise her interest in them by unilaterally effecting a division.  The fundamental question I have to consider is whether such a course was lawfully open to her.

Before turning to that question I should, perhaps, refer briefly to the circumstances in which Melissa claims to have become co-owner of part of the herd.  Rohan, whom she married in 1984, had worked on the farm of his parents (Reg and Alma Gillie) for some years prior to the alleged making by his parents to him and Melissa in 1986 of the gift of all of the
cows - 120 - then being worked on the farm.  Melissa’s evidence was that the gift to Rohan preceded her marriage to him in 1984 and she became a co-owner of the cows in consequence of her marriage vows.  She was, in my view, mistaken in both of these matters.  Rohan and Reg gave evidence that the gift occurred (if it occurred) in 1986;  that it was part of a process through which, over time, the parents would transfer the farm and its chattels to Rohan;  that it coincided with the beginning of a share farming arrangement between Reg and Alma and Rohan and Melissa;  and that Rohan thereafter acted in ways vis-a-vis third parties consistent with his being a co-owner (with Melissa) of the property.

Separate from this alleged gift transaction, in  1988 Rohan and Melissa claimed they purchased an adjoining property (“Wakenshaw”) and the herd on it of about 80 cows on their own account.  Their evidence is that, after settlement of that purchase, they then co-owned 250 cows, 50 spring heifers and 70 yearlings.

It is the trustee’s case as I understand it that the 1986 gift was ineffective - either because there was no delivery of the cattle or because there was no donative intention.  The trustee further points to Melissa’s own evidence which could not have resulted in an effective gift but which he invites me to accept as providing the correct account of the basis of her
claim.  As to the 1988 Wakenshaw purchase, the trustee alleges that it did not include the cows and he disputes that Melissa made any contribution towards their purchase. 

From some time in the late 1970’s Reg formed what has been described as an informal partnership - R & A Gillie & Sons - which consisted of Reg, Alma, Rohan and his two brothers.  At the end of 1990 a formal partnership instrument was actually executed by all five partners though it was in fact backdated to 1989.  It is the trustee’s case, as I understand it, that all of the cows were partnership property or had become so, notwithstanding that Melissa may have acquired an interest in some of them at some time.  I need not enlarge upon how this case is put.

There are two additional matters to which I should refer.  First, genealogical evidence has been put before me that allows for the accurate matrilineal tracing of the parentage of cattle born to the animals claimed to be co-owned.  Secondly, because the trustee denied that Melissa had any interest in any cows in the herd, he has disposed of a major part of it.  The cattle removed by Rohan and Melissa were themselves potentially the subject of a contract of sale.  I do not in these proceedings have to determine the trustee’s potential liability to Melissa in the event that co-owned cows were sold:  cf D P Derham, “Conversion by Wrongful Disposal as Between Co-owners”, (1952) 68 LQR 507.  I do observe, though,
that counsel for Melissa relied upon the threat posed to her cows by the trustee’s contract to justify her “recaption” of them.

It is to the taking of the cattle to which I now turn.

The Unilateral Division of Co-owned Chattels

It needs to be said at the outset that the subject of co-ownership in a case such as this is of each and every cattle co-owned.  It is, of course, open to the co-owners, by agreement, to effect a division of the cattle for the purpose of procuring their several ownership of the divided parts.  In the present case, if there was to be such an agreement, it would have required the consent of the trustee, given the assignment to him of Rohan’s interest under the chattel mortgage.  Such consent was never obtained.

It equally is the case that partition of the co-owned cattle could have been effected in proceedings for this purpose taken in a court of appropriate jurisdiction in Victoria.  No such proceedings were taken.

Instead of the above two courses, Melissa resorted to self help.  In my view all she has succeeded in doing has been wrongfully to dispossess her co-owner, the trustee.

There is a considerable body of early, arcane, but subsisting law on the rights inter se of the co-owners of chattels when one co-owner assumes to deal with the co-owned property for his or her own benefit:  see D P Derham, “Conversion by Wrongful Disposal as Between Co-owners”, above;  Balkin and Davis, Law of Torts, (2nd ed, 1996 Butterworths, Sydney) 88;  Harper, James and Gray, The Law of Torts, (2nd ed Little Brown & Co, Boston, 1986) Vol 1 para 2.32;  Clerk and Lindsell on Torts, paras 1131-1132 (14th ed, Sweet & Maxwell 1975 - the last edition before the passing of the Torts (Interference with Goods) Act 1977 (UK)).

For present purposes I should accept despite the justifiable criticism made of it, that the rule to be applied is that a co-owner will only be guilty of converting the chattels co-owned if he deals with those chattels “in a manner inconsistent with the rights of the [other] co-owner by excluding him from possession and preventing him from exercising his rights”:  Kitano v The Commonwealth (1974) 129 CLR 151 at 172 per Mason J; see also Baker v Barclays Bank Ltd [1955] 1 WLR 822 at 827; and on such “ouster” generally and on its debt to co-ownership of real property see 20 Am Juris 2d, “Cotenancy and Joint Ownership”, Para 51; Pollock and Wright, Possession in the Common Law (Clarendon Press, Oxford, 1888) 87.

If Melissa has asserted, and is asserting, an exclusive possession of the cattle taken, then she is a converter of them.  On the evidence before me I do not see how her actions can be seen in any other light.  Indeed in written submissions made on her behalf she has sought a declaration as to her ownership and exclusive possession of the cattle taken.  Furthermore, she sought to conceal their whereabouts from the trustee only revealing their location after ordered so to do by this Court.  Again, her disposal of the offspring of the cows taken has been in furtherance of her claim to sole ownership.  Accordingly, I conclude that her possession of such of the cows, yearlings and offspring as remain in her hands must be categorised as wrongful unless her act of division was itself effective to make her alone entitled to the cattle taken.

There would appear to be a dearth of authority in this country on the issue of unilateral division.  Despite giving counsel the opportunity to address this matter in supplementary written submissions, no material of relevance has been forthcoming.

I am of the view that the appropriate rule to be applied, because it accords with principle, is that stated in 20 Am Juris 2d, “Cotenancy and Joint Ownership”, para 40.  It both reflects, and is reflected in, judicial decision in the United
States:  see eg Kelly v Lang 62 NW 2d 770 (1954);  Deutscher v Broadhurst 12 NW 2d 807 (1944):

“The general rule of the common law is that property held in common can be divided only by the consent of the owners or by a proceeding in a court of equity;  and it appears that this rule still prevails where the common property embraces several things of different qualities or values, or consists of but a single object that cannot be divided without destroying its character or identity. But where personal property is severable in its nature, in common bulk, and of the same quality, each tenant may sever and appropriate his share, if it can be determined by measurement or weight, without the consent of the others.”

If the present were a case in which the chattels divided were indistinguishable in their attributes I would incline to the view that severance without consent would have been open to Melissa as a co-owner.  But such is not the case.

The uncontradicted evidence here is that the cattle taken were of varying quality.  While it needs be said - and it is to Rohan’s credit - that he effected a division in a manner which he considered fair by selecting cows of various quality, that such a selection process had to be engaged in itself indicates why the general rule of non-division must be applied here.

I would note that a like view was reached in Kelly v Lang, above, where it was held that a flock of spring lambs was not severable by the unilateral action of a co-owner.

I find, then, that Melissa has committed the tort of detinue, the trustee having (at least as co-owner under the chattel mortgage) an immediate right to possession and having demanded and being refused, the return of the cattle wrongfully removed:  on this tort see Balkin & Davis, above, 105 ff.  This finding makes it unnecessary for me to determine whether (a) the cattle taken were wholly or partially cattle alleged to be co-owned;  and (b) Melissa in fact was a co-owner of any cattle in the herd. Even co-ownership of the cattle taken, as I have indicated, would provide no defence to the tort action.

As is well known, at common law an action in detinue did not entitle a plaintiff as of right to specific restitution of the goods detained.  Even where recovery of the goods was sought, the defendant had the election to pay the assessed value of the goods rather than return them.  The common law position was first ameliorated by the specific restitution jurisdiction developed in courts of equity:  see generally, Meagher, Gummow and Lehane, Equity:  Doctrines and Remedies, (3rd Ed, Butterworths 1992) Ch 22;  and was subsequently modified in England by the Common Law Procedure Act 1854, s78 which empowered the court after judgment in detinue to order execution by way of specific delivery:  on the rule and its statutory modification see Nash v Barnes [1922] NZLR 303. That statutory modification has been replicated in this country, albeit in Victoria it now exists, so it would seem,
in consequence of inferences drawn from the Supreme Court’s General Rules of Procedure in Civil Proceedings 1996, O21 r3 and O66 r4:  see Williams, Civil Procedure Victoria, (Butterworths), I21.O3.130; I66.04.0.  It is this inferred power to order delivery of the cattle that I am invited to exercise in these proceedings.

It is the case that the jurisdiction which derives from the Common Law Procedure Act and its successors is a discretionary one:  see Howard E Perry & Co Ltd v British Railways Board [1980] 1 WLR 1375 at 1382-1383; Nash v Barnes, above, 306-307.

Because the circumstances here are ones in which there are reasonable grounds for apprehending that an award of damages would go unsatisfied, and because no set-off or cross claim has been raised, the case is one “where it would be unjust or improper that [Melissa] should have the option of paying the money or keep the [cattle]”:  cf Chilton v Carrington (1855) 24 LJCP 78 at 80. I will, then, give judgment for the delivery of the cattle. I should add that, in all probability the equitable jurisdiction to which I have referred would equally have justified the making of such an order: cf Aristoc Industries Pty Ltd v R A Wenham Builders Pty Ltd [1965] NSWR 581 at 588.

This conclusion makes it strictly unnecessary for me to consider a range of issues raised by the respondent and, in particular, whether Melissa in fact had an interest at all in any of the cows in the herd held by the trustee.  During the course of the trial I indicated this possibility to counsel.  I would note that no application was made in consequence by either party to seek at least a declaration of right.

My orders will do little to quell the dispute between the parties over their respective entitlement to the cows that remain unsold by the trustee.  While I had entertained the possibility of addressing this issue in such a way as could provide some guidance in the future resolution of the matter, I have come to the view that it is not appropriate for me so to do, regrettable though this may be given the issues traversed in evidence and submissions.

I have been insufficiently addressed both on the law of gifts (and particularly on delivery:  cf Pollock and Wright, above, 57ff) and on the rights of co-owners inter se:  cf D P Derham, above;  and against third parties (in cases of sales and mortgages):  see eg Fisher and Lightwood, Law of Mortgage, (Butterworths, Sydney, Aust ed, 1995) para 11.3;  as to be able to deal with this matter in a way which would be fair to the parties.  I should, though, add that it would seem appropriate for the trustee to give greater attention to such matters than appears so far to have been the case - the more
so because he has claimed lawful authority to sell the cattle. I would also add that, on the evidence presented to me by both parties there are, manifestly, serious questions to be tried as to whether (i) an effective gift was made to Rohan and Melissa in 1986;  (ii) a joint interest in the Wakenshaw cows was acquired in 1988;  (iii) Melissa had a significantly larger claim as a co-owner than that suggested in these proceedings;  and (iv) Melissa, having become a co-owner, had taken no effective action to dispose of her joint interest by way of gift, contract or abandonment.

I should emphasise, lest there be any misunderstanding, that my judgment and these reasons do not in any way provide additional authority to the trustee in disposing of the cattle.  He is now clearly on notice of the nature and basis of the claim made to the cows.  I need hardly comment on the position in which this may place purchasers from him.  Given the time spent ventilating the ownership issue before me, one would hope that the parties will be able to resolve their dispute without the need to resort to further and costly litigation.

There is an additional matter to which reference should be made.  The respondent has sought to make the conduct of the firm to which the trustee belongs a matter of adverse comment and controversy in these proceedings.  Here I need only say that it would be quite inappropriate for me to comment upon
that conduct as an isolated matter, the more so because it could itself well become the subject of separate proceedings between the Gillie family and the firm in question.

Turning now to the orders to be made in this matter I would note that the amended application seeks delivery up not only of the survivors of the 125 cows and 35 yearling calves removed by the Gillies but also of all offspring thereof.  I have been informed that up to the end of the hearing any and all offspring had been disposed of apparently so as to provide funds to maintain the cows and yearlings.  In these circumstances I will only make an order in relation to offspring as will relate to offspring not disposed of before the making of this order.

As this application is one which could have been brought in a State court but which has been argued before me as a cross-vested matter, and as it raised a very narrow point not at all commensurate with the time taken for the application, I will invite submissions on the appropriate costs order to be made.

The order of the Court then will be that the respondent deliver to the applicant so many as now survive of the 125 cows and 35 yearling calves removed by and on behalf of the respondent from the dairy farm at Matheson Road, Tongala during the Easter weekend 1996, all such offspring thereof as have not been disposed of prior to the date of the making of this order.

I certify that this and the preceding 15 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate

Dated:  12 November 1996

Counsel for the applicant        :  G T Bigmore QC, M J Galvin
Solicitors for the applicant :  J M Smith & Emmerton

Counsel for the respondent   :  R Appudurai
Solicitors for the respondent     :  D E Phillips

Date of hearing                  :  20,21 May 1996,
   28,29 October 1996

Date of judgment            :  13 November 1996